In 2021, the crypto ATM market in the US grew by 8-10% monthly. The number of machines installed by...
The crypto ATM market in the US keeps constantly and gradually growing. Both in terms of number of transactions and volume of fees, as well as by increase in the quantity of new kiosks in the overall network. Up to the end of 2021 the latter amounted to about 10% at average growth month by month. And this ramp up pace was by-and-large immune to fluctuations of prices for major cryptocurrencies traded or other matters of impact. It was more like a pure market invasion.
Generally, that might seem as a quite obvious behavioral model for such a still young market. Key players and challengers relentlessly place machines here and there to cover as many potential customers as possible. Alongside that, enormous funds are spent on marketing and promotion of those locations striving to maximize visibility, outreach and distinction. And ultimately - to gain revenues. To some extent and to a certain point of time it may work. But, as the once growing margins begin to slow down and no longer correlate with the investments made and recurring costs incurred, or when the conversion rates start to leave much more to be desired - this tactic turns out to be reasonably doubtful. In other words - not that viable! Another vivid demonstration of it is the slow down in month by month growth in the number of kiosks from 10% to 4%.
The 2 key questions that come up my mind here while observing all this are:
- How to anticipate and take advantage of market conditions?
- What to do if you already find yourself amid a downturn?
While the very questions might seem tough, both answers are quite straight and genuinely simple.
From the preventive side it's first of all crucial to align your sales, marketing and customer services functions around joint and shared goals. For instance:
- maximizing profitability (instead of revenue) and return on investments
- making sure that your customers return again and again
- managing spends as much reasonably and wisely as possible
- being pioneers and disruptors, not followers
One could argue that it's easy to say. But how to do we get there? And here we come to the middleware - which is data analytics. Not a standalone or silo one usually used in each of the aforementioned functions. But the one much wider and enriched with complete and accurate data across multiple dimensions that cover such aspects as:
A. Your current and planned network data, i.e:
- Geolocation (for current and prospective ATMs)
- Sales
- Network state and technical performance
- Demographics (population - headcount and density, income per capita, etc.)
B. Your customers' data, i.e.:
- Types (segments, quartiles)
- Behaviors
- Age structure
- Demographics
- Frequency, Recency and Monetary aspects
C. Publicly available data (inside / outside your network coverage and plans), i.e.:
- Population headcount and density
- Age structure
- Income per capita
- Employment / Unemployment rates
- Public events (those impacting blockchain and cryptocurrencies - regulations, government initiatives, geo-political and macroeconomic events, etc.)
D. Competitive intelligence data, i.e.:
- Number of ATMs
- Geolocation of ATMs
- Network growth dynamics and areas
Putting it all together can bring a bunch of truly impactful and initially unobvious insights (at least from the plain view perspective) on the leadership table and help both to highlight areas for further expansion of your crypto ATM network and those to consider for shutting down or relocation.
Such an approach is also beneficial from the standpoint of the non-contractual nature of the crypto ATM business and is one of the critical steps on the way to building genuine customer centricity and maximizing customer equity.
When it comes to the state of the fall down, the damage is already inevitable. But, until you get to the point of no return (insolvency, bankruptcy, etc.), this in no way means the absence of a parachute or any ways to change the course of actions and raise up back to the heights. The pivotal question here is the same - how to do that?
The starting point is to take a hold and promptly scrutinize the network performance - mainly from the standpoint of revenue and profitability. In other words - it's about clarifying the span and scope of the issue.
Once that's done, it's crucial to define the key anchors that pull the business down - i.a.: heavy customer churning rates; underperforming locations - those with poor number of transactions or sales volumes; marketing / promotion campaigns that are not returning the gains back as expected and so on. And again, this is exactly where insightful data analytics is utmost to help.
Having made all the above clear - the time comes to devise the remedies. And here the Pareto principle rule (80/20) perfectly applies. However, there should also be enough leadership urge and strength to take strong and bold decisions. For instance: re-shape or even shut down certain marketing / promotion spends (both general, and those focused on selected customer segments or quartiles), turn down poor performing locations, temporarily lower margins, reorganize some functions, optimize headcount, etc. Certainly, you can always choose to do nothing and keep everything as it is hoping for the better. But let me be clear - in a state of free fall, it will only continue to worsen. The earlier you start to counteract (rationally and consistently) - the lesser the ultimate damage will be.
Both approaches, outlined above, are also worth to consider and adapt even if everything in the business is going good. And is not just about proactively managing risks, but rather relates to helping build a sustainable crypto ATM business. Or, as the adage goes - if you fail to prepare, you prepare to fail (c).
To summarize, the industry is still emerging and its development is quite volatile. And it will continue to be like this. It’s a crucial cross-cutting point to consider in the paradigm of doing this business. And, even more than that, it means that what works today to make it robust and sustainable, might not work or even harm tomorrow or the day after. As such, it's essential to be vigilant, proactive, flexible and bold for sailing your crypto ATM business to the new shores and new peaks. HODL, and stay tuned.
