The New Paths to Customer Loyalty

NATIONAL REPORT – 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 loyalty evolution is not slowing down any time soon.

“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. It is 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.

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.

“In every other major geography in the world outside of the U.S. — Canada, Germany, United Kingdom, Australia — coalition is the predominant loyalty model,” noted Dennis Armbruster, vice president and managing partner of LoyaltyOne Consulting based in Toronto, Ontario, Canada. “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 LP 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 Point users, with the numbers growing every day, Rick Dery, senior vice president and chief marketing officer for Gulf Oil, told Convenience Store News.

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.

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., operator of 140 convenience stores in New Jersey and New York. “What the consumers ask for, we have to deliver.”

QuickChek’s new website and app, launched in March 2015 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,” he 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.

For much more on the evolution of loyalty programs in the convenience channel, look in the November issue of Convenience Store News.