7th Annual Kiosks Study Final.

Executive Summary.

For this, our 7th annual kiosk study, approximately 14,100 email invitations were sent to readers of RIS News, Hospitality Technology, Consumer Goods Technology and Vertical Systems Reseller magazines. Of these, 551 respondents entered the online survey. Only current or planned kiosk deployers were invited to complete the entire survey; those with no plans exited the survey after answering a few basic questions.

This is the first year that Hospitality, selected by 52% of our respondents with current or planned kiosk installations, has overtaken retail (with 40%) as the dominant vertical. Last year, Retail was cited by 41%, followed by Hospitality with 39%. The current boom in hospitality self-service looks set to continue, as the percentages of Hospitality respondents installing within the next 12 or 24 months are significantly higher than the equivalent percentages for Retail. As the most established vertical market for kiosks, Retail has less demand for new installations.

Improving customer service remains the key reason for deploying kiosks; over half of our survey respondents (61%) consider it to be 'extremely important', up from 48% last year. In terms of important technologies, touch screens had 76% of respondents ranking them as either 'extremely' or 'somewhat important', followed by Internet connection, printers and credit card readers. Biometrics is starting to make inroads into kiosk deployments, and much potential is there for RFID in self-service devices, once prices come down for these technologies.

In a separate survey of Value Added Resellers, we found that all those with current kiosk business expect it to increase in the next 12-18 months, and 8% expect that growth to exceed 100%. Over half of them expect to experience double-digit growth from kiosks over this period.

This level of optimism was found throughout this year's study, as the technology shifts in many verticals from competitive advantage to competitive parity, as illustrated on the Gartner Hype Cycle chart. We'd like to thank Gartner's key analysts Bob Goodwin, Susan Cournoyer and Ken Brant for continuing their valuable contributions to our study, including their annual updates to the Hype Cycle charting the industry's progress over the past year.

Multi-Channel Integration Streamlines Customer Service.

By Mike Webster - Vice President and General Manager, NCR Self-Service Solutions, explains where multi-channel integration is heading and what your business should be focusing on to take advantage of the new opportunities.

Consumers want quick and consistent interactions from the Web to the kiosk to the handheld.

Integration of the multi-channel business enterprise draws together the strengths of all of today's consumer interactions the Internet, kiosks, handheld devices and cell phones to create a seamless service and shopping experience. Consumers are increasingly comfortable with shopping online and using self-service devices like kiosks at airports and hotels. Mobile payment options and text messaging promotions are now being integrated with more familiar channels to create a seamless experience both online and offline that meets consumer expectations and increases loyalty.

What is the current landscape for customer service?

As businesses struggle to differentiate themselves and thereby earn customer loyalty, they increasingly look to drive tighter integration across multiple customer service interactions. Today's Internet, mobility and self-service automation tools are structured as independent channels that create separate and inefficient interactions with customers. This results in both higher costs and missed opportunities to drive sales and influence customer behavior.

How are consumer expectations driving multi-channel integration?

Consumers are increasingly time-starved and frustrated with waiting in line. The average American spends a total of two days per year waiting in line, according to a research report conducted by NCR titled The Queue Review, the Wait We Hate The Most. At the same time, consumers are looking for alternative channels that enable them to serve themselves in an effective manner. Last year, consumers purchased 560 million plane tickets online and spent more than $300 billion for online goods and services.

So, multi-channel consumer behavior is already starting to happen. The airlines are transforming travel through online booking and check-in, using kiosks to provide boarding passes and sending text messages to mobile devices to warn of flight delays and changes.

In healthcare, patient portals are enabling a secure online patient- provider relationship for important interactions such as scheduling appointments, providing medical history and updating insurance data. Upon arrival at the hospital or doctor's office, the patient is handed a self-service tablet PC for positive authentication, validation of insurance information and collection of co-payment if necessary. After the visit, lab tests and other information can be sent to the patient's mobile device to be read at the patient's convenience.

