How spending $320 can earn you $43,200

I saw a great “zero budget marketing” tactic in action on the street this morning that has some inspiration there for us all.

I walk past a cafe strip, where there are 6-7 places you can grab lunch or – more importantly for many people – a coffee.

One of these locations is actually a restaurant. And they are also a cafe that does coffee. But to the passerby, it looks MORE like a restaurant, thus people bypass it to go to a “coffee shop”.

Obviously the manager cottoned on, and realised they were missing out on the very lucrative morning coffee trade. How lucrative can coffee be, I hear you ask? It has a HUGE profit margin – the average latte costs around 20cents in “materials” to make. A good barista can pump out about 100 in an hour. And an average coffee price in the city is $3.

So that’s $300 in revenue in an hour for about $20 in material and $20 staff cost. Around a 750% return. Highly profitable if you can sell a lot of coffee!

So, back to the idea. The restaurant had one of their staff members, with a blackboard and some vouchers, directing people to go and get a FREE coffee.

So clever, so cheap. Being conservative, a regular coffee drinker would buy a cup once a day, 3 days a week (actually, most serious caffeine addicts do 2-3 every day!). And if you like the coffee and one place, and it’s a convenient location, you’re likely to buy these three coffees every week for the 48 weeks you’re working.

This translates to around $432 in revenue in a year – for a promotion that would cost around FORTY CENTS! 20 cents for the coffee and 20 cents worth of staff time.

So again, that’s spending 40 cents to get $432 in revenue over 12 months.

Image if they got only 20 new people a day on this promotion and they ran it for 5 days.

The restaurant will have generated $43,200 in revenue from this promotion, which will have cost a few hours a day in staff time (say $300) and $20 in free coffee.

If only we all got that sort of RETURN ON INVESTMENT!

So it’s a great little case study that encourages you to think about what you should be giving away, to get customers to try (and hopefully love) your product or service. Not all margins are as healthy as coffee – and luckily not all products are addictive – but even if you get a fraction of the results, this is a hugely successful zero budget marketing tactic.