Building Long-Term Revenue Through Loyalty

Data has become the name of the game when it comes to competing successfully in the convenience arena. But chalking up a win won’t happen if you play that game using existing data alone. Collecting data throughout the engagement ecosystem, segmenting it and then creating personalized loyalty programs aimed at building long-term revenue are all key steps in scoring successfully. “Twenty years ago, data capture was done by knowing your customers personally. The operator knew who came in everyday, what brand of soft drink they liked to buy, and often knew the names of their customers’ kids,” said Roy Strasburger, CEO of StrasGlobal, a provider of contract operations for gas stations and convenience stores, and cofounder of The Vision Group Network, an organization that brings together industry leaders in quarterly virtual meetings to create a knowledge base of experience and innovative ideas. “This still holds true for owners and operators of single stores. But if you have multiple stores, more sophisticated loyalty programs have become necessary to maximize your sales and profit potential,” he noted. “The better you know your customer, the better you can meet their needs.” Data Capture Strategies There are several strategies convenience store retailers can use to capture data, according to Bonnie Woods, senior strategist at Paytronix, a provider of SaaS customer experience management (CXM) solutions for c-stores and restaurants. This includes surveys, which deliver qualitative data; loyalty programs and technology, which offer key metrics “especially when a seamless customer experience enables brands to engage through digital channels;” and social media, which Woods said many Paytronix brand partners use “to connect with guests and build a more robust data set for each customer.” Whichever strategy retailers employ, data-gathering should be a gradual process, Strasburger stressed. “Having a long profile data entry for someone to fill out when downloading the app is annoying and may lead to people abandoning the registration process. The best idea is a registration protocol that only asks for the information that is crucial for your method of communication — text or email, for example — and, if you are doing online payment, payment information,” he said. “As the customer uses the app, ask an additional question every two or three interactions to gain demographic and preference data. This will allow you to build a robust profile over time without creating friction with the customer.” Insights from the January 2023 report, “CLVG Currents of Change” — the first in a series of reports from the Convenience Leaders Vision Group (CLVG) — support that advice. The inaugural meeting of the CLVG brought together c-store industry leaders to discuss a broad range of topics impacting convenience retailing today. “While there was no defined limit as to how much [information to ask for] is too much, everyone agreed that you have to be sensitive to overreaching,” Strasburger relayed. Offering incentives is one approach that can enhance the data-capture process. “With any loyalty program, it is critical that guests are incentivized to identify themselves on every transaction, so marketers can build a complete guest profile,” Woods said. Strasburger echoed this, stating that “customers are transaction-oriented — they will give us something if we give them something in return.” Providing rewards and recognition to loyal customers without giving away something they already planned to pay for, he added, is the challenge. “The loyalty perks should be items that provide either intangible rewards, such as recognition or experiences which drive an ‘emotional’ loyalty; offer the opportunity to upsell the customer such as a discount on a drink that is larger than the one they normally buy; or introduce the purchase of an item that is not part of their normal buying pattern — ‘if you like this, then you will probably like this,’” Strasburger explained. Points of Engagement Deciding how you’ll capture information about your customers is one step in playing the data game; figuring out when to connect with customers and what to ask at various points in the engagement ecosystem is another. “The two critical phases are registration and the first half-dozen interactions,” said Strasburger, who stressed that the initial point of engagement should be as frictionless as possible and immediately rewarding. “Any type of friction — multiple screens to navigate, multiple questions to answer, manual data to enter, security codes, passwords at each step of the way — will reduce the likelihood that the customer will use the app, even if they are shopping with you.” Woods said the points of engagement should depend on the retailer’s goals at any given time. “On the business side, c-store brands should look at their strategic priorities and then look to loyalty as a way to build the data they’ll need to reach these goals,” she advised. Stores with “somewhat less mature” loyalty programs should make sure the data is mapped to communicating the core program value, Woods noted. “And if the concern is customer lifecycle management, then the program data collection should focus on those problem areas that could negatively affect retention, acquisition or engagement.” Maintaining engagement throughout the ecosystem in ways that help retailers achieve their goals without burdening customers is another challenge, according to Strasburger. “Promotions and benefits need to be new and fresh,” he said, noting that one solution is to create a tiered program that provides additional benefits the more the app is used. For example, convenience store chain Texas Born (TXB) uses silver, gold and platinum levels, each one with a benefit multiplier or special access to individualized deals, Strasburger explained. Segmenting the Data Once operators have data in hand, they must analyze and organize it in ways that will help them build out and maintain an effective loyalty program. “It’s really about using the data to make better decisions,” Woods said. “If you’ve collected data about purchasing habits, then you can cluster by items and categories and, through that, understand what a person is likely to purchase next or what their best category is. This can help drive them to new categories and increase basket size.” Recency/frequency/monetary value (RFM) — a data-driven segmentation technique that can reveal when a customer’s last purchase was, how often they’ve purchased in the past, and how much they’ve spent overall — is another strategy that can help c-store retailers understand shopping cadence and overall customer lifetime value, she said. “We also can understand whether a buyer is driven by merchandise, like coffee or snacks, or if they’re coming in for gas and making a purchase as a secondary action,” she added. “Then, there is the lifecycle of the