News

Thinking Out of the Box

Find out if a turnkey approach to kiosks is right for your business.

April 3, 2005

Is there a business owner on earth who doesn't want to decrease overhead and increase customer satisfaction?

Is there a dieter who doesn't want to lose pounds and eat more ice cream at the same time?

The two concepts may seem at odds. And for the weight-conscious, they surely are. But for entrepreneurs and their managers, the spread of kiosks and other self-service devices is indeed lowering costs while at the same time providing customers a better experience.

Even better, they can boost revenue with the addition of new kinds of services. And when not in use, it can be programmed to be a digital billboard, calling to sale items. It can even run advertising and dispense coupons for the restaurant next door (for a fee, of course).

But even if you are sold on enabling your business with self-service, another major hurdle stands in the way: How the heck do you get started?

In the old days of kiosk deployment (read: a couple of years ago), the business owner had to know what she wanted and hit the Internet for companies to design and build its components. As the self-service industry matures, more providers are offering complete solutions, turnkey machines that with a few critical decisions can be turned loose on your customers and your bottom line.

You plug. You play. What's not to love?

One-stop shopping

Not everything that's called "turnkey" is as simple as it sounds.

The word itself sparks visions of turning a key, as one would in a car, and having something come to life instantly. But the reality is somewhat more complicated.

"Sure, it may be mechanically `turnkey,' but there's a lot that has to be done on the backend," said Hamed Shahbazi, chairman and CEO of InfoTouch Technologies.

Imagine if everything that has to be done on the solution's backend were left up to you. Are you technically savvy enough to design your own kiosk down to hardware, software, and connectivity? You are? That's great! But if you're not, and you'd rather concentrate on your core competencies, like serving your customers, a true turnkey solution might be for you.

But what exactly is that?

A true turnkey kiosk, says Tom Weaver, vice president of sales and marketing for Kiosk Information Systems, is sort of a vending product, a combination of software and hardware. It shows up at your location, you provide connectivity, and it's ready to go. If connectivity makes your head hurt, many vendors that provide turnkey solutions will take care of that, too.

For Robert Giblett, director, North America sales and marketing for King Products & Solutions, a turnkey kiosk solution is a single source with all of the required resources to meet the total needs of the client. It could range from a single standalone, informational unit with minimal software requirements, to a complex deployment of thousands of kiosks distributed over a large geographical area.

Francie Mendelsohn, president of Summit Research Associates, looks at turnkeys an eye on accountability.

"There's one throat to choke. If anything goes wrong, you go to the vendor who sold it to you, no matter whose fault it is."

What's out there?

If you are looking for a way to give your customers something extra while they're shopping, a number of applications are available. And none is hotter right now than the photo kiosk. Kodak alone has more than 50,000 of its machines deployed worldwide, according TouchPoint Solution's Rob Howard, whose company just signed a major software deal with the photo giant.

As digital photography gained popularity-digital cameras have outsold their film counterparts-shutterbugs began to face a conundrum about what to do with all those images that began collecting on their hard drives. Printing at home proved expensive and time-consuming, and consumers opened to other choices. Photo kiosks offer reasonably priced alternatives that either print images at the store or allow them to be uploaded to a photo lab for even better results.

Kiosks that allow users to access the Internet have been around for some time. Retailers make their money from users who pay for time behind the keyboard, from advertising on the kiosks, or both. These kiosks may include bill payment functions, gift card purchases, and VoIP (voice over Internet protocol) service. The growing number of the unbanked or underbanked Bill payment kiosks are increasingly popular, especially considering the large number of unbanked and underbanked customers in the United States. It's difficult to pay bills without checks or credit cards. Most bill payment kiosks accept cash and allow customers to pay bills, such as utilities.

Those bill payment kiosks can be turnkey, but they won't be cookie-cutter. The vendor has to work out agreements with billing entities so that the types of bills to be paid coincide with the geographical location of the kiosk. This is where the back end development comes in and simplifies matters for the business owner.

Other types of popular kiosks are building directory, horse racing and betting, and even donor recognition kiosks for nonprofits. Just entering the market now are music downloads and ring tones for cell phones. Weaver said if you're pumping gas before a road trip, a music download kiosk might entice a customer to download some tunes and burn a CD for the road. How about DVDs? One turnkey kiosk actually acts as a movie vending machine.

Of course, no matter how exciting the application, the most question must be answered: What do your customers want that you currently aren't giving them? If your gas station or C-store is in an affluent neighborhood, odds are a bill payment kiosk will gather dust. Consider applications that are a natural extension of your current products and services, and start from there.

Best locations for turnkey kiosks

Twenty years ago, the idea of an ATM in a convenience store was unheard of. Now they are commonplace. And interestingly, many of those ATMs are placed there by ISOs (independent service operators). ISOs are looking for ways to increase profitability, and there are hybrid kiosk/ATMs available today that add value to the traditional ATM.

Shahbazi sees ATMs "cross-pollinating" with some kiosk functionalities. Multi-functional ATM/kiosks will become more common, allowing customers to bank, purchase pre-paid top-ups for their cell phones or phone cards, and even purchase money orders.

