A/B Testing the Coffee Shop
As I was waiting in line at the coffee shop that I work at most mornings, I noticed that the display typically reserved for doughnuts had been replaced with croissants.
While that might seem like a small change, I began to wonder how and why they made the decision to switch. Was it because the doughnuts weren’t selling well? Was it based on a hunch that croissants might sell better or maybe they have better margins?
That got me thinking about how interesting it would be if small shop owners had a toolset that they could use to easily test small changes around their shop. If they could quickly get quantitative feedback about the performance of this test they could not only make more money but also make their patrons happier by serving the pastries they actually want to buy.
On the web, it is common practice to A/B test elements of a website to improve conversion rate, sales, and retention. What if coffee shops, restaurants, and physical retail stores could do the same? How much extra revenue could they squeeze out?
Quickly brainstorming, here are a few tests that could be monitored:
- Changing window promotions
- Outdoor signage
- Checkout upsells
- Menu layouts
- Store layouts
- New menu items
- Bread at the table before ordering
There are probably hundreds of other tests that could be run, with hundreds of more variations.
A serendipitous factor about this idea is how ubiquitous Square has become as their payment processor and point-of-sale software for these types of businesses.
A SaaS that played nicely with Square’s API could unlock a lot of value for store owners who are always looking for ways to incrementally increase revenue. It could provide a user-friendly dashboard that store managers could use to quickly set up experiments and get feedback.
A/B testing has become a huge industry on the web with several companies valued over $1B. I think the idea of bringing that functionality to the off-line world could have legs.