Shell Leaps into Loyalty

At a Glance: Shell’s Fuel Rewards Program

 


In an effort to bring value to its fuel customers and branded marketers, Shell Oil Products U.S., in July, launched its Grocery Rewards program with several of the nation’s largest supermarket brands in markets across the country. Customers earn one fuel point for every dollar spent at participating supermarkets. For every 100 points earned, customers receive a 10-cent discount on a gallon of fuel for up to 35 gallons per month. The partnerships include:

 

Royal Ahold. Shell teamed up with Ahold’s two largest supermarket brands, Giant Food of Landover, Md., and Stop & Shop in the Northeast. Giant operates 180 stores in Maryland, Virginia, Washington and Delaware. All stores with the exception of two units in Charlottesville, Va., stores are participating.

Gas rewards can also be earned at nearly 250 Stop & Shop locations. Plus, points can be obtained by shopping at Peapod, Ahold’s online grocery delivery service. In addition to redeeming rewards at Shell stations, Stop & Shop customers can receive their fuel discounts at the grocer’s company-operated gas stations.

The Kroger Co. Shell’s Grocery Rewards program is available at Kroger’s supermarket brands including Bi-Lo, Ralph’s and Kroger in markets nationwide, such as San Diego; Cincinnati; Indianapolis; Jackson, Miss.; Knoxville, Tenn.; Raleigh, N.C.; Detroit; Dayton, Ohio; and, beginning in September, Dallas.

Winn-Dixie Stores Inc. Unlike with Kroger and Ahold, the Winn-Dixie program is administered by a third party: Excentus Corp.’s fuelperks! Beginning in July, customers at the 54 Louisiana Winn-Dixie stores in New Orleans, Baton Rouge and Lafayette were eligible to integrate their Winn-Dixie Customer Reward Card (CRC) with fuelperks! For every $50 in qualified purchases that customers make using their new CRC at Winn-Dixie, they will receive a five-cents-per-gallon fuel discount redeemable at more than 125 participating Shell stations.

The competition for customers has never been so furious. Consumers have more and more choices every day, and the right customer loyalty program has the power to make or break your business. Consider that a Jupiter Research study found that nearly 80% of American consumers have at least one loyalty card. But while software, card programs and loyalty schemes are the tools of customer loyalty programs, they aren’t the essence of loyalty. To build loyalty, you must earn it.

It’s common knowledge that acquiring customers costs more than keeping them. Furthermore, it’s clear that building customer loyalty programs have a great side effect—they yield customers who are brand advocates. Hence, the right customer loyalty program offers threefold benefits; it can reduce costs, increase customer value and create a customer base that’s invested in your brand and eager to share information about your offerings.

Shell Oil Products U.S. has seen the data, understands the importance of loyalty and is springing into action with a new loyalty marketing program that it said could be a “game changer” in terms of cornering the market on fuel brand loyalty. The Houston-based oil company has unleashed its Grocer Rewards program, a consortium of partnerships with three of the country’s largest grocers and their multitude of retail brands.

“Our vision is to be the world’s best supplier of fuels to the world’s best wholesalers by offering them a value proposition that includes a great infrastructure of fuel supply, logistics and pricing,” said Dan Little, North America fuels marketing manager for Shell Oil Products U.S. “To accomplish this, and what helps us differentiate Shell Oil, is the strength of the brand. Not only can we give our wholesalers and dealers the right products at the right price and at the right location, but we can leverage our brand beyond the fuel pumps. We want to give them the tools they need to drive more loyal customers and more valuable customers.”

Exclusive Partnerships
Little described Shell’s push to cultivate loyalty as a three-part process. The first step was differentiating its fuels, which it has done at the pumps with Shell V-Power and nitrogen enriched gasolines. The second step was solidifying its payment options, which includes offerings like Shell’s Drive for Five Citibank card that lets customers earn up to five cents off a gallon of fuel and the Shell Select card that offers rewards on hotel and airline purchases. Now the refiner-marketer is pushing phase three: Grocer Rewards.

