Best Practice

The Cost of WiFi for Small Business and the Value of Customer Retention

People in a coffee shop

As the consumer landscape evolves, many marketers are finding that their customer bases are more diverse than ever before – making traditional customer segmentation less effective. Additionally, customers are demanding more and more that companies have a comprehensive understanding of their individual needs. Obtaining access to customer insights and analytics is one way to help companies reach these higher demands and build long-term customer relationships.

It has become an expectation that most establishments offer WiFi, which also provides a way for businesses to collect customer data. But for small businesses, the cost of offering WiFi is often considered to be prohibitive. Businesses need to consider whether saving money on WiFi infrastructure is actually losing the business money. What many don’t realize is that WiFi analytics can help increase customer retention and therefore, increase revenue.

WiFi and customer retention

In order to retain customers, you must first have an idea of who your customer is. How old are they? What gender are they? How much disposable income do they have? 52% of customers have switched businesses in the past year due to poor service. The overall impact of this is estimated to be $1.6 trillion. These statistics emphasize that in order to retain customers, you need to excel at customer service which starts with knowing who your customers are.

This is where WiFi comes into play. When businesses adopt Local Measure's WiFi solution, users are presented with a login splash screen (captive portal). The captive portal requires users to sign-in to a social media account or provide an email in order to access the network. When user consent is given, businesses then gain mailing access to customers and valuable insight into their demographics (gender, age, etc.). Additionally, businesses are able to keep track of the frequency and duration of customers visits, which helps to understand how customers interact with your physical venue. With these fresh insights, companies are able to better design a marketing strategy that caters to individuals and, thus, feels more personalized from a customer’s perspective. This is crucial for customer retention.

With contact information for your customers and an understanding of what they need, companies are able to take customer engagement one step further and create personalized communications. This may include reaching out for customer feedback, offering exclusive specials, prompting further sales, or wishing them a happy birthday. Whatever the approach, WiFi provides companies with a database of customer data and analytics that allows them to elevate the customer experience and, with time, strengthen their customer relationships.

Making loyalty programs more intelligent

Companies can use customer data collected from WiFi to increase revenue, just as Starbucks did with their loyalty program that debuted in 2016. Because Starbucks was able to tell what drink someone was likely going to drink and when, they were able to send out promotions to customers accordingly. Additionally, they were able to monitor the stores’ overall traffic, volume of orders, and the street traffic in the area to assess where it would be profitable to expand. Research shows that just a 5% increase in customer retention can increase profits by 75% and, on average, loyal customers are worth 10x as much as their first purchase. After starting their customer loyalty program, Starbucks showed a 20% increase in member spending.  

Cost of WiFi for small businesses

The cost of WiFi for small businesses varies relative to specific needs. The seemingly high costs are often a deterrent for small businesses to invest in a WiFi network. The reason for this is that the hard costs of setting up the WiFi is more easily calculated and apparent than what the business hopes it may return in customer value. There are numerous calculators that can help you determine your hard costs, but to figure out your WiFi ROI, you need to track the number of new customers enrolling in your database, the increase in likes, mentions and new followers of your brand on social media and the increase in online reviews. Once you’ve been able to determine a financial value for each of these, the conversion calculations are straightforward. Going through this exercise can help provide the evidence of ROI you need to justify the WiFi expenditure.

With all that customer WiFi has to offer a company, it is clear that the long-run costs of opting out are much greater than the costs of customer Wi-Fi itself. Investing in knowing your customers is an overall investment in your business.

November 18, 2021

Nicole Long

Local Measure Intern

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