PersudeCafe

PersudeCafe has run into a few road bumps. It is imperative for us to get our stock prices and
revenues back up. In order to do so we will be implementing an iPhone/ Andriod application for
the devices. The application will raise revenues which will in turn eventually help our stock
prices. This application will go through extensive review before being put into implementation.
Below we have put together a review of problems and answers to make the app the most
outstanding cafe application.

Initial Cost of Investment and Potential Revenue

The initial investment would be to create a web and mobile based platform. According to the
former CEO of AppVee, a well-crafted application costs $100,000. Since each of our 220 stores
will need to scan the electronic receipts of each mobile user, we must implement 2D barcode
scanners which cost approximately $200 each; a total of $44,000. For example, we will compare
our estimated revenues to Starbucks' in the early years of 2009-2010. Starbucks first launched its
mobile application in the year of 2009. After its first year of implementation, its revenue
increased 11.22%. A study from the Mobile Marketing Association, in partnership with IHS
Global Insight, studied US Mobile Marketing Expenditures and their impact on sales. The study
concluded that spending on mobile applications translates to $20.00 in sales for each dollar spent
on the mobile and web based platforms. For the purpose of this analysis we have assumed an
increase in sales of 2%, which equates to an $18.00 increase in sales for every dollar spent. This
conservative 2.0% generates $2.6 million in sales within the mobile applications first year. This
can be estimated from the amount of users that will use our application.

Survey Collection
Our recent survey collected replies from 8,900 customers over a two week period. According to
PeoplePulse, only 10%-15% of customers even respond to customer surveys; therefore, it is
estimated that across all 220 stores, PursuadeCaf services 53,999 people annually. As of right
now, 37,973 out of 53,999 people state that they visit our store at least a few times a week, if not
every day. However, 24,840 claim that our service speed is too slow. Through increasing speed
with this mobile application, we hope to convert infrequent buyers to loyal customers, which will
help contribute to this stated 5% increase in revenue. Not only will the companys sales cease to
decline, but growth will accelerate each year as more customers begin using the application.

Increasing Revenues
To further increase our revenue, we will offer discounts on the whole beans, t-shirts, and tea.
Each of these items contribute 8%, 1%, and 9% respectively, towards the total revenue. If each of
these items were to increase a modest .05% due to the discounts, this will still incur an increase
of $1.97 million. This alone could cover the costs of the initial investment.
Decrease in Revenue/ Stock plummet
Recent end-year analysis shows Persuade Cafes revenue in 2009 plummeted 10.3% while stock
prices are down 27% from a historic high. These results are of great concern because Persuade
Caf has seen steady increases in revenue since opening year in 2002. It is vital Persuade Caf
implements a business improvement program or strategy that will have a high return on
investment, much while having a strong role in future success at Persuade Caf. In the last year,
Persuade Caf had invested a lot of capital in opening twelve new stores. If this company cannot
come up with a business strategy which would increase sales revenue, then drastic measures
would have to be taken to support the payments for each of these new stores which could
ultimately trickle down and affect loyal employees who have families to support.

Customer Analysis
A customer survey was compiled by an outside firm to help shed some light on what customers
think about Persuade Caf in terms of how often they visit Persuade Caf, what their overall
experience is, rating of coffee, and how they ranked Persuade Cafs service. The survey
represented 8900 customers and was broken down into percentages that ranked their ratings from
poor to excellent; while also ranging from once a year to everyday in terms of daily visits.

Loyal Customer-Base
Persuade Caf has a very strong, loyal customer base. The survey conducted showed that 81%
or 7209 customers surveyed admitted going to Persuade Caf every day to once a week. Within
this margin, 3382 customers or 38% attend more than once a week all the while 2314 customers
or 26% attended every day. To put this into prospective, Persuade Caf has a very strong
supportive customer base since only 445 individuals or a nil 5% reported only visiting once a
year. What this means is that as a whole, 8455 out of the 8900 surveyed at the very least visit
Persuade Caf once a year which suggests a very loyal customer base.

Good Coffee
The customer survey rating of coffee is overall very good. The survey suggests nothing needs to
be changed to the coffee and there are far larger issues to be attended too first. For starters, 80%
or 7120 participants rated coffee very good and or excellent. A closer look reveals 14% or 1246
of the population surveyed found the coffee to be fair while only 6% or 445 people out of the
entire population disliked the coffee and rated it poor. These results can be extrapolated
differently, but it is important to realize that standards for coffee shouldnt be regarded as highly
as perhaps pastries or food in general. For example, coffee isnt on as high of a pedestal as other
food items largely because of the fillers that customers add to their drink, as well as the initiative
behind drinking coffee. Many people add sugar, milk, all sorts of various sweeteners to their
coffee which takes away from the expectation of their beverage. In addition to this, many people
drink coffee primarily for caffeine heightening which lowers their overall standard between
various types of coffee. With these precedents in mind, the 14% or 1246 customers surveyed
who rated coffee as fair can be expressed as a positive result. With this factor included, only the
445 people in the entire population were not happy with coffee. Coffee shouldnt be of concern.