customer, so we can understand whether they’re in the nurturing phase, an active member, or lapsed … and finally, we want to know what channels they’re using, so we can drive adoption of additional channels. For example, if a person is only shopping in the store, how do we move them to the mobile app? How can that drive additional revenue?” Demographic information such as age, gender and zip code are the segments Strasburger is most interested in. “This can be married to the purchase history when your customer gives you their loyalty number to provide insight into the customer basket and the demographics associated with the purchase,” he said. “If this is done well, it can surprise the owner as to who their real customers actually are and shed a bright light on their buying habits and patterns.” Best-in-Class Connections How are successful convenience store operators using data to connect with customers and build long-term loyalty — and long-term revenue — in the process? According to Woods, the best brands marry qualitative and quantitative data sets to personalize the guest experience. “Top brands focus more on reinforcing good behavior vs. focusing too heavily on generating net new behavior,” she explained. “It’s really about engaging with guests where they are, offering them choice and value in their preferred categories, and building deep relationships that increase customer lifetime value.” The U-Drive Plus program from United Dairy Farmers (UDF) is one example of a loyalty program that has evolved significantly and successfully since its launch as a fuel rewards program more than 10 years ago. In fact, it took the top spot for the gas stations category in Newsweek’s “America’s Best Loyalty Programs” for 2023. Today, the core of U-Drive Plus consists of everyday cents off, fuel rewards, U-Drive Plus pricing and market basket savings for all members. Registered members who provide more personal information enjoy additional perks, such as birthday rewards, weekly app freebies, targeted offers, and a low-price lock that automatically rolls back the price they pay to the lowest fuel price of the day. These features drive customers in from the fuel pump to the c-store because “people don’t want to leave savings on the table,” Denise Jenkins, vice president of marketing, insights and loyalty for UDF, told Convenience Store News. “Often, if you can get them to come for gas, you can get them for something else.” Flying J — No. 1 in the convenient stores category in Newsweek’s best loyalty programs ranking — is another retailer taking a creative approach to collecting data. “When they launched their loyalty program, they offered every new member the chance to win $10,000 in their ‘Trace Adkins Ride for Rewards’ cash giveaway as a signup bonus,” said Strasburger. He called this “a great motivator to initiate action.” Playing the data game in a way that builds robust loyalty programs is key for c-stores that want to thrive today — something Strasburger predicts will be even more imperative as society moves into what is certain to be an increasingly technology-driven future. “Store loyalty programs are going to become more important with the growing use of electric vehicles. No longer will customers be fuel brand centric. It will be all about the store,” he concluded. “A good loyalty program will help a retailer stand out from the competition.” Upping Your Game With Data By Andrea Mulligan, Paytronix Data lies at the heart of any major convenience store and nowhere is this truer than when it comes to building lasting guest relationships. People have become accustomed to personalized experiences in their digital shopping and not just at digital brands like Amazon. Convenience stores also have seen a sharp increase in guests seeking personalized digital experiences. In fact, 71 percent expect companies to personalize their experience, and 76 percent get frustrated when that doesn’t happen, according to a 2021 study by McKinsey & Co. Getting to that level of personalization means having access to the right data, and having the tools in place so that marketers can use that data to create a more relevant experience — and, through that, increase revenue. At a minimum, a person should be able to see their last order at the top of a custom menu. But guests want more, like suggestions for an add-on item or something they are likely to purchase. To do that, you need to understand the purchasing habits of that individual, as well as those of people who have made similar purchases. Artificial intelligence (AI) plays a significant role here. Done right, this kind of experience happens without the guest entirely knowing that something is built just for them. Behind the scenes, a digital guest engagement platform is learning that guest’s visit cadence, their preferred items, and even the dayparts they generally choose. Then, the marketers can use the platform to spring into action so that win-back programs reach a guest at just the right time while offering up the right item. Campaigns to promote a new food offering can reach the people who are most likely to act on it and help them feel seen. Loyalty is about keeping guests coming back. If you’re just looking at rewards and discounts, you’re missing the bigger picture. Loyalty can do so much more and help raise customer lifetime value and, through that, long-term revenue. Loyalty should be a foundational element in a convenience store brand’s broader marketing mix. Loyalty is not a campaign or a promotion, it is a long-term commitment to the customer relationship that is the most direct route to true connection of any of the marketing tools available. It considers the journey customers want to take with you and you want them to take with you. An effective loyalty program is part of a broader digital guest engagement strategy that keeps your guests active in that journey and coming back for more. That journey must include elements like online ordering, mobile apps, CRM tools, and messaging. Ensuring these elements work in concert is key to meeting the brand promise. Our data finds that people who use a brand’s native mobile app return more often, tip better and spend more than those using third-party apps. What’s more, they also tend to be part of the loyalty program, which means it’s easier to understand their preferences and easier to communicate with them directly. The ability to personalize the experience meets customer expectations and drives a higher shopping cart. All this is to say, when you engage the guest fully across the whole platform, you can build those strong relationships that are at the core of the hospitality industry. Andrea Mulligan is chief customer officer at Paytronix. She helps customers realize the full benefits of the Paytronix Customer Experience Platform by ensuring that every customer receives world-class service.

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