Convenience stores lag other retail channels when it comes to loyalty and rewards development—and the c-store industry is miles behind airline and hotel industry loyalty/rewards pioneers.
But progress is being made. In its September 2023 report focusing on loyalty, Paytronix examined current c-store and restaurant trends from all in-store and online transactions via its database—amassing more than 1,800 retailers and 35,000 stores—between Jan. 1, 2020, and June 30, 2023.
The Newton, Massachusetts-based technology development firm noted that convenience enjoyed a 19% boost in the number of loyalty members during that period, falling below quick-serve restaurants but above full-service restaurants. It’s a signal that the industry “is headed in the right direction when it comes to loyalty participation,” Paytronix said.
Visionary retailers have their eye on the prize. At Fat Dogs Convenience Stores, North Platte, Nebraska, leadership took seriously data indicating that customers armed with their loyalty card or mobile app spend $14 more per shop occasion for both fuel and inside items, as opposed to non-loyalty card carriers. “You need to enlighten customers that you have a loyalty app, and that occurs a number of ways—at the POS register via suggestive selling, GSTV pump messaging, email blasts, in-store QR codes to register on site,” said James “Jim” Riewe, president of the seven-unit network of stores that dot the I-80 corridor in Nebraska. “The juice is worth the squeeze.”
Riewe said that 15% of Fat Dogs’ customers have registered for its loyalty offer. That number is climbing; and Riewe is aiming to reach 20% soon. Other chains know loyalty reaps large, sustained dividends: Weigel’s, a Powell, Tennessee-based c-store chain with 72 stores, migrated from its legacy platform for myWeigel’s Rewards in late 2021 into 2022 to Alpharetta, Georgia-based PDI’s loyalty platform, deriving solid results for downloads, registrations and user-retention metrics.
Weigel’s also partnered with St. Louis-based Rovertown, where users can download the free myWeigel’s Rewards app on a smart device using the card’s built-in QR code or through the Google Play or Apple App stores.
“Rovertown is one of our most important tech partners,” said Jessica Starnes, category manager of tobacco and loyalty for Weigel’s. “We continue to see user engagement as a direct result of the Rovertown app.”
Fat Dogs Sees Loyalty Success
At Fat Dogs, the payback when customers activate loyalty—which includes Gulf Oil-branded (recently acquired by Atlanta-based RaceTrac) gift cards—is basket-filling: Customers spend almost $15 more per shop occasion for both fuel and inside items compared to non-loyalty card carriers, says Riewe.
Indeed, fuel is “fueling” the loyalty equation. Simply put, consumers will drive out of their way to obtain even modest savings on fuel purchases, as it flows right to their bottom line.
At Fat Dogs, compelling loyalty starts at the forecourt with gas fill-ups, and dovetails inside, says Riewe. Loyalty registrants fetch lower pump prices and, with savings in tow, come inside to “reward themselves,” he said.
“Maybe they’ll try a new food item [or] upsell at the beer cave,” Riewe explained. “Essentially, people are giving themselves permission to spoil themselves, and it starts with fuel.”
For retailers, the inside volume boost means more transactions for higher-margin items. When Gulf gift cards are used—good as cash—customers reap rewards, while Fat Dogs avoids onerous credit card transaction fees.
Retailers like Fat Dogs encourage customers to established automated clearinghouse (ACH) payment methods through their financial provider—which can also be tied to loyalty. The merchant again avoids transaction fees.
The Art (and Science) of Building Loyalty
In addition to collaborating with third-party partners (Fat Dogs with Patron Points, Minneapolis, on its loyalty upgrade initiative), recruiting new loyalty patrons is a daily undertaking blending human interaction with technology.
When done effectively, one lucrative opportunity in harvesting higher loyalty is embedded in the art—and science—of one-on-one relationship building with customers. In short, knowing customer A buys energy drinks while customer B is inclined to buy a bottled juice or tea.
Peter Rasmussen, principal and founder of Boston-based Convenience & Energy Advisors (CEA), specializing in consulting and managed services and solutions for c-stores, said artificial intelligence (AI) represents a real—but thus far slow slog—for convenience retailing, all to jumpstart their quest for supreme loyalty curation.
