Filling Station Loss Leaders
In my role as humble rep, I’m often left pondering what more I can do to create a sense of urgency. Something that compels my prospects to act immediately. The traditional route is to give the shop away. Discount is usually seen as the key decision-making inducement. Yet most long-in-the-tooth sellers realise this to be mistaken practice. Then I got to hear about two South African examples were people had transformed their businesses with a cunning loss leader approach. This is the kind of thing marketeers love, where you offer something for nothing, hoping to ensnare the margin-rich allied sales. Supermarkets have been doing it for years giving bread and milk away for next to nothing so that we also fill our basket with premium goods once gripped by gawping aisle-fever.
Both examples had the aim of bolstering “litrage”. This apparently forms the basis of a filling station’s re-sale value; the more liquid gold pumped on the forecourt, the more you can sell the business for.
Free Coffee
The first example concerns the Newlands plot at a major traffic light junction in Cape Town’s Southern Suburbs. The Engen garage had issues. Like the rest of the country, even this wealthy area was not immune to violent crime. The locally renowned Billy The Buns bar/restuarant across the street suffered a hold-up, where a gang of half-a-dozen bundled in brandishing pistols to take everyone’s valuables, and on the forecourt itself a student was fatally bashed over the head with a brick whilst withdrawing cash at 2am. The owners realised security fears could cause trade to go elsewhere. The solution was to offer free coffee to all police and security workers inside in their shop, which had a small seating area. The result was staggering. Word quickly spread, and during darkness you’d always see a couple of cop-cars and similarly liveried vehicles from the likes of Chubb and ADT parked up. The place became known as a meeting place, and somewhere to rest-up before the new dash to the inevitable next troublespot. This presence in turn gave passing trade satisfaction it was a safe place to do business during nightfall, and litrage soared.
Free Coke & Meal
My friend Cobus’ brother bought a run-down filling station in the dust bowl that is the N1 highway between Cape Town and JoBurg. He paid next-to-nothing, and is now able to sell with a handsome appreciation. He made the instant decision to erect a huge sign, saying “All Truckers, Free Coke & A Meal When You Stop By”. And stop by they did. In droves. And each time, they filled up. Big style. Yes, the initiative cost margin, but what is the cost of a bottle of coke and a roll, compared to a 500 litre fill-up? Especially considering the aforementioned litrage calculation.