As the consumer landscape evolves, many marketers are finding that their customer bases are more diverse than ever before – making traditional segmentation less effective. Additionally, customers are demanding more and more that companies have a comprehensive understanding of their individual needs. Obtaining access to customer data 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 Wi-Fi, which also provides a way for businesses to collect customer data. But for small businesses, the cost of offering Wi-Fi is often considered to be prohibitive. Businesses need to consider whether saving money on Wi-Fi infrastructure is actually losing the business money. What many don’t realize is that Wi-Fi can help increase customer retention and, thus, revenue.
Wi-Fi 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 service which starts with knowing who they are.
This is where Wi-Fi comes into play. When businesses adopt Local Measure's Wi-Fi 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, you are able to keep track of the frequency and duration of customers visits, which helps you understand how your 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 engagement one step further and create personalized communication with customers. This may include reaching out for feedback following their visits, offering them exclusive specials, reminding them of an item they left in their cart, or wishing them a happy birthday. Whatever the approach, Wi-Fi provides companies with a database of information 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 Wi-Fi 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 loyalty program, Starbucks showed a 20% increase in member spending.
Cost of Wi-Fi for small businesses
The cost of Wi-Fi for small businesses varies relative to their specific needs. DSL Wi-Fi connection, which is the least expensive high-speed connection, can start at as little as $50 per month whereas T3 broadband capable of high volumes of traffic could cost $3000 per month.
The seemingly high costs are often a deterrent for small businesses to invest in a Wi-Fi network. The reason for this is that the hard costs of setting up the Wi-Fi 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 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 Wi-Fi expenditure.
With all that customer Wi-Fi 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.