International Parking & Mobility Institute

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The Business of Parking

Financial

Unleashing the Power of Marketing

stock.adobe.com /  hywards

Gain Enhanced Customer Satisfaction and Financial Success

Are you ready to help accelerate off-street parking? Consumer insights, marketing tactics, and customer satisfaction can be crucial to your parking company’s success. With a well-crafted marketing and service approach, you can boost your customer lifetime value by elevating customer acquisition, service, and retention.

Shopping For Off-street Parking

At its core, off-street parking involves renting short-term real estate to drivers. When shopping for off-street parking, drivers are likely to prioritize two key factors: proximity and price. We’ve compared various search experiences through numerous studies—from focusing solely on distance or price to utilizing a hybrid approach that considers both. We’ve discovered that a thoughtful mix of nearby options ranked by price tends to lead to higher conversion rates. Observing how drivers mentally weigh these factors when making parking reservations is invaluable to the financial success of parking facilities.

After analyzing customer interviews, it becomes apparent that the top benefits drivers seek in their parking experience are convenience and price. Convenience in this context translates to proximity near drivers’ final destinations and plays a critical role in their decision-making process and the price at which they can do so.

In Chart 1, we compared the conversion rates of consumers who experience three different on-site search experiences: (a) a distance-only search from the closest facility to the furthest away, (b) a price-only search experience, and (c) a hybrid search presentation where the price is ranked within certain distances.

Chart 1: Off-street Parkers Weigh Distance vs. Price

In this experiment, the hybrid mix of relevant nearby locations sorted by price was 3.65% more likely to convert than the distance-only search and 4.78% more likely to convert than a price-only sort. These notable and statistically significant differences in consumer behavior reflect an intuitive decision-making process involved in off-street parking.

These essential trade-offs are validated further through customer interviews. Customers were asked about the main benefits they receive from their online booking software. Drivers consistently cite “convenience” and “price” as top value propositions, correlating with their online search behavior. Benefits like “transparency of prices” and “ease of use” were cited less often.

Nevertheless, it’s important to note that most responses categorizing “convenience” are distilled to a “convenient location.” In other words, “convenience” frequently translates to being near their ultimate destination, as one would anticipate.

Marketing Tactics

Before developing a marketing strategy inclusive of price, distance, and customer lifetime value, it is important to look closer at addressability. For instance, the airport parking segment presents some of the greatest addressability through search engine marketing (SEM) keywords and typically generates a high average order value. However, it exhibits a relatively low repeat rate due to the relatively low frequency of travel purchases for most North American leisure consumers, who typically travel only a few times per year.

Chart 2 illustrates a matrix of lifetime value and addressability. Although the matrix is somewhat simplistic, it highlights the diverse business dynamics observed across various segments, offering insights into the suitability of different marketing channels. Any seasoned marketer would certainly caution against adopting a narrow or isolated growth strategy, emphasizing the importance of a holistic marketing approach.

Chart 2: Marketing Channel Mix: Addressability vs. Lifetime Value

From Tactics to a Strategy

An example where you can draw on marketing tactics to create a holistic strategy is when the parking industry took a fresh look at growth opportunities in the wake of the COVID-19 pandemic. Overall, the demand for parking experienced a notable decline, particularly in the commuter segment, due to widespread remote work practices leading people to forego commuting to offices. However, surprisingly, the event segment showed early signs of promise following the pandemic’s onset.

Taking a multifaceted marketing approach to rebound from the pandemic was essential for beginning to grow event rentals after COVID. Developing a coordinated campaign using several channels, including event partnerships, SEM, search engine optimization (SEO), email, and higher-funnel brand marketing proved an effective multi-channel approach and made a direct financial contribution. However, relying solely on marketing tactics is insufficient for optimizing lifetime value.

Product and Service Quality Matters for Retention

The parking industry has undergone significant changes in the past decade; however, there is still ample room to improve customer experience due to a lack of technical industry standards as well as certain fundamental facility constraints. Many facilities lag behind, failing to adopt digital methods or lacking the resources to upgrade their equipment. Additionally, the industry lacks consistency in operational practices; some operators manually manage their lots and handle cash, while others use ticket machines or barcode scanners.

Interestingly, despite parking being a low-consideration purchase, it results in a highly stressful customer experience. Due to the emotionally charged nature of parking, customers tend to remember and value positive parking experiences.

For instance, many customers highly value prompt resolution and exceptional customer service when dealing with a negative parking experience. Surprisingly, customer satisfaction scores for challenging situations, like a parking spot being occupied, often receive a 5-star rating when customer service exceeds expectations. In reality, many customers do not anticipate high-quality customer service for their parking experiences.

Plus, these dynamics are quantifiable. The impact on retention due to customer service quality becomes evident by isolating a cohort of commuting customers and observing their behavior over time. For customers acquired in 2022, there is a noticeable relationship between the number of customer service interactions per customer and their value, measured by rental revenue. Chart 3 below illustrates this relationship, suggesting that strong service can significantly influence customer lifetime value over time. Conversely, poor service will adversely affect retention.

Chart 3: Service Cases Per User vs. Price Per Rental/User Index

Conclusion

While consumers often consider the simple trade-off between distance and price when choosing off-street parking, the reality is that a diverse mix of parking use cases demands a strategic alignment of comprehensive marketing tactics, product enhancements, and customer service to meet broader business objectives. ◆

CMO and Chief Commercial Officer | 

Chris Stevens is the CMO and Chief Commercial Officer with SpotHero.