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Rivalry

Competition Improves Parking Performance

Kevin Warwood

I topped up my truck with diesel the other day. Interestingly, down the road from my house here in New Zealand, there are three separate gas stations on the one intersection.

I pulled into the “yellow” one because we had received a large discount coupon from a friendly supermarket the last time we spent an enormous amount of money there on wine and a little on groceries, or so it seemed. I also use the “green” one to top up my auto-club account with points. If I use the “blue & white” one, I feel better about myself, because a component of the fuel is from bio-diesel, and I am saving the environment.

I don’t use the “blue & red” one that much, but the company says its fuel is more technologically advanced. Finally, there are the little independents that make you feel good about supporting the local business. There aren’t any of these guys around my neighborhood.

I also use a large telecom company to provide my Internet services. I had used two other companies in the past, but through various issues and price changes, I have ended up where I am now. The funny thing is that although I use the current company, each time I changed ISPs, they didn’t move me to a different DSLAM (the hardware that connects me to the Internet in the telephone exchange), I just moved companies. All they did was take the label off the DSLAM and change it to another company’s name. The companies market to me vigorously to come over to them for whatever reason they advertise and provide many different services and prices, but I still use the same hardware. Now, relate this to parking.

All of these service providers are in a huge competitive battle with one another to secure our money and keep us as regular customers. They will use almost any gimmick and marketing tool to gain our favor.

Most of us understand the concept of competition, and how it provides better opportunities for the customer. This is especially true if the market has a lot of participants and the playing field is level enough to allow any new player a shot if its product or service is good enough.

Competitors offer us gadgets, widgets and apps to connect with them and to collect our information, and they lure us in with contests, prizes and other benefits. The result is generally much better services and products and, of course, pressure on price.

So why do we limit competition in parking? You may say, hang on, we have parking companies competing against one another for customers, surely? Well, yes and no. We see that sort of competition between companies fighting for customers’ money, but not as suppliers to the parking companies themselves. The result is higher prices and fewer choices. Let me give you an example.

A parking consultant, I did a review of on-street pay-and-display machines for a city council. I was reviewing them for the type and quality of data I was getting, so I could move the parking operation in the direction I needed it to go in.

I found world-class on-street P-and-D machines that were limited in what information they could give me. I had been used to the off-street equipment that would give you almost any raw data you needed, and then you turned that into the information you needed in the form of reports.

In this case, I was after peak occupancy information. I needed this as the city council had not yet moved to sensor technology, and I needed a less complete but still very important view of the on-street occupancy from these machines.

The work in trying to extract the information actually led me to look at the prices being charged to the council.

I found that the prices it was paying to the service provider was higher than I expected. I did think this was a lot, but the service provider was under a contract and that was the amount the council paid.

I have no issue with paying for the services from these companies because they have their own costs. They also cover counting the meter money and banking the revenue, plus maintenance and repairs as well. They also are entitled to a margin, of course.

This was a fully comprehensive service and one that several cities could use, because the parking operations and related auditing skills are more administrative than operational in nature in those cities. But this wasn’t one of those cities, so the price should have been less.

Pay-and-display machines are designed to act as merely a “portal” to get the revenue from the carpark, through that portal, to the bank account. That’s all, nothing more. The equipment and various related technologies are well-designed and robust, but that portal function is what they are primarily there for – to get the revenue from the carpark to the bank account.

So how do we get competition in the so-called portal market? Most cities and companies have taken the first step but need to move to the second step now.

• First, introduce pay-by-phone or similar technology along with pay-and-display machines. This is where most cities and companies are at. Unfortunately, they don’t promote the pay-by-phone enough in the carpark so customers still go to the old faithful meter.

• Second, remove the meters (or make pay-by-phone as easy to use as meters), and put in two or three different pay-by-phone services in the same carpark to compete against one another.

The rules should allow for competition at all times but not favor any one company or any one piece of equipment. Carparks should have the standard terms and conditions, safety and guidance signage as always, and the service providers could have a single 16.5-by-11.75-inch sign where each machine is placed.

The service providers could put whatever words and instructions they want on the signs. They also could market to the customers however they want in the carpark, within reason. The aim is to give the service providers plenty of opportunity to compete against one another, and the result will be cheaper fees to the city council and better choices to the parking customer.

The city council must retain control over the parking revenue portion of the fee, because this is the tool it must use to control the street occupancy. So as you set up a dynamic parking system to respond to the changes in demand in the city, the customers are being fought over by the service providers through cheaper fees or more services. (The prices can be advertised as parking revenue plus fees, effectively isolating the fees as the piece of the pie that is flexible and competitive.)

Examples of the new parking services might be:

• “Yellow” company – offers discounts to people who park with them on Fridays.

• “Green” company – offers no discounts but has a strong corporate presence and offers services for regular salespeople and travelers.

• “Blue & White” company – offers early-bird discounts.

• “Blue & Red” company – offers deals related to my current auto club membership.

Competition is a good thing, and it can be used in many stages of the parking process to benefit the city council or the company. You should no longer be locked into a service provider contract that is too expensive and doesn’t offer the levels of service to the customers you are targeting.

Get service providers to compete, and let the successful companies win your approval and improve your bottom line.



Kevin Warwood, a Parking Consultant in New Zealand, also blogs at www.parkingithere.blogspot.com. He can be reached at kevin.warwood@gmail.com.

 

Article Abstract from January, 2013




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