Six Simple Rules For Building Successful Self-Service Applications

Chances are it’s been about 20 years since you’ve stood in line at your bank to get cash from a teller. ATMs offer such convenience—and are so much more efficient for banks—that no one can fathom going back to the old days. Ever since then, companies have been eager to tap into the free labor pool of customers who can be convinced to help themselves. Through self-service, organizations have been able to reduce labor costs, increase revenue from orders of out-of-stock items or increase the loyalty of customers who appreciate speedier service.

But as surely as you love using ATMs, you’ve walked away from a kiosk that’s confusing or abandoned an unscannable item at the self-checkout line—and some company lost a sale. The reality is that although some self-service projects pay off handsomely, the ROI from such projects can be elusive. Francie Mendelsohn, president of Summit Research Associates, estimates that 15 percent to 20 percent of all self-service kiosk projects ultimately fail. Success with kiosks and self-checkout systems is often tricky to achieve because so many things can go wrong. Such systems won’t work if customers have no incentive to use them. If kiosks are too complex, customers get confused and give up in frustration. Sometimes, self-service fails for the simple reason that customers don’t know it’s an option or are wary of trying it on their own.

American Greetings once spent millions on kiosks that enabled people to design their own cards, only to find that customers weren’t willing to pay a premium for their own creativity. Grocery chain Hannaford Bros. fared better, but its first attempt at self-service fizzled. In the late ’90s, Hannaford piloted handheld self-checkout scanners in its Scarborough, Maine, store. The few customers who used the scanners loved them, says Hannaford CIO Bill Homa, and tended to spend more. But no more than 11 percent of customers used the tool, so Homa couldn’t justify a full rollout. Homa suspected that customers, who were required to sign out a scanner but still had to pay a cashier, found the scanners too much of a bother. So Hannaford turned to the more convenient self-checkout lanes. Today, as much as 28 percent of customers use the service and the ROI is slightly ahead of breakeven.

Companies such as Hannaford that have done well with self-service succeed by following six simple rules, which they derived from their own and others’ mistakes. Learn from them, and you can fix what ails your own self-service systems—or even get them right the first time.

Rule #1 Provide a Benefit to Customers

Self-service has to make something faster, cheaper or better for customers, says Sam Israelit, a Bain & Co. partner and retail IT strategy expert. “If it doesn’t do one of those three,” he says, “you’re wasting your money.”

For instance, kiosks that the Mayo Clinic once installed in Target stores in Arizona offered consumers little to no value. The kiosks were intended to sell books, newsletters and a CD for kids about anatomy. Yet instead of setting up the kiosk to demonstrate the CD or let consumers swipe their cards to order one, Mayo just displayed the CDs and books on a rack. Meanwhile, the clinic squandered the kiosk screen: Set up to provide health information to customers, it spewed out too much data. The “coughs and colds” entry, for instance, included a 12-page, single-spaced list of over-the-counter and prescription medications. After four months, Mayo Clinic pulled the plug.

On the other hand, airline passengers are willing to use kiosks to avoid long lines. Although a check-in agent will beat a kiosk user in a time trial, kiosks make it possible for multiple simultaneous check-ins, which make for shorter lines. “The time the customer has invested from the time they arrive at the counter to the time they go to the gate is shorter, even though individual transactions can be longer,” says Rocky Wiggins, CIO of AirTran Airways. In some cases, even the perception that self-service technology saves time is enough to get customers happily using it. Homa says that customers think Hannaford’s self-checkout is speedier, even though cashiers generally scan more than four times as many items a minute as the average customer. “Customers are busy scanning and not waiting,” he says, “so it just seems faster.”

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