Parking companies are fighting for customers on two levels: direct and indirect. When they are focusing on direct competition, there’s a real risk that it happens at the cost of the just as important indirect market battles.
Successful parking companies need to constantly win battles on two fronts
First of all, parking companies have to win the trust of property owners in order to get a contract to operate a parking garage. Property owners generally put parking operators against each other in bidding competitions, where the parking operator with the best price-quality ration usually wins. This is a situation of direct competition between two or more parking operators.
Second, after they win the deal, parking companies then have to win the trust of consumers. They must constantly work towards getting customers to choose their garage as the place where they park their vehicles. Consumers have many different options of transportation available to them, so the never ending question remains: what can parking companies do to remain attractive in the eyes of the consumer.
The parking companies of today are not so worried about the direct competition with each other. Nowadays, there’s a much greater threat, one that has emerged in the past 10 years: alternatives to private car ownership.
In our interview with John (who also gave us his thoughts on parking brokerage), this came up many times: “Parking business used to be purely a yield management business, where all you worried about was the location of your parking lot, and how you can optimize pricing to maximize ROI,” he said, “whereas today, consumers are attracted by other, more user-friendly means of transportation, which forces parking companies to shift their focus toward the actual user experience.”
Fight battles against your direct competitors
If you are in the parking business, and another parking company has its garage nearby, that other company with an identical business is your direct competition.
“Many parking companies are very focused on their direct competition. They make a lot of those key marketing decisions based on what the other parking providers are doing. When one company orders new street signs, the other one does too,” John said, and continued:
“I have made that mistake myself. I was so caught up in that rivalry, that I started to lose revenue because car drivers started abandoning me. By paying attention to what consumers are doing and what they want, I could have noticed the existing pattern there much quicker. I was not losing customers to my direct competitors. Most of my lost revenue was due to people using other, more convenient means of transport.“
Prepare for war against your indirect competitors
“People need to go from point A to point B, and they can do this in many different ways. People will always pick the easiest and most cost-effective way for moving from one place to another, and that’s the point we are focussing on,” said John.
Public transport, bike rentals, carpooling and Uber are all things that impact the business of a parking company. They are alternative options for getting to the cinema or work or whatever the destination is. These are services that are offered by both municipalities as well as private providers, and are getting more and more widespread and user-friendly all the time. And the better they work, the less people will drive, and the less they will park.
This, John explained, is a must to understand: “Basically every option that can bring the person to point B easier is a competitor for the parking business. For car drivers, the biggest obstacle a lot of the time is to find a parking spot close to their destination. That search is frustrating, and it makes the user experience bad. When the user experience is bad two, three, four times in a row, people start to look for other, easier means of transport.”
The key is the user experience, which is the way today’s transport options capture their customers – easy, cheap, fast, on demand.
The challenge: Keeping up with evolving rivals
It isn’t only a matter of how well transport services and apps are arranged for consumers right now. “Parking companies need to realize that everything concerning city life is developing at a fast pace. By ignoring these developments that are happening left, right and center, they will be left out of the competition,” John said.
More than anything, the competition here is a matter of quality. “Transport services have harnessed modern day technology to help people move to places. And that’s something that parking companies are still looking around for. Parking needs to become easier at the same rate that everything else does. There’s a momentum that needs to be embraced, because consumers are not going to use a parking garage if something else is available that’s better.”
Be customer-centric and customers will reward you
It’s good to sometimes go back to the basics and ask the question: What kind of user experience am I offering my customers? “We ask that question daily, and embrace new ideas to improve the experience,” John said. “This has helped us stay on top of our game in the industry overall.” A company that can attract customers well is subsequently able to make better offers in public tenders, get higher user satisfaction rates, and generally have a very good promotional advantage in comparison to other companies.
“Consumers vote on their feet, and that’s a very powerful force. When a person leaves home, takes out their phone or arrives at their destination, those moments are where the battles need to be won,” John concluded.
“The one question we need to focus on is this: how can we offer user experience equal to that of Uber, Lyft and other modern transportation services?’