Maximizing Loyalty: Building Stronger Connections with Customers by Mark Radosevich.

Throughout my petroleum career I’ve handled assignments across most of the downstream gamut, from fuels to lubes to retail and commercial. Being primarily fuels oriented, I’ve navigated retail operations from a macro view, focusing on the key financial drivers such as the store sales, food service and other key revenue contributors. These past months I’ve had the opportunity to take a deeper dive into the subject at several individual meetings with an assortment of chain operators. This experience really highlighted how far the convenience industry has evolved and how simply running great stores with great food service is not enough to optimize customer engagement and maximize long term business value.

These meetings demonstrated how the deployment of an effective customerloyalty initiative is the catalyst for taking a fine-tuned store operation to the next level. Given this importance, I decided to devote this article to the subject. But since my own loyalty engagement may be best described as utilitarian, centered around CPG discounts at the dispenser, I’ve enlisted one of our affiliated colleagues, Peter Rasmussen, former Wawa executive and president of Convenience and Energy Advisors to share some proven insight on the subject.

Q: Given your extensive work creating and managing highly effective loyalty platforms, what are some basic challenges and opportunities that you’ve encountered?

Peter: “It’s surprising how many well run operations have multiple loyalty programs concurrently running, including major oil at the forecourt, store food offerings and some with over-the-road diesel. This results in periodic execution complications, confusion and less than maximum customer engagement.”

Q: It’s clear that loyalty programs are here to stay and that there’s a need for greater sophistication. What do you see going forward?

Peter: “Too many retailers offer too many choices that can overwhelm customers. The challenge is to find the right balance and streamline their loyalty options to avoid this confusion. Programs must align with the needs of the customer while also supporting the business objectives of the retailer.”

Q: What are some suggestions that can improve loyalty effectiveness?

Peter: “Avoid generic promotions. Strive to build affinity with the business by connecting on a personal level. Rather than just sending a simple promotion, invite the customer, by name, to take advantage of an exclusive offer.”

Q: Besides the personal touch, what else can be done to fine-tune program results?

Peter: “Program follow up fosters continuing improvement. Tracking customer engagement by measuring the percentage of fuel and merchandise sales from specific campaigns or offers helps gauge overall effectiveness and identifies areas for improvement.”

Q: How can oil company loyalty programs be optimized to benefit the overall business?

Peter: “A key question that one should ask their loyalty provider, Can the rewards from the convenience store’s program be stacked with those of the oil brand? Stacking rewards is a powerful strategy. Synergism is created by stacking loyalty points and rewards from both the oil brand and the proprietary program, which engages customers on a deeper level, leading to increased retention and sales.”

Q: Are there available tools that can move loyalty from a static, generic approach to something more personalized and effective?

Peter: “A slate of integration processes and tools are available to achieve the various loyalty enhancementsthat I’ve discussed today. It begins with a comprehensive assessment of the current operational systems and circumstances unique to each retailer to highlight the appropriate remedies to be utilized. This requires strong owner or upper management commitment to embracing this next generation of loyalty and allow their program to be taken to the next level.”

Q: What final thoughts can you share?

Peter: “The most effective loyalty programs are committed to building strong customer bonds beyond basic price or discounts. Those that focus on personalization and meaningful rewards will stand out. In a cluttered world full of loyalty offers, retailers that craft programs that go beyond the basics and truly resonate with their customers will maximize loyalty, increase retention, and continuously drive business growth.

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Possessing over thirty five years of downstream petroleum experience, Mark Radosevich is a strong industry advocate. He is president of PetroActive Real Estate Services, LLC, offering confidential mergers & acquisition representation and financing services exclusively to petroleum wholesalers. He can be reached by email at mark@petroactive.net and by phone at 423-442-1327.