How a coffee shop is like an airline

The topic of whether the church is growing, shrinking, thriving or failing is constantly being discussed.  From the idea in the 90’s that it would grow at a constant rate and fill the earth ( most recently stated in Mark Koltko-Rivera, Ph.D., an award-winning social scientist, in his latest book, The Rise of the Mormons: Latter-day Saint Growth in the 21st Century) to Marlin K. Jensen’s statement on Apostasy being like that of Kirtland’s there have been a plethora of individuals talking about the topic, and almost all of have them have gotten it wrong.

And by that, I don’t mean that I’m going to be right, but I want to take a new approach to understanding why everyone is wrong on church growth.   And to do that, we’re going to need a cup of coffee.

Well, actually we don’t need a coffee, someone else needed a coffee, we’ll just observe

Back in the 2008 I was at a Barnes and Noble waiting while relations selected books.  I wandered over to the snack counter and was pondering which delectable treat I might consume when I beheld a most fascinating sight.

A man walked up to the counter, and the woman called him by name and handed him his coffee perfectly made the way he wanted it.  This, in and of itself was not something particularly spectacular, but the interesting bit was, he hadn’t ordered.

I walked up to the counter and said “I bet he is one of your top 3% of customers and they account for 25% of your revenue”.  She nodded.  “And the next 7% of customers care about loyalty rewards and status upgrades and account for the next 25% of revenue”.  Again, she agreed. “And the bottom 10% are a lost for your company”.

“Just who are you and how do you know so much about our store?” she demanded.

You see, I was working for an airline in their CRM (Customer Resource Management) department.  We were doing analysis on the most loyal customers, and focusing on what motivated each of the groups and how much revenue those groups drove.  And the numbers stated above applied to the airline, just like the coffee shop.  The most valuable thing to the airline top 3% was that the flight attendant knew their name and preferences.

And so the coffee shop customers were exactly like the airline customers.  I could instantly see the same dynamic in parking spaces at shopping malls.  My mother was one of the 3% shoppers at our local mall, and she would drive for 10 minutes to get a closer parking spot; because she knew how much we would bring home at the end of the (all day) shopping trip.  If one mall had set up a set of “favored customer” shopping spots and known which stores she preferred, welcoming her, I would have lived my early years out of a shopping mall.

Here are the relevant numbers:

  • Top 3% of customers – Regular, repeated customers or big spenders, 25% of revenue
  • Next 7% of customers – Typically business partnerships, care about upgrades and loyalty rewards.  Treat them like a superior member and they respond well.  Next 25% of revenue
  • Next 80% of customers – 50% of revenue a mix of coupon consumers and occasional buyers.
  • Bottom 10% of customers – Cost 10% of your revenue, use coupons exclusively, only shop when there is a deal

So we return to the question of church growth.  Typically individuals only focus on the raw statistics. tells us a lot about growth from the church’s own reported numbers.  We can see that growth has peaked and has remained basically flat in overall numbers.

But then why all the talks about “Stay in the boat” and Marlin K. Jensen’s Q&A session talking about apostasy.

It’s because the WHO of who is leaving has shifted.  Any leader in the church can tell you that the roles have had huge numbers of individuals who came once or rarely attend.  Primaries are filled with empty seats.  Most estimates put church attendance between 30-50% around the world.  And it’s been this way for a long time.

Most of the posts about people leaving the church in “droves” talk about how the collapse of the church is imminent because so many are leaving.

What’s really happened is that the “inactive” were always part of the bottom 60% of the church’s business.  They consumed most of the humanitarian aide.  They used a lot of the resources and attended little.

Tithe paying members are that top 10%, who mostly care about feeling special.  Think about how the lessons are structured, they talk about how many perks the members get, and how they are special in the special knowledge.  Members get access to special rights (temple attendance, missions, blessings, etc.)

The top 3% of contributors are the people who bring the casseroles, the bishop knows them all by name.  The Stake president knows them.  They always have a handshake waiting for them.

