Why fuel discounts matter less to customers today
Gas retail operators run any number of loyalty and incentivization programs. The most familiar one to Canadians is the gasoline discount, where customers will receive a discount on gasoline – or an item in the gas retailer’s c-store – if they stop and fill their tank.
According to Joel Percy, Eagle Eye’s regional director based in Canada—Eagle Eye is a provider of API-based, cloud-native marketing platforms to power loyalty and customer engagement solutions for such businesses as Loblaw/Esso (as Eagle Eye powers PC Optimum’s loyalty program), Shopper’s Drug Mart — that fuel discount has had a surprisingly successful run in Canada.
“The first thing to say is that in many markets in the world, and certainly in Canada, fuel has always had a special place when it comes to loyalty because of its perceived value” Percy said. “Customers will drive quite far, they will go out of their way, to save a few cents a litre in a way they won’t in almost any other space.”
Saving say 10 cents a litre brings a psychological satisfaction, he added, more than say saving 10 cents on any other item which is why fuel savings have taken the top spot for so long when it customer to customer loyalty and driving customer retention.
Fuel discounts for loyal customers are so successful now that everyone now offers similar incentives. The problem, as Percy suggested, is that with everyone offering a discount on fuel there is nothing to distinguish one loyalty program from another - or one gas retailer from another. With everyone offering the same incentive as part of their loyalty program, does it matter then which gas retailer one decides to pull into; and later to walk into their c-store and purchase a coffee, snack, meal or beverage offering?
“If I’m a fuel retailer trying to win more traffic and saying to a customer. ‘Hey, come to me and you can earn cents off the litre with me,’ it is like ‘Well, I can do that everywhere now,” Percy said.
The challenge is now finding what more a loyalty program can offer to bring people to the gas retailer’s pumps and into the c-store, he added.
That is why personalization is becoming the key differentiator in loyalty programs now. The challenge is to find the personalization that works. Throwing out any old offer with the hope that it will bring someone to the pump or c-store is likely not going to work. Think for a moment of a standard grocery store. It may be some 60,000 sq.-ft. in size and offers thousands of different SKUs of products. A typical shopper at their regular grocery store may only every buy from 2% of that total SKU count, the remaining 98% never to be considered for purchase.
Personalization needs to first know what 2% a customer buys and then to make offers that will attract customers to them. The next step is to then understand why that customer is coming into the store, be it a grocery store, gas station or c-store.
That involves expanding personalization to include such customer behaviours as how often they come to the gas station and c-store, how much does that customer spend per visit, what is it that they purchase and even what part of their reward program are they using during the visit.
“Then what other services or products that are on the property that can be taken advantage of, say a car wash, EV charging, what specific items in the c-store brings them or what can be offered to bring them in,” Percy added. “In Canada, you have a broad selection now of quick serve food offerings that are very attractive, and which can be part of any personalization effort.”
Key to this will be mining customer data. Loyalty programs are a proverbial gold mine of customer data that if effectively tapped into can provide a granular view of a customer, that is not a generic version of a customer, but a better understanding of that specific customer.
“One thing I can do with that data is to try to help me understand what Joel wants,” Percy added. “What does he buy and when does he come into the c-store? Does he buy a coffee, or does he come in and purchase a car wash? Is he open to upgrades or other offers.”
The goal is to start using data to create a more sophisticated picture of a customer and to use that to create programs and offers that reflect who they better interact with as a brand.
“If I don’t understand what they are doing, I then don’t really know what I could offer them to spend more with me and to earn rewards with me,” Percy said. “So, if you have someone who just regularly comes to get fuel and food, but never a car wash, there is now an opportunity to grow their spend there if you give the right incentive and motivate them.”
This will become more important as more gas retailers add electric vehicle charging stations to their operations. Depending on the chargers offered, an electric vehicle owner could spend up to 30 minutes at the station as their vehicle is being charged. Percey said operators of loyalty programs are now trying to find ways to get people into c-store or to agree to add other services to their charging to drive further sales and customer retention.
“Having some 30 minutes of idle time where I’m on the property and looking for something to do is a marketer’s dream,” Percy said.
