The Immediate ROI of a Hotspot

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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.
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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:

  • Cost of Hotspot Product + Installation + Additional Bandwidth
  • • Number of customer visits per day: Total potential visitor pool
  • • Estimated Percentage of HotSpot visitors: Percentage of total pool
  • • Immediate Sales Impact: In-store buying incentive

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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!!!).

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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.