Chevron Pairs With Safeway for First U.S. Loyalty Program

SAN RAMON, Calif. -- Chevron Corp. is getting all its ducks in a row to launch a loyalty rewards program with partner Safeway Inc.

While the oil company would not reveal an exact date for the launch, the roll out will begin next month.

The loyalty program will be Chevron's first in the United States. It has a program in Canada and in some in its Asian markets, according to Cary Knuth, general manager of marketing, sales and services, Chevron Americas Products.

"We get the question from our customers and we are not blind to what the competition is doing," Knuth told CSNews Online. "In order to do it right you have to get the right partner. They have to be a good fit overall as a company, their culture, their brand and just as important is their geography."

Chevron has been in discussion with Safeway, which has an existing loyalty program, for approximately a year and the two companies matched up demographically and on a brand basis. "We looked at the profiles of their customers and of our customers, and there are enough similarities that we see some brand synergies," Knuth said. "At the same time, not all Safeway customers use Chevron gas and not all Chevron customers shop at Safeway. We are confident there are still a lot of customers that we can build some loyalty for both brands with the program we put together."

The pairing will allow customers to use Safeway's existing loyalty program to earn points and "burn those points" at Chevron- and Texaco-branded gas stations, he added. "It gives them incentive to use [the points] for discounts at Chevron and gives them an incentive to go back and continue to shop at Safeway. We think it builds a nice synergy between the two brands," he added.

Geographically, Chevron, based in San Ramon, Calif., and Safeway, with company headquarters in Pleasanton, Calif., make a good fit as well. According to Knuth, when comparing the two coverage areas, the companies are in the 90th percentile of coverage. "We got a really good fit," he said. "In fact, we laughed together as we looked at our various networks and you have this feeling that we almost did network planning together at some point because they fit so well together."

Chevron has not announced the specific markets tapped for the roll out, but Knuth said the first phase will be in the California area, encompassing about 1,000 Chevron stations and 250 Safeway stores. "It is a pretty big geographic area and not just one city or small market," he explained. "The first phase covers a good part of the west for us."

Partnering with Safeway may seem odd when Chevron's portfolio includes its own retail outlets, Chevron ExtraMile. Knuth told CSNews Online that while there are ongoing discussion about establishing a loyalty program through ExtraMile, the company wanted a broader reach for this loyalty program.

"We are getting up there in terms of [ExtraMile] stores and we got a great footprint but we are trying to find something that would stretch across the west and would not be limited to our ExtraMile footprint, which is kind of limited to just major [metropolitan areas] across the west. We wanted something that would have reach into each state that we market in," he said.

Customer request has been a main driver behind the launch of the loyalty program, Knuth explained, adding it was a topic of discussion at their annual customer event last year. "We said we are going to do it the right way and find the right partner. Quite frankly, if it is just meeting competition-type strategy then we don't think it has the longevity it needed," he said. "One of the things we told our customers is that we are not going to do this unless it is a win for everybody. We think we have the right partner to work us and our retailers, and we can all be successful together."

Chevron has already begun introducing the loyalty program to its customers and, so far, of those approached, 100 percent have participated, he added.

"We constantly explore innovative ways to bring value and savings to our shoppers," Mir Aamir, president, customer loyalty and digital technologies at Safeway, said in a release. "Gas and groceries are two critical and frequent purchases consumers make. Partnering with Chevron to create a program that offers our customers savings at the pump is a natural fit."