San Antonio, Texas-based Valero is the latest to confirm that it is in the testing phases of a loyalty program that could potentially be rolled out to its entire network. While "still under development," officials told CSP Daily News that their California pilot program "worked [image-nocss] well."
Though too early in development to discuss details, the official said rewards kick in after a certain number of fillups or purchases, with one of the incentives being free movie rentals from DVD kiosks.
Just last month, Houston-based Shell and Cincinnati-based Kroger Cos. announced a partnership involving grocery ties to fuel-reward redemption. Beginning February 15, Kroger and Shell said they would roll out the grocer rewards program in Cincinnati and Dayton, Ohio; Knoxville and Nashville, Tenn.; and San Diego. Customers can earn rewards including a minimum of 10 cents off a gallon of gasoline for every 100 Fuel Points they earn by using their free loyalty cards when purchasing a variety of products inside Kroger and Ralphs stores.
Last fall, Houston-based BP announced a loyalty agreement with Irving, Texas-based Excentus Corp. to work with the loyalty provider's fuelperks! program. The companies announced that BP will become the fuelperks! redemption partner in the majority of marketing areas in which BP operates.
These moves represent the most significant turn of events regarding loyalty in the channel since Speedway SuperAmerica LLC (SSA) established a formidable program within its 1,600 stores five years ago [click here for CSP magazine coverage], according to Anton Bakker, president of Outsite Networks, Norfolk, Va.
The sheer numbers involved back his assessment, with as many as 8,000 BP sites, many in major U.S. markets, being eligible for upgrade.
"The race is on," Bakker told CSP Daily News. "From our 10 years of loyalty experience, we know very well the cost and value of early movers."
He said he believes retailers can still edge out the majors, as it will take the better part of the year to complete a major-oil rollout, but "undoubtedly the shifts in market share will be significant."
Bakker also warned retailers to make educated choices. Here are some areas of concern: Equipment. In some major-oil programs, loyalty "ports" in system hardware may be turned off, potentially cutting off retailers with established programs. Cannibalization. Retailers have to trust that loyalty partners won't discount products that customers can also purchase at c-stores. Converting new customers. Retailers must assess new traffic and have plans in place to convert fuel-redeeming customers into people who also buy items inside the store. The best possible scenario, especially with a grocer involved, Bakker said, is to be the "designated redemption store. It's close to Kroger and that's where [customers] go to redeem fuel points. So for sure, you're offsetting the number of people who may already be coming to your store."
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