Manual price collections: too expensive and a thing of the past, surely?
In the fuel sector, the cost of putting people in cars and driving them around cities and rural areas to observe prices at competing retail sites, day after day, adds up. Is it really worthwhile in the long-run?
It most definitely is cost-effective to perform manual collections of this kind. Our analysis shows that companies who fail to do so are losing far greater amounts in margin than they realise.
As mentioned in our first article, recent analysis we performed in Western Europe showed that the average prices obtained by our clients’ own sources differed by an average of EUR 1.5¢ per litre from reality – due to vested interests in reporting artificially lower prices at competing sites.
Extrapolated out over an entire network, this means that a client with 100 sites would stand to lose ~€2.5 million per year in lost margins. This figure invariably outstrips the costs associated with any collection service – by far.
The estimated cost of running our manual collection service in any given geography was an average of just one sixth of the amount the client was losing in margins due to this problem. In other words, any money spent on manual collections would stand to be made back 6 times over in improved margins – a 600% ROI.
This is a remarkable multiplier and one we firmly believe to be equally valid in other markets around the world. Our experience has repeatedly shown that fuel companies tend to severely underestimate the extent to which inaccurate price reporting occurs and the total cost to the company.
As eye-opening as this figure is, it fails to take into account the other tangential financial benefits to be had from manual collections:
- Increased visibility of the competition, and ability to effectively implement pricing strategy with confidence
- Optimised “price for offer” at individual sites
- Greater whole of site profitability
- Reduced agent commission fees
- Increased efficiencies from a human resources perspective: staff are freed up to focus on their regular day-to-day duties
- Reporting what the customer actually sees at your own sites
The benefits to be derived from collections of this kind are clear. Companies who are not alert to their value are leaving money on the table.
Speak with one of our sales consultants today about how you can make uncertainty a thing of the past when setting your prices – and implement your pricing strategy with confidence.