Who would have thought the freemium model would have hit the gas station business, but I saw it today driving back from a great team bonding trip white water rafting in Maine.
As I approached the gas station, I noticed that there was no credit card facility at the pump. Nor did they tell me that I had to pay first. They let me fill my tank of gas and then wander into the convenience store to pay.
When I asked the owner (it was a small store) why there was no credit card facility on the pumps (which I had never, ever seen on new pumps), he told me that he makes no money on gas.
By driving folks into the convenience store he can “upsell them” (my words) on much more profitable items.
Gas was not just a loss leader, it was a critical gate to get folks to spend more. But importantly, he understood the value of charging after the fact, so that people would get the ease of use pumping their gas first and paying afterward. (I wonder how many of us have been totally frustrated having to pay first!).
He had to special order the pumps because they don’t come that way.
Lessons learned:
- He understood his customer acquisition costs and his margins at every step in the customer lifecycle
- He made it as easy as possible for customers to get their top priority done quickly (key point here!)
- He made sure they could pay (a lower priority) with some inconvenience, but not too much
- He made sure he had good stuff for folks to buy in their path to paying for gas with minimum fuss
- He went to the extra effort to special order the pumps to see his vision through.
How many times have websites denied me the ability to get my top priority done quickly. Who is likely to spend more — a happy customer or a pissed off customer?
I wanted to show the new pumps, but google maps only has the old ones.