Capturing Recurring Revenue In OCS – CoffeeTalk

Recurring revenue is a crucial aspect of the convenience services industry, and it has become increasingly important for operators to focus on it. In the past, recurring revenue opportunities were reserved for office coffee service (OCS) operators, but since the pandemic in 2020, OCS operators have increasingly focused on recurring revenue sources. This is due to the emerging opportunity pertaining to advertising in micro markets, which makes recurring revenue available beyond OCS.

Judson Kleinman of Corporate Essentials in New York stressed the importance of recurring revenue in OCS, stating that customers are open to a maintenance program on their bean-to-cup machines. He suggested that operators can come as often as they like, cleaning the machine every week or month, and charging the customer accordingly. Arthur Siller, senior vice president of operations and business development at Evergreen Refreshments in Seattle, noted that customers expect to pay for additional services, including delivery charges, equipment rentals, and other fees related to providing optimum service.

Operators can partner with companies like 365 Retail Markets and Cantaloupe Inc. to participate in revenue-sharing advertising programs, where kiosks and other equipment are used to display messages from local companies or CPG brands. Longtime operator and industry consultant Orrin Heubner offers his operator clients a good gauge for recurring revenues, suggesting that at a minimum, 10% of their total revenue should be recurring. Recurring revenues for OCS include point-of-use water machines, ice machines, Bevi units, kegerators, coolers, and bean-to-cup machine rentals.

Heubner believes that recurring revenue associated with OCS is nothing less than an annuity, and he has specific strategies for selling it. He suggests selling rentals at the lowest common denominator, charging every 4 weeks and getting 13 rental periods per year. Upselling the equipment and providing as much rental equipment as possible will increase rentals, and operators must continually look at ways to monetize the services they provide.

As enthusiastic as Heubner is about recurring OCS revenue, he is equally excited about the newest opportunity for micro market operators: Advana from 365 Retail Markets and Cantaloupe Advantage. Under these programs, operators receive monthly checks for allowing advertising in their micro markets on screens, kiosks, and other devices.

Micro market advertising is a popular strategy for operators, as it provides a consumer engagement opportunity and generates revenue. Operators can easily deploy ads from insurance companies, technology companies, or any advertiser to reach their employees in the break room. Recurring revenue programs allow operators to receive monthly checks for advertising on screens, kiosks, and other devices, with revenue ranging from $5 to $30 per month per location, depending on the city.

Advertisers appreciate this as the people seeing ads are employed, getting a consistent paycheck, and returning to the market multiple times per day or week. If operators are willing to add additional screens or work closely with CPG brands to launch products, show video, display other rich media, or engage in a more targeted advertising program, the revenue potential grows significantly.

Cantaloupe Advantage, a payments and software services company that provides end-to-end technology solutions for the self-service retail market, has launched an advertising program designed to be easy for operators. Operators simply sign up to allow Cantaloupe to deploy advertisements onto their qualifying Cantaloupe card readers or kiosks. Feedback from operators has been positive, with operators loving the seamless deployment with little to no effort to participate.

The advertising opportunities will become increasingly creative and lucrative, with the Mastercard digital ad campaign aiming to help restore millions of trees across the globe. For every $4 donation a consumer makes to plant a tree, they will have a chance to win a prize, including trips for two with select events at a Cantaloupe-powered venue and 90 daily first prize winners of $100 digital Mastercard prepaid cards.

Huebner believes this type of promotion is a no-brainer, and operators should maximize the revenue opportunity associated with these programs.

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