ZipKey: Quick Payback and High ROI

Published by Marcio Avillez February 28, 2017

In a large study of IoT products, Accenture found that more than 83% of customers surveyed had difficulty with their connected products. 20% had trouble getting their products connected at all.

The Problem

Argus Insights looked at 276,000 customer reviews of connected products, and found that 39% of the negative reviews were caused by initial setup and connectivity issues—by far the two largest categories.

Product managers are well aware of the effect of even a small percentage of customers experiencing difficulties out of the box:

  • Negative product reviews and word of mouth hinder sales.
  • Customers with setup and connectivity issues drive up support costs.
  • Customers who are unable to successfully set up and connect their products are more likely to return their products.

These factors significantly impact a product's economics.

The Solution

Cirrent's ZipKey® technology is one concrete step product managers can take to mitigate the impacts of a customer's inability to get their Wi-Fi products setup or connected to their home Wi-Fi network.  

Enabling a product with ZipKey doesn't require new hardware; it’s a software solution that provides instant, secure Wi-Fi connectivity right out of the box.

It takes between one and two months to ZipKey-enable a product and run it through QA. Once ready to ship, these products can connect to more than 67 million ZipKey hotspots in the US and Western Europe that are operatred by Cirrent's ZipKey network partners.

So companies have an opportunity to start seeing the benefit of ZipKey in the near-term.

The Payback

We've worked hard to make ZipKey-enabling a product simple and straightforward.  Based on our experience with current customers, we estimate that the total project cost (if we assume a fully loaded engineer costs $150K/year) to be less than $40k.

While it's great to know that something can get done quickly and inexpensively and that it is likely to impact a significant portion of your customers, you wouldn't be a product manager if you didn't ask about the financial impact of moving forward.

While the numbers are likely to vary from product to product and from category to category, we’ve outlined below an initial assessment based on a company that ships one million units per year.You can use our online Benefits Calculator to estimate the impact for your product and business.

Using the calculator, you can reasonably estimate the following benefits:

  • Estimated reduction in support costs: $0.1875 per unit.
  • Estimated financial impact of reduced product returns: $0.625 per unit.
  • Estimated lift in sales resulting from improved user experience and fewer negative reviews: $2.50 per unit.

This brings the total gross benefit to $3.3125 per unit.

The cost of adding ZipKey is charged only for the units that actually connect to a ZipKey hotspot, and is a one-time fee of less than $1/unit.

In the example above, assuming that 50% of the products are shipped to homes that enjoy ZipKey hotspot coverage, the resulting average price per unit is less than $0.50.

Therefore, the net benefit is $2.8125 per unit, or a total of $2,812,500 per year. The resulting return on investment (ROI) for the project in the first year is a whopping 6,900%.

With Cirrent’s low implementation cost and robust platform, the effort to add ZipKey capability to a product can pay for itself in less than a couple of months. In the example above, the payback in the first year would be nearly 70x!

This substantial quantitative benefit is in addition to the qualitative benefits of improving the product quality and the customer's out-of-box experience. Happier customers, higher Net Promoter Score, fewer negative and more positive online reviews, quick payback, and high ROI—what’s not to love?

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