More convenience stores are finding that building a loyal customer base has its rewards.
By Traci Dawn Carneal, Contributing Editor
More convenience stores are offering registered customers exclusive access to discounts, promotions and more. That’s because loyalty programs, in their many forms are effective at doing what they are supposed to do—build a base of loyal customers.
Other benefits include data analysis to better understand what motivates consumers to spend, as well as opportunities to partner with suppliers and generate excitement in the community through special promotions and events.
If you’re on the fence about starting such a program, consider this: More than half of c-store users (51%) say rewards or loyalty programs influence their decision to visit a particular store, according to Mary Chapman, senior director of product innovation for Technomic Inc. The percentage shifts almost 30 percentage points higher for heavy c-store users and younger consumers.
This is no surprise to Fritz Schierl, CEO of Team Schierl Cos., who said 27% of all transactions at the company’s chain of c-stores are loyalty based.
“We have a very active and loyal fan base through our Impact Rewards discount club,” Schierl said. Participants can use the card at any of the company’s operations, which include 25 c-stores, 16 Subway restaurants, and a tire and service business.
OBVIOUS BENEFITS
Clearly, a c-store can benefit from offering a loyalty/rewards program. The first challenge is choosing whether to use an aggregate rewards company such as KickBack or Gas Buddy, team with your fuel provider (CITGO, Exxon), or offer your own program.
When looking at a program, keep your ideal customers in mind. What will motivate them to show up? Are they willing to carry a fob or add an app to their phone? Will they want to share personal data to sign up?
Today’s consumers face rewards program offers practically everywhere they shop, causing many to pause before signing up for one more.
“Consumers are being more selective about who they give their phone number, address or email to, even if the trade-off is discounts,” Chapman said. “They are more cautious in light of identity theft and data breaches. The program has to offer something that really sings to them.”
She added that consumers also want it to be easy to participate in a loyalty program. Rather than remember they have a punch card in their wallet, they want the retailers to keep track of their purchases and eligibility for rewards. After they purchase the ninth coffee, soda or sandwich, for example, they want the system to automatically give them the 10th item for free.
AMPING UP ENGAGEMENT
While fobs and cards are still in use, the trend is to replace them with phone apps to make loyalty program participation even easier and more engaging. Mobile apps open up a slew of opportunities for retailers to interact with customers, from text alerts and live updates via the store Website to 24/7 social media engagement.
Country Fair Stores recently launched the Club CITGO mobile app (which appears in a company promotion on page 130) as a complement to the c-store’s CITGO cash card loyalty program. The company worked with CITGO Petroleum Corp. to plan a variety of events to celebrate the chain’s 50th anniversary and to encourage people to sign up for the app.
According to Paul Rankin, division vice president for Country Fair Stores, the loyalty rewards program allows CITGO marketers and retailers to engage more effectively with the communities they serve through a mobile platform, in which they can customize in-store discounts available to customers and receive direct feedback.
CITGO provides its locations with complete account management and training on the mobile app—retailers determine the app’s content and can even use Club CITGO as a platform to communicate with employees.
Country Fair Stores hosted a trade show that brought together about 1,100 employees and 120-plus vendors in anticipation of the mobile app launch and anniversary celebration activities. Over the next month and a half, the company hosted events at 50 store locations for customers.
“We had a whole team at each event to give out hot dogs and sandwiches, and we had music and line dancing,” Rankin said. “It generated excitement in each community and we got people to sign up for Club CITGO.”
New app users received a $2 gas reward on their mobile devices when they “checked-in” on Facebook to the event booth at each celebration, with one in four receiving a $5 gas reward (a maximum of $7 in gas rewards).
Country Fair and CITGO also donated $1 to charity for every Facebook check-in.
Since then, Country Fair has seen $5,000 a week or more in redemptions.
“I’m not sure if that is good or not since we are so new to this, but I do think we are CITGO’s largest app customer,” Rankin said, noting that the coupons for 25 or 50 cents off Snapple and 50 cents off a number of candy bars have been well received.
Rankin realized the challenge remains to provide enough interaction with app users that they don’t just delete the app. “We are at the infancy of this, and that will be our next step—to have a robust enough offer so it will keep people involved,” he said. Another goal is to access the data from the loyalty program.
“We need to figure out how to data mine,” Rankin said. “I know our competitors do this…you see the patterns then adjust your couponing accordingly. Sheetz does a good job of this.”
Chapman said loyalty program aggregators are gaining in popularity because they condense several apps into one.
THIRD-PARTY NETWORKS
Another option for c-stores is to use an outside vendor to provide the back-end management and administration functions. Most of these programs are designed to take the stress out of loyalty program logistics, and usually provide data collection and reporting for retailers not equipped for these processes.
Often, these programs provide training for c-store employees, technical support, data reporting and consultation. Before hiring such a company, find out which point-of-sale (POS) systems are compatible, if data is encrypted to avoid breaches and the range of services offered. For example, KickBack Rewards captures data at POS to provide real-time information on customers segmented by store and the types of customers they serve, where they are shopping, what they are buying and when.
Regarding options, retailers can choose between a “coalition” loyalty program—one that partners two or more businesses—to participate in or a “proprietary” program, sponsored by a single business with one or more locations.
Team Schierl uses the Outsite Network to host its loyalty program. Consumers pay $1.99 for a key fob that tracks all purchases and accumulates points for gas and store purchases and rewards.
“We get monthly reports, which is how we know the percent of our customers who are members of our loyalty program,” Schierl said. “We partner with different manufacturers to offer the rewards. It’s a great way for customers to guest trial a new item, and for us to build loyalty and volume.”
Chapman said independent operators that have a chain brand to identify with can use those marketing programs.
“In that case, you’re building loyalty by being a member of the community and building true loyalty versus frequency loyalty,” he said. “Having your own program, perhaps managed by an outside network, may be a great option.”
