Deriving Loyalty From Data

NOCO_S-58_Genesee_1905_hiresScanned data is putting basket-level insights in the hands of decision makers who can turn this information into strategies that drive profitability.

By David Bennett, Senior Editor

A customer’s continuing business is no longer guaranteed. Because of that fact, convenience stores strategize more and more on the need to understand their customers better, and to quickly respond to their wants.

Building brands is about building customer loyalty.

Today, loyalty programs are helping c-stores in that aim, providing important data on customer preferences and buying trends. Capturing scanned data in real time and having the ability to analyze it quickly requires good planning and modern technology.

But today, customers and prospective customers want to interact with retailers on their terms, experts say. With such understanding comes the ability to interact with customers in a market, using channels, such as direct marketing, coupons, social media and product promotions.

NOCO Express, a family-owned and operated gasoline convenience store chain headquartered in Tonawanda, N.Y., uses as a centerpiece of its on-site marketing, the Friends & Family Club, which offers “rewards” including free merchandise, surprise and delight specials, birthday and “members only” specials.

Mike Newman, executive vice president of parent NOCO Energy Corp., said building a strong relationship with its customers is more important than ever, and loyalty programs offer an opportunity to reward, recognize and engage them. As a result, NOCO Express is tweaking its successful loyalty program to wring more pertinent data, so the chain can better engage patrons, including mobile wallet technology.

“With new technology, we’re looking at being able to pay at the pump with a phone,” Newman said. “Also, we can communicate with customers more dynamically as they walk in, and our database picks up that this is a phone number of a Friends & Family Club customer. We message them ‘while you’re here, don’t forget to buy this,’ or ‘we can give you a discount on this.’ The technology platforms haven’t gotten so much better than what we were working with.”

NOCO is also looking at expanding its loyalty program to include Bronze and Gold categories. Customers applying for the gold status provide more information, but obtain more perks. In turn, the information gleaned will enable NOCO to interpret customer preferences, and ultimately, respond to purchasing patterns and engage patrons more.
“We like to invite them into our world,” Newman said. “Help us design stores, merchandise stores, providing information about healthy products they like, or maybe they see something in another city and ask us to carry it. That’s the engagement we’re really hoping to achieve. That’s a conversation.”

Traffic to convenience stores decreased by 3.5% in the first three months of 2014, compared to same period last year.

Those who did visit convenience stores in the winter purchased slightly more (1.4 percentage points) fuel and products compared to the same period last year, according to NPD’s Convenience Store Monitor.

Loyalty was also a benefactor of the severe winter weather, which discouraged consumers from making multiple stops. In the first quarter of 2014, 9% of consumers chose c-store chains because of a rewards or loyalty program, a two percentage points increase over same quarter last year.

Given different scenarios, loyalty holds value for retailers. The question is: can retailers take advantage of it? Emily Collins is an analyst with Forrester Research who specializes in customer loyalty programs, with an emphasis on trends, technologies, services and analytics.

Collins said connecting with customers isn’t as easy today as a couple of decades ago, because the customer base has evolved. As a result, there’s a shift in focus from the basic idea that loyalty is all about transactions and discounts. In the future, it needs to be more about engagement, as NOCO is striving for.

“Today, consumers are ultra-connected and empowered,” Collins said. “They demand more control over the interactions they have with brands, have less patience for traditional marketing, have an incredible amount of choice when it comes to purchases, and can find the cheapest prices from suppliers all over the world. As such, customer relationships and loyalty are the only remaining competitive sources of advantage. Loyalty is more important than ever in the ‘Age of the Customer.’”

That said, loyalty programs are a good investment, if the data is put to good use.

“Capturing transaction data, or scan data, helps convenience stores uncover customer purchase patterns and shopping behavior,” Collins said. “They can begin to unpack customer baskets to understand what categories and products they purchase, where they buy them, how much they spend, and even how they pay. With that information, convenience stores can use analytics to more effectively merchandise their stores, target promotions and predict future customer behavior.”

At the beginning of this year, 382 c-store food and beverage shoppers participated in a nationwide, online exercise to develop an “ideal c-store loyalty program.” The qualitative study was conducted by the General Mills Convenience & Foodservice division. The findings showed the industry lagged behind other retail channels.

According to the study, 89% currently participate in some type of loyalty/reward program across a variety of channels and categories including: 64% participate in a grocery loyalty program; 52% participate in a drugstore/pharmacy loyalty program and; 35% shoppers participate in a convenience store or gas station loyalty program.

“It’s not just about products purchased. (Retailers) should also be looking at what else is in the basket, when/where customers are making purchases, etc. And, if you are able to combine that with qualitative data, demographic data, psychographic data, or implicit data like offer responses, you can build an even richer customer profile,” Collins said. “You can start to understand why customers are shopping, how they respond or not to the offers you are sending, and plan how to expand and improve the relationship and better meet customer needs.”

Tony Huppert, co-owner of Team Oil Travel Center, said his Spring Valley, Wis.-based operation doesn’t promote a specific loyalty program. Rather Team Oil specializes in personalized customer service. The travel center, located off the highway, offers free water to travelers and provides free RV overnight parking sites, complete with water and electricity.

“The Team Oil Inc. philosophy is to treat every customer like they are a new customer every time they walk in the door,” Huppert said. “Retailers have a tendency to get complacent. As soon as you start treating your customers with anything less than the excitement you would show a new customer you have the chance of losing that customer.”

With more than 150 paved parking stalls and acres of green space, Team Oil Travel Center averages 650 customers a day and generates more than $4 million in gross sales annually. Along with a full convenience store and a BP gas station, the travel center offers a liquor store, car wash, RV parking area, Subway and a fully staffed WESTconsin Credit Union.
Good customer service, Huppert said, has always been a mainstay in maintaining loyal customers.

“Everyone wants and needs a moment of feeling important, even if it’s just for a few seconds during their visit to your store,” he said.


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