View From the Top: Certified Oil’s Leadership Team
If experience is an accurate indicator of a company’s success, Certified Oil has a bright future. Three members of the company’s senior leadership team have been with the company for more than 30 years, and several others have major oil, grocery and management consulting backgrounds. The leadership includes:
•Peter Lacaillade, President and CEO. The son-in-law of company founder Carlyle Baker has been with the company for 12 years. He was formerly with Paine Webber.
•Greg Ehrlich, Chief Operating Officer. Ehrlich joined Certified Oil in 2007 after serving as a management consultant with A.T. Kearney and vice president of operations with Massachusetts-based Best Petroleum.
•Dave Hogan, Chief Financial Officer. Among the longest tenured company employees, Hogan has been with Certified for the past 34 years.
•Keith Cheney, Regional Vice President. Cheney is one of several members of the management team with 30 years at Certified.
•Gregg Edwards, Regional Vice President. Four years with Certified after honing his skills at Sunoco and Crown Petroleum.
•Tom Bell, Vice President of IT. Oversaw all retail technology upgrades in the prototype and the implementation of Certified’s loyalty program. Like Cheney, has been with the company for 30 years.
•Wayne Wills, Merchandising Director. Wills has spent the last 10 years with Certified after gaining valuable experience at K-Mart and Big Bear Grocery Stores.
Few 70-year old oil companies fly below the radar these days. But with 141 company-operated and dealer stores spread across three states, Certified Oil may well be the biggest oil company you’ve never heard of. That will all change as the Columbus, Ohio marketer moves forward with aggressive—and impressive—retail upgrades.
After several years of planning, the changes are coming fast and furious. Last month, Certified opened the doors to its retail prototype in Chillicothe, Ohio, a spacious 3,200-square-foot store that features eye-catching red and blue colors, strong in-store programs and graphics, state-of-the art lighting and an equally attractive forecourt befitting a flagship store.
Several months earlier, the chain rolled out its Certified Savings loyalty program that features rewards and discounts for repeat customers. Both of these offerings are supported with progressive marketing programs that range from ACH debit card discounts on fuel and special discounts for customers that sign up to receive company text messages and emails to club rewards that allow customers to earn free products after a set number of purchases.
The company’s long history dates back to 1939 when founder Carlyle Baker opened his first gas station. It wasn’t until the mid-1980’s that Certified started developing traditional convenience stores. Upon his death in 1998, Baker’s son-in-law Peter Lacaillade took the reigns as president and CEO. Under his command, Certified began evaluating the company’s entire portfolio in order to move forward with a plan that would provide long-term sustainability.
“Certified has always been a very conservative company and we have been able to finance growth through positive cash flow and no debt,” Lacaillade said. “Over the past 12 years, we have focused on closing the stations that didn’t have the space for a good convenience store and put our money and effort to upgrading properties with this new image and rebuilding our brand.”
In addition to its retail operations and proprietary Certified gasoline brand, the company maintains a strong jobber business distributing Sunoco, Marathon, Valero and Clark fuels.
Building a Brand
As part of that rebuilding process, Lacaillade brought in Greg Ehrlich as chief operating officer. Together with a senior leadership team that includes three veterans with more than 30 years experience at Certified—Dave Hogan, chief financial officer; Keith Cheney, regional vice president; and Tom Bell, vice president of Information Technology—the oil company set out to create something special.
“When I joined in 2007, the company, from a real estate perspective, was in good shape, but it needed to be taken to the next level,” Ehrlich said. “The initial two keys we identified to get there were creating a great new retail image and developing a loyalty program.”
And creating something new is exactly what it did. The prototype is a complete departure from anything Certified has offered customers in the past. It starts with the view from the road. Certified had a lot of brand awareness in the past, but the presentation of the brand was inconsistent.
Just as important, Ehrlich noted, was the owner’s willingness to dip into the company coffers to execute a fresh retail strategy.
For his part, Lacaillade sensed the company was at a crossroads and needed to take the next step. “We like where we are positioned in the gasoline and convenience store business. We have good locations, attractive stores and a loyalty program that will help us compete, so the time is right to continue growing the business with a consistent image throughout the network.”
The development of Certified’s prototype was truly a team effort beginning with finding the right design firm. Ehrlich and his team interviewed eight designers from across the country that could mold its grandiose ideas into a cost-effective retail image that would transform the company into a stronger regional player to more effectively compete with the likes of Sheetz, Giant Eagle and Kroger. After several rounds of interviews, the company found what it needed in its own backyard with Columbus-based Integrate Inc.
Integrate’s close proximity was a major plus during the many rounds of brainstorming meetings needed to complete the blueprints. One of the key elements that tipped the scale in the design firm’s favor was its plan for a cost-effective rollback design that is being used to retrofit existing stores where a raze and rebuild is not warranted.
As the design process began, the only thing that was sacred was the company’s red and blue colors and the Certified brand. Everything else was open for debate. Ehrlich praised Integrate for bringing a fresh voice and described meetings with designers as “brutally honest, but necessary to get us on track.”
