Most hospitality venues and attractions would like to sell more of everything, not just coffee, but coffee illustrates my point rather well so I’m going to go with it. Coffee is high margin and relatively easy to do well if you have a good process. The problem is that is small value transactions so how can you get people to buy more coffee in one go (invite their friends) or stay for longer (what we’ll tackle here).
Many years ago I was the General Manager of a successful restaurant in the New Forest. One of the things we also did well was take away coffees in the summer months, but we never had people really stick around to ‘drink in’. Then again it was 2008 and the iPhone had only been launched a few months prior, mobile data was still expensive, laptops were large and people didn’t really yet work in public places like we do now. I like to call us coffee shop workers the ‘Starbucks Generation’.
I spend a great deal of time with my laptop, and usually my dog Charlie, working from coffee shops, cafes and hotel lobbies. Wherever takes my fancy really. I do this for a few reasons, 1) because it helps me focus not being stuck to the same seat all day, 2) I like coffee and nice food and 3) just because I can. I’m also a fan of combining business meetings with lunch. I have to do both so why not together. The key element here that swings my decision on where to go is do they have WiFi and is it free? Whether they let Charlie in or not is a story for another day.
With our recent move to a smaller office and more remote working, it got me thinking… Why are some venues still reluctant to, or even dead set against, offering free WiFi to their customers?
Whats the issue?
I’m pretty convinced the issue is that lots of places, but especially small ones, think that offering free WiFi means the laptop brigade will turn up, hog all the seats and buy one coffee every 3 hours. Because, as if by some quirk of their local area, all those people can’t get the internet at home and so will immediately turn up to leach their precious and very valuable resource. I’ve even seen this belief first hand in two venues local to me when I asked about their WiFi, or lack of. While I jest a little, I can sort of see the logic behind their reluctance. Even inc.com has reported on this in the past, agreeing with business owners that choose to charge instead of offer it for free…
“He estimates that business owners likely choose to have patrons pay for their wi-fi usage to prevent loitering. “Paid model would be for businesses that have smaller seating areas,” says Phillips. “And they offer food and they need to have available seating for that percentage of customers that choose to stay and eat or drink or whatever.”
What are your option then?
Ignoring my opinions for one moment, you have to ask yourself why large chains like Starbucks offer free WiFi to their customers. There has to be something in it for them. So what are your options on the WiFi front?
- Don’t offer WiFi at all, but then you’re competitors mostly will be
- Charge customers for WiFi in addition to their purchases
- Offer completely free WiFi to all and hope you make the money back in additional sales
This really isn’t much of an option these days as I’m sure I’m not the only person that will choose one venue over another depending on the WiFi.
This can actually have the opposite effect to the one you might be looking for. Studies show (like this one) that charging for WiFi actually makes people stick around on the internet for longer and take up that seat space you were trying to keep open. You can understand why when you think about it a little. When it’s free you don’t have any cares about money so you use it only for what you need. But as soon as you attach a price tag to it, customers get a ‘I’ve paid for it so I’m going to use it’ mentality.
This is then the only way to go but will it really make you additional revenue. Well for one that same study of 5 Columbus Coffee outlets in Paris showed that the free WiFi had on average 9-10 users a day where as the outlets with paid for WiFi had only 1-2 users a day. Granted not all of those users might be new customers and some might have been in there anyway. But if you assume the average spend of those customers is only £3, then the venues with free WiFi took an extra £30 a day compared with the ones that made you pay. Thats £900 a month and more than outweighs the cost of the service. And in that same study it showed that customers only used the free WiFi for 89 minutes on average, so not hogging your table space after all.
Of course you could be cheeky with your free WiFi like the Coffee Company in the Netherlands who frequently rotate their wireless network name to things like ”BuyALargeLatteGetABrownieForFree”, “BuyCoffeeForCuteGirlOverThere?” and “HaveYouTriedCoffeeCake?”. If nothing else I’m sure it’s entertaining when you have to ask the barista for the name of the network and he shouts back “OrderAnotherCoffeeAlready”.
Yes of course I have an Option 4 – a good friend of mine, Adam, has started a Social WiFi service called Fusion WiFi. It lets you offer free WiFi to your customers but gets you a little marketing data in return. Use the data to trigger automated emails to them to get them back in more often and really make your free WiFi generate more revenue from you. You might as well since we’ve established you probably should provide it anyway.
Just to illustrate my point further, I’m sat in the Coffee Saloon in Canford Cliffs right now, using free WiFi, drinking coffee and writing this article.
Finally don’t get too carried away and get fined like Marriott hotels did recently because they blocked customers own WiFi hotspots. Also check out my article about the new European Wifi data retention laws.
I actually couldn’t resist putting this in also… is so funny I might actually consider going here just because of the sign. (courtesy of Google Images and this site).
This post originally appeared on Lumiserv.com in February 2015.