Mixed Customer Experience

There are mixed concerns within the experience analysis of the customer survey due to a large
portion of those not happy with experience. Starting with the positive side, of the 8900
customers surveyed 67% or 5963 individuals reported that their experience at Persuade Cafe
ranged from good to excellent. While this does suggest that the majority of customers are happy
with their experience at Persuade Caf, this shows 1/3 of every individual who enters the caf, or
more significantly 2937 of everyone surveyed isnt satisfied with their experience. The 33% of
surveyed who rated their experience poor and or fair means they might not return or even worse,
create a bad buzz. This should create concern within Persuade Caf because with sales revenue
already down 10.3%, the company needs to retain as many of their customers as well as branch
out to new customers without ensuing bad word of mouth.

Inconsistency in Service
Within the survey conducted by the outside firm, nearly half of those surveyed had slow service
while the other half had average or quick service speed. Persuade Caf should most importantly
focus on improving this facet within the survey that was introduced to customers. When delving
into these results, ratings ranged from very slow to average and very fast. Within the very slow
and slow ratings 46% or 4094 of the entire population fell within this category. When
disregarding those who rated service average, only 38% or 3382 participants rated service
quick or superfast. In regards to whether or not participants were happy with service, its suffice
to say that a greater majority of individuals were less than happy with service since 4094
participants ranked service poor, while conversely 3382 of participants were happy with service
because they rated service fast. Because of the overwhelming majority of individuals who were
not happy with service was such a high margin, and Persuade Cafs low year end results,
Persuade Caf should implement a business improvement strategy which will counteract slow
service while sustaining a high return on investment.

Potential Problems of Mobile Applications

While creating a mobile application will improve PersuadeCaf return on investment, there may
be problems that we could potentially run into during the process. It can be difficult to keep up
with all the changes within the environment which makes it easy to make mistakes along the
way. There are four major difficulties when dealing with app development, however there are
techniques to overcome them.
Developmental Issues
One of the biggest problems developers come across is trying to cover too many platforms at
once. This actually increases the cost of the app production considerably and could potentially
reduce the success rate of the application. Focusing on just one or two platforms to start and
taking a look at which platform would propose the best value. Using market research and social
media polls are beneficial as well. We compared both Android and iOS to see where the main
interest lies, and iOS had far more votes. On average, Android users spend significantly less than
iOS users, so iOS apps make significantly more than Android apps. For the most part, many of
the top apps come to iOS before Android. We will start bringing this app to iOS devices to
measure the success rate first, and then, if decided, we will start gearing towards Android as well.

Less Features, Better Results

In addition to covering too many platforms, developers should also avoid including too many
features on the app. With too many features, the app could either have limited appeal across a
wide target market or one with a wide variety of features, but the features are too limited to be
useful. When launching this app, we are only going to include features that we want the app to
achieve, as well as what makes this different than competing apps. The member rewards
program, the pre-pay option, our points system, and various discounts will make us unique
from other competing companies.

Quick and Easy to Learn

The next problem is creating an overly complex app. Mobile apps should be easy for everyone to
navigate through. Our goal is to make our mobile app quick and easy to learn for first time users.
As soon as the user opens the app on their device, it will have an option to either sign up or sign
in. Once they are signed in, there will be multiple tabs listed that will help them easily navigate
through the app. In addition to the easy navigation, once new users sign up there will be an
option to view a tutorial on features of the app as well as how to properly use it.
QR Codes
Once we have finished developing the application, we have to find a way to successfully market
the app. Typically, no information should come out on new apps until they are fully tested and
released. We believe that one of the best marketing tools for our app would be QR codes. We will
add them to our business cards, brochures, receipts, and on our store window. Once scanning the
code, it will show users what they will get when they download the app, as well as showing an
overview of what it will look like.
These four difficulties can either make or break the mobile application and knowing them prior
to beginning to app development process is beneficial for us. We now know what they are and
what we can do to avoid these problems.
What will the App Do?
Persuade Caf will implement a mobile application for either Android or IOS users that will offer
a variety of different features, with the overall goal over improving speed and consistency that
includes the added benefits of increasing sales and customer loyalty. Customers will download
the app and create an account which makes them a member within the companys new rewards
program. The programs main feature is our pre-pay option, which will allow customers to
place an order before even entering the store. With this option the speed at which the customer
receives the coffee will be much greater, since there is no ordering and waiting for the drink to be
made from start to finish. It also gives customers the option to set a time beforehand, for when
they will want their order ready, or the time they will be in the store to pick up their order. If a
customer knew they were going to be on break from 2pm until 2:30pm, and it takes them 5 min
to get to the caf, then at the start of the day the customer could go onto our app, fill out an order,
and set the pickup time for 2:05pm. Pre-pickup would give customers a sense of ease and a
release of stress throughout their day, knowing that at a specific time later on they will be able to
walk right in to Persuade Caf and pick up their order. However, some people can even be too
busy to be bothered with scrolling through the menu and picking out their order. Thats why the
pre-pay function will include an order history feature enabling customers to just open the
app, go into history and click any order theyve previously ordered, and itll be immediately
placed as a new order. This not only makes it easier when in a rush, but it further instills
customer loyalty. A regular, who orders the same thing every day will only have to take a couple
seconds out of their time to open the app, click their usually order and go, without the hassle of
reentering the order from scratch every day.

