Beating the Odds: Why rewards programs with fuel savings currency are thriving

Offer rewards and benefits that attract customers and keep them engaged.

When it comes to the components of a well-structured loyalty program, it’s important to offer rewards and benefits that attract customers and keep them engaged in the program year-over-year. This is particularly important for convenience retailers, as the presence of a loyalty program – ideally one that provides a relevant currency and high levels of customer engagement – is one of the key factors influencing consumers’ decisions to visit a c-store.

By Scott Wetzel

APPEAL TO CONSUMERS

There are many ways to attract and maintain consumers’ attention. Brands can market a product or service to them that inspires passion, like Harley-Davidson, Apple or Starbucks. Or they can appeal to consumers’ desires for unique experiences, such as Tesla, Disney and Emirates.

Those are great approaches for the brands and for the markets they serve. However, research has repeatedly concluded that consumers often bypass emotional desires in favor of practical benefits. And when it comes to c-store loyalty programs, nothing is more practically rewarding for consumers than saving on fuel at the pump. Nothing. Not even cash-back.

In the most recent Road to Rewards 2017 survey conducted by Excentus, fuel savings rewards have overtaken cash-back rewards as loyalty shoppers’ preferred currency. 39% of shoppers prefer cents-per-gallon discounts, while 35% say they prefer cash-back. For c-store operators, this means their chief salable commodity – fuel – isn’t actually a commodity at all, but a coveted rewards currency that can generate and maintain consumer loyalty.

This means their chief salable commodity – fuel – isn’t actually a commodity at all, but a coveted rewards currency …

 

INSIDE THE NUMBERS

Convenience stores, as their name suggests, thrive on creating a quick and easy buying experience. But just like grocers and discount store operators, increasing basket size, maximizing footfall, and generating incremental revenue are key goals for convenience retailers, and loyalty programs with the right loyalty currency can help attain them.  Importantly, a loyalty currency like cents-per-gallon discounts can be leveraged with offers from CPG brands that promote in-store sales (and are usually funded by CPG manufacturers), which earn the consumer more fuel discounts, which encourage repeat business – creating a virtuous cycle.

Another of Excentus’s recent reports, the C-Store Shopper Profile, provides insights into the pump-to-c-store conversion rate, finding that just more than half of shoppers (51%) who purchase gas venture inside the c-store and make an additional purchase. This is slightly higher in males (60%) and people with children (59%).

At first glance, this may seem to speak strictly to the convenience factor – if a young man needs a sports or energy drink and some jerky, is it easier to shop at a grocery store or do a fly-by a convenience store? But research indicates that the presence of a loyalty program – and the quality of the currency it uses – can influence that purchasing behavior nearly as effectively as “convenience” considerations. Additional findings in the 2017 Road to Rewards survey identified that the 43% of c-store shoppers who make their shopping decision based on the c-store’s rewards program compares favorably to the 44% who decide where to shop based on location.

Not only do consumers prefer fuel savings as their reward of choice, but they defer to loyalty programs as a tiebreaker during the moments that matter. With the right program structure featuring fuel savings, convenience retailers can create a compelling and profitable rewards program. For consumers, a fuel saving rewards program means: convenience + LOYALTY + price = value. For c-store operators, it equates to: preference + LOYALTY + frequency = increased revenues.

 

THE PATH TO SUCCESS

To deliver a meaningful and compelling program to consumers, c-store operators should consider three things:

  • The Value Proposition needs to provide the right mix of rewards and benefits to get consumers to alter their behaviors. Most times that means offering them what they desire, instead of what’s easiest or cheapest for the operator. CPG-funded offers on in-store purchases combined with cents-per-gallon rewards are the best of both worlds, utilizing vendors’ funds to lessen the discounting burden on operators, while encouraging consumers to spend more on high-margin items with a fuel discount incentive. If a loyalty program doesn’t alter base consumer behaviors and drive incremental, sustained gains for the operator, then it’s in need of an overhaul.
  • A reliable and proven technology platform is required to do ALL of the heavy lifting for operators. Operators need to focus on managing their businesses, not on manually manipulating their loyalty program. The platform should be reliable, integrated and automatic to account for all eligible transactions, points calculations and reward redemptions. Picking the right technology partner is one of the primary catalysts to success.
  • When considering technology, make sure your program is based on a mobile-first solution. A mobile app usually works best to ensure program members are connected to the brand at the pump, in the c-store and even when they’re not on location. It also allows for ongoing dialogue with members through program updates, account activities, achievements, redemptions, targeted offers, check-ins and many other useful utilities to keep the program fresh and exciting. It’s important to meet today’s consumers where they live – on their phones.

A well-designed program, implemented by a proven technology partner and delivered through a mobile app, gives operators the foundation for success in 2018 and beyond.

 

EXPANDED REACH FOR FUEL SAVINGS

Fuel savings programs aren’t exclusive to c-store operators. Many grocery stores and other retailers have successfully partnered with petroleum and c-store brands to deliver added value for their customers, create brand preference and increase store traffic for themselves.

Likewise, consumer packaged goods (CPG) brands also have opportunities to boost product sales by aligning with a fuel savings program. This is especially true for salty snacks, energy drinks, sports drinks, beer, frozen shakes/smoothies, tobacco and similar categories that are significant sales and gross-profit generators in c-stores. With the right approach, CPGs can generate additional funding for fuel savings programs to drive incremental product purchases by program members.  On the flip side, operators can offer CPG-funded promotions on in-store purchases that result in increased shopper engagement and in-store sales.

Based on the findings of the Road to Rewards report, c-store operators and fuel brands have a clear advantage over many other retail categories. The fuel drives the frequency. The fuel savings is the most appealing reward for loyalty program members. And the c-store offers the additional value-add to generate profitable add-on sales. Therefore, when all elements are combined into a loyalty program, it manifests itself into the perfect strategy to change consumer preference and grow share for the program sponsor.

 

KEY TAKEAWAYS

  • Programs focused on fuel savings is as good, if not a better value proposition than any other offer a brand can make to consumers. Fuels savings is now more popular than cash back and a loyalty program is on par with location as the #1 driver determining where c-store customers shop.
  • Making it easier, convenient and compelling for consumers, delivers better results for the brand that executes the program. Mobile App based technology is that solution today, as well as tomorrow and it will be the enabler of c-store operator to consumer relationships for the foreseeable future. When this convenience and addressability is combined with an appealing value proposition, operators have the foundations for a successful loyalty program.
  • Grocery, Retailer and CPG brands should consider taking advantage of opportunities to partner with a fuel savings program to drive incremental foot traffic, brand preference and revenues. Likewise, c-store operators should use the lure of fuel discounts to drive sales on high-margin products in the store.

Scott Wetzel is SVP Business Development at Excentus.

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