The popularity of high quality coffee has given OCS operators the chance to better position themselves as refreshment service specialists in recent years. While much of the discussion now focuses on the nuances of what makes a good cup of coffee, operators should not pay any less attention to maximizing their allied product sales.
In fact, the increased variety of coffee being provided has created opportunities to offer a greater variety of allied products. With more blends of coffee being served, the customer is more likely to want a broader selection of flavorings and condiments, in addition to the more traditional paper and plastic allied OCS products.
Fortunately, product suppliers are responding with a wider assortment of flavors, creamers, teas, mineral beverages, juices, health-oriented snacks, and it couldn’t be happening at a better time. OCS operators need to maximize sales now more than ever, given the rising costs of servicing their accounts.
Operators must maximize sales per location
Maximizing revenues by selling creamers, sweeteners, cups, napkins, first aid supplies, single-serve beverages, snacks and other miscellaneous products is nothing new. But competition for these products from other retail channels has presented new challenges to OCS operators.
Operators have no choice nowadays but to work harder to make sure their sales and route delivery personnel are aware of the variety of allied products available to customers, and to make sure they are taking the initiative to sell them. Doing so not only improves the company’s bottom line. It also builds stronger customer relationships and provides employees the opportunity to maximize their own compensation.
Some OCS operators have reported allied product sales in excess of 50 percent of total sales. The average OCS operator’s allied product sales represents closer to 30 percent of total sales, according to the Automatic Merchandiser State of The Coffee Service Industry Report.
The opportunity to increase allied sales depends on several factors.
Factors affecting allied sales
There are several factors separating operations with high and low allied product sales figures.
One factor is the type of market being served. Operators serving big metropolitan areas with a lot of high-rise office buildings generally sell more allied products than those serving rural or suburban areas. This is because it’s easier for locations in suburban and rural areas to shop other retail outlets.
Another factor is what types of allied products the operator has opted to offer. Operators who limit their allied sales to traditional coffee-related items such as stirrers, creamers, filters and cups will have less opportunity than those who have broadened their offerings to include cleaning products, ink jet cartridges, bathroom supplies, and foodservice supplies.
Perhaps the most important factor is the amount of training operators provide their sales teams. Those who take the time and trouble to make sales people aware of all the products they sell and the importance of making the customer aware generally sell more allied products.
Price increases extend to allied products
Compounding the challenge to sustain and improve sales are the recent price increases that many of these ancillary products have incurred in recent years. The challenge is even stronger than in the past, due to the new willingness by many retail competitors to undercut OCS operators on price.
In the case of office supply retailers, these competitors are enticing customers by using the Internet, a growing medium for all types of purchases. Customers perusing office product catalogs online are finding all types of office and break room supplies in these catalogs.
Internet shopping emerges
“If you’re not on the Internet (with a Web presence), all your customers are, so you’re in trouble,” said Dan Ragan, president of Joe Ragan’s Family of Companies in Springfield, Va.