Got Loyalty?

Loyalty is not what it used to be.

What started in the convenience store industry as punch cards and points with limited redeeming options is evolving thanks to technology, coalitions and consumer demand. And this evolution is not slowing down any time soon.

Earlier this year, 46 percent of retailers reported loyalty programs as a top priority, and in the next five years, 883 percent more retailers plan to have the ability to identify customers when they walk in the door using smartphones, according to a report by retail consulting firm Boston Retail Partners.

“Loyalty is less and less about points and thresholds,” said Mark Johnson, CEO and chief marketing officer of Loyalty360, the loyalty marketers association based in Cincinnati, Ohio. “Loyalty programs should boost interest and engagement for brands.”

For convenience stores, the goal is not only to drive fuel customers into the store, but also to encourage repeat visits. Using the latest technology, operators can identify who is at the pump or in the store, and personalize offers based on each consumer’s activity.

Thorntons Inc., based in Louisville, Ky., launched its Refreshing Rewards loyalty program powered by Paytronix Systems Inc. in September 2014. Rewards are based on three levels: Welcome, Premium and VIP. Using the Paytronix Rules and Wallets Engine, the program can segment registered customers by how often they visit or purchase gas, and the company can deliver varying levels of rewards based on visits, spending and purchase behavior.

Thorntons’ goal is to encourage gas-only customers to shop inside the store and also drive frequent shoppers’ incremental visits by leveraging their transaction history.

“While it’s very difficult to get someone who is not using a convenience store to begin using it, Paytronix has given us the ability to capitalize on the huge opportunity to increase the visits for existing customers,” said Thorntons President Tony Harris.

Additionally, while gas discounts play a role in the Refreshing Rewards program, members can also receive personalized perks based on the things they purchase most, as well as frequent purchase rewards and automatic sweepstakes entries.

Despite the declining gas prices of late, “fuel rewards will be part of programs consistently moving forward,” according to Loyalty360’s Johnson, noting fuel still has an emotional appeal. In fact, many c-store rewards programs either focus rewards around gasoline or include it as a major component of the program.

“Consumers became hyper-sensitive as soon as gas exceeded $4 per gallon and while the hypersensitivity has waned a bit, the concern has not gone away,” said Rick Dery, senior vice president and chief marketing officer for Gulf Oil LP, based in Framingham, Mass. “People still like the idea of spending less on what you have to and more on what you want to, so paying less for gas is still something resonating with customers.”

In July, Chevron Corp. launched a new Techron Advantage Fuel Credits program in collaboration with Synchrony Financial that enables Techron Advantage personal credit card and Visa cardholders to earn 3 cents per gallon in fuel credits at participating Chevron and Texaco stations. Visa cardholders can also earn 10 cents per gallon on purchases of $300 or more at non-fuel merchants each month, and 20 cents per gallon when spending $1,000 or more.

“Chevron has had a loyalty discount as part of our Visa co-branded card since 2008. With the new program launch, we are excited to offer an enhanced loyalty discount to the entire cardholder base,” said Brian Sardelich, consumer card manager at Chevron.

Savvy c-stores are expanding their customer rewards beyond fuel as well, as today’s consumers are demanding choice, simplicity and flexibility from loyalty programs, according to Dennis Armbruster, vice president and managing partner of LoyaltyOne Consulting based in Toronto, Ontario, Canada.

“One thing is consistent, no matter what industry, and that is choice and flexibility,” he said. “The more open you make the rewards side of the equation, the better.”

COALITION LOYALTY

While many loyalty programs allow customers to earn points on purchases made at the company’s locations and redeem points in the same way, coalition loyalty programs are starting to gain some traction. These programs span across other businesses and industries, allowing consumers to earn points shopping at participating merchants, and in some cases choose how and where they redeem the points.

American Express teamed with marketers earlier this year to launch Plenti, one of the first coalition programs in the United States. Plenti allows shoppers to earn and redeem rewards points across various brands, including ExxonMobil, Rite Aid, Macy’s, AT&T, Nationwide, Direct Energy and Hulu. Not tied to a credit card, the program is free to join and works with all payment networks, including MasterCard, Visa and cash payments.

“In every other major geography in the world outside of the U.S. — Canada, Germany, United Kingdom, Australia — coalition is the predominant loyalty model,” Armbruster noted. “Most traditional models rely on a grocery chain because of the percentage of income from grocery, but the U.S. doesn’t have a national grocery chain so that’s a challenge.”