  • To break it down the LDS Church claims 14 million members (As of earlier this year)
  • 3% top members who care about namedropping and knowing their preferences – 420,000 members
  • 7% loyalty who care about perks – 980,000
  • 10% who consume humanitarian resources and only come when the church is servicing them – 1,4 million

You can see it in any given ward on any given Sunday.

Census records indicate that only about 5 million members self-identify as LDS.  That would break the numbers down even further to how few people would need to leave to really impact a revenue stream.

So when members say the numbers aren’t that different, or “There have always been inactives” they are right.  When exmormons and anti-mormons say the church is losing members they are also right.

What has happened is there has been a shift where the top 10% have started to question.  They have started to leave.  The most loyal ones are caring less about the handshake, and the loyalty rewards; and far more about the actual product being sold.

In airline terms, the route that they traveled on is being shifted; and it is impacting the customer base negatively.

The organization needs to understand that the demands of their customers has actually altered if they are going to respond to the issue.  They must match the product to the demand, or else they will lose their most loyal customers.

And you can see this shift; the Letter to the CES Director, John Dehlin’s Mormon Stories, and other factors are impacting the top customers’ expectations ; while the overall membership is remaining relatively steady.

50% of revenue comes from your top 10% of customers

But the impact to revenue (in this case, tithing) is not small. Remember our coffee shop?  50% of revenue came from that top 10% of customers.  In the church, that top 10% produces half the tithing.  For our airline, that top 10% paid all of our bills, and all bonuses, new routes, marketing and new technology was purchased out of the remaining 50%.  It was the “Bread and butter”.  Shifting the top 10% impacts the day-to-day operations, because the remainder of the organization loses R&D opportunity.  The “Share the gift” social marketing push, the Meet the Mormons film, all of these come from a budget that is threatened by the shift in the demand of the top 10%

That is why Ordain Women, Mormon Stories, and other NOM groups are threatening to the church.  That is why there is a sudden push for talks to keep people from leaving the church (Which is a failing strategy, btw; stop with the talks and instead meet the market demand!).  It is all in this dynamic of the shift in the break down of the members rather than an impact in overall membership numbers.

The church can continue to claim 14 million members and even make up 20% growth but that will not matter compared to the hard breakdown into what camp those members break down to.

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Last edited by Mithryn on December 22, 2014 at 3:30 am

6 Responses to How a coffee shop is like an airline

  1. Aaron says:

    Great analysis, and thanks for the analysis into the airline and coffee businesses, too.
    I’m guessing TSCC won’t make necessary changes until after the coffers are dwindling in unbelief (could take a while since they’ve been hoarding tithes for years), and by then it might be too late to recover.

  2. I never drink wine says:

    Sanity – isn’t it about time?

  3. Paul Anthony says:

    Great post!

  4. Eric says:

    Interesting insights … made me think about BYU students – potential top 10% customers – leaving the church shortly after graduation. The following analysis is probably has factual errors and inaccurate assumptions, but still …

    If it costs the University about $170,000 (my guess) to educate a 4-year undergraduate education, and the 4-year tuition is only $20,000, then the Church needs to get $150,000 back from each to break even.

    Since a college graduate will make on average $2.3 million over a lifetime, that’s a $230,000 in tithing loss. Added to the subsidized education, that puts them $400,000 in the hole per upwardly mobile professional apostate.

    If we assume 10% of the BYU graduates will disaffect within a few years of graduation, that’s 600 per class and 6000 over ten years. That means $2.4 billion in lost revenue over a lifetime … and that’s only a fraction of the total cohort of LDS undergraduates.

    Is seems serious impact on revenue. Does BYU remain a good investment for the Church? Is the Church worried about the rising cost of education and keeping up with the arms race of campus accoutrements to maintain their status?

    • My husband and I are part of that disaffecting group. We were probably part of the top 10% mentioned in the post too. Previous to our resignations we were both BYU students, I was in a relief society presidency and he was a ward clerk. Both full tithe payers…

  5. Pingback: Segmenting customers | jonasreads

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