Free Wi-Fi – Added Value or a Revenue Stream?

There appears to be confusion in the service industry about the real function of Wi-Fi – at least by some! My assumption has always been that you provide a free service as a way of attracting more customers, or a way to show what else you have to offer, so you can increase purchases of additional items. A couple of examples: EVM’s (Extra Value meals) in the quick service restaurant business reduce overall profit margins by discounting the bundled price, but at the same time, bundles the most profitable items (fries and drinks) together. They would not want everyone just to buy the EVM’s. They are  merely a traffic builder. Crew  suggestive selling and merchandising will sell customers on buying additional higher profit items. The same concept is practiced with 50 cent cones. “Get them and trade them up!”  Similarly, “stack ’em high and sell ’em cheap” in supermarkets and grocery stores is another way of building traffic. The retailer reduces margins on specific products so shoppers attracted by these deals will buy higher margin items as part of their visit.

So, what about Wi-Fi? Is this a traffic builder or a revenue stream for retailers? In my view, free Wi-Fi offered by smart operators used to be a way of attracting more customers to spend more time on their premises and hopefully buy more products.  Companies like Starbucks (on whom I spent some time looking at their customer service in a previous blog), was probably one of the leaders as a major retailer in providing this service. Others quickly followed, notably McDonald’s. You could argue that in the US having Free Wi-Fi is the green fees for any established or growing business. The customer has come to expect it. And the list of the types of service companies that provide this has grown.

Companies have learned that where there is a likelihood of delays in appointed times to conduct their service, like Doctors; patients (or customers) feel less like they waited a long time if they can check their e-mail, update Facebook or just surf the web via their tablet or phone! Apart from the traditional chain of retailers in the US such as Starbuck’s, McDonald’s Zoup and Panera BreadI can enjoy Free Wi-Fi now at numerous upscale restaurants, the hairdressing salon, at the train station, at my allergy clinic, at my son’s therapy clinic, at the hospital, at my car wash facility, at the Wine Bar, at down town village centers  and all hotels.

We ARE connected in the US. However, there appears to be confusion within the airline and hotels industry as to what added value really is. Or, they understand what it is, but are reluctant to really provide it. At the point of providing it, they get confused! “Ah! added value, but maybe we can charge for it too. Now people have got used to eating meals on flights and getting drinks, let’s charge for them! They are so used to this added value, let’s make money out of them! It’s not our fault that oil prices have gone up and costs have increased. Let’s cover our increased costs and lack of efficiencies with charging for drinks and food, and while we’re at it, let’s charge for baggage as well. Oh! Let’s charge by weight and number of bags, that way we get them both ways! Sounds like a plan!” Really?

But I digress with another rant… I still find it remarkable that the only country (in my experience) that charges for alcoholic beverages in airline lounges are those in the US. If you are fortunate enough to have travelled outside the US, this is not the case. Providing drinks to weary passengers is perceived as added value, as is soup and food. Anyone living in the US does not have to travel far to see how this works. Fly with Air Canada, but use one of their lounges IN Canada.

I have ranted before about airlines lack of customer service culture. But not for a while! But what I really wanted to address here was how the people who run the airports are as confused as some of the hotels about Wi-Fi and value. What is Value? One of the best definitions I could find was:

Value is the worth of something. To value something means to highly appreciate and admire it. Value can be measured by cost, quality, quantity, etc.

What the US has normally got right is the Free Wi-Fi in most hotels and service minded businesses. There are still hotels that gouge you for being a caged victim within their facility with no alternative. So, a note to them – “I do not expect to have to pay exorbitant amounts of money to be connected just because I am captive in your hotel (or in an airport lounge!) That is not adding value. It’s taking advantage my the situation.”

How about this one? When I was recently travelling in Sydney, Australia with my daughter, we could not understand why the Wi-Fi kept going down on our devices. And then we discovered a pattern. If my MacBook Air lost its connection, Karly’s iTouch was OK. If I then switched on my iPad instead, Karly would lose her connection. Hmm! We inquired at reception about the problem and were informed that you could access Wi-Fi for your room at $20 per night for ONE device!! If you wanted to access via more than one device? Yep, you guessed it. You have to pay per device and would receive a passcode for each one. WHAT? We were traveling with a MacBook Air, iPhone, iPad, iTouch and 2 Kindles; all of which required Wi-Fi to really function to their optimum.

This same experience was replicated when we travelled to Rotorua in New Zealand. The so called added value went out of the equation completely and we almost wished we hadn’t got access at all, as we felt ripped off!

Free Wi-Fi is becoming pretty well the norm in the US. Apple provides a free App. for finding Free Wi-Fi sites. Even cities, such as San Francisco, Chicago, Denver, Miami and Portland, Oregon, provide the service! But our airlines and hotels remain confused. It is yet another symptom of them thinking more about costs and profits than customer satisfaction and customer service!

Adding value has to be a genuine, treasured gift that customers respect and is a differentiator. If you continue to charge for something that elsewhere is free, customers will quickly go elsewhere!

About the Author:

mm
I am the customer relationship mentor, who helps those responsible for their company’s most important customers, to build and maintain their customer relationships and keep them happy, so that they can protect & grow their business.

3 Comments

  1. Barbara Eadie August 22, 2012 at 11:27 pm - Reply

    The articles you are writing are really useful both for myself personally and for my company – St John Ambulance. We are all about customer service in so many areas and have already implimented some of your suggestions – thanks so much

  2. narayana April 20, 2016 at 6:27 am - Reply

    nice post

  3. Jennifer May 10, 2016 at 10:29 pm - Reply

    We've always viewed Wi-Fi as a service and a value-added part of Emirates' overall product, rather than a revenue stream

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