If you first saw Cigana cafe two years ago, you'd have thought, "I wonder how they'll survive?" It's not just their location; it's also that two doors down, fierce competition opened in the form of Nosh, a popular gourmet food store and cafe.
Well, your assessment would be wrong, because today both cafes pulsate with people and activity.
How has owner Tim Jones done it? Why has Cigana prospered in the face of fierce competition, expanded to another location, created a new web presence and experienced booming sales?
He's not your run-of-the-mill cafe owner. He floats between his three locations, doesn't work behind the counter and always is smiling and chatting with his customers. It's amazing how many know Tim by his first name. He's also very sharp and to quote Tim: "I'm always looking for ways to grow." We sat over coffee last week and I asked Tim what he thinks are his secrets to success.
DON'T BE FOOLED BY LOCATION
Cigana is in a small strip of shops in Glen Innes, opposite Pak'n Save, an auto body shop and several tire stores. You'd think it would be a bad location. When he opened, they were the only cafe in the area for one year. The next street over is solid industrial and commercial, while Montana with 400 staff were down the block. Tim correctly surmised that almost all his clientele would come from the St Heliers and Glendowie area, with a higher disposable income.
TRUST, NOT LOYALTY, MAKES CASH FLOW
Understanding who his clients were and where they were from, Tim decided to do pre-purchase rather than loyalty cards. He recognised two things. First, his customers would have the resources to purchase their coffee in advance. Second, loyalty cards did nothing to drive in nor keep customers "loyal". Tim felt that if your customers trusted you, they would go for it. The prepaid card of eight coffees has been a raging success.
Why? For the customer, it's pure convenience - being able to have a coffee without the financial transaction. It also gives them a saving off the normal price. For Cigana, the card:
* Locks in customers rather than having them go elsewhere.
* Increases sales. I can attest to getting a coffee when I only marginally wanted one - because I had the card with me.
* Each card sold equals cash up front, improving cashflow. Tim ran a two-coffee-card special and told staff that if they could sell 1000 cards during the month, the reward would be a $500 bar tab. They came in slightly under the 1000 mark, but prepaid cards reaped $27,000 in sales. Naturally there's a slight dip afterwards as customers use their cards, but income pops right back up.
I don't see why many other businesses don't use this prepaid concept. The natural extension is for burgers, salads, sushi and similar. But what about dry cleaning or warrants of fitness? Any business that sells low-cost items of a similar value can use this concept, giving customers choice, convenience and savings. And giving the business guaranteed sales and better cashflow.
HAVE A POINT OF DIFFERENCE
How many cafes, clothing stores or restaurants have you gone into that seem so similar? Tim's strategy of knowing his clientele and catering to them makes a point of difference from competition. He decorated the cafe to provide a neighbourhood feeling: retro, bachy, friendly. There's acoustic tiles to minimise noise, a mixture of tables, chairs and sofas. Chalk boards for the children.
He has a different price point than his competition next door. He went for simple, satisfying yet economical. It works.
Think about what your market needs to be comfortable or drawn to your premises. Then do it as a point of differentiation.
ENTERING A MATURE MARKET
Tim decided to open another outlet for coffee in St Heliers, with a partner selling organic ice cream. They were the 13th option for grabbing a coffee in the village, while the dairy around the corner sold fresh ice cream. Tim's strategy to get people through the door was value and volume. He came up with the idea of selling bread, milk and newspapers at St Heliers (and milk in Glen Innes).
Instead of being the fifth location for fresh bread or milk, he struck the knife through competitors by offering two-for-one fresh bread deals; two 2-litre milks for $5; a coffee and European baguette lunch for under $10. His strategy is not being greedy, but taking a minuscule mark-up on bread and milk, which brings the multitude of feet through the door. To give you the idea of the volume, they are Green Valley Milk's largest independent distributor.
What is next? A newsletter, more Facebook specials and a website offering downloadable coffee coupons.
Debbie Mayo-Smith is a best-selling author and international speaker.
Website for Motivational Speaker Author Debbie Mayo-Smith
