As good as cash: The business case for investing in a loyalty program with cents-per-gallon savings

A cents-per-gallon currency drives frequent redemptions.

Jeff Hassman, CMO at Excentus


One of the most critical elements in any loyalty program is the currency used to account for member equity – specifically, the value that currency represents to program members. The reason for this is straightforward: the more valuable members perceive a loyalty currency to be, the more willing they are to earn and redeem through the program, and ultimately spend with the brand.

In short, an optimized rewards currency = higher revenues. When it comes to loyalty program design, this equation shouldn’t be overlooked.

Finding the Right Currency


Of course, there’s the small matter of identifying the currency that consumers will value most. Some businesses’ loyalty programs are inextricably tied to a very specific type of currency – think airline frequent flier programs and miles, for instance – but for many businesses there is a choice to be made. Retailers in particular have a seemingly endless array of options, ranging from cash-back to “points” earned toward free or discounted merchandise.

But of all of these options, our new research report – The Road to Rewards 2017 – revealed that a loyalty program that helps its members save on the cost of gas is more appealing than any program reward. Programs that leverage cents-per-gallon discounts saw a 10% growth in 2016 and 2017. 64% of the members stated that they joined their preferred loyalty programs for the opportunity to save on fuel costs, an increase over 59% in 2016 and 54% in 2015.

That’s the 3rd consecutive year that fuel savings has been chosen as the #1 rewards currency – preferred even more than cash-back rewards. When asked “Which type of reward do you currently earn?”, 39% of respondents cited fuel-savings rewards, with cash-back in 2nd place at 35% (other rewards identified were related to flexible retail and c-store redemptions).

The conclusion suggested by these findings may be surprising: that discounts at the pump are at least equivalent to actual cash in the perception of the consumer. In part, this is because fuel is a predictable, consistent and repeated expense, so therefore any savings realized on fuel purchases are more tangible than “points,” and more immediately viable than longer-accruing currencies.

The Multiplier Effect


Fuel savings rewards can compound their own value with c-store and retail offers – both also ranking in the top four preferred rewards by program members. That gives a well-crafted loyalty program, with a cents-per-gallon currency at its center, the ability to significantly change consumer behaviors with accelerated value through an integrated, multi-faceted strategy.

Another benefit of a cents-per-gallon currency is that it drives frequent redemptions due to rapid gas consumption. And frequent redemptions lead to ongoing engagement, traffic and repeat purchases. Couple that with a compelling value proposition at the c-store & retail level and there are ample opportunities to increase average transaction value, frequency of purchases and overall average CLV (customer lifetime value). For example: When a member redeems his or her cost savings at the pump, a brand might offer them a double rewards bonus for any purchases made in the c-store, driving foot traffic from the forecourt to the store and multiplying the single-visit value of the offer.

This sort of compound effect can be realized again and again, as an additional benefit of a fuel-rewards value proposition is that even in a market where gas prices may drop, 58% of those surveyed say they would still prefer to save on the cost for fuel. This also indicates the resiliency of the currency even in the face of oil market volatility.

Whereas different types of loyalty program currencies may be right for different businesses, there is a clear effectiveness differential when it comes to cents-per-gallon savings, particularly for retailers and c-store operators. Our research indicates that this currency is highly valued by consumers, is perceived as comparable to cash, and can be easily compounded by other offers and a well-executed loyalty strategy. Add to that its resilience and staying power as a currency, and cents-per-gallon discounts are clearly a viable loyalty proposition for most brands. Is your brand a candidate for this solution?

To learn more about cents-per-gallon savings and why c-store shoppers prefer it as a loyalty currency, download The Road to Rewards 2017 report today.

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