Pre- Paying
Pre-pay, Pre-pickup, and order history all will promote higher sales velocity as customers
use mobile payments to get through the lines quicker. In addition to those features, our mobile
app will offer weekly discounts on various beverages, pastries and even online store items to
provide further incentive for customers to order from us. A discount could provide a customer
who is skeptical, the opportunity to try out our pre-pay option and our products. Some people
see the savings from the discount as a trade-off for the potential possibilities that they may not
like our service or products. In the end if it turns out after that discounted purchase they like our
service and/or products, weve just earned ourselves another loyal customer, which overshadows
any revenue set back from the discounts.

App Discounts
 Along with being a mobile app user and receiving discounts, our customers will be able to
collect points which can be accumulated with every mobile application transaction. Over time,
once a customer receives a certain amount of point, they will receive half off of either t-shirts,
coffee beans, and tea as these items contribute the lowest to our profit margins. In order to keep
track of purchases, points, orders, rewards and more the app would have, what most would
describe as, a mobile gift card. With gift cards you put a set amount of money on them, and can
add more when or if necessary. The mobile gift card idea is that the app will have a card virtual
card in which all transactions will go through; you can hookup that card up with your bank
account or debit/credit card, but in order to get money onto the card you must make a transfer on
the app. This allows a better guarantee of getting the right amount of points, avoids
overspending, and keeps everything thing associated with Persuade Caf organized into one app
and one virtual card.

Migration of Mobile Apps

Many food and drink companies have joined the migration towards mobile platforms in e-
commerce, so our mobile app will allow us to stay fully competitive with the rest of the world.
Not only will it keep us competitive, but the way we have designed our app, we will have a
leading edge. Dunkin Donuts created a mobile application in the effort to boost revenue and
efficiency; unfortunately for them they only got a 2.5-star rating. If you look at the features of
their app, its easy to understand why they have such a low rating. They have the idea of a virtual
card, where a customer adds money to the card on the app, and then can pay right from the app
while in the store. DD Perks is a big part of their app, where, similar to ours, with each purchase
a customer receives points that can add up to a discounted or free menu item in the future.
Dunkin is on the right track with both these features, but they need a little fine tuning. Unlike our
app where the discounts and rewards show up in the app itself, Dunkin emails the reward coupon
to the customer. Its frustrating for those who are looking for a quick way to access everything
that they now have to go through their email to access a reward they earned through points on the
app. Another chief complaint is glitching within the virtual card the app offers; since there is no
pre-pay option with the Dunkin app, it can prove to be very disheartening for customers to
travel all the way to Dunkin just for their card not to work. Typically we would like to avoid
glitches in our mobile application but in the event of any technical error, customers would be
aware before they even made a move for the store since the pre-pay ordering would be down.

How will we Compete?

Starbucks is another big competitor in the same market as us, and they too have developed a
mobile application to improve their business. Their app got a 4.5 star rating, meaning it seems to
have been pretty successful for them. Many of their features such as pre-pay, rewards, points
and more are almost identical to what our app has to offer. What sets us apart from them and
gives us the competitive edge is our use of order history. Each time a customer wants to order
something through the mobile app, whether in-store or with pre-pay, they have to type out their
entire order from start to finish. Its not so much of a problem for people who order occasionally,
or who always order different things, but for those loyal everyday customers who have sampled
everything and come across their absolute favorite, its a pain to go through the whole ordering
process every time. With order history it gives our regular customers who have their regular
orders the relaxation of knowing we remember and have their exact order ready just by clicking
on it, real quick in the order history section.

Fees and Costs

There will be cost and fees that come along with this mobile application, as there is with every
business decision. Our features, not only address our main concerns of speed and consistency,
but establish loyalty, pump up the profits even from our lowest money makes, and just overall
increase revenue. All of these things will come back to Persuade Caf in a positive way, to the
point where we can make back the money dished out to pay for the mobile application and more.
This isnt a short term fix, this provides a way to keep customers coming back and are revenues
constantly increasing.

References
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Hines, K. (n.d.). How to market your mobile app.
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pick iOS over Android.
Starbucks (SBUX). (2015). Retrieved March 30, 2016, from
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