Loyalty is a Retail Game-Changer for Oil Companies

phillipsMarketers like Phillips 66 are driving repeat business and cultivating loyal customers through participation in the KickBack Rewards program.

By John Lofstock, Editor

Difficult economic times are forcing customers to take a hard look at where they can tighten their belts and how they can stretch their hard-earned dollars. To meet their expectations, retailers are offering more digital coupons and in-store promotion redemptions as consumers look to save on a range of items like food, snacks and other household products. Also, gas rewards are another means in which consumers are demonstrating frugality, prompting the gas-centered convenience industry to act accordingly.

Convenience store and petroleum marketers who have already invested in a rewards program are gaining an edge on competitors who are still waiting to take the leap into loyalty.
The opportunity has its rewards. The Convenience Consumer Insights Panel (cciPanel), a partnership between MSA and Paradigm Sample, found that 89% of today’s busy customers would be motivated to shop more at these stores that participate in these programs. Furthermore, where gas operators offer programs so shoppers can earn rewards when they fill up on gas to get a discount to redeem at a partnering retail outlet, three-quarters reported that they would definitely or probably make these gas stations and convenience stores their regular station to fill up.

The higher per gallon discounts achieved, the more that the shopper spends, improving the overall dollar ring at checkout for the retailer.
Phillips 66 has been a leader in driving rewards for its branded marketers. Among the biggest commitments Phillips 66 has made is its investment in a growing loyalty program by launching the KickBack Points Program at its branded sites in 2011.

The company recognized that loyalty programs are increasingly influencing where consumers purchase fuel, how much they spend and which brands they purchase. To assist Phillips 66, 76 and Conoco-branded retailers in their efforts to drive sales and grow customer visits, Phillips 66 selected the KickBack Points Program to strengthen brand loyalty across its network.

Driving New Business
KickBack’s innovative solutions are currently deployed in more than 900 Phillips 66, 76 and Conoco-branded sites with another 300 sites scheduled to come on line in the second half of 2014. KickBack’s approach to loyalty marketing quickly provided results for these stores which included increased customer visits, higher ticket averages and incremental sales growth.

Furthermore, when this loyalty sales data is collected and analyzed, it can yield analytics and metrics to provide a better understanding of customer shopping habits.
New research from Loyalty 360, a loyalty marketer’s association, indicates that when brands don’t connect customer data with marketing efforts, the results are “inconsistent engagement that leads to lost opportunities, diminished results, eroded margins and fleeting brand value…engendering a loyalty divide.”

Consumers demand better, authentic connections based on value and brands must deliver. Savvy marketers blend data from multiple sources to provide customer engagement that is authentic, relevant and consistent to the brand, nurturing comfort, familiarity, safety and trust, thus increasing loyalty with their customers.
Before partnering with KickBack, the Phillips team began examining these options very closely to ensure it was choosing the partner that offered the greatest chance at impacting positive long-term results.”

“We liked the fact that the KickBack Points Program was developed by a petroleum retailer so it is a loyalty program that was really designed with the retailer in mind. We also like the fact that the program was designed as a coalition program, which has proven to be the most successful model in other countries around the world,” said Mike Krampf, manager of brand sales, West Coast, for Phillips 66. “And finally, we liked the fact that the program captures consumer information, which allows our retailers and Phillips 66 to have targeted offers and promotions, which will allow the right offer to be delivered to the right person at the right time. That is the power of data and that is why companies like Netflix and Amazon are winning today—they have figured out how to turn consumer data into increased sales.”

Partnering for Perfection
While marketers collect customer data from many sources, Loyalty 360’s research found that a lack of coordination and integration widens the divide between the loyalty that companies want and the potential loyalty that customers give.

To avoid this pitfall, Phillips is working together with KickBack to achieve a common goal, which is to have powerful tools that improve its marketing to consumers.
Using KickBack’s analytics, Phillips 66, 76 and Conoco-branded retailers are gaining operational advantages, such as learning when their customers shop and what they are most likely to buy.

Just as important, retailers are learning about price elasticity, where they can identify what prices customers are willing to pay for specific items, so it’s a margin management tool in addition to a loyalty program, said Mike O’Connor, manager of programs and brand image for Phillips 66.

More than 80% of the KickBack Points earned by customers are redeemed inside the store, so the program has been effective at driving customers from the pumps into the store.
Converting customers into the store is major plus for fuel marketers. Loyalty marketing, when deployed correctly, can increase the rate of conversion from the pumps into the store exponentially.

Loyalty 360 reported that the savvy marketers who are investing in data analysis that yields the deep segmentation and audience targeting necessary to recognize valuable behaviors when customers will pay a premium for some things, and on other items, won’t budge on price. Understanding the wide variety of audience attitudes and preferences reveals opportunities for brands to understand and act upon these differences in price elasticity.

For convenience store and petroleum marketers, this is a new frontier that offers a whole new opportunity for profitability and incremental sales growth. Plus, it slowly changes the customers’ shopping behavior so that they become loyal to one store over another, creating additional competitive advantages.

The bottom line is that in this digital age of empowered consumers, companies can’t afford not to have multidimensional insights into their customers’ habits and buying behaviors. Rewarding them for their loyalty brings you one step closer to capitalizing on a crucial opportunity.

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