When he first came up with the idea of making cell phone charging kiosks for retailers, Doug Baldasare felt certain he was solving two big problems: consumers needed to charge their phones on the go; and brick-and-mortar stores were desperate for ways to get shoppers to spend more at the register.
“It makes sense,” he says. “Aren’t people going to spend more time and then more money in stores if they’re charging their phones?”
There was just one problem. Baldasare’s 3-year-old company, ChargeItSpot, charges retailers a rental fee for their charging kiosks, which charge customers’ phones for free in a locked, secure drawer while they shop. “But retailers aren’t used to having a line item in their budgets that says ‘cell phone charging station,’" he says. "We had to justify ROI.”
Teasing Out ROI
Baldasare came up with the idea for ChargeItSpot as an MBA student at Wharton. On vacation with some buddies in Miami, he and three friends were walking around downtown when they realized they had forgotten to charge their phones the night before. “I thought, ‘why can’t I just walk into Urban Outfitters and charge my phone?’” Baldasare recalls. Now, he can. ChargeItSpot currently has 120 charging kiosks deployed at retailers including Whole Foods, Belk, Neiman Marcus, RadioShack, Staples and, yes, Urban Outfitters. But it wasn’t an easy sell.
Urban Outfitters, in fact, was one of Baldasare’s first customers. To tease out the ROI, ChargeItSpot sent its interns into stores to observe the behavior of people who charged their phones in-store as compared to those customers who did not. “We found that people who charged spend more than double the time and the double the money,” Baldasare says. But Urban Outfitters wasn't convinced. Perhaps the customer who chooses to charge a phone had already planned on spending a good chunk of time in the store anyway, they posited. Fair enough, Baldasare responded. So last April, he hired an independent market research firm, GfK, to prove his point.
The firm sent 20 observational researchers to five Urban Outfitters stores and first took note of customers who used the kiosks to charge their phones, classifying them as the “test group.” Next, the kiosks were filled with dummy phones, so people who wanted to charge their phones were told the kiosk was full and to come back later. This was the “control group.”
The result: “The test group spent 29 percent more dollars at the register than the control group, and 115 percent more time in the store,” says Baldasare, thus proving that those customers who chose to charge, but were unable to do so, weren't necessarily predisposed to spending more time shopping. “Urban Outfitters was thrilled,” Baldasare says. And that research opened the door to other clients.
Adding Even More Value
Now, Baldasare is intent on rolling out other features that will bring value to his retail customers. The kiosks, he says, will serve as data collection points, prompting customers to enter their phone numbers and email addresses—valuable information for retailers. “We’ve heard that retailers value email addresses at $10 a pop,” he says. And a ChargeItSpot app that customers can download will also detect when a phone has less than 30 percent battery life remaining, and direct the consumer to a nearby retailer that has a ChargeItSpot kiosk. To further entice the customer to visit, the store might offer a discount coupon.
Baldasare won’t discuss exactly what retailers pay to rent his kiosks. It depends, he says, on the number of retail locations and the length of the rental agreement. At some point, he’ll come up with a formal tiered pricing program, but right now, he’s focused on getting a fix on what features are most valuable to retailers and how much they’re willing to pay for what he has to offer. He’s armed with $3 million in venture funding and a 33-person staff that includes the engineering team which built the technology for Redbox, the company that rents movies video games through retail kiosks. That, he says, will help him increase his number of deployed kiosks to 500 by the end of this year. “And if we convert the right clients,” he says, “it could be much more.”
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