Gulf Oil took the coalition approach when creating its Power Points loyalty program for Gulf Electricity customers in October 2014. The company extended Power Points to its branded dealers in July 2015. In the past, points accumulated from shopping at a number of participating retailers, including Macy’s, Target, Walmart and Home Depot, could be used to pay Gulf Electricity bills. Now, consumers can choose to apply the points toward their Gulf Orange Card bill or receive a Gulf cash card in the mail to use at any Gulf location for gas or merchandise inside the store.

The company currently has more than 200,000 Gulf Orange cardholders and more than 10,000 Power Points users, with the numbers growing every day, Dery said.

“Customers can shop online at any of the participating stores and get a percentage back on their total purchase in Power Points,” he explained. “Right now, each Power Point is worth $1 and that will roll into a customer’s account and translate to Gulf gas cards or as payment toward their Gulf Orange card.”

LoyaltyOne has done research around value propositions for customers to apply rewards toward bills they don’t like to pay, such as gas and electricity, and there is a demand for it from customers, Armbruster said.

“There is an appetite for that, and I applaud Gulf for going down this path. I think others should take a look at that,” he noted.

Gulf is now testing the next phase of the program, which will include a mobile app, offering customers the ability to pay via mobile, redeem Power Points and rewards at the pump, and more.

GETTING TECHNICAL

With the continued evolution of mobile apps and mobile payments, technology is reshaping the way consumers participate in loyalty and rewards programs from retailers. In fact, consumers are requesting this more than ever.

“We created our mobile app and redesigned our website through OpenStore by GasBuddy because consumers have been asking for it,” said John Schaninger, vice president of sales and marketing at QuickChek Corp., based in Whitehouse Station, N.J., and operating 140 convenience stores in New Jersey and New York. “What the consumers ask for, we have to deliver.”

Wawa Inc. and 7-Eleven Inc. also both launched mobile apps connected to rewards, with Wawa introducing a mobile app and Wawa Rewards program earlier this year. As of January, Wawa stores were accepting mobile payments, and the app also allowed customers to make in-store purchases using a Wawa gift card from their smartphones. Customers can sign up to earn Wawa Rewards, redeem rewards and more from the app.

Meanwhile, 7-Eleven’s new loyalty platform, 7Rewards, is based on its mobile app and enables customers to receive a free beverage for every six purchased, including coffee and fountain drinks. Each time a customer purchases a cup, the cashier scans the barcode in the app and a “punch” appears in the app. After six, a “You’ve earned a free cup” notification appears in the app.

“7-Eleven is a beverage destination for millions of Americans, with over 60 percent of our customers including a beverage with each purchase,” said Laura Gordon, 7-Eleven’s vice president of marketing and brand innovation. “We know that millennials like to have plenty of choices and, hands down, 7Rewards offers more beverage variety than any other rewards program.”

At QuickChek, its new website and app launched in March was the fastest launch in OpenStore history in terms of the number of downloads, Schaninger noted. The company can now offer digital coupons and campaigns directly to mobile phones.

“Typically, we offer something free or a price promotion, where a notification pops up on the screen of their phone alerting them to the message or deal,” Schaninger said, explaining technology will be playing an even larger role in the future. The company already installed beacons in all of its stores, and will be looking at geo-fencing soon so the retailer can message customers when onsite or inside the store.

“The engagement between customer and store team will grow through technology and the growing importance of technology in speaking to customers, specifically millennials, is a key factor in what we will do moving forward,” he said.

OTHER INDUSTRIES TO WATCH

Loyalty programs are not just evolving in the convenience store industry. The changes underway are affecting all industries, and c-stores can learn from them as well, including the restaurant, hotel, grocery and drugstore industries.

“The hotels are creating simplicity and personalization, so X amount of stays equals a free stay no matter what entity you stay at,” said Johnson, citing Wyndham Rewards and Best Western Rewards as two leading examples.

Wyndham customers can choose to earn airline miles or partner points instead of Wyndham points when staying at a property, and they can also earn points through car rentals and other partners. At Best Western, rewards members can redeem points earned at a number of participating retailers including Amazon, Apple and Walmart, and a variety of dining and airline partners.

Some loyalty programs in other industries offer the option of donating rewards to a local group or charity. Target’s Red Card lets customers earn points toward their local school, while a grocery chain in California donates a percentage of sales to any registered nonprofit in the community or a school program, said Armbruster.

“If parents register their card for a local organization or school, then a percentage of sales over 30 days will be sent to the organization for membership dues, kids equipment fees, etc.,” he noted. “It’s this outside-of-the-box offering that has value to consumers.”