As coffee shops cut the cord, are they cutting their own throats?
Why do I think this? I was one of those nightmare customers who bought a cheap cup of coffee, parked myself in a chair near an outlet, and then tuned out for the next three hours as I sucked up the shops WiFi. Admitedly, for those three hours, I was not a money machine for the coffee shop. But viewing me only as a three-hour mooch is misleading.
For starters, I occupied a key marketing role for the shop. I was a visible body during a time of otherwise low traffic. I served as evidence that this coffee shop was OK. I was the local, the regular customer who gave that shop its stamp of approval. If I got the boot, then the shop would look that much more barren and empty during off-peak hours. And, by extension, that much less inviting. Who goes into a food establishment that's empty? Very few people because there must be a reason it's empty, right?
While I may have been a non-payer on any given day, my lifetime value to my local coffee shop was much greater. At my local coffee shop, I am likely to go in and have a sandwich once or twice per week, or to have a breakfast burrito on the weekend. So while my value to the shop might be low for any given three hour stretch, that's not the full picture. Unplug my laptop and I'm gone for good, off to Starbucks (SBUX) or some other larger chain that is happy to service my kind.
In other words, a coffee shop owner should look at me as a lifetime revenue opportunity and a potential upsell. And there certainly would be ways to upsell me. How that free WiFi, some shops offer? Make it free WiFi with a $7.00 purchase. Then you've got me on the hook for a cup of joe and a scone. Suddenly, I've gone from total loser to at least break even if not a moderate profit center.
As behavioral economist Dan Ariely discusses in his book "Predictably Irrational," consumers respond emotionally to "free" offers. Give something away for free and it sounds like a bargain. And, in a sense, it is. Starbucks would charge me for WiFi. My corner coffee shop will *give* it to me for free, with a modest purchase. How awesome is that? Take away the WiFi and the reason to plug-in diminishes markedly.
Or here's another radical strategy. Ask for a donation for plugging in. Put up a sign at the register that explains power is expensive and the shop is paying for WiFi so a customer should chip in whatever they think is appropriate. This is also known as the "best-efforts" strategy and it has worked in some similar situations, where restaurants let diners pay what they thought a meal was worth. Surprisingly, the customers paid more than what the fixed menu prices had been before, on average. So please, please, coffee shop owners. Don't cut the chord and instead figure out ways to make people like me understand the true value of a (relatively) quiet well-lit place to jack in.