How can multi-channel and self-service automation drive customer loyalty?

Meeting consumer expectations, especially today when they are rising so sharply, is the key to keeping and maintaining loyalty. Consumers want a seamless multi-channel experience. NCR research shows that 92% of customers value multi-channel integration and would like all interactions to be fully harmonized.

Personalization is another key element that can improve service and build loyalty. When databases are fully integrated and there is consistency across channels, then promotions can be personally targeted and delivered in the manner that the customer prefers. Limited time offers, for example, can be sent to customers mobile phones while they are shopping in the store. And, finally, expanding channel options is a good way to add new consumers and keep your current ones more loyal. A new area gaining traction is contactless mobile payment. This is a rapidly growing payment option that is convenient for consumers and ready to expand into other areas of retailing.

What are some key multi-channel functionalities that consumers expect to see today?

Currently, many consumers use the Web to research products online before heading to the store to make a purchase. Consumers want more information at their disposal than ever before and more convenience in getting it. Consider the following trends we have uncovered in our research:

89% want to track delivery status of their online orders and pick up these orders from the stores

80% want to be able to access gift registry services

79% want to locate, learn about and compare product information online

As retailers exploit the powerful synergies of a multi-channel strategy throughout their organizations, they will reap the benefits of increased sales, improved customer loyalty and savings through operating efficiencies.

How would a retailer or other business begin the process of fully integrating its customer-facing channels?

It is vital to have a user-centered design process to incorporate individual customer preferences and incorporate all interactions. The user experience across channels should be consistent in the way it meets users' expectations. However, the experience must be customized to operate effectively in each channel. The basic principles of user interface design must be adjusted for each channel to optimize usability and satisfaction. Retailers should always build upon current channel strengths. If self-service is the strongest offering, expand by taking that user experience to the next level of utility. For example, you could move into mobile offers from a strong Web or kiosk presence, maintaining the look and feel of your brand across all channels. Familiarity and consistency will comfortably transition users to the new channel and drive repeat usage.

Market Snapshot:

Kiosk Penetration continues into major vertical markets.

As we predicted last year, hospitality has now overtaken retail as the dominant market for kiosks indicated by our survey respondents. Hospitality was selected by 52% of our respondents with current or planned [within 24 months kiosk installations, followed by Retail with 40% of responses. Last year, Retail was cited by 41% of respondents, followed by Hospitality with 39%. This year's data reflects the explosive growth in hospitality kiosks, primarily for check in/out in lodging and for food ordering in food service.

This year we again cross-tabulated respondents vertical markets with their current state of kiosk deployment. As shown on the State of Deployment chart, 44% of both Retail and Hospitality respondents have already installed their kiosks. Last year, the already installed numbers were 49% for Retail and just 30% for Hospitality. This reflects the current boom in hospitality selfservice, and looks set to continue, as the percentages of Hospitality respondents in the process of installing or installing within the next 12 or 24 months are all much higher than the equivalent percentages for Retail. As the most established vertical market for kiosks, Retail has less demand for new installations. Hospitality has many more plans for kiosks because the technology is still becoming established in this vertical. Given the success and popularity of check in/out and food ordering kiosks, this trend is set to continue for the next 2-3 years.

I believe that all large [hotel] companies are going to have kiosks in the lobbies, predicts Marriott General Manager Yves Badaroux. They'll eventually become as commonplace as airline kiosks in airports. I see a great future for them in hotels that cater to the business traveler. They'll also become an integral part of the select service environment, where staffing costs are always a significant concern. An early adopter of this concept is Formule1 in Europe, a hotel chain that has gone over 100% to self-service in order to lower rates and streamline service for budget-conscious travelers.

Kiosk Market Expansion

The range of businesses using kiosks expands every year. Business employment services, Defense contractor, Gaming arcades, Publisher and Automotive were among the new categories listed by this year's respondents.

