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Management And Training

Vending: The Sure-fire Way To Increase Revenue

July 29, 2011
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It all started innocently enough: A member of a cleaning crew was working at a vocational school in Ft. Myers, Florida, and saw that the vending machines in the student lounge were very dirty.

He wasn’t sure whether or not those machines fell under the scope of cleaning work and decided to call his boss.

That simple action ended up adding over $100,000 in annual revenue to that building service contractor (BSC).

This may sound far-fetched, but speaking from experience, I can tell you it isn’t because that is exactly what happened with my BSC in 2009.

When that worker called and asked what he should do, the first thought that came to mind was to look out for our client’s best interests.

That led to the employee cleaning the machine, but it also led to an epiphany.

If we already had someone in place to make the vending area meet aesthetic standards, why couldn’t that same person service the product inside the machine and, therefore, send the vending money and profits into our company’s bottom line?

The biggest impediment to doing this was that successfully navigating the vending world takes a certain level of expertise.

Thankfully for us, that was a road I had already been down while serving as a cleaning consultant for several vending machine manufacturers in the 1990s.

This prior experience allowed me the ability to inquire with the campus director if she was interested in perusing alternate vending proposals.

She said she was not very happy with the current company, and the idea of dealing with one firm for both services was quite appealing.

A proposal was delivered to her shortly after that led to an immediate go-ahead to proceed with the combined vending/cleaning business model.

A Hand In The Cookie Jar

The next step was to determine the proper installation for this 40,475-square-foot facility.

There were a variety of ways to go about this, so I contacted Phil Masters, vice president of national accounts for the Wittern Group located in Des Moines, Iowa — the world’s largest manufacturer and financier of vending machines — to get some direction as to how to proceed.

Masters indicated there were three probable levels of sales for this particular installation.

The lowest level would see approximately $48,000 in annual revenue and a 47 percent gross profit margin; the standard revenue stage would see $72,000 in yearly sales at a 54 percent gross margin; the highest expected annual financial gain would be around $96,000 with a 58 percent profit margin.

We would have been happy with any of those numbers, but the actual results turned out even better than the best estimates.

In the first year, the five machines that were installed at this facility brought in $103,451 at a 60 percent gross profit margin.

Masters said this was the first time in the 80-year history of selling vending machines to BSCs that a single location brought in over $100,000 in revenue in a one-year period.

Incentivization

One of the reasons sales exceeded projections was the effective use of low-hanging promotional fruit.

These can often focus on “more vending bang for the buck” items such as buy one get one free (BOGO) coupons, but similar results can also be achieved by attaching Florida lottery scratch-off tickets, two dollar bills or dollar coins to randomly placed vending products.

Items of this nature can often cause customers to purchase multiple snacks in an effort to obtain the attached prize and, when budgeted for properly, can do so with minimal impact on the bottom line.

In addition, we tried to make it as easy as possible for customers to purchase the products by installing credit/debit card acceptors on every machine.

These turned out to be a huge boon to business, as credit and debit card sales now account for approximately 30 percent of our company’s total vending sales.

Another benefit of combining these two company types is that it gave us a number of advantages over our competition, including more consistent cash flow and higher worker productivity.

Having two businesses also allows our company to submit lower priced bids — both on the cleaning and vending sides — and thus generate more client opportunities in both areas.

This approach succeeded for us in part because of the ready-made synergy of these industries.

That alone would have made it more than worth the effort.

However, getting creative with the promotional side proved invaluable not only in spiking sales to the six-digit level, but also to increasing the enjoyment of running this business.

The immediate results one can see after putting together an inventive vending sales campaign has made the company more fun to operate while at the same time making it a much stronger competitor in our local field.

With an open mind, a bit of hardwork and some sales ingenuity, it can do the same for you.


Gary Joyner is the chief executive officer (CEO) of Ft. Myers, Florida-based BSC Advantage Refreshments. He has over 30 years of experience in the cleaning and vending industries. Find out more about his company by visiting www.advantagerefreshments.com or e-mailing him at gary@advantagerefreshments.com.

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