Among the features of the prototype are dramatically improved lighting and signage with strong visibility from the surrounding roads, a unique rectangular brand sign promoting the Certified banner and 14-foot glass windows with a clear view inside the store. Plus, a scrolling LED reader board sign allows the company to communicate special offerings directly to motorists without them having to enter the store, a strategy employed for years by drug store chains like Walgreens and CVS.
“Previously, we were positioned as a discount gasoline retailer and since there wasn’t a lot of oversight of dealer locations, every store looked different and the offering certainly wasn’t consistent,” Ehrlich said. “Now the chain is positioned as a more upscale retailer, and we don’t have to compete with the lowest end of the market for sales.”
With the bright colors, open airy lot and state-of-the art lighting, the unit seems to take on the look and feel of an upscale shopping center, which is just the look Ehrlich was aiming for. “Over the years we built new stores and put someone else’s sign at the fuel island and our product suppliers’ signs and logos throughout our store interiors. In the new store, we wanted something that was distinctly Certified,” he said.
Design of the Times
Prototype aside, Certified’s reimaging efforts first hit the street last year as part of a multimillion-dollar redesign of its existing convenience store and petroleum network. The reimaging project saw 20 of its company-operated stores upgraded through 2009, and it plans to renovate as many as 25 more by the end of 2011. The company also has a selective process to evaluate each location to determine if the site is appropriate for a complete raze and rebuild or a redesign.
Of the 141 Certified locations, only the 80 company-owned and operated units are eligible for rebranding or a rebuild. There are no plans to offer the design to dealer-operated sites at this juncture, Ehrlich said, although there has been significant interest.
The reimaging campaign, like the prototype, presents a more cohesive image to consumers, creating a consistent look that is immediately recognizable from one location to the next, Ehrlich said. In addition, the new design creates a warm, inviting environment to appeal to female shoppers—a consumer group that has historically eluded convenience stores.
Getting a distinct look that met its needs in both the prototype and retrofits proved to be a challenge. “When we rolled out the first redesign last October, Peter saw it and wasn’t satisfied,” Ehrlich said. “He wanted a canopy that was more vibrant, so we went back to the drawing board to make it more distinct. It’s nice to have an owner that has flexibility, but is also willing to increase funding to get the right image, and what he wanted proved to be a great improvement.”
Inside the store, Certified also distinguishes itself with a host of unique features ranging from its proprietary Carlyle’s Cup coffee program and attractive front counter display to a new pricing strategy that leverages technology to help the company maximize sales volume and margins.
“This new store provides us with an opportunity to expand our foodservice selection beyond what we have typically done,” said Gregg Edwards, a regional vice president. “We have added an expanded roller grill program, breakfast sandwiches, pizza, milkshakes and an open air cooler for sandwiches and salads. Going forward, we will continue to try new products to find what works best for customers.”
While the new apperance gives customers something nice to look at, it doesn’t give them an incentive to visit more often. That’s where the Certified loyalty program comes into play. The new program is a three-level system:
Level 1: Includes product discounts and automatic entry into club programs where customers buy a designated quantity of a product, such as a cup of coffee, with an eventual free purchase. Level 1 customers also earn points on purchases with redemption options that includes gas discounts. Five points are awarded for each gallon purchased and 10 points for every dollar spent in-store, excluding age-restricted items like beer, tobacco and lottery.
Level 2: Includes all Level 1 benefits, but Level 2 cardholders are also provided an option of receiving two cents off per gallon of gas for enrolling in Automated Clearing House (ACH) payment. The ACH debit payment plan allows the cardholder to transfer funds by authorizing Certified to electronically withdraw funds from the cardholder’s checking account.
Level 3: Includes all Level 1 benefits, but cardholders get a three-cent per gallon discount for using cash.
The program, developed in partnership with VCMG, allows the company to modify cardholder benefits by store, customer, products and even day of the week. “The possibilities and combinations for customization are endless,” said Bell, Certified’s vice president of IT.
The loyalty offering also includes a merchant coalition program where non-competitive merchants, such as movie theaters, will allow Certified Savings cardholders to purchase services and products at reduced prices.
Bell and Ehrlich described loyalty as “absolutely essential in central Ohio” where companies like Speedway SuperAmerica and Sheetz have thriving rewards programs.
“To compete in this business you have to offer a rewards program,” Ehrlich said. “Loyalty does two things: it maintains a customer base and allows you to interact with customers in a way that you could not do with out the technology. It is not necessarily something that will grow the business or serve as a customer acquisition strategy, but is more about customer retention. In partnership with advertising, the right product mix and store promotions, you can grow volume and maintain that business.”
Aside from the uptick in sales, Bell believes loyalty will provide an avalanche of data that improves its ability to target consumers. “At the beginning of my career, management would wait for monthly reports to see how the stores were doing. Thirty years later if the information is a few hours old we look at it as outdated,” he said. “We are continually researching better ways to mine the data we capture to give everyone the most current and useful information possible.”