Proc.new

Whatever businesses do there are consequences. Even the seemingly smallest procedures can affect your customer base, your employees in ways you didn’t intend. One specific example that has occured to me lately is the purchase of gasoline. It used to be that you’d pull up to a gas pump, put the handle in your car, select your grade of gasoline and they’d automatically activate the pump for you. After you had finished pumping your gas, you’d go inside the store and grab some items that were appealing, and then pay for the items and your gasoline.

Now when you go to a gas station you have two choices, you can pay for your gas by credit card or you can go inside and prepay with cash. I like to purchase everything with cash, it’s how I manage my budget. I have a specific place in my wallet for my gas money, and a different place for my spending money. I don’t have to balance anything, and I can easily assess if I’m running low on my budget by checking my cash on hand. It’s a system that has worked well for my wife and I for years. Yet suddenly I’m finding that filling up with gasoline is becoming more and more of a pain. To pay with cash it means I usually have to go wait through the line inside the store twice. Once to give them enough cash to cover a fill up, and then I have to go back to get my change. The hassle is enough to make me consider leaving my gas money in my bank account so I can just use my debit card to fill up.

The obvious reason the gas stations make people pre-pay is so they can eliminate gas-n-go, people who fill their tank then leave without paying. Here’s the problem with that philosophy though. By tightening the belt on those who might gas-n-go, they are treating all of their customers like criminals. So now they’ve raised the transaction cost of using cash. Raising the cost of the transaction tends to push customers towards a different mode of payment. So now, let’s say everyone pays with Credit or Debit cards before they pump their gas. All of the sudden people have no reason to go into the store, which means you lose all the incidental purchases they would have made while they were inside the store. People will still go inside the store, and people will still buy things, but when people are paying for their gas with a credit card, they will only go inside if they needed something specific. Those people may still buy something they didn’t intend simply because they saw it, but all of the people who don’t go in the store won’t buy anything incidental. I talked to one gas station employee and she incredulously told me that three people had driven off without paying for their gas in the last three months. Three people?!? I had thought we were dealing with some sort of epidemic. That’s the cost of one tank of gasoline per month. I would bet cold hard cash that these policies are actually causing companies to lose a lot more revenue per month than they are gaining.

Ultimately I suspect the business model of treating all of your customers like criminals isn’t the best or most efficient way to serve customers. The companies that really truly do treat their customers well seem to be very resilient even in the face of tough economic conditions. I hope that some companies will get their message and realize that by saving a few bucks in stolen gasoline, they are losing revenue in other ways. It’s entirely possible that I’m off base here and companies lose more in gas than they gain in incidental purchases, however one thing is for sure. Unless I can find a gas station that doesn’t make me prepay for my gas, I’ll soon join the rest of the world and purchase my gas with plastic.