Current loyalty programs provide a good foundation, but in order for a convenience retailer to garner brand affinity with its customers, a mix of the old and new may be required.
By Mark Radosevich
The early days of my petroleum career involved extensive retail marketing for a major oil company during the advent of the industry’s official embrace of the convenience store concept. Although they had been around for many years, the widespread convergence of the store to gasoline was just beginning.
By the early 1980s, the majors finally realized that the “c-store” phenomenon wasn’t a passing fad. The days of the multi-bay service station were over and various “Shop” or “Mart” incarnations began to emerge. My firm was responsible for the transformation of a 2,500 store chain spread across 22 countries, speaking four different languages.
What fun it was informing hundreds of long-time service station dealers that their stations were slated for a raze and rebuild and that they now had to focus on selling snacks and cigarettes versus oil changes and the sale of tires, batteries and accessories (TBA). But that’s a subject for another article.
IN THE BEGINNING
Our marketing responsibilities began with modularizing and then training in a standard grand opening process to the marketing teams in each country, and then extended to an aggressive quarterly promotional calendar focused on the forecourt. Being fuel-centric since the advent of the automobile, our marketing programs focused on increasing fuel volume, a new fuel additive, packaged motor oil (inside the store) and sometimes fountain and roller grill features.
The store side of the business was usually an afterthought. When considering the current state of forecourt marketing, it’s enlightening to look back at some of these promotional concepts and the high level of customer engagement and sales results that they generated.
Back then, marketing on the forecourt featured concepts such as “Scratch-Off, Instant Win Games” with prizes awarded in the store; “Grand Prize Sweepstakes” that tied-in with cruise lines, local quick service restaurant chains or vacation destinations. “Self-Liquidations” and “Free Offer” promotions usually generated tremendous motorist participation.
A free glassware promotion that featured imprinted images of the oil company’s feline mascot moved millions of glasses and increased fuel sales by 25% during each promotion period. Most of the sales increases came at the expense of our competitors and temporarily disrupted the brand loyalty that they enjoyed with their customers.
These types of marketing activities are generally a thing of the past. Today with the advent of the internet, social media and mobile devices; forecourt marketing relies upon various manifestations of digital concepts with the objective of creating higher levels of motorist engagement.
Initially embraced by one or two major oil companies in an effort to tangibly demonstrate brand value and continued relevance against sophisticated unbranded store operators, an entire loyalty industry has blossomed. A brief walk around the recent Upper Midwest Convenience and Energy show in St. Paul, Minn. uncovered numerous distinct vendors, each offering a unique loyalty program approach.
Loyalty has become as important an operational feature as fuel dispenser card readers or quality foodservice programs for small to mid-sized store operators to profitably compete in the market today. Given the clutter of so many branded and unbranded programs, the ability to increase new customers through a specific program is questionable. The best a store operator can expect may be for their loyalty program to help maintain a customer base and prevent competitive poaching.
The initial objective of these programs is to build brand loyalty, whereby a customer will only purchase products from one brand or retail chain over all others. Once brand loyalty is achieved, the next objective is to move the customer to a higher level of engagement: brand affinity.
At this level, the customer enjoys a personal, emotional relationship with the business, making it much more difficult for a competitor to break. A customer with brand affinity believes a particular store or chain is inherently superior because of the personal connection and bond that they have with it.
During the research for this column, I interviewed several branded marketers and discovered that most quality store operators tend to embrace up to three separate types of loyalty concepts:
• National Loyalty: Oil company sponsored programs that encompass a specific fuel brand and include other third-party sponsor businesses. Earned points from purchases at the various participating sponsors enable fuel price rollbacks at participating c-stores.
One of the marketers that I interviewed stated that his program was now enjoying double-digit levels of customer engagement, whereby 10% or 12% of customers were regularly participating in the program. A program vendor confirmed that this level of engagement is typical across the industry.
That still leaves a vast untapped majority on the sidelines, either because they haven’t yet enrolled or because they aren’t active in social media and may never be adequately engaged.
• Internal Loyalty: Programs that provide rewards for store purchases made within the marketer’s c-store chain. Points are then accumulated for fuel price rollbacks or discounts in the store.
• Fuel Debit: Programs that enable a motorist to garner regular fuel price discounts by using a marketer’s proprietary fuel card. Once enrolled, the card is swiped at the pump and the price is automatically rolled back and the customer’s checking account is debited for the purchase. Fuel discounts tend to run between seven and 10 cents per gallon.
A promotional card—provided to me by Tommy Hunt, president of Calloway Oil Co., based in Maryville, Tenn.—illustrates to customers the “Three Ways to Save” program that the company currently features at its 22-store E-Z Stop Food Mart chain. It also captures all three loyalty concepts (see the E-Z Stop card, page 56) in a comprehensive format.
Looking forward, it seems certain that forecourt loyalty programs are here to stay. Stopping them would be as difficult as an airline trying to unwind its frequent flyer mileage program. The challenge is to discover ways to capture a wider level of motorist engagement. The current reliance on social media, mobile devices and the internet motivates a limited customer demographic.
Proactive retail marketers should consider employing some successful marketing concepts of the past and integrate them into their annual forecourt marketing calendars. This will help engage a wider range of customers and add some fun, excitement and differentiation from competitive brands and programs.
Possessing 35 years of downstream petroleum experience, Mark Radosevich is the president of PetroActive Real Estate Services LLC, offering confidential mergers & acquisition representation and financing services exclusively to petroleum wholesalers. Mark can be reached by email at [email protected] and directly by phone at (423) 442-1327, web address www.petroactive.net.