With online purchases increasing by orders of magnitude over the last decade, companies have become increasingly interested in providing value-added services and incentives to both retain and grow client relationships. Ironically, the act of “physically walking into a store” has become the more burdensome option and more than ever, it is incumbent for businesses to help customers justify choosing that experience over the convenience (and price) of online shopping.
Since the inception of our company, one of our largest buyer segments has been businesses with 25-50 user networks that have limited IT resources and directly interface with their clients. These are small to medium-sized organizations that need an easy, all-in-one network security solution that allows them (or their service provider) to implement the necessary Internet-protection tools efficiently and at a reasonable price. A big contributor to Endian’s success is its capability to help businesses easily roll a fully-automated captive portal Hotspot solution.
Because foot-traffic is high for a lot of these organizations, many of them are looking for creative ways to engage with their clients by implementing a wireless guest Internet access.
A properly utilized Hotspot not only helps organizations provide a valuable service for its clients, but can also generate revenue opportunities.
In our blog, “9 Ways to Generate Revenue with a Hotspot“, we tackle the question, “Why would someone login to your hotspot” and provide several deployment scenarios to leverage the technology to your advantage. So how does a Hotspot impact the bottom line and more importantly, how quickly? Let’s take a look a the basic components to calculate the ROI of a Hotspot. You’ll need to account for:
For example, a clothing business that sees 100 visitors a day, 25 days a month (accounting for closures) has a pool of potentially 2,500 clients to visit the hotspot. At even a 10% WiFi access ratio, that’s 250 hotspot visitors a month and 3,000 a year. Adding a compelling buying incentive like an in-store promo could ramp that up to as much as 30% or 750 visitors a month which is 9,000 a year!
Take the total cost of a Hotspot ($1,500 e.g.) + the cost to install ($250 e.g.) + additional bandwidth ($500/yr) for the cost basis, in this case $2,500 year one. That drops down to $500 in year two because you’re only on the hook for the extra bandwidth, but that aside.
For the first year, in this scenario, a Hotspot would cost a business $0.28 per store visitor.
BUT, keep in mind that the store provided an immediate in-store incentive to join the Hotspot. If 20% of those that logged in did so to take advantage of the discount [and wasn’t planning on that particular purchase], that’s 1,800 extra purchases a year! Now, let’s assume a $50/ticket average at a 50% margin for round numbers, that’s an extra $45,000 in PROFIT!
In this illustration, the success of the promotion returned a $3,750 profit in the first month (1 month ROI!!!).
There are other, more nuanced considerations for determining the overall ROI of a hotspot:
Cost reduction: The investment in Hotspot equipment & services might be tax deductible reducing the cost basis.
Ticket average increase: Providing quality services may keep clients in the store longer and increase ticket averages. A baseline for measuring this should be taken pre and post Hotspot installation.
Ongoing client engagement: The ability for a business to acquire contact information from clients that opt-in to company newsletters and promotions gives sustainable visibility and sales opportunities to a demographic of their target audience! Ongoing email campaigns or social media interactions are now possible with this mutually beneficial exchange of services.
Additionally, this new level of client-connectedness may also lead to increases in sales production for the company’s web store. Here’s a great infographic about how buyers behave when shopping online.
What are the drawbacks of installing a HotSpot? It depends. How easy is the hotspot to configure & manage properly? What are the ongoing service costs? How robust and dependable is the product? Does the Hotspot provide security and can I prevent malicious activity?
Endian helps companies overcome all of these challenges with its new line of dedicated Hotspot products.