Those popular photo kiosks are best placed in areas where there is repeat traffic. Convenience stores and pharmacies are good examples, although you may want to situate the kiosk so that the customer has a bit of privacy. This way he won't have to worry about displaying photos of his bachelor party to all the customers who are in line with their milk and bread. Anyone with a digital camera can find value in a photo kiosk. Photo kiosks can accept different types of digital media, offer different sized prints, and may have editing capabilities. Customers may be able to add captions, borders, or frames on their prints. Tourist areas are also prime locations for photo kiosks.

Surprisingly, turnkey kiosks are well suited for government agencies. The government deals with a variety of people and has to be consistent with all of them. InfoTouch's Hamed Shahbazi sees killer applications for government, such as drivers license renewals, payment of fines, and fishing and hunting licenses. Kiosks also solve the problem of limited hours of operation at government offices; machines placed in secure lobbies or breezeways can operate 24/7.

What's the catch?

Suppose a vendor says you can deploy a kiosk solution for $15,000, never have to do a thing to it, achieve ROI in six months later, be able to retire in a few years. Would you believe it? Surprisingly, many savvy business owners have fallen for such promises, and the fallout of their disappointment has been to tarnish the image of the kiosk industry, said KIS exec Weaver.

"Some businesses hesitate to deploy kiosk solutions because they have a limited understanding of the technology," said Giblett from King Products. "They get confusing messages from suppliers who try to sell them one part of the solution and not a turnkey solution."

When a solution is out-of-the-box, it's more likely to be reliable, having been on the ground in other locations to work out the bugs. This is important because while business owners may become disillusioned relative to ROI and other such issues, a non-functioning kiosk damages not only the host company, but the reputation of the self-service devices generally.

When Summit's Mendelsohn took a cruise recently, she quickly came upon a very attractive kiosk onboard the ship. Unfortunately, it was dead. It was nothing more than an piece of hardware that took up space. Had it been working, it could have directed passengers to activities throughout the ship or advertised for-pay services. Passengers would have used it, and other passengers would have seen them using it and might have become curious. The passengers who used it would have told other passengers, and so on..

Another consideration: Cost. Depending on the type of kiosk and its functionality, expect to pay in the neighborhood of $10,000 per machine.

Do your homework

Savvy business owners know that there has to be a compelling reason for customers to use the kiosk. They won't use it just because the business owner has installed it. Mendelsohn advises business owners to sit down and figure out what the kiosk is supposed to do for their customers. It should not be a solution in search of a problem. "In the end, your customer will tell you by voting with their fingers whether the kiosk is useful to them or not."

Read what the analysts are saying. Summit Research offers Kiosk and Internet Technology and the Kiosk Industry Directory, which lists 550 companies in the industry. It also helps to talk to people who have already deployed kiosk solutions. Also, visit Kioskmarketplace.com to gather information on vendors.

Speaking of vendors, make sure yours qualified. Pick a company that can design, engineer, manufacture, service, and maintain units they build. Make sure that the software has been tested thoroughly. Software is critical in a kiosk situation. Giblett advises that software should be stable, flexible, and well-integrated with the hardware platform. It should be open, allowing for customization, and state-of-the-art reporting features are a must.

Put thought into the place where you will actually install the machine, starting with such considerations as traffic patterns. Of course, you must have a power source nearby. Shahbazi recommends that someone knowledgeable about your business be present when the electrician comes, so that the plug is installed in the correct location. The same goes for networking and Internet access.

When deciding on Internet connectivity, Weaver advises against dial-up. It's too slow, especially if the kiosk payment system requires credit card authorization. DSL is a better bet, but you need to make sure that DSL is available in your area.

Most importantly, make sure from the beginning that you'll have a good maintenance plan so that if something goes wrong, it can be repaired almost instantly.

Think down the road. After you've deployed the kiosk, you may find that your customers are asking for another feature or two. If the kiosk has built-in modularity, adding another component should be relatively easy. If the design is not modular, building in the feature may be expensive. Many cars, for example, come with a wiring harness for better speakers, which allows the owner to add them later without having to pay for expensive installation. Kiosks can be set up the same way. Not sure you want to take cash, but not sure you don't, either? Have the machine built so a cash acceptor can be added later.

Software upgrades can be relatively easy, provided the kiosk is connected to the Internet. If so, software upgrades can be pushed out to all kiosk locations at the same time. Remote monitoring is a feature that will help in this situation. It can alert you if your bill acceptor is full or your printer is out of paper.

What's ahead

Weaver sees a bright future for turnkey kiosks.

"As the country's population matures, the people who spend money are going to be the people who grew up with technology," he said, because they are not computer phobic and may actually prefer interfacing with a computer. Weaver said that as more types of applications become available, kiosks will be popping up in unconventional places. He sees the combination of more applications and the younger generation as major factors in the future success of kiosks.

Turnkey kiosks are making it easier for small- and medium-sized businesses to stay competitive as more customers seek out automation and self-service. Vendors that offer these solutions have the expertise to put them together and can pass the economies of scale onto businesses. As always, business owners should not go into any new venture blindly. They still need a solid business plan and must objectively evaluate the offerings of the vendors they are considering working with.