HOUSTON — Is the fuel island clean? Check. Is the windshield-washer station fully stocked? Check. Are the canopy lights functional? Check.
Any fuel retailer who has conducted a mystery shop is familiar with the basics of a strong forecourt and backcourt offer. For Phillips 66, which has more than 7,500 sites carrying the Phillips 66, 76 and Conoco brands, it comes down to five fundamentals: clean, operational and well-stocked fuel islands; a positive interaction with the store cashier; that cashier in uniform and wearing a name tag; clean restrooms; and a clean, well-lit store.
“Those are the things that drive consumer loyalty and encourage consumers to come back and visit the location time and time again,” said Michael O’Connor, manager of brand image for Houston-based Phillips 66. And O’Connor has the numbers to prove it, thanks to an ongoing partnership with Market Force Information, a provider of mystery shopping and other customer experience services.
Phillips 66 has partnered with Peachtree Corners, Ga.-based Market Force for more than a decade on a mystery-shop program, dating from before it was spun off from ConocoPhillips—along with the major oil company’s refining assets—into Phillips 66 in 2012. After the spinoff, the group launched an effort to upgrade its marketing assets with new forecourt images for the Phillips 66, Conoco and 76 brands.
Upgrading the experience
“As part of that, though, we just didn’t want to see an improvement in the assets, but we really wanted to upgrade the experience as well,” O’Connor said. “A convenience-store shopper … is a more discriminating shopper, and I think the expectations had been raised in the industry, and we wanted to make sure that we were meeting those expectations of the consumer.”
So Phillips 66 executives met with Market Force to re-examine the mystery-shop program and how well it measured the customer experience. One of their first realizations was that the mystery shop’s quarterly frequency just didn’t provide enough data, so they increased the frequency to monthly.
Phillips 66 and Market Force also decided to separate the brand-image evaluation from the customer-experience piece so each could get the focus it deserved. Brand-image inspections take place twice a year in an audit to ensure that branded operators are following Phillips 66’s image guidelines in terms of signage, pump decals and image elements.
“The mystery-shop program was changed to be really totally dedicated to seeing the experience through the eyes of the consumer, and focused on those things that were important to the consumer,” said O’Connor, citing the aforementioned five fundamentals.
To develop a more accurate way of measuring Phillips 66 marketers’ performance in these fundamentals—and provide them with a resource to help them improve—Market Force conducted several pilot visits and assessments, said Gail Funderburk, vice president of client strategy for Market Force Information. “Then we brought our analytics team to the table, and they sorted through all the data and measurements and … came up with a metric, a measurement tool, what we refer to as our questionnaire or assessment tool,” she said.
This tool is fed by the results of the monthly mystery shops; the information is submitted via an online platform that Phillips 66 and Market Force developed together. Through the tool, branded operators can check their scores and look for areas to improve.
The new mystery-shop program, called Retail Excellence, evolves each year based on external feedback from branded retailers and internal feedback from Phillips 66’s sales and marketing teams. For example, Phillips 66 has expanded the customer experience assessments from daylight hours into the evening shifts.
“The feedback we were getting was … our consumers shop 24 hours a day, and a clean, well-lit facility is important,” O’Connor said. “So we now look at sites at least once during the first quarter and once during the fourth quarter as a night shop. It really lets us know how that location’s performing maybe in a third-shift environment or in a night environment.”
Phillips 66 also began having mystery shoppers document their visit with photos to highlight issues such as cleanliness or out-of-stocks. And if a branded operator feels a mystery shop was flawed, it can submit an inquiry through the platform; Market Force’s quality-control team will investigate the complaint and adjust that mystery-shop score as warranted.
Market Force regularly stress tests the tool and evaluates it through statistical analysis “to make sure that it’s still capturing the things that are … helping it work and serve as a business improvement tool, by driving better fuel sales at the locations,” Funderburk said.
“We have tried to take it from where the customer looks at this as a cost of doing business … to where they look at this as a tool for them to get better,” O’Connor said. “It’s documented that locations and customers that do these things well, that perform well in these key drivers of what’s important to the consumer—those sites sell more gasoline and they make more money.”
With the greater volume of data from the more frequent mystery shops, Phillips 66 and Market Force have examined how the fuel volumes compare for branded sites that perform well on all five measures—as well as those that have weaker performances.
“Locations that … perform well on five of the five key drivers, their volumes typically are twice what those are that perform well on one out of five,” said O’Connor, pointing out that this trend has remained consistent over the past few years.
New fuel tool
To better connect the customer experience with fuel volumes for marketers, Phillips 66 and Market Force developed the Key Driver Fuel Forecast Indicator tool. This predictive online tool allows Phillips 66 to provide its branded marketers with the mystery-shop scores for their locations either individually or in total. From there, the marketers can see how their fuel volumes would improve if their scores improved in any of the different fundamentals.
“Based upon seeing that improvement and sustaining that improvement over time, marketers can now see the impact that it has to their volume,” O’Connor said. For example, if the marketer improved in key areas, the fuel forecast indicator might predict a 7% improvement in fuel volumes. As a result, they can better understand the profit potential of a better customer experience.
“They know what their margins are, so they plug in what the retail fuel margins are, and it comes out and shows them what that is worth to them financially,” he said.
“It takes it from a macro type of story to a micro or a site-specific or customer-specific story, and it’s much more impactful,” he continues. As the Phillips 66 sales team sits with marketers to review the numbers, they can explain why the five customer-experience factors are so important and tie it to their profitability.
“Doing this well can add to your volume, and add to your profits,” O’Connor said. “So don’t look at the fact that it costs you a certain amount per month; look at this as feedback, and if you do these things well and improve your scores, you can sell more gasoline and make more money.”
Because the Key Driver Fuel Forecast Indicator tool was rolled out in mid-2018, Phillips 66 and Market Force do not yet have any hard volume improvements to share. That said, engagement with the branded marketers is high, with more than 1,000 sessions with the tool.
For Phillips 66, the results have demonstrated how powerful the connection is between the customer experience and fuel volumes—a relationship that rivals basic drivers such as price or location.
“In this business, we’ve always placed a very high value on the real estate, the location, as determining our success,” O’Connor said. “But this really does demonstrate that people who deliver an exceptional consumer experience sell much higher levels of volume, and they sustain that.”
The past few years have seen a complete image refresh of Phillips 66’s three fuel brands: Phillips 66, 76 and Conoco. In 2015, Phillips 66 began rolling out its new premier imaging, reserved for sites that meet key standards. This includes having at least four MPDs, a minimum c-store size, scanning capability and indoor restrooms. As of early 2019, nearly 1,500 of Phillips 66’s approximately 6,400 sites meet the premier imaging standards, said Connor.
For the sites that do not meet these standards, Phillips 66 introduced its signature imaging in 2017. The new forecourt look hearkens back to the brands’ original imaging. For Midwest icon Phillips 66, this means a focus on the brand logo’s shield. For 76, well-known on the West Coast, it’s a revival of the signature orange, wave and crest imagery. For Conoco, it’s a fusion of the historical branding with updates. The response from marketers has been overwhelming, O’Connor said.
“Our plan was to pilot those signature images throughout 2017, but we walked out of that marketing conference with our customers saying, ‘We want to go sooner,’ ” said O’Connor. With this high demand in mind, Phillips 66 began rolling out the signature image by late 2017 and into 2018. The plan is to have the entire marketing network reimaged by the end of 2020; Phillips 66 is about 40% through that process, the company said.