The following article is re-published from CSP Daily News and features commentary from W. Capra Executive Consultant, Ed Collupy, and W. Capra Partner, Mike Streams.
A new survey reveals the great potential for fuel retailers to capture more market share
What price loyalty? For fuel retailers, capturing customers’ repeat business at a time when brand carries little weight has often meant offering the lowest price—not a margin-friendly tactic in the long term. Loyalty programs have enormous potential to transform the commoditized gasoline business, but they’re influencing only a minority of fuel customers’ purchasing decisions.
A recent survey puts this gulf of opportunity in stark relief. In February 2017, GasBuddy surveyed nearly 11,000 users of its fuel-price information app to understand what drives their participation in fuel loyalty programs. These consumers are fuel-focused, not only buying it frequently but also tuned in to their options, because they use the app to guide them to the gas station with the lowest price.
That said, nearly half of GasBuddy users (46%) do not belong to a fuel-related loyalty program.
“When I think about it in context of who GasBuddies are, it’s definitely surprising,” says Ed Collupy, executive consultant with W. Capra Consulting Group, Chicago. “They’re passionate about fuel and fuel pricing in particular. … That shows the overall complexity in loyalty programs in terms of getting consumers to sign up for it.”
The GasBuddy survey, shared exclusively with CSP, reveals the great potential for fuel retailers to create a winning loyalty program and capture more market share during a time of slowly eroding demand. It also highlights areas where the c-store industry’s current offers have opportunity to improve and better deliver on the convenience promise.
Or, as the analysts behind the GasBuddy survey observed: “Brand loyalty does not exist yet; loyalty programs have yet to create it.”
Driving sign-up
A few key features are likely to trigger a consumer’s loyalty-program sign-up, according to the GasBuddy survey.
More than three-quarters of respondents who were not participating in a fuel-loyalty program said a higher reward for participating would incent them to join, suggesting current offers are not delivering a big enough payback.
“Consciously or unconsciously, consumers are recognizing that margins on the forecourt in particular are thin,” says Mike Streams, partner with W. Capra. “Therefore, the amount of value that’s available to be put back into play from a loyalty perspective is relatively thin, and maybe not leading into something compelling.”
Besides meager rewards, he also suspects another issue is at play in the relatively low loyalty participation rate among GasBuddy members: poor on-site execution by the fuel retailer.
“Consumers may not be picking up that welcome kit, may not be paying attention to pumptoppers, and if the associates aren’t reinforcing it, the consumers aren’t being engaged,” he says.
The third and fourth most popular incentives to sign up for a loyalty program were tied to greater convenience: ease of use (36.0%) and the availability of more convenient fueling locations (35.9%).
Consumers’ interest in an easy-to-use offer suggests the potential of mobile-based loyalty programs, whether through an app or integrated into a mobile wallet such as Apple Wallet. But meeting this desire is not necessarily straightforward, Collupy says.
“The life of an app on a typical consumer’s mobile device is not that long,” he says. “An app can help but it isn’t going to be the sole thing that puts a loyalty program over the top. You’ve got to create loyalty in many ways, not just with a card program.”
Fan or freak?
Of GasBuddy members who do participate in a fuel-based loyalty program, most are highly active, with 90% using it at least once a month and 55% using it weekly.
“Since most people fill up their tanks once a week, these results depict strong consumer loyalty,” according to GasBuddy analysts. Case in point: Eighty-five percent of the consumers said they were very or somewhat influenced on where to fill up by their loyalty membership.
The most commonly used loyalty program was Speedway LLC’s Speedy Rewards. Its high ranking—above national major-oil brands such as Shell and BP—belies the Enon, Ohio-based Speedway’s relatively smaller 23-state footprint.
Collupy says this reflects how engaged Speedway employees are in selling the program, something he saw firsthand when observing the chain’s conversion of sites from its 2014 Hess acquisition.
“The cashier and employees got engaged with it, and they had in-store mechanisms to help with their [sign-up] kiosks, to engage even further in the process,” he says. “They put a lot of resources behind the program in terms of people and with technology.”
“Speedway also is successful at providing moments of ‘surprise and delight,’ ” something it has in common with top-ranked regional brands Sheetz and Thorntons, according to GasBuddy analysts.
The MySheetz Card loyalty program offers three tiers of membership—fan, friend and freak—each determined by how many points the user has earned. While all tiers receive a 3-cent-per-gallon discount on fuel purchases, freak-level members get to enjoy “surprise and delight” types of events such as the ability to try new items for free and invitations to special events.
Thorntons Inc.’s Refreshing Rewards program is also points-based and mobile-driven, offering special fuel pricing and surprise cents-off-per-gallon rewards the more the customer uses it.
Among national brands, Shell is the clear leader, with its Shell Fuel Rewards program used by more than 27% of survey respondents. Like Speedway, its mobile app is five-star-rated, showing how a well-designed user experience in the app can ease loyalty-program engagement, GasBuddy analysts say.
Shell—as well as ExxonMobil via its partnership with Plenti—offers coalition-based fuel-loyalty programs, wherein a purchase at a participating retailer can earn the customer cents-per-gallon savings at a branded fuel site. ExxonMobil, which ranked third among national brands, also offers Speedpass contactless payment, another element that aims to make fueling convenient.
BP, ranking second among national brands, offers the BP Driver Rewards loyalty program, which is linked to the customer’s preferred payment card, providing an additional element of choice.
The Ideal Program
The survey results sketch out the outlines of an ideal fuel-loyalty program, according to GasBuddy analysts. They include:
Choice. Choice can be delivered by integrating the fuel-loyalty program to a payment card network, such as BP’s Driver Rewards.
Convenience. The ideal program would avoid special passcodes, key fobs, multiple procedures or special rules for participating.
Truly rewarding. The program should give members plenty of opportunity to earn and use rewards, and surprise and delight them every now and then.
If you are interested in learning more about how to optimize your fuel loyalty program, contact Ed and Mike and visit wcapra.com.