Fueling Loyalty

Apps, gasoline rewards, day-part pricing push customers buttons.

By  Samantha Oller, Senior Editor/Special Projects Coordinator

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As the fuel landscape spins with uncertainty, from a global recession to political upheaval in the Middle East, the onus is falling on petroleum operators to provide either real or perceived deals to soften the blow of sizzling street prices.

Even the savings of a few pennies per gallon can win a motorist’s loyalty. “Fuel rewards have moved the marketplace greater than anything that we’ve been able to measure in our data in 30 years,” says David Portalatin, director of industry analysis for The NPD Group, Port Washington, N.Y. Portalatin backed up the conviction with a consumer study he presented at CSP’s Convenience Retailing University in February.

Historically, 2% of consumers based their most recent gasoline brand purchase on a reward, coupon or discount. That number has spiked to 14%, Portalatin says. “We are starting to see a lot of convenience retailers leverage fuel discounts to drive a lot of traffic,” he says. “And it’s really starting to move the needle in the databases in dramatic ways.”

Retailers are tapping into that decision process through a variety of means, including the on-the-go technology of mobile phones and loyalty programs tied to other retailers.

Toward that end, Norfolk, Va.- based Outsite Networks this month plans to launch a new app, AllPoints Rewards Network, which ties the location-based capabilities of common media sites, such as Facebook and FourSquare, to behavior at the pump and in stores. It will be available for the iPhone, Android and Blackberry systems.

“It’s one thing to sit behind your screen at home and have your Facebook open,” Outsite CEO Anton Bakker says. “But it’s another thing to have your cell phone in hand and you’re driving around town and you’re able to check in and link your behavior to some kind of reward or incentive potential.”

Bakker points out that the app will capitalize on the company’s current 5.3 million RFID loyalty tags that are out there. “So we’re stepping onto the stage with some big shoes,” he says.

Phoning It In

Members who have the RFID cards can download the app through one of the close to 100 retailers that are registered with Outsite. They can see their points, rewards or pending rewards on the app. They also can electronically scan or claim rewards through a bar code that will display on their phone. Even nonmembers can use the app to locate a retailer’s stores and get special deals, potentially driving new customers to the pumps, into the stores and to join the loyalty program as they learn about more benefits. In short, the latest technologies are making loyalty more portable and accessible through a smart phone, while allowing retailers to sync their fuel island and store through promotions.

Add social networking to this, and you potentially expand your customer base without lifting a finger. For instance, when customers see a deal on their phone, they can “shout it out” to let others know via Twitter, FourSquare or Facebook, without leaving the app. Using a GPS location, the app “knows” if the consumer is actually at the location, and it allows them to then redeem the discount.

Reinforcing Portalatin’s price-discounted approach, Kwik Trip Inc., La Crosse, Wis., has been working since July with mobile-phone technology to capture loyalty. The company began testing e-mail, text and smart phone coupons through Brooklyn Park, Minn.-based GasBuddy’s Open- Store platform at 34 sites in the Minneapolis area.

On Mondays, Kwik Trip sends out product coupons valid for two days, and on Thursdays it dispatches fuel coupons good for one week. The company has experimented with text promotions offering discounts of 5 or 7 cents per gallon, which can be used throughout the week. Smartphone coupons have featured “hotter” discounts—$1 to $2 in free gas, for example—and are limited to one use.

The chief aim of the promotions is to increase customer loyalty, as well as draw new customers, with a bump in fuel gallons also welcome, says Brenda Waldera, marketing project manager. She could not say whether the promotions have increased fuel sales; however, one measure of success is the redemption rate, which has reached more than 12% for the smart-phone coupons. Kwik Trip is currently unable to track the redemption of promotions offering cents off per gallon through the POS.

The test, Waldera says, should be complete by the end of April. “So far, we have been getting a lot of good response from [customers], a lot of inquiries of adding their towns to the program from some people who’ve heard about it from radio stations,” she says. “They’ve been calling in, asking, ‘How can we join, and are these good in my area?’ ” Nearly 30,000 customers are participating in the promotions through the 34 sites.

Tried and True

Dallas-based Excentus Corp., provider of the fuelperks! Rewards program, brings c-stores into third-party loyalty programs, giving consumers cents off per gallon as a reward for purchases at grocery stores and other retailers. Although the fuelperks! coalition program has been around since 2008, the company recently added 700 online retailers, providing a 5-centper- gallon discount for every $50 spent at the online mall. Some of the retailers have multipliers. So if there is a 3x multiplier, a customer would save 15 cents per gallon for every $50 purchase at that retailer.

“They’ll watch the price roll down across all the grades of gasoline. That’s the magic moment, and that’s what gets people really excited about it. We’ve had people jump up and down out by the pumps,” says Scott Wetzel, vice president of marketing for Excentus.

Excentus is also unique in that discounts can accumulate to where a consumer might even get his or her gas for free. Excentus has patented its efforts around that (and even fought Safeway for patent infringement).

There are 1,200 gas stations active in the program. Fuel retailers pay a “nominal fee” for redemption transactions, and pay for point-of-sale upgrades to activate the loyalty feature and any marketing of the program tied to their sites, Wetzel says. While he didn’t break down the pricing, he says, “It’s very rare that we have somebody that says, ‘I don’t want to do that because it costs too much,’ on the fuel side.”

Wetzel estimates that c-stores that join the program often see the number of gallons sold go up by 20% to 30% when the program launches. Inside sales typically go up 10% to 20% as well, he says.

The program has 700 online retailers and 700 grocery stores at which consumers can earn discounts. And those numbers are expected to triple by the end of next year, he says, with existing participants such as Winn- Dixie and Buy Lo rolling out the offering marketwide. Excentus is talking to insurance companies, mortgage companies, utility companies, quickserve restaurants, apparel stores and other avenues to enrich the program.

Short-Term yet Long-Term

Sometimes, efforts to spark consumer awareness run for a shorter period of time. Following the Gulf oil spill, which tarnished BP’s image and led to backlash against independent operators, the major-oil company launched a smaller-scale loyalty program, rewarding customers who made five 8-gallon purchases between Dec. 1, 2010, and March 1, 2011.

Those customers then received a $10 gift card during that “Thank You Days” promotion, designed to “recognize and express gratitude toward consumers who have remained loyal to BP, while simultaneously encouraging consumers who have left BP to return,” BP spokesman Scott Dean says.

Results weren’t available at press time, but Dean says the company typically runs an on-site promotion at that time of year. “This year, we felt it was important to provide our branded marketers with a program that all consumers could participate in and receive a reward for that participation,” he says.

He explains that when BP introduces a consumer program or promotion that has been developed to help its branded marketers drive volume, it typically requires a minimum purchase of eight gallons. Frequency programs commonly require four to five purchases.

“We hope that consumers will continue to remain loyal to their local BP sites and support the small-business operators that, in many cases, have served their individual communities for generations,” Dean says.  

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