Shell has forged exclusive alliances with Ahold, The Kroger Co. and Winn-Dixie Stores Inc., whose retail brands combined reach approximately 90% of the country. The brands are household names in major markets: Giant, Stop & Shop, Kroger, Bi-Lo, Winn-Dixie and Ralph’s, among others.

How it Works
As part of Grocer Rewards, customers can earn points at Ahold and Kroger supermarkets on grocery purchases using the grocers’ loyalty cards—one point is earned for every dollar spent. For every 100 points customers accumulate, they earn a minimum of 10 cents off a gallon of fuel at participating Shell stations. The offer is valid up to 35 gallons per month.

To redeem the rewards, customers simply swipe the respective grocer’s loyalty card at the pump and the price rolls back automatically using the Shell rewards proprietary software platform. Gas points are valid for 30 days from the day they are earned. There is no rollover so if they are not used within the 30-day window, they will expire. All points can be tracked online at the respective Ahold and Kroger Web sites.

“The beauty of these programs is that you have three partners—Shell, the grocer and the dealer—all connected by a seamless loyalty interface,” Little said. “So when a Shell customer goes to a participating Shell station, they are prompted to utilize their Kroger rewards card or their Giant rewards card, and when they do so that dispenser will automatically authorize their reward. In addition to the discount they are receiving, customers feel empowered by prompting the immediate price roll back.”

The program with Winn-Dixie is slightly different. The program is administered by a third-party: Excentus Corp.’s fuelperks! rewards program. Customers who shop at any of Winn-Dixie’s 54 stores in Louisiana can earn a fuel savings at more than 125 participating Shell stations in the state.

For every $50 in qualified purchases customers receive five cents off each gallon purchased. Additionally, fuelperks! rewards are stackable allowing customers to earn 10 cents off per gallon if they spend $100 or 15 cents per gallon for every $150 spent, and so on.

“Customers in our Jacksonville, Fla., and Panama City, Fla., markets, where we are currently running this program, have already saved more than $4.6 million on gas with fuelperks!,” said Joey Medina, Winn-Dixie’s New Orleans region vice president. “We’re thrilled to bring the same opportunity to all of our shoppers here in Louisiana.”

Customers First
For Giant Foods, which sells its own proprietary gasoline at seven supermarkets in Virginia, Delaware and at a handful of stores, the Shell partnership creates no conflicts. In fact, the company was quite clear that it views the Shell loyalty component as a crucial part of its long-term plan to attract and retain its customer base.

“Shell was a natural choice because of the great number of stations in close proximity to our stores,” said Bob Bennett, senior director of front end operations and cost containment for Giant Food of Landover, Md. “We work hard to give our customers the greatest value and help our shoppers stretch every dollar In addition to the value programs we currently offer, like free antibiotics and $9.99 generic prescription refills, we’re able to bring our customers more value and savings in a new area: transportation.”

While the program is still relatively new, the early results are overwhelmingly positive. For example, High’s of Baltimore, a Shell marketer that operates more than 70 High’s Dairy Stores in Maryland and Delaware, finds itself a happy recipient of increased fuel volume from Giant customers at its 34 participating Shell stations.

“Our customers are very enthusiastic about the savings they are receiving, and they seem to be spreading the word,” said Edmund Broderick, High’s director of petroleum operations..

More importantly, the company didn’t have to outlay any cash to get the increased volume, which was one of Shell’s primary goals with developing the program. Participating Shell marketers do pay a transaction fee for taking part in the program.

The spike in volume didn’t come as a surprise to Shell. “Kroger and Giant operate fuel centers and have been targeting their own customers with fuel rewards for a number of years now. We are adding to the number of redemption centers available,” Little said. “In doing so, what we are seeing is that we are appealing to a completely different customer—the customer that will buy from a high volume retailer like a grocery store or a big-box, versus a quality fuels retailer like Shell. Now we’re converting them and creating incremental business. This is part of the boost our marketers are enjoying.”

Shell’s research also shows that the core customer represents a broad spectrum of each individual market. Men and women, customers young and old across all demographics are signing up. “That’s the great thing about this program is that it appeals to gasoline customers who are also buying groceries,” Little said. “That is a significant percentage of the population.”

