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Equipment Economics

In today's hyper competitive world, everyone is looking for a way to gain a competitive edge. Providing a positive customer experience and projecting a quality brand image represents two of the most effective ways to attract and retain customers, and gain their long-term loyalty.

Projecting a cleaner, safer image and an inviting environment goes a long way toward getting people to prefer your site for their fueling needs. If you take it a step further, once a fuel customer is secured, every 1 percent increase in fuel volume results in a 0.36 percent to 0.57 percent increase in real inside sales growth, according to David Nelson, an industry analyst. However, to keep them coming back to your fueling island, and possibly inside your store, you must deliver more than just an image, you'll need to consistently deliver on your promise of a quality experience -- both emotionally and functionally. Making people feel good about your site is the emotional side of your brand. Making sure your fueling equipment is always reliable, hassle-free and consistently performs as expected is the functional side of the brand experience.

Keep in mind your dispensing system, and in particular your fueling nozzles, represent the most frequent hand shake you have with your customers. Ensuring you are always delivering a quality, reassuring handshake begins by having the best quality equipment at this critical customer touch point.

It is important to know the only time your customer has an "experience they remember" with your fueling nozzles is when they fail to perform as expected, meaning they feel cheap; leak; fail to shut off or splash back; prematurely shut off; or won’t flow product. With this in mind, your goal should always be to minimize any customer "events" at the island. You can do this by specifying quality built hanging hardware (nozzles, breakaways, swivels, etc.). This will ensure the most reliable, trouble-free handshake possible with your customers every time they visit your site.

Using the highest quality hanging hardware is the obvious way to help minimize problems and keep customers satisfied. But quality equipment has a higher initial purchase price than low-quality alternatives. At first glance, going with the lowest cost equipment seems as if it makes sense, but in the long-term it is a costly mistake to make.

First and foremost, one must consider the lifetime value of each customer. And once a customer is unsatisfied, they spread the word, which has an immeasurable, exponential negative impact on your business. The economics of first-cost versus total life cycle value has been proven to strongly favor the total life cycle side of the equation. The overall cost of ownership is lower and business retention is dramatically preserved.

If you are a first-cost (meaning low initial cost) equipment buyer, it would be advisable for you to do a quick analysis of your equipment history (i.e., purchase price, service call costs, hardware replacement costs and hassles, lost revenue due to dispenser downtime, etc.). Even a small percentage of nozzle failures from using low-quality equipment will quickly result in dramatically higher operating costs. Any perceived price advantage a low-cost nozzle may have offered is offset many times over by maintenance call costs, replacement nozzle costs, clean-up costs, etc. This is real money and lost profit -- not to mention the damaging effect an inoperative, low-quality, cheap-feeling nozzle could have on customer attitudes and long-term customer retention.

Research indicates that quality-built, new nozzles are approximately twice as reliable as rebuilt nozzles, and relative to longer service life, the typical service life of a quality-built new nozzle exceeds rebuilt nozzles by about one third.

It just stands to reason that quality-built nozzles and other hanging hardware are the best overall value for the money. First of all they use 100 percent new parts; parts designed to work together so they perform more consistently and reliably, and last longer.

So, do the math. Compare the price you are paying for your hanging hardware, replacement costs, service costs and downtime costs, and don’t forget to factor in something for lost business due to unsatisfied customers. Once you have done the math it will be evident that low-quality equipment is not a very good deal after all. As the old saying goes …"be careful not to step over a dollar to pick up a nickel."

When you compare the economic benefits of quality equipment versus low-quality equipment it will not take you long to see that the return-on-investment is quick, substantial and real. Don't throw your money away. Be smart. Buy the best possible fueling equipment you can afford. It will have a positive long-term impact on your business, which will more than offset the potentially higher initial cost.

Rahul Deshmukh is the general manager of OPW Fueling Components, Aboveground Products. OPW Aboveground Products include conventional, manual and vapor recovery nozzles, swivels and breakaways, vapor recovery systems, aboveground storage tank equipment and clean energy fueling products. Deshmukh can be reached at (513) 870-3382 or [email protected].

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