Bonus tokens with credit cards?

[BBE]

What are your thoughts on giving or not giving bonus tokens when customers use a credit card?

Right now, we give 6 tokens for a 5 dollar bill, 12 tokens for a 10, and 24 tokens for a 20. We had been doing this for credit card customers as well. However about 3 weeks ago we stopped doing the bonus tokens for credit card customers due to processing fees. Since then I've had comments from 3 different customers. The first one was one of our regulars, and he was nice about it, but he did notice. The 2nd one I mailed 1 dollar back to replace the bonus token he lost out on, and then followed the refund up with a voicemail explaining the situation to him that we would no longer be doing bonus tokens on credit cards because of processing fees. The 3rd one, was an f-bomb tantrum a lady threw about how big of a rip off my carwash is because I didn't give the bonus tokens for debit card customers. I calmly explained about the processing fees that we have to pay.

From a customers perspective, I understand. It's costing them 10 dollars regardless of it comes off their debit/credit card or if it is a 10 dollar bill out of their pocket, so why should THEY have to pick up the tab for my credit card processing fees, I get it. From an operator standpoint, I think it's a pretty normal thing that cash speaks louder in almost any scenario than credit or debit card does.

Should I rethink this? I'd rather eat the processing fee than to make my customers angry enough to not come and spend their money at all.

 

[PaulLovesJamie]

Its kind of hard to answer without more info about your wash, pricing, demographics, competition, etc. Otherwise most anything I could say would be speculation and/or opinions based on my locations & experience.
That said, I'll throw a couple things out to get things started:
Does your pricing model account for giving away 10-20% in tokens to every customer, and in addition incurring an additional 5-10% in fees for credit customers?
Fwiw, I do NOT give free tokens to credit customers.

 

[MEP001]

It sounds like you'd be better off adding credit card acceptance to your equipment. It's a big investment, but your customers will spend more with no complaint because they can just swipe their card and wash all they want without stopping to add more money.

 

[Randy]

Years ago, maybe 20 or so. We tried a bonus token promotion for a limited time. We found that once you start giving away Bonus tokens it’s hard to stop because the customers expect it all the time. The best thing you can do is to stop giving bonus token all together. Put a sign on your changer saying something like “We are no long dispensing Bonus tokens as this promotion has ended”

 

[JeffM]

So if I am correct, your current pricing structure looks like this;

1 token for $1 each
for larger bills, tokens are $0.833 each

While encouraging customers to purchase tokens by doing volume discounts should bring in more revenue, customers viewing them as "bonus tokens" which are taken away are essentially responding to a price increase as most consumers would. It really comes down what your average customer is spending per wash. If the average customer is spending 5 tokens for a wash (for the sake of example), why discount that volume?

There are a couple ways you could go about this. Getting rid of the "bonus tokens" will be seen by your regular customers as a straight out price increase and may cause minor backlash for a very short period of time. While it will improve your revenue long term, it will be hard to really measure what impact that will have, but probably very little as you can always cound on people having a shory memory.

Another way is to offer the "bonus tokens" on the $10 and $20 purchases. This provides incentive to purchase more and to keep returning. Again with this method, you are taking back the additional revenue which will more than cover any card processing fees.

Lastly, you could decrease the amount of time a customer gets for each token. While this is essentially a price increase, it is less noticible, unless the time is decreased by a large amount. However, if a customer catches on you may be in for an earful.

As MEP001 said, adding credit card acceptance is a big investment, people will usually spend more money as the physical feeling of parting with it does not hit them until the statement comes at the end of the month. Doing this and getting rid of "bonus tokens" should help.

 

[Sequoia]

I considered doing token promotions but felt it would "cheapen" the perceived value in the eyes of the customer. All my machines are set to deliver 1 token for 1 dollar, 20 tokens for 20 dollars, etc.

When I am at the wash I frequently add extra tokens while people are washing, or give away free air fresheners. Other than that I've done few price promotions and in a small town market it has worked well for me.

 

[mjwalsh]

What are your thoughts on giving or not giving bonus tokens when customers use a credit card?

The 3rd one, was an f-bomb tantrum a lady threw about how big of a rip off my carwash is because I didn't give the bonus tokens for debit card customers. I calmly explained about the processing fees that we have to pay.

From an operator standpoint, I think it's a pretty normal thing that cash speaks louder in almost any scenario than credit or debit card does.

Should I rethink this? I'd rather eat the processing fee than to make my customers angry enough to not come and spend their money at all.

BBE,

To some extent ... it comes down to who runs the show ... a very tiny % of customers ... or you the owner. Last week, I had an experience with a new user in our dog wash who was extremely happy with how it worked for her. She asked for a paper token to give to her Mom & when she asked if I accepted CC ... I said we can via "PayPal Here" on our cell phones. To our delight ... she actually somewhat aggressively said ... "you provide an ATM" ... she explained she was neutral as to CC or cash. She pulled out a $10 bill & I gave her 3 dollars back ... she definitely was not disappointed.

The point is ... using the $$$ lost from merchant fees to pump that same lost money into other amenities can more than offset ... those few stubborn customers ... who are overly adamant about the ability to use card swipes on each piece of equipment.

mike walsh king koin

 

[I.B. Washincars]

Won't "walk-off" tokens offset the CC fees?

 

[Stuart]

I would get rid of the bonus tokens with the exception of bulk token sales. Get rid of the bonus tokens and do a few promos where they get extra time per coin but designate it as such with a time frame. This may help alleviate some of the grumbling customers. Also be sure that your wash is producing a better product than your competitor. Pressure, chemical, customer service, cleanliness and more to make sure your customers know where the best place is to wash their vehicle.
My customers can buy $60 in tokens for $50.00.
Do not start any type of promo without an end date unless you KNOW you want to make it a long term one, but them it stops becoming a promotion. Always test first with and end date.
I also have CC customers come to my locations because I take CC's. This is a value in itself. No hassle with coins, time running out, having to go to changers. Hope this helps your decision.

 

[MEP001]

Do not start any type of promo without an end date unless you KNOW you want to make it a long term one, but them it stops becoming a promotion. Always test first with and end date.

I don't think the OP ever meant the bonus token vend as a promotion.

 

[Stuart]

I don't think the OP ever meant the bonus token vend as a promotion.

I didn't say I did. The promo reference was to to following quote " Get rid of the bonus tokens and do a few promos where they get extra time per coin but designate it as such with a time frame." Sorry I did not make that clear to you!