A $21 billion opportunity. That’s the figure that made CSP vice-president and group editor Mitch Morrison pose this question:“How do we use the fuel island as an effective billboard to bring people into the store? You need to look at the forecourt as your front door.”
In late January, about 80 petroleum marketers and retailers spent the day focusing their attention on how to maximize their forecourt opportunities. Presenting at CSP’s “Forecourt A Marketing Vehicle with Unlimited Potential” meeting in Glendale, Ariz., were representatives from industry names specializing in customer behavior, fuel-pricing strategies and forecourt loyalty.
“Fuel is a store category; it’s the biggest store category we have. Unintentionally, many of us today manage fuel as a silo, as something different,” said Mark Hawtin, senior vice president of strategy and business development for KSS Fuels, Florham Park, N.J.
Hawtin was joined by Priya Baboo, president of State College, Pa.-based VideoMining Corp.; and Dustin Coupal, co-founder of Brooklyn Park, Minn.-based GasBuddy and OpenStore. Morrison moderated the discussions.
“We get so focused on what’s happening inside the store that we don’t pay a lot of attention to the details that are happening on the forecourt,” said Baboo, whose consultancy tracks how consumers travel through c-stores.
While Baboo urged retailers to think of the c-store journey beginning at the pump and to strategize ways to draw customers into the store, Coupal encouraged attendees to consider shoppers’ needs even before they get to the store.
Get Them to the Site
“The forecourt is that place where you have your [physical] first impression with the customer,” Coupal said. But rather than wait until the consumer can see a gasoline price sign or other promotional signage, Coupal recommended retailers reach out to customers in the car, at the office or even at home via mobile marketing and application use. The mobile phone, he said, “has become the new gas price sign.”
Millions of motorists today tap Gas-Buddy’s consumer website and mobile app to find and share the best gasoline prices; 25 million people have downloaded the GasBuddy app. Meanwhile, its OpenStore service, which develops mobile apps for retailers, allows those companies to promote and advertise their prices—and promotional offers—to consumers specifically looking for that kind of data.
“Technology can help drive sales,” Coupal said. It can also provide analytical information about customers to retailers, allowing them to personalize and customize promotions. “Every retailer has areas that people should shop in their location,” he said. “Whatever that is, you’ve got to let that play into the value proposition for consumers.”And the more targeted your offer, the more effective.
“If you have someone who comes in every day except Saturday to buy a sandwich, let’s send them a promotion for a free sandwich on Saturday,”
Coupal said. “Let’s see if we can change his behavior.”Coupal also sang the praises of social media, pointing out that Facebook users are 51% more likely to make purchases from companies they follow on the site. And 93% of online consumers subscribe to promotional emails.
Another strong option: “Gasoline coupons are consistently near the top of the list for redemption,” Coupal said.“ ‘$2 free gas with this coupon’—That’s pretty powerful.”
These types of promotions relate to one of Copal’s favorite sayings: “It takes six times as much investment and spend to attract a new customer as it does to maintain a current customer.”
Get Them Inside
With such offers pulling consumers onto the forecourt, the challenge moves to getting them into the store and, more important, convincing them to spend money inside the store. Baboo of VideoMining recommends a rethinking of how retailers use signage at the pump and product adjacencies in the store. Consider that customers who purchase gasoline spend nearly twice as long at the pump as they do shopping in the store, opening up what is today a rarely tapped opportunity to talk to customers at the fuel island.“It looks like we’re not presenting the right information or promotion sat the pump,” said Baboo. “The c-store journey begins here. It starts from the forecourt. … There’s a huge opportunity to influence those people to buy something.”
VideoMining’s data shows fuel consumers spend an average of 4 minutes and 26 seconds pumping gasoline and only 2 minutes and 28 seconds shopping inside a c-store, including checkout. Current use of signage at the pump, however, shows retailers are not getting through to consumers.
“Only 1% of customers who took advantage of a promotion say they saw the signage for that promotion at the pump,” Baboo said. However, “You have a lot of potential to influence their decision in the forecourt.”
For example, 56% of fuel customers look at the pump while at the fuel island. Baboo suggests retailers consider digital signage to better influence these customers. Even if they pay attention to only a few seconds of the digital message, that should be enough convert some shoppers into buyers.“You cannot count on customer engagement for a long time,” she said.“It should be ‘glance media,’ ” or a message that can be fully understood in just a few seconds.
Get Them to Buy
Once inside the store, retailers have to be blatant in promoting specials or combo deals. “People are making quick decisions,” Baboo said. “Either they have planned their purchase or … they are creatures of habit; they know just what they’re going to get.”
Retailers should study what products complement each other—such as a soda and a bag of chips—and consider appropriate merchandising adjacencies to drive more cross-purchases.
“Every trip tells a story, but if we look at every trip, we can get a better idea of what is happening at every departing every area of the store,” she said.“We can see: This is what people do, and we can capitalize on that to sell more products.”
VideoMining data shows 89% of consumers have been influenced by ac-store promotion. The most successful: buy one, get one free.
Meanwhile, Hawtin of KSS endorsed using predictive models to consider how various strategy changes might affect store sales.
“The trick to better managing our sites is to understand the interrelationship between all the categories,” Hawtin said. “Fuel is the main driver of traffic to the site, but it can also drive merchandise sales, work as a promotion device and drive loyalty.”
KSS collects data—some of it hard data, some of it observational—from the stores it serves, as well as from neighboring stores, local census information, consumer preferences and more. Putting it all together, the company is able to paint a picture of whom a retailer is serving and whom they maybe missing as a customer.
“This helps to understand the demand opportunity around your stores,” Hawtin said. It then can create “scenario models” that forecast what fuel, c-store, QSR and car-wash sales should be.
“We determine the winners and losers in your store,” he said. “These tools become the basis for why you make a change at a store or not. … We look at where there is demand in a market and then ask: How good are our sites at meeting that demand?”
Overall, meeting consumers’ needs means having what they need, but also letting them know you have it, and that it’s a value to the consumer.
Toward that end, Baboo said, “Traffic does not equal audience. We need to know who the audience is, when it’s peaking, and design content [and promotions] around that.”
Best of the Best
Promotional ideas that rose to the top during CSP’s “Forecourt: A Marketing Vehicle with Unlimited Potential” meeting:
- Think of the forecourt and fuel as a category and how it can complement other store categories.
- Make your stores’ best attributes part of your value equation. If foodservice is a hit, tie promotions in to other categories.
- The best-performing coupons typically center on free gasoline.
- The most-appreciated promotions are buy-one-get-one-free offers.
- Anything “free” is an attention-getter.
Calculating the Opportunity
Store-traffic researcher Priya Baboo started out CSP’s “Forecourt: A Marketing Vehicle with Unlimited Potential” meeting by establishing that there is a $21-billion opportunity within the convenience store industry’s grasp if it can just convert more gasoline buyers into in-store purchasers. Here’s how she figured the amount: For every 100 customers who purchase gasoline, only 31 make a purchase inside the store—21 of them having paid for gasoline at the pump and 10 of them paying for gasoline inside the store.
According to Baboo, an average c-store selling gasoline has 277 fuel customers a day. If only 31% of them (86 customers) make an additional purchase inside the store, with an average transaction of $4.82, that leaves a loss of $920 per store per day in potential sales to the other 69%. Assuming there are 150,000 c-stores in the United States, that leaves about $21 billion per day for the entire industry.
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