With AI deployed, a retailer might know that one customer fills up once a week. “So do you send me an alert on day six that I might need fuel tomorrow?” said Rassmussen. “Or, if you’ve not seen me for a while, do you send an alert with a promotion on an item to get me back in? If I buy Red Bull, do you send an alert for a Celsius-branded promotion too?”
Rasmussen said c-stores might want to eventually follow the lead of QSR chain Hardy’s (CKE Restaurants), which recently deployed AI at some of its units nationwide. AI-powered Presto Voice automated voice ordering technology connected at Hardy’s drive-thrus saw the technology attempt to upsell 88% of guests—intuitively knowing they might be poised to add more items—with 46% of upsell attempts accepted, says Phil Crawford, chief technology officer at CKE.
Crawford added that “the pilot program yielded positive outcomes, with deployed stores experiencing a significant rise in revenue due to the upsell capability.”
Creating Tech Partnerships
Taking the loyalty leap no doubt remains an industry-wide work in progress. Companies are tasked with finding one—if not more—reliable tech partners with expertise in niche areas—to make loyalty/rewards apps as dynamic as possible.
Using Rovertown, Weigel’s makes modification on promotions in minutes to reflect daypart-buying pattern shifts, said Starnes, who told CSP in January the chain is in the process of soon unveiling “Loyalty 3.0,” the latest iteration to unlock more power in myWeigel’s Rewards.
Weigel’s also integrated PDI’s Koupon technology, known for engaging with retail shoppers to grow sales and obtain insights on buyer behavior. Koupon has delivered well over 5 billion offers since 2011.
PDI, which acquired Koupon in late 2021, can leverage age-verification capabilities around tobacco, expanding an opportunity for age-restricted brands to promote special offers to the right audience at the right time.
Following Industry Leaders
Often—in any industry—it’s a case of herd mentality to follow leading-edge brands that take that technology leap. In this case, it’s loyalty and rewards expansion.
Altoona, Pennsylvania-based Sheetz Inc.’s loyalty platform offers three unique tiers: Fans, Friends and Freaks. Customers become “Fans” by registering and can upgrade to the “Friends” level upon reaching 1,000 loyalty points. They attain “Freak” status at 2,500 points.
Circle K’s“Inner Circle” program offers discounts on fuel and merchandise to regular members, allowing them to upgrade to premium memberships that include more exclusive deals and early notice of new products.
Meantime, RaceTrac’s loyalty initiative gives members a “VIP status” that offers 10 cents off per gallon for their first 40 gallons, and 3 cents off per gallon on each additional gallon purchased every month. A VIP membership costs $2.49 per month.
“In 2024, I think you’ll see more competition around the fuel side of the equation to attract customers based on cents-off per gallon,” CEA’s Rasmussen says. “Chevron is big on creating relationships with customers around fuel.”
Speaking about loyalty tied to the professional driver trade, Rasmussen says this opportunity can’t be underestimated. “We’ll see more chains investing in ‘hybrid’ retail formats [travel center combined with traditional convenience] to create a better opportunity to draw in the lucrative professional driver-customer.”
The role of Palo Alto, California-based Mudflap, an app targeted to both small commercial fleet and independent over-the-road drivers, fetches deep discounts on diesel and DEF. The provider has made an impact with not much competition. Rasmussen expects more competition will develop in 2024 and beyond to battle Mudflap for market share.
Chains continue to have their eye on the loyalty stakeholder prize. Fat Dogs started its loyalty app upgrade in 2023 by partnering with Patron Points to deliver a more robust, intuitive and dynamic program. Fat Dogs is generating faster transactions, higher in-store conversion rates, and a capability to obtain rich, once-elusive customer scan data around buying trends, Riewe said. “It’s given us a real enterprise-wide view of both local customers and professional driver patrons,” he said.
On its goal to become more aggressive with “push” notifications driven by the mobile app, Fat Dogs wants to up that ante on sending daily and weekly alerts around store promotions, including the role of e-coupons.
“I can look at our business at this store and say, ‘Wednesday is the day of the week that’s extremely light with loyalty usage—particularly between 4 p.m. to 7 p.m. We can track that and respond.”
Adds Riewe: “We’re at 15% [customers activating Fat Dogs loyalty], but it took us two and a half years to get there. Loyalty is not a luxury but a necessity.”