If a home heating firm can lose nearly 50% of its business over an extended period of time, the same underlying factors are applicable to your convenience store.
By Jim Callahan
Many years ago, when I was younger and a little less wise, I led an acquisitions team that purchased a small fuel oil and home heating company, based in upstate New York.
At the time, it was a common practice in the industry to sign up customers on a “retained gallons” basis, and in turn, stocking gallons of oil based on estimates of existing business maintained over a specific period—in this case: five years.
At the end of that time, we would perform a process—now antiquated—which we referred to as “rolling the (customer) deck.” We did this to determine the number of customers that we had retained to analyze our operational standing.
The numbers indicated that we had grown the company through many new customers over that five-year span. The team was surprised, however, to find that we had lost slightly more than 50% of the original customer base. Of course, this was more than a little alarming.
Finding Reasons
We then made a detailed study of the customers lost during each of the five years and set about ascertaining the all-important reasons behind the valuable piece of the profits that were being lost.
Among the reasons for the loss was finding that a fair percentage of our clientele had merely moved away, or were deceased, while others switched to the dreaded enemy “natural gas” during those times of spiking crude oil prices. We even lost customers who opted for wood burning stoves as their heating source.
The sticking point was we had actually lost customers to poor service, high pricing or both. If it was the case with either, we always contacted the individual and tried very hard to win back their business with incentives, always remembering the cardinal rule: “Customers you have failed have an adverse effect on your company’s reputation.”
Not surprisingly, the same rule that applied back then pertains to the c-store industry today.
Every convenience retailer is vying for customers, offering the best cappuccino or most efficient pay-at-the pump solution to keep customers enthralled and coming back again and again. In this industry of immense competition, a retailer can do no less.
Accordingly, it behooves us in the business to understand the need for clear, superior services, including:
• Great, friendly and ever improving customer service;
• Competitive pricing;
• Clean and well-stocked and merchandised stores—inside and out;
• Sparkling restrooms, which pass the “mother test;”
• Enact a well thought-out and continuous advertising program (you can quote Henry Ford here: “50% of all advertising is wasted, my problem is, I don’t know which 50%.”) However, the act of avoiding the cost of advertising or spending too little on advertising will not attract new business to replace those who have moved on to another competitor.
• Don’t neglect to invest time and effort into modern social media practices and connective loyalty programs, including Facebook, LinkedIn, Twitter.
All major chains do and grocers like Kroger’s are effective at it. They dominate most every market they enter because of their due diligence.
Remember, embrace the times that you live and work in. It’s not enough to take care of your existing customers, you also must become adept at attracting new customers—the life blood of any successful business. Do both well and I promise that you won’t be scratching your head whenever the deck is rolled.
Here’s to a prosperous new year.
Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CSDecisions.com. He can be reached at (678) 485-4773 or via e-mail at [email protected].