With gas prices again on the rise, consumers are pumped about loyalty programs that offer discounts on gasoline.
By Pat Pape, Contributing Editor.
Today’s competitive retailing environment makes it tough to attract and keep customers, so convenience stores are turning to loyalty programs that allow the faithful to earn points as they shop and redeem them later for discounts and freebees.
Because so many different businesses—from airlines and hotels to grocery and convenience stores—offer loyalty programs, some critics claim they are commonplace and losing their value as customers become jaded to the multitude of offerings.
But that doesn’t seem to be true with programs that help consumers gain a smidgeon of control over fluctuating fuel prices. In fact, programs that give a few pennies off per gallon seem to attract customers and keep them swiping loyalty cards at the register and the pump.
Frequent Fuel Customers
Flash Foods, with more than 170 stores in Georgia and Florida, has seen its original loyalty program morph over the years to better meet the needs of customers and the operation.
According to Jenny Bullard, chief information officer for Flash Foods, the company has experimented with coalition loyalty programs, which typically combine offers from two or more businesses. While coalition programs are designed to split the program’s risks and requirements among the partners, Flash Foods management felt a proprietary program would better meet company objectives and enhance the brand while rewarding repeat customers.
“So we introduced a new functionality to our Rewards in a Flash loyalty program that we call Flash Cash,” Bullard said. “Customers earn two cents for every dollar spent inside our store, excluding lottery and fuel. That accrues for them, and every time they use their loyalty card they get a receipt that tells them how much Flash Cash they have. Or they can go online to our Website and check their balance.”
Flash Cash may be used to purchase anything in the store, including fuel and lottery, and it has become a valued program. “I’ve been in stores on inspections and customers have said, ‘Oh, I love Flash Cash. I’m saving it up so I can fill up my tank,’” Bullard said. “We feel like we’re giving them back money on what they spend with us.”
Back Office Management
Loyalty programs like Flash Cash would be impossible to administer without sophisticated technology. Flash Foods relies on software purchased from Pinnacle Corp., the Arlington, Texas-based company that develops retailing and fuel management technology. “A lot of retailers use it,” said Bullard. “It has been very successful for us.”
Flash Foods purchased the software and adapted its “redemption on demand” application to create Flash Cash.
The original program required customers to come inside the store to receive their fuel discount. “We could have rolled back the pump, but we preferred that the customer come inside. While they were there, perhaps they’d spend other money with us,” Bullard said. Soon, management noticed that many loyalty customers used credit cards to pay for fuel, adding credit card interchange fees to the low-margin sale that had just been discounted.
To resolve that issue, the stores introduced a second fuel discount program dubbed Go Blue. The centerpiece is a proprietary Automated Clearing House (ACH) payment card that guarantees shoppers a per-gallon discount at the pump. It is also managed with Pinnacle software.
To join the program, customers simply visit the Flash Foods Website, which explains the program, and if they chose to sign up, they click a link that takes them to a secure banking site. Customers then share their banking information and email address in order to create a Go Blue account.
“You do have to educate the customer because they think, ‘I’m giving my banking info to Flash Foods’ and that’s not the case,” Bullard said. “They’re using a secure ACH processor Website.”
Go Blue customers simply swipe the card at the pump, input a personal identification number and watch as the pump rolls back the price. “It works like an electronic check,” she said. “The customer receives a receipt at the pump and within an hour gets an email receipt telling what store they visited, how many gallons they pumped and how much will be debited from their checking account. Once customers get signed up, they’re excited.”
Plugging Go Blue
Flash Foods recently changed the Go Blue fuel discount program to make it even more appealing. “In May of last year we were offering a five-cent-per-gallon discount at the pump,” Bullard said. “In June this year we went to 10 cents per gallon.”
The chain planned to run the promotion for a month, but customer response was so positive it was extended until October. “Our target is to get customers to use Go Blue at our locations instead of credit cards or another debit card,” she said. “We save the credit and debit interchange fee, and we give customers what we would have paid. The result creates loyalty and Flash Foods brand awareness with customers.”
Educating customers is crucial to the success of any loyalty program. Flash Foods touts Go Blue on Facebook and on the company’s Website. Signage is posted and brochures are available in each store. Live radio remotes have helped draw local consumers to the stores where the program is explained. “The marketing department has one employee who goes into stores on a daily basis, talking to customers about the program and signing them up on site,” Bullard said.
If a customer has issues using the card, Flash Foods has a 24-hour, seven-days-a-week telephone help line to provide immediate assistance.
This fall, Spinx convenience stores will launch its own loyalty program dubbed Spinx Xtras, a debit-style card that gives customers fuel discounts and lets them earn rewards that can be used to purchase merchandise in or outside the convenience store.
The Greenville, S.C., chain tested the program with company employees and will roll it out in two phases, said Chris Dillard, loyalty marketing manager for Spinx, which operates 67 stores. “We want to combat the super high interchange fees that are killing the convenience store industry,” he said. “We want a way to try to save that and pass it on to our customer.”
For Spinx Xtras, the method of payment is provided by National Payment Card Association, a Florida-based source of branded debit cards. Additional technology comes from Excentus, a Dallas loyalty program developer.
Creating the program was a learning experience. “There are not a lot of case studies in the c-store industry that divulge information (about loyalty programs),” Dillard said. “We think we have a good go-to-market strategy. Of course, we hope everything will be smooth and flawless and customers will accept it. But it will take some customer training and education because it’s definitely going to be something new in our marketplace.”
He expects that radio and TV spots, as well as in-store materials, will be used to promote the program.
Dillard believes a loyalty program with a fuel discount provides value for customers and will keep them coming back. “We feel that in order to be competitive we need to be there,” he said. “And we think that as more (convenience stores) get in on the program and see results, it will set a standard. These programs give you the opportunity to build incremental sales, build loyalty and provide a discount at retail for your customers.”