Cashless systems are increasingly prevalent nowadays: after a solid ramp up after the pandemic, almost everyone who has been to a festival in the last 5 or so years is guaranteed to have interacted with a cashless system one way or another. This is expected considering the benefits cashless systems bring to the table for both attendees and promoters:
- Less cash flowing around means increased security, which reduces risk when dealing with large crowds and occasional workers with whom you might not have built trust yet.
- Having a convenient payment method and more opportunities for upselling translates to higher average spend per attendee.
- At a time where data means everything, the data available from cashless systems gives promoters the ability to more effectively direct their marketing actions, ensuring they are as relevant as possible to their attendees.
The case for clubs
Clubs, especially those hosting more than a thousand attendees per night, are similar to festivals in that they handle large crowds, sometimes need help from occasional workers and have opportunities to put data to work, but they also have some key differences which must be considered when implementing a cashless system:
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Events are shorter. A night at a club generally lasts for less than 12 hours, which means lower spend per customer compared to a festival which in turn translates to a lower budget to invest in cashless systems. This also dictates the experience for attendees: entrance lines need to move faster and there's barely enough time for a security and ticket checkpoint.
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But customer relationships last longer. Most clubs run every weekend, which means much higher opportunities for recurrence and building customer loyalty. In fact, some clubs have already implemented loyalty programs ranging from a simple newsletter to a full blown digital membership.
Let's look at how the key features outlined in the introduction compare between clubs and festivals considering the above differences:
| Festivals | Clubs | |
|---|---|---|
| Security | Occasional staff, huge crowds and the presence of external providers such as food trucks completely rule out cash in the bars, event at the cost of customer experience. | More recurrent staff and lack of third party vendors reduce the requirements on cash, but minimizing it is a plus as long as it doesn't impact customer experience too much. |
| Customer experience | Festivals have more leverage when asking customer to register or force them to recharge their cashless at a single point since attendees will spend at least a few days at the event. In any case, easy of payment correlates with average spend as expected. | Making it dead simple for attendees is paramount since they'll spend just a few hours at the event and can elect to spend less, e.g. by pre-gaming for longer. Anything that introduces friction in the purchase experience will likely result in loss of business. |
| Data | Useful data comes from coarser spending metrics that help promoters plan capacity for upcoming editions. Correlating with ticket sales plays an important role since users can be profiled by the tier or date of purchase. | Capacity planning is less of a problem since operations tend to be more streamlined. The focus is on finer details like individual employee performance and on building personalized relationships with customers that can be targeted multiple times per year. |
Comparing cashless systems for clubs
Now we can have a look at how some of the most popular types of cashless systems perform in clubs considering their unique features. Let's review how each of these work:
- Tokens or tickets. Customers purchase plastic coins or pay for drinks individually at a ticket booth once they're in the event. Then they have to walk up to a bar that will exchange them for a drink. The digital version of these is a self-order machine like the ones found in fast food restaurants. These provide more data and traceability, but lines quickly form around them. In fact, most fast food chains are moving away from them into allowing customers to order directly with their phone.
- Cashless bracelets or cards. First, customers have to be given a card, normally done on a dedicated ticket booth so that the entrance isn't clogged up and they can make their first recharge there. Cards work like a digital wallet which is discounted by the staff every time they order at a bar and that they can top up at the booth. These require quite a bit of specialized hardware and are not very reusable (especially with bracelets) so they have a high implementation cost.
- Mobile cashless systems. You can think of these as an evolution of paper tickets with to major advantages: customers don't have to wait in line to purchase them, they can do it straight from their phone, even without having to download an app. They provide greater traceability and more insightful data since each purchase is tied to the customer's phone. Finally they have one of the lowest implementation costs since they don't need specialized hardware or single-use cards or bracelets.
Let's summarize the pros and cons of each kind of cashless system from the point of view of clubs in this table:
| Tokens or tickets | Bracelets or cards | Phone cashless | |
|---|---|---|---|
| Security | Low in the case of offline tokens due to the lack of traceability. Higher with tickets if barcodes are tracked. | High: full traceability of every order. | High: full traceability of every order. |
| Customer experience | Poor due to lines forming at ticket booths or totems. | Poor due to lines forming at ticket booths or recharge points. | Better: lines don't appear since there are no bottlenecks. |
| Data | Limited to some bartender data in ticket implementations, but orders are anonymous. | Can be excellent, but associating bracelets or cards with the ticket significantly complicates handing them out. Bartender data is generally very good. | Excellent: fine grained data of both bartender and customer data since each of them interacts with the platform with their personal device. |
| Costs | Low implementation costs, but maintenance costs can be high due to staffing ticket booths and/or supervising totems. | High implementation costs due to specialized hardware and single use cards/bracelets. | Low implementation costs since no specialized hardware is needed and low maintenance costs considering staff savings. |
Clubs look to be right in the sweet spot where phone-based cashless systems shine: they have lower costs while maintaining excellent security and data quality. They're not a silver bullet though, as we've seen bracelets are likely better suited for extremely large festivals with very limited cell coverage, and simple plastic tokens or just accepting cash at the bar can work for the smaller clubs were security is not as critical. On the other hand, while some more advanced features like enabling pre orders or implementing loyalty programs are doable with bracelets, the friction they introduce is significantly higher.
At FesteaPay, we understand the unique challenges clubs face and have developed a cashless platform specifically with clubs in mind which is already being used by thousands of customers every weekend in one of the largest clubs in Spain. Everything happens under their own brand and is customizable so that they can deliver a top experience to the audience they know best. Contact us today and let's do the same for your own club!