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A carwash professional who recently started using $1 coins told
me some of his customers, never having seen the new Sacagawea $1
coin, were quite angry upon receiving what they thought were brassy
tokens from the change machine.
However, they were greatly relieved to learn that they were
not tokens, but were, in fact, legal tender money.
Hmmm. Is there a subtle message here?
Another operator, who pumps more than a million $1 coins into circulation
each year, was more blunt. He said that any operator who gives tokens
as change for a large bill does not have much competition. "Customers
want to leave my establishment with money in their pockets, not
tokens," he said.
The utility of tokens and coins varies greatly from one sector of
the economy to another. So, I thought I would share some insights
I've gained from talking to professionals in the mass transit and
gambling casinos industries.
An official in Washington, DC's transit system said the speed and
efficiency of using and counting a $1 coin versus a $1 bill or credit
card is not a consideration when deciding which payment systems
to promote with riders. He said consumers perceive the cost of using
a car as only the cost of gasoline and parking. The cost of insurance,
maintenance and purchase price is totally discounted! Therefore,
many commuters believe using the subway costs more than driving
a car to work.
This being the case, Metro wants to encourage the use of stored-value
smart cards purchased with credit cards, because commuters do not
perceive that credit card purchases cost money in the same way that
dropping currency into a farecard machine costs money. Cash is "now;"
credit cards are "later."
These arguments can be reduced to fighting the myth that owning
a car is free with the myth that using a credit card is free. As
crazy at this sounds, Metro wants to encourage riders to charge
$60 on a Smartrip stored-value card with a fee to Visa of about
$1.00 instead of using three $20 bills, which Metro could process
for about three cents. On buses, $1 coins could be counted for a
tenth the cost of a $1 bill, but Metro will not expend any resources
to encourage coin payment over paper payment -- because they want
to discourage cash payment across the board.
In trying to extrapolate a lesson to a carwash setting, one could
conclude that tokens are the way to go, because the customer does
not perceive them as money. But not so fast. Customers purchased
those tokens moments earlier using a $10 or $20 bill -- not a credit
card.
Stored-value subway cards are easily carried in a wallet or purse
for use later that day, or for a trip later in the week. Tokens
do not transport as easily.
Let's skip to a casino setting. Here, tokens are encouraged because
colorful chips lose their identity with money, so the gambler parts
with them more freely. And additional tokens can be purchased with
credit cards, which removes the tokens' connection from money even
further.
Here again, one must be careful about drawing conclusions too quickly.
The casino knows that customers would be unhappy if they were forced
to leave the casino floor with tokens. Casinos know that those tokens
must be converted back into cash in order to have a satisfied customer.
I question whether the wonderful little secret about walk-away tokens
and hidden profits is really so wonderful after all. If I lose one
or more tokens or forget to bring them for my next visit your carwash,
I'm not a happy camper. I will feel like the thrifty housewife who
clips the Sunday coupons before going to the grocery store, then
forgets to bring them.
So all other things being equal, I guess I would tilt towards the
$1 coin over a token. But not all things are equal. The ability
to give tokens away as marketing promotions is a powerful argument
for taking tokens. And in sites where vandalism is a potential problem,
tokens again have a lot to offer.
The ways in which customers perceive the cost of a product or service
is highly complex and difficult to assess. I am sure I'm on solid
ground in saying that a $1 coin is vastly superior to four quarters,
but you carwash professionals will ultimately make the call on tokens
versus coins.
Of course, the true utility of the $1 coin is that it replaces four
quarters and brings speed and convenience directly to the customer.
Those arguments have been discussed at length on SSCWN pages.
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