While these difficult economic times continue to peck away at customers’ disposable income, higher fuel prices are eroding discretionary spending.
Gasoline prices nationally have increased steadily since the Biden Administration came into office, rising nearly $1.40 to an average of $3.41 for a gallon of regular unleaded, according to the AAA Gas Prices index at press time.
While global demand and the war in Ukraine are causing inflated prices, it is unlikely national averages will reach $5 a gallon again. Still, the fear of rising gas prices is enough to curb consumer spending. Fuel, like food, is one area consumers cannot avoid. This can work in the industry’s favor. While spending in areas like entertainment, electronics and apparel are going down, spending in other areas is going up.
For example, during the Great Recession of 2008, more people took vacations closer to home and opted to drive rather than paying higher airline costs. As a result, more dollars were spent locally sustaining small businesses. People may also hold off a year or two buying a new car but will require more repairs and maintenance on their current vehicles.
This “stay local” trend is great for convenience stores and presents an opportune time to revisit your loyalty programs. Higher fuel prices typically present a big opportunity for retailers that already have a fuel rewards program in place. If you don’t have a program in place, get one. Make it meaningful and tie it to other areas in your store that help benefit you, including your foodservice program and other high margin categories and product lines.
Customer rewards programs have become a core component of marketing for c-stores that drive incremental visits and sales. Rewards programs also enhance the customer experience, establishing brand loyalty and opening communication channels to engage customers directly. A carefully crafted rewards program presents an opportunity to boost targeted customer behavior, but not all rewards programs are created equal. The path to success requires a solid understanding of the core options and the potential offers presented to customers. Poor planning makes success more challenging, and an unsuccessful rewards program will waste a great deal of money and manpower.
The foundation for a strong rewards program is built upon two elements: the core program, and the layers and promotions that leverage the program.
The core program is the heart of your loyalty initiative. It defines the rewards as well as how they are earned and redeemed. The core program is what the brand communicates to customers and what is displayed in your store. Successful core programs will motivate guests to visit more often and spend more of their budget with you. The core program can reward guests based on their spending or how often they visit the store. Design the program to align with your brand and your business objectives.
The second part of the program consists of the challenges, bonuses and occasion-based rewards that you can add to your core program. Examples of layers include traditional birthday rewards or contributing a portion of the customer’s spend to charity. These layered programs differentiate a brand and strengthen your relationship with consumers.
Meanwhile, promotions are targeted and timely offers that can be sent to boost traffic during slow periods, to increase customer spend, or even to win back lapsed customers. Promotions and layers are designed to influence buying behavior and introduce an element of fun for your loyalty members with interactions that create urgency.
I urge you to take the time to start exploring your loyalty program and the new options available. There are literally dozens of scaleable, customized solutions available for chains of all sizes. If you are not currently offering a rewards program you are already a step behind the market leaders, not only in convenience, but in the grocery industry as well. The time to act is right now.