EL DORADO, Ark. — Tobacco still appears to be the biggest beneficiary—and driver—of Murphy USA’s current loyalty efforts, with program participants increasing trips and basket rings, officials said in the company’s recent earnings call.
Saying the loyal customer base is “already immediately additive and accretive to the business,” Andrew Clyde, president and CEO of the El Dorado, Ark.-based chain, said that outcome wasn’t what they expected.
- Murphy USA is No. 5 on CSP's 2019 Top 202 list of convenience-store chains by number of retail outlets.
Here are several of Murphy’s tobacco-category insights revealed during the Aug. 1 conference call …
Loyal customers get more loyal
Describing the company’s initial hypothesis on its Murphy Drive Rewards (MDR) program, Clyde said the company thought it would lose money on loyal customers and make up the losses from new customers. “What we found is these loyal customers are giving us an extra trip on the fuel side—about 8 gallons more per month—and that we were seeing other higher purchases in both tobacco and the overall basket,” Clyde said. “But that loyal customer base is already immediately additive and accretive to the business.”
Enrollment higher than average
Another surprise was the magnitude of customers who signed on. “If you look at the number of members per store, that density in orders of magnitude [is much] higher than others," Clyde said. "And we looked at some public comps of other companies where we could see the data and our numbers on a member participant per store [basis] are higher than the next four or five combined.”
Many loyalty customers haven’t bought fuel
Yet another surprise Clyde revealed was that 2 million of the 9 million loyalty customers signed onto MDR have yet to purchase fuel with Murphy. He said the potential to turn them into new fuel-buying customers through the loyalty program was significant.
And there is more potential in customers not fully signed onto the program. Of the 9 million signed on, only 2.2 million are what Clyde calls “fully enrolled.” The potential of enrolling those customers into full-member status is also a great opportunity for the chain.
Tip of the iceberg
Discussing how the company has just begun the MDR program, Clyde said, “We're not even in the first inning. I mean, we basically just turned on the basic features and functionality, and we've been able to get this response.”
When Murphy starts doing targeted consumer offers at scale, the benefits will be significant. “We've done a lot on a smaller-scale basis to demonstrate the capability, [and] proved [to] ourselves and our supplier partners that these are highly accretive marketing investments for us,” he said.