Location, Location, Location

Posted: 08/1998

Location, Location, Location

By Bob Lane

Independent payphone providers (IPPs), like real estate agents, measure
the success of their companies by the locations of their products. Real estate agents
don’t make money on houses in bad locations; likewise, IPPs don’t make money from poorly
located payphones.

The differences between a successful payphone route and an unsuccessful payphone route
usually can be traced to the quality of the payphone routes’ locations. Profits (or
losses) are significantly influenced by the income streams inherent in a route’s
locations. To an IPP, there should be nothing more important than the quality of payphone
locations.

What Makes A Good Location

Business hours: A payphone that is "open for business" 24 hours has
the potential to be used more than a payphone in a business that locks its doors every
night. In reasonable weather conditions, an outside payphone will generally get more use
than an inside payphone.

Visibility: A payphone that can’t be spotted easily by a customer won’t get much
use. A payphone that can be spotted easily will be used by customers looking for a
payphone and by those spur-of-the-moment payphone users. A payphone with a large,
colorful enclosure will have the advantage of increased visibility, as will a lighted
payphone.

Traffic: If a payphone is highly visible and in close proximity to substantial
pedestrian traffic, there is good reason to believe that a number of passers-by will use
that payphone.

This principle applies to drive-up payphones, also. A highly visible, conveniently
positioned drive-up payphone may have a lot of appeal to a customer, especially if the
weather is bad or parking is a problem in the area.

Economic factors: It is well-known among veteran IPPs that lower-income areas
can offer exceptional opportunities in the form of good locations. One of the reasons for
this is that a smaller percentage of a lower-income community’s population may be able to
maintain regular residential phone service. Those who are unable to maintain regular
residential phone service may find themselves using payphones on a more frequent basis. In
some cases, residents of these communities have been known to protect payphones from
vandalism because they rely on the payphone for their personal communications (almost as
though the payphone was their personal home phone). A payphone outside a boarded-up
business might just turn out to be a winner.

Conversely, an area populated mostly by cellular phone users may not be a good place to
operate payphones.

Proximity to competition: A payphone location may be perfect in every other
respect, but if the payphone is going to be too close to a competing payphone, then it
could be a losing proposition.

On the contrary, some IPPs "collocate" (put their payphones at the same
location) with local exchange carriers’ (LECs’) payphones with the idea in mind that a
productive LEC payphone will "share" some of its revenues.

Containment (captive audience): Any place with a naturally large population
where circumstances make it difficult for the customer to go to a competitor’s nearby
payphone is likely to be a very good location. Airports, bus stations, train stations,
penal institutions, state or county fairs are examples.

Some business owners will be happy to let an IPP put a payphone in their business
because it keeps employees and customers from using their business phone and running up
the phone bill.

What It Takes to Get a Good Location

The IPP can do it: A new IPP can always canvas for locations personally.
However, the new IPP may already know of some terrific locations and just not realize it
(and may even be acquainted with the business owners). When I started out in the payphone
business, some of the best locations I found for my payphone operations were places I
originally knew as my local market, mom-and-pop convenience store, dry cleaner, TV repair,
framing shop, Chinese carry out, bagel deli, pub and restaurant. This list could go on,
but the point is that any place a new IPP already does business is a likely opportunity to
acquire a payphone location.

Paying referral fees to others is another way to get closer to location opportunities.
I have paid referral fees to others in my community who were kind enough to tell me about
a good location that I could sign up. Some IPPs have told me they’ve even recruited route
salesmen and policemen to provide good location leads.

Joining the local chamber of commerce also is a good way to get exposure to other
businesses in the community, and it has worked well for me. In addition, an IPP can get a
lot of exposure by placing an ad in the yellow pages directory (I have one client who is
building a very nice payphone operation with an advertisement in the yellow pages).

Hire a salesperson: Many IPPs hire and train a full-time or part-time
salesperson to secure payphone locations. If the size of your payphone operation and your
investment capital can warrant it, then this is a very good way to develop your route. You
can train your salesperson to work your way and to get the kinds of locations you feel are
appropriate. One good way to compensate a salesperson is part "per location" and
part "residual" based on the locations’ incomes.

Use a professional locating service: If you are unwilling or unable to obtain
your own payphone locations and if you are convinced that you need to use a professional
locating service you should be very careful. The following are some things to keep in mind
when dealing with a locator:

Regardless of which method(s) an IPP uses to obtain payphone locations, it pays to stay
alert to the opportunities to be found in virtually every community and to remain
sensitive to the basic characteristics that comprise a quality payphone location.

Bob Lane is the owner of Payphones-USA (www.payphones-usa.com)
  and telefone.com (www.telefone.com).  He
also is the owner of Lane Communications Co., a payphone company serving Virginia,
Maryland and Washington, D.C., and co-founder and former vice president of the Atlantic
Payphone Association. Additionally, he is the CEO of Payphone Consultants. He can be
reached at (800) 213-6754.