Chevron, Safeway Team Up on Loyalty

New program taps into synergies with customers, geography

Samantha Oller, Senior Editor/Fuels, CSP

SAN RAMON & PLEASANTON, Calif. -- Chevron is partnering with supermarket giant Safeway Inc. for its first fuel-rewards-based loyalty program in the United States, with California as its launching point.

In the first phase of the loyalty-program rollout, which starts this October, customers earning points in Safeway's Reward Points loyalty program can use them toward a discount at the pump at participating Chevron and Texaco branded locations. Safeway operates more than 1,600 food stores in the United States and western Canada.

The first phase of the program rollout will include approximately 250 Safeway and Von's stores in California.

"We think it's a great combination between two brands, we've got something that is compelling in the marketplace and will differentiate us from our competition, will make us look different on the street, and more importantly will drive synergies between their customers and our customers," Cary Knuth, general manager of marketing, sales and services for Chevron Americas Products, told CSP Daily News.

"We constantly explore innovative ways to bring value and savings to our shoppers," said Mir Aamir, president of customer loyalty and digital technologies at Safeway. "Gas and groceries are two critical and frequent purchases consumers make. Partnering with Chevron to create a program that offers our customers savings at the pump was a natural fit."

Many Chevron and Safeway sites operate in the same areas, providing geographic symmetry for the program. In addition, while the two companies share some customers, "there are opportunities for customers who don't always shop at Safeway or don't always shop at Chevron, and we can build some loyalty with them," said Knuth.

While the specific details of Chevron's program are yet to be released, Knuth said that "it won't be unlike what they currently do at Safeway."

Safeway's Club Card currently grants one reward point for each dollar spent on groceries. At Safeway gas stations, every 100 points earns participants 10 cents off per gallon in a single fillup, with 20 cents off per gallon with 200 points, 50 cents off per gallon with 500 points and $1 off per gallon with 1,000 points. Participants can use points in increments of 100, with a limited-time use up to 1,000 points for a single fillup, according to the company website.

According to Chevron, there are approximately 950 Chevron and Texaco stations that are eligible to participate in the new loyalty program. The Safeway fuel locations are spread throughout the entire market and Chevron will have many sites participating in the program that are near those Safeway fuel locations.

Chevron considered Safeway's established loyalty program a major benefit to the partnership. "Safeway has a successful loyalty program so we frankly didn't have to become an expert in the loyalty business--we can partner with someone who is an expert in the loyalty business," said Knuth.

According to earlier sources, Chevron marketers had been anxiously awaiting a loyalty program from the major oil, especially in light of Shell's loyalty programs with large grocery chains Kroger and Giant, and its launch of a tie-in with the third-party FRN network that features Macy's, Barnes & Noble and J.C. Penney's among the rewards partners.

For Chevron retailers, Knuth said the advantages of participating in the loyalty program are significant. "Instead of putting together promotions where customers will have to buy something, this will be influencing their behavior to shop at our retailer and marketer locations," he said. "It will also reinforce to Safeway customers that the more they buy, the more points they earn and the more they can use the points to save on gasoline at Chevron stations. We should all see greater loyalty and sales as a result of that."

The first phase of the program will launch in October with more than 1,000 Chevron and Texaco branded locations in Northern and Southern California. About 200 of these sites are company-ops, with another 200 ExtraMile franchises and the rest Chevron branded retailers and marketers, according to Knuth.

The program will continue to roll out in the rest of San Ramon, Calif.-based Chevron's Western footprint, which includes Oregon and Washington.

Chevron will implement training and software upgrades over the next six weeks in preparation for the program launch. The program will be promoted by both Chevron and Safeway--which Knuth considers a plus. "We advertise a little differently," he said. "There are strengths to the way each brand approaches that. By bringing those two approaches together, we can spend more dollars in advertising and more effectively."

While Safeway's loyalty program will provide the vehicle for the partnership, the two partners will be able to share some data on purchasing behavior to help illuminate how their customers are making their choices.

"We want to do it in a way that makes sense not only for us and our retailers but also whoever our partner is," said Knuth. "We want to link up with a partner whom we think complements our brand and whom we can compete with. We think we've got a good match in terms of brand, a situation that allows everyone to be successful, and so we're pretty excited about it and think we can drive consumers to buy more Safeway goods and more Chevron gas."

"At the end of the day, it's got to translate into more sales for Safeway and us," said Knuth. "We'll create baselines and measure against them, and what we hope to see are same-store sales increasing at a greater rate."