STRATEGIC PARTNERS
The surcharge, that is. While its in-store sales got a boost, Dairy Mart didn't get the numbers it needed to cover the costs of its fee-free ATM program.by Ann All, editor
April 16, 2000
Dairy Mart customers are about to find that convenience does, in fact, have a cost. After nearly a year of offering fee-free ATM usage at more than 600 convenience stores in Ohio, Michigan, Pennsylvania, Kentucky, Indiana Tennessee and North Carolina, the Hudson Ohio-based chain is bringing back a surcharge. "We were pleased with the growth of the program, but the No-Fee economics was a hurdle that required more transactions than we attained," said Denny Tewell, Dairy Mart's senior vice president of marketing. To cover the cost of running its ATM program, Dairy Mart needed more than 2,000 transactions per store, according to company spokesperson Betty Yopko. As any deployer with machines in a large number of retail stores can attest, transaction volumes can vary widely from location to location. It's difficult to cover the cost of a machine at low-volume locations -- even when ATM users are charged a fee. The only way to change the economic equation is to lower costs -- by asking merchants to do their own cash replenishment and first-line service, for example. That wasn't an option for Dairy Mart, whose program is managed by Efmark, a Westmont, Ill.-based ISO. Another factor that drove up the cost of the fee-free program was Dairy Mart's high-profile efforts to promote it. Radio and newspaper ads, store signage and billboards -- including one behind home plate at a Cleveland Indians game -- were part of the marketing mix. Transactions spiked when the ads were in heavy rotation, then dropped as ads disappeared. On March 1, Dairy Mart began charging a $1.50 fee at its ATMs in North Carolina and Tennessee, the lowest-volume sites. After examining the program in the remaining five states, Dairy Mart decided to assess a lower fee of 99 cents, beginning on April 1. According to Tewell, the company wanted to offer its customers "a competitive, below industry average fee." "We hope our customers will continue to see the value," Yopko added. Dairy Mart also intends to continue dispensing value-added coupons at the ATM, a service it has been offering since August. The coupons have been well received among customers, Yopko said. "Our redemption rate is amazing."
