Murphy USA's Loyalty Program Converts 2M Customers to Full Membership

EL DORADO, Ark. — Murphy USA's new loyalty program is catching on with its customers since its national launch in March; however, the company sees opportunities to expand its membership.

According to President and CEO Andrew Clyde, Murphy Drive Rewards (MDR) is building on top of Murphy USA's core category growth strategies. The loyalty program is growing and sustaining customer traffic in the company's key categories, and to date, 2.2 million members are fully enrolled in MDR.

In addition, one in six fuel transactions are with members, and in the original pilot markets members are purchasing about eight gallons more per month now vs. a year ago, he said during Murphy USA's second-quarter earnings call on Aug. 1.

"If asked what inning we are in with MDR, we would say we have just finished warming up and are about to take the field," Clyde said.

"Second, at the launch of any loyalty program you are obviously going to sign up your most loyal members first and at a cost, but our most loyal customers are already exhibiting behavior changes that are highly additive to our business," he said. "This is the group we thought we would have to subsidize by gaining a larger share of wallet from less frequent customers and attracting new customers. I would never want to compare a gas station to Amazon, but the behavior we are seeing from our loyal customers is quite similar."

As he noted, MDR continues to attract 500,000 participants per month — only four months after its national launch.

"These customers are earning and burning points at similar rates and getting the immediate satisfaction they seek. In fact, 90 percent of the members who joined in June 2018 remained active in the program compared to other loyalty programs that experienced 40-percent attrition within the first three months," Clyde explained.

Moving forward, the chief executive sees opportunity in converting the 7 million non-member participants to members.

"Many of these non-member participants are gaining value by accessing tobacco programs, and we believe there are significant upside as we gradually convert them to members and engage them," Clyde said. "Growing our existing customer share wallet and acquiring new customers has some costs, but we still believe it is still more efficient than acquiring customers by buying someone else's old stores."

He added MDR cost impacted fuel margins by approximately $4 million and merchandise unit margins by 40 basis points, or about $3.2 million.

"As members burn through non-transactional points from sign up, we are quickly reaching the stage where the monthly earn and burn are in sync, one of the best signs of a healthy program, and these costs will decrease. We also have initiatives that will enable us to deliver the benefits more efficiently over time as well," Clyde said.

El Dorado-based Murphy USA's portfolio includes 1,474 stores in 26 states, consisting of 1,160 Murphy USA sites and 314 Murphy Express sites. Murphy USA is No. 29 on the 2019 Convenience Store News Top 100 report.