Within each vertical market, we asked respondents to specify their subcategory. In Retail, Specialty Retail non-apparel garnered the most responses with 36%, followed by Supermarket/ Grocery with 24%. Both of these areas are deploying Selfcheckout at an increasing rate. Within Hospitality, Lodging came top with 51% of responses; this reflects the lodging sector's recent chainwide deployment of check in/out kiosks by most major hotel brands in the US. Next came Foodservice - Quick Service with 20% of responses, Gaming/Casinos with 15% and Foodservice Table Service with 13% of responses. Food ordering kiosks are gaining traction in the Quick Service Restaurant (QSR) sector, while Table Service restaurants use kiosks more for employment applications and training, or to service their loyalty programs. Casinos are also using kiosks for point redemption and other loyalty account services.

If Not, Why Not?

With any new technology, it is also useful to ask why people are not deploying it. As shown on the chart, cost justifying kiosks relatively low or 'soft' return on investment (ROI) is the top reason, drawing 27% of this year's respondents. Close behind is No budget, at 26%.

Soft vs. Hard ROI

If the economy improves and technology budgets expand, the 'soft ROI' of improving customer service through kiosks will grow to become a matter of competitive advantage for businesses looking to improve customer loyalty. 'Hard ROI' figures from upselling and increasing sales through the kiosks, i.e. through their 24/7 availability and line-busting capabilities, will improve as they continue to gain traction with consumers. Several of this year's respondents added, Don't know enough about ROI, Cautious Planning, Need More Data, Need More Proof they Work, and Averse to Change as reasons against deploying kiosks.

Interestingly, Needed application does not exist is becoming a less important barrier to deployment, with 23% of responses. This option came top last year, with 27%, so this could be an early indication of kiosk applications extending their reach to fill a wider range of business needs. The other reasons cited were selected by roughly the same percentage of respondents as last year.

Of those respondents without kiosk projects or plans, 18% said they had tested or purchased kiosks in the past. When asked for the causes of failure for these previous projects, 53% cited Low usage, followed by No internal sponsor to continue project with 27%, Unacceptable ROI with 24% and User interface was difficult for consumers to understand, with 22% of respondents.

These problems will become less frequent as users continue to embrace self-service, improving ROI and the perceived value of kiosk projects. The intuitiveness of the average graphical user interface (GUI) has come a long way from the early days of kiosks. Today's tech-savvy consumers are also more comfortable approaching a new interface for the first time and using it unaided.

Kiosk Types & Numbers

A shown on the chart, the most numerous kiosk type deployed by this year's respondents is Point of Sale (POS)/Self Checkout with 27% of responses, up from 16% last year. Self-Checkout stations cost two to three times more than a standard kiosk [which still costs around $5,000], but their measurable ROI from line busting and staff reallocation makes them easier to cost justify for businesses. Customer Information/Point of Information and HR/Employee Self-service, tied with 23% each, came next. Check-in/Check-out and Food Ordering also tied, with 22% each, indicating the sustained growth of both types of kiosks in the past year.

New kiosk types under Other included DVD rental [like the fast-growing and profitable Redbox kiosks], Music, Printing services, Recipe center, Promotional cashback kiosks, Redemption programs and Printing services, as well as Deck design system and 3rd party finance with Wells Fargo. We will see this list continue to grow with each year's survey.

Kiosk deployments remain relatively small, with 40% of this year's respondents indicating 1-10 kiosks, followed by 17% with 11-50 and with 101-500 kiosks, respectively. As shown on the New Kiosk Plans chart, kiosk deployments planned for the next 12-18 months are slightly smaller, with 54% planning 1-10 kiosks, and 14% planning 11- 50. Overall, the smaller deployments look set to grow in number, while the larger deployments show fewer numbers planned for next year. These results are similar to last year's survey, and reflect the conservative nature of technology budgets in today's uncertain economic climate.