I pulled into a large and beautiful convenience store recently that was well run and food forward. Thinking that this retailer had its act together, I was surprised to find a loyalty program tied to major oil on the forecourt, a food-focused program for the convenience store, and an additional loyalty offer for over-the-road diesel. Which one do I choose?
As a complete convenience-store nerd, I subscribe to multiple brand communication programs. My inbox, notifications and texts are flooded daily with offers like BOGO (buy one, get one) Monster, free small coffee, free roller-grill item, or $1 smart water with purchase of a sub. I find these offers are white noise, and why in the world would anyone restrict size when promoting free coffee?
Getting It Right
A well-run loyalty program should be so meaningful to your brand that you can track the percentage of gallons and merchandise dollars that are tied to loyalty, and whether you balanced just the right margin per segment to win the right frequency of both visits and basket size. A well-run loyalty program allows you to get personal with your customers where instead of just sending an offer for awareness, you can send a message that says: “Peter, click here to redeem this offer.” That is a situation where a relationship happens with a brand and a customer feels that he or she was personally rewarded.
For retailers that have a major oil brand of fuel, one of the first questions you should ask your loyalty provider is what major oil brands they can provide rewards stacking with, as well as if there are any point-of-sale limitations with their configuration. The logic here is that if you are competing with a major oil loyalty program, then ultimately there is a lower chance of a customer creating a meaningful connection with your brand, as they may prefer the major oil rewards. If you can stack the programs; however, then not only do you create a stronger relationship with your customers, but a customer loyal to your major oil brand is now more likely to be loyal to that oil brand as well as your convenience store versus a competitor with the same major oil.
Another Factor
Now let’s bring the last common piece of the puzzle into play. For retailers that also have truck stops and travel centers in their portfolio, loyalty gets a bit more complicated, especially given that most of your over-the-road diesel gallons are driven by fleet cost plus retail minus agreements, or discount networks like Mudflap. Start with the basics here, by providing a separate registration and program for professional drivers. By doing this, you can make the economics work appropriately with your points construct, and if say cents per gallon drives your primary program, you could do a different program such as points for professional drivers, as cents per gallon may not make sense given the economics of diesel pricing, and the professional driver may not be incentivized by this if their company is paying for the fuel.
Your brand’s loyalty program is a marketing engine that can become your lowest cost of advertising given the ability to directly target, personalize and steer larger wallet share to your business. This marketing engine is more important today than ever, as the ability to target through other methods becomes thinner given evolving customer privacy standards and laws.
Your loyalty program is a relationship with your customers, and retailers that don’t focus on personalizing through their program run the risk of alienating their customers and ultimately undercutting their wallet share, as well.
Peter Rasmussen is an industry advocate, convenience and energy veteran, and CEO and founder of Convenience and Energy Advisors, Boston. He can be reached at peter@convenienceandenergyadvisors.com.
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