Commentary

How to find the best locations for your kiosks

A well-informed business location strategy will ensure the best and most profitable place for every kiosk, freeing you to rapidly grow your business with confidence.

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May 31, 2021 by Maria Mullen — Strategic Advisor, THinc Partners

Anyone who owns a network of kiosks knows how important it is to put these valuable assets in locations that will garner the best return. But how do you determine where these "best locations" will be? It is not as easy as choosing high traffic locations, because if that traffic does not match well with your target audience, you will just have a lot of people walking past your machine.

Building out a viable location universe specifically for your kiosk type is critical to maximizing revenue per kiosk and achieving a quicker return on your capital investment. It doesn't matter if you are just starting out or you already have kiosks in place. Either way, this work will ensure your network is as productive as possible.

So, where do you start? You start with what you know and what you have.

If you already have kiosks in the market, you have actual performance data and you have an operational infrastructure. Organize the following information:

• Which kiosk are performing the best and the worst? What do those locations have in common with each other — channel placement, size of store, regional demographic, in-store placement?
• Did some kiosks take longer to ramp up? Why?
• Are any kiosks unprofitable? Why?
• If you have more than one revenue sharing model for the retail space owners, which one is maximizing your profitability?
• Where are your replenishment depots/warehouses?
• Where are your operations personnel located (even if this service is outsourced)?
• How far apart do your kiosks need to be to provide good operational density while not cannibalizing each other?

This information gives you a starting point. You have a feel for what is working and what is not. You also have an operational geography to build out from.

Tips for beginners

But what if you have not placed any kiosks yet — in this instance, start with answers to the following questions:

• What type of product or service are you vending?
• Who is your target audience — demographically and psychographically?
• Where do they live and shop?
• Where is your product or service in high demand? And why?
• Which segment of your target audience will be interested in securing your product or service via a physical kiosk?
• Which channels/location types best align with your business?
• How often will your kiosks need to be serviced/replenished? Who will be doing that work?

Next, you'll need to layer on other data to help you narrow down all the possible placement options for your kiosks. There are a couple ways to do this.

The first option is to do the work to pull the data sources together yourself. Since specific attributes determine a location's potential, identify or hypothesize which attributes will ensure your kiosk's success, and then focus on the data sources for these attributes. Once you've collected details from the data vendors, prioritize the data options based on availability and budget/cost.

Here are some examples of the types of data at your disposal:

• Retail locations per channel — address, square footage, annual sales, traffic, store hours.
• Demographics per zip code — where is your target audience clustered?
• Regional category indexes.
• Internal data. For example, if your product or service is available online or on shelves, you can identify the highest volume geographies and feed that into the model.

It is important to keep it simple to start — too much data just causes confusion. Think of all the possible locations going into the top of a funnel; your data choices will act as filters in that funnel to aid you in identifying the locations with the most potential. Too many filters and your location options are too narrow; too few filters and your location options will be overwhelming.

Integrate and aggregate data

Once you have access to the data, you must integrate and aggregate that data in order to build a profile for the most desirable locations and then filter all the potential locations against that profile. This option usually requires help from a data scientist to set up the model and maintain the data.

The other option is to subscribe to a geographic information system service. These solutions have popped up in recent years and they do the work to integrate multiple data sources with anonymized mobile device data. Their traffic data is accurate and timely, and they overlay things like census demographic data, psychographic customer segmentations and retail location details. Some have the capability to incorporate your data and build a customized location scoring model, and most have a user-friendly mapping and reporting tool. You'll need to investigate each of the tools to make sure they have included the data that is most critical to your business.

No matter which option you choose, once you have a viable universe mapping tool set up, you will continue to feed actual kiosk performance data into the model so it gets smarter and smarter over time — ensuring that most every kiosk you install is as profitable as possible, as quickly as possible.

Don't rush the expansion

I highly recommend slowly expanding your kiosk network at first. Test your model outputs. Are the recommended locations actually ramping and performing as expected? If not, investigate why. Is the in-store placement sub-optimized? Are consumers generally exposed to the kiosk to drive awareness? Does the retail location have enough traffic to support the kiosk? Whatever the reason, tweak the kiosk placement and feed all that info back into the model. It is for this reason that a "friendly" location partner is ideal when you are in the learning stages of your kiosk network expansion. They will work with you and will often be patient about kiosk moves and placement tests, which is so helpful in the beginning.

I also recommend talking to consumers as they use your kiosk, if possible. What do they like about the kiosk transaction? What don't they like? When in their shopping trip did they use the kiosk? Where would they expect to find your kiosk? Would other market locations be more convenient for them? Data can take you a long way, but there is no substitute for actually talking to your customers about their experience.

Identifying the best kiosk locations is crucial to your overall success. It is important to take the time to do the necessary research before committing to a location and expanding your network. Think about each potential location not only from your perspective as the business owner, but also from the point of view of a potential customer. A well-informed business location strategy will ensure you find the best and most profitable place for every one of your kiosks, freeing you to rapidly grow your business with confidence.

About Maria Mullen

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