Vendors can do everything right – the right vending machine, right product selection, right service strategy, right product price point – and still miss out on a large percentage of sales. That’s because regardless of how much consumers want that drink or snack, they must have the means to pay for it.
And, in many cases, they do not.
The vast majority of consumers carry at least one credit card and larger denomination notes like $20 bills, which are commonly dispensed by ATMs. But only 50 percent or less of consumers carry $3 in coins or bills. In fact, 65 percent or more of consumers carry either $1 or $20 bills – the two notes that are the highest in circulation. According to the U.S. Mint, 31 percent of all currency in circulation today is the $20 bill and 46 percent is the $1 bill, while all other denominations have circulation levels well below 12 percent.
Despite money circulation levels, most vending machines out there today don’t accept higher denomination bills and/or credit cards. They only accept coins, $1s and possibly $5s. Frustrated, many consumers storm off from a vending machine without that desperately needed afternoon pick-me-up. Even worse, they are likely to give up on the vending machine permanently in favor of a convenience store or drive-thru chain that accepts all forms of payment.
Recent field studies found that higher denomination bill acceptance leads to at least a 20 percent increase in overall vending machine sales because it literally “unlocks consumers’ wallets” and makes it convenient to buy.
Why don’t machines accept higher denominations? Because operators have been concerned about changer starvation due to demands for large change amounts as change from payments made with high denomination bills.
Many operators report sales losses of 80 percent or more when a machine requires exact change only due to changer starvation. Bill changers, which change out large denomination bills, are expensive. Just one bill changer can cost as much as $1,200, require hundreds of dollars in change in the changer and hundreds more in replenishment funds.
Today’s cash recycling technology now allows operators to easily and cost-efficiently accept larger denominations, reverse customer attrition and drive sales.
Field-Proven Cash Recycling Technology
Cash recycling technology is not new, but it is just now hitting a significant adoption curve. In the first quarter of 2011, MEI sold more than 10,000 cash recyclers to vending operators since the technology was introduced in October 2008. Operators have reported success, citing various advantages – some expected, some not anticipated at all. Cost savings, sales lift, new profit opportunities, and an increase in customer satisfaction are among the highest reported benefits of cash recyclers.
The earliest adopters of the technology report sales lifts as high as 75 percent and return on investment (ROI) in as little as six months. The Coca-Cola Bottling Co. of Lehigh Valley, Pa., part of the ABARTA Beverage Group, for example, invested in cash recycling technology nearly two years ago and has experienced unexpected sales increases in all of its recycling-equipped vending machines.
“Customers have told me first-hand how thrilled they are to receive bills as change instead of dollar coins,” said Mike Gallagher, service manager for Coca-Cola Bottling Co. “Sales on those machines have increased, and the technology has been extremely reliable.”
Here’s a look at seven ways three vending machine operators – each with different vending operations – are using recycling technology.
Improve Customer Satisfaction
Consumers like choices and convenience. Cash recycling technology enables vending machines to offer customers more payment choices and encourages them to return to that machine again and again, confident that they can make a purchase with whatever is in their wallet. Also, providing change in paper bills more closely mimics purchases at traditional stores and restaurants.