The Next Phase
Little emphasized is that in order for this program to succeed, all partners must work together to promote and market the loyalty offering, and to execute it at the store level.

“The bi
g concern when you’re rolling out something new is that customer can get a little confused,” Little said. “If they go to redeem points and then they’re turned away, that could be potentially hurt the entire program. All sides are working together to make sure that doesn’t happen.”

Over the next 12-18 months the oil company will focus on getting the program rolled out to gap markets from coast to coast.

Giant Foods, on the other hand, is working to bring manufacturers on board. For example, CPG companies, beginning in August, can now buy into the program by offering customers an opportunity to earn extra points on purchases of specifically promoted items. This again creates a win-win for customers and suppliers. Customers will earn points more quickly, while manufactures will start seeing spikes in product movement. Plus, it gives them a vehicle to tout new products by incentivizing customers to try them.

“We are looking at every angle and every customer in our effort to increase sales,” Bennett, of Giant Foods said. “We want our regular customer to buy more. We want the customer that shops with us every now and then to stop hopping from store to store and stay with us. As customers become more aware of the benefits we’re offering they may do some impulse shopping elsewhere, but it will be in the back of their minds that they can get a better a deal at Giant. At the end of the day, it will be hard for our competitors to top that.”

Eight Ways to Earn Customer Loyalty

 


Dan Little, North America fuels marketing manager for Shell Oil Products U.S., is a big believer in loyalty, and with good reason. He is seeing firsthand the impact the Big Oil company’s Grocery Rewards program is having on fuel sales. Loyalty, he said, is not only here to stay in the convenience store industry, those not investing in a program to reward loyal customers and offer ongoing incentives to retain their business will eventually notice a drop off in sales as other chains target their sales dollars. Experts weighed in on the necessary steps for building customer loyalty.

 

Company Loyalty First: Customer loyalty is a two-way street. How can you expect customer loyalty if you don’t practice company loyalty? Are you loyal to your best customers or are you giving discounts and extra attention to new customers? Loyalty is about being fanatical with devotion to your best customers, said Ben McConnell of marketing consulting firm Wabash & Lake and co-author of “Creating Customer Evangelists.”

Employee Loyalty Second: Any customer loyalty program must factor in the front line of the business. It’s the point of contact between customer and employee that sets the foundation of repeat business.

“Hire for attitude, train for skill. Hire nice people. As a customer, I’m always amazed when businesses put unfriendly, surly people in front of their customers,” McConnell said. “Loyalty is often the direct result of the relationships your employees build and maintain.”

Quench the Thirst: Consumers are thirsty for trust following corporate scandals and the general distrust of corporations. If your business is not trustworthy, the odds of establishing customer loyalty are diminished.

Establish good business ethics and practices.

Finding Loyalty: Any business wishing to start a customer loyalty initiative needs first to identify important customers and understand their customers’ behaviors. Use whatever tools, software and data-mining techniques to locate your repeat, regular customers. Also, know your profit margins. Don’t offer discounts until you know the impact on your bottom line.

Reward Customer Retention: The key metric to track in a customer loyalty program is retention. How many customers are defecting? How many are retained? Measuring customer retention is half the battle. Your staff must be rewarded for retention.

Use Customer-Centric Language: It’s easy to think you put the customer first. However, take a closer look at your marketing communications. How many times does your literature refer to “we” the company versus “you” the customer? Go back and speak from the customer’s perspective.

Bolster Customer Communications: Part of customer loyalty and retention are maintaining regular contact with your most profitable customers. Communication to your best customers should take the form of showing your appreciation and providing new learning experiences to add value to your customer’s life. Send “happy birthday” emails and establish regular communications, such as newsletters to connect with them.

Leverage Your Brand: Smaller businesses will always have the advantage in connecting with customers and building a solid relationship. Their hands-on passion for helping customers is difficult for large companies to replicate. “Small businesses thrive on outstanding customer loyalty. It’s their currency of growth and their best differentiator,” McConnell said. “Without loyalty, small businesses are destined to compete on a playing field with larger competitors where they are outnumbered and outwitted.”

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