Better user experience grows Houston, Texas operation

by Emily Refermat
Created: June 18, 2012

Micro markets allow CNC Vending to offer more product variety, including healthy options.
Micro markets allow CNC Vending to offer more product variety, including healthy options.
When Olson put in a Seattle's Best Coffee machine in a college campus, sales spiked 70 percent over a generic hot beverage machine.
When Olson put in a Seattle's Best Coffee machine in a college campus, sales spiked 70 percent over a generic hot beverage machine.
CNC Vending wanted to create their own social media campaign, starting with a contest for vending and market users called "Connect for Cash."
CNC Vending wanted to create their own social media campaign, starting with a contest for vending and market users called "Connect for Cash."
CNC Vending put signs promoting the National Automatic Merchandising Association's Vend.Love.Win. facebook program in break rooms.
CNC Vending put signs promoting the National Automatic Merchandising Association's Vend.Love.Win. facebook program in break rooms.
Sylvia comes to the market every day, but she rarely did when it was a bank of vending machines. She says the quality is better now, as well as the variety. "It's been really great," she said.
Sylvia comes to the market every day, but she rarely did when it was a bank of vending machines. She says the quality is better now, as well as the variety. "It's been really great," she said.
Eloy has been filling the Houston Community College Southwest ice cream vendors for years. When the school added a cafeteria to the back of the building, he suggested Olson add another bank of vending...
Eloy has been filling the Houston Community College Southwest ice cream vendors for years. When the school added a cafeteria to the back of the building, he suggested Olson add another bank of vending machines. It's done excellent in sales and there hasn't been a dip in the other banks sales.
CNC Vending offers customers coffee in micro markets by printing out a special reciept that can be scanned at the market kiosk.
CNC Vending offers customers coffee in micro markets by printing out a special reciept that can be scanned at the market kiosk.
CNC Vending has a line of food for its micro markets, which includes some organic dishes.
CNC Vending has a line of food for its micro markets, which includes some organic dishes.
Micro markets allow CNC Vending to offer gourmet sandwiches and deli food with it's label as well as branded food.
Micro markets allow CNC Vending to offer gourmet sandwiches and deli food with it's label as well as branded food.
Micro markets can also offer commonly needed, non-food items, like cough drops and pain medicine.
Micro markets can also offer commonly needed, non-food items, like cough drops and pain medicine.
To properly service micro markets, drivers need to be aware of merchandising like facing products and the "strike zone" of high margin products.
To properly service micro markets, drivers need to be aware of merchandising like facing products and the "strike zone" of high margin products.
Chuck Olson of CNC Vending, serving Houston, Texas, thinks micro markets are the most exciting innovation to hit vending.
Chuck Olson of CNC Vending, serving Houston, Texas, thinks micro markets are the most exciting innovation to hit vending.
Chuck Olson provides food in micro markets, despite low margins. He gets higher margins on ancillary products such as the snack and drink customers purchase with food items.
Chuck Olson provides food in micro markets, despite low margins. He gets higher margins on ancillary products such as the snack and drink customers purchase with food items.

Food has a place in markets

According to Olson, offering food makes a big difference in sales, but it is only effective in micro markets due to the 3-day shelf life and the fact that consumers really want to physically examine the food products and read the labels.

CNC Vending outsources its food. However, it puts its CNC Company Market labels on the products to build its brand. The products offer variety, including soups, gourmet sandwiches, salads, entrees and even organic foods. Olson admits the margin on food is minimal. He makes his money when the customer also buys a snack and drink to go with it.

The selling cycle on markets is a little longer than for vending banks, Olson said, because customers are less familiar with them. He finds he has to explain what the market is and how it works to several people at a potential location, including the location manager, the facilities manager, etc. He’s hoping it will be easier and faster now that he can take potential customers to an existing market.

Theft not an issue in markets

Theft is everyone’s first concern when they see a micro market. But Olson said it hasn’t been an issue. “No employee wants to lose their job over a Snickers bar,” said Olson about why he doesn’t think more employees steal from the markets. He experiences about 1 percent shrinkage, which could be accounted for, at least in part, by mishandled inventory. Even so, when Olson compares the 1 percent in shrinkage to the 250 percent lift in sales he averages from a market, it loses all relevancy.

Another advantage to the markets is the stored value account, which helps Olson avoid the transaction fees associated with debit and credit cards. When Olson opens a market at a new location, he gives every employee $2 in their account. Customers can authorize the stored value purchase with their finger using the biometric scanner on the market kiosk.

He also offers occasional promotions. During the grand opening week, if the employee puts $20 in their account, he’ll add an extra $5. Or, Olson will authorize buy one, get one free promotions, which he can’t do with a vending machine.

The stored value account gives employees an opportunity to add their email address. Olson will use those emails to send special offers.

Because Olson can access the market remotely, he can correct prices or give refunds. Staff at locations, who used to handle refunds, enjoy being able to email Olson about a refund request instead of doing the refund themselves.

Currently, 5 percent of Olson’s business is micro markets, but he’s aiming for 50 percent in the coming years.

Growth strategy leads to social media

Last year, when NAMA announced the IGS, it opened Olson’s eyes to the need to communicate with customers and really set himself apart from the competition.

He took advantage of NAMA’s Facebook contest, Vend.Love.Win., by placing signage and clings on machines at his locations. While he felt it was worthwhile, it was hard to determine how successful the campaign was because he couldn’t see analytics of the NAMA Facebook site. So he came up with his own campaign, “Connect for Cash,” where Facebook and Twitter fans could enter a drawing for product tokens or credits redeemable for products.

Olson enlisted his daughter, Cami, to launch CNC Vending’s social media campaign. He made his own signage for the Connect for Cash program, started checking Twitter a number of times per day and began posting comments on Facebook.

Facebook is especially useful to Olson, due to the built-in reporting features. As of this article, he had 250 fans on Facebook. According to the analytics, when those fans comment on his company, there’s a potential 115,000 people who will see it.

Olson finds social media useful, whether it’s getting people to like CNC Vending on Facebook or guess how many fumbles would happen during the Super Bowl. He got immersed in tweeting during the game, and soon noticed a group of customers talking back and forth.