Fuel and loyalty – special report
Fuel is set to become a customer retention tool as retailers search for ways to maintain revenues.
Rather than just dropping prices, some retailers are proving more innovative and incorporating fuel saving into loyalty schemes.
Buy fuel, pay less for groceries
In the US, two family-owned businesses, Ukrop’s and Uppy’s, have launched a fuel savings programme called ‘FuelPerks!’ in Richmond, Virginia which gives customers the chance to save anything from ten cents to several dollars per gallon based on their Ukrop’s grocery purchasing behaviour.
For example, savings of US$0.10 per gallon of fuel can be gained for every US$50 worth of groceries they buy.
The two businesses teamed up to provide the programme at participating fuel stations throughout the Richmond area, beginning with a trial of the new loyalty programme that began late June.
Ukrop’s customers who register for the pilot programme initially have the chance to earn price reductions at 14 fuel retail locations operated by Uppy’s and supplied by Southside Oil. The number of participating fuel outlets is expected to increase to more than 30 by the end of the summer 2008.
The discounts earned can be accumulated over multiple grocery purchases and can be used for purchases of up to 20 gallons of fuel at a time.
For example: A customer spending US$100 at Ukrop’s will earn a discount of US$0.20 per gallon; A customer spending US$250 at Ukrop’s will earn a discount of US$0.50 per gallon; A customer spending US$500 at Ukrop’s will earn a discount of US$1.00 per gallon.
Each discount is valid for a single fuel purchase, after which programme members begin earning toward their next discount, based on qualifying grocery purchases.
Customers can find their FuelPerks! balance on each grocery till receipt, or by logging in to the programme online, or by calling the programme’s call centre.
Car sharing becomes a club thing
Britons are increasingly signing up for clubs where vehicles can be hired by the hour for just a few pounds.
One company taking advantage of the trend is Zipcar which has seen a 25 percent spike in membership month-on-month since the credit crunch started to bite.
“People are working out the cost of motoring and seeing they can make savings of up to 80-90 percent by using car clubs,” said Paul McLoughlin, managing director.
Zipcar differs from traditional car rental companies in that members pay a joining or annual fee – typically about 50 pounds (US$100) — and use smart cards to unlock vehicles left across the city in designated parking bays.
In contrast with rental firms, many car clubs give free petrol for up to 60 miles a day and members can have a car for as short or as long as they want.
The concept is well established in other countries and Zipcar boasts 225,000 members worldwide, most of them in the US.
The AA motoring organization estimates the cost of owning a car, whether it is used or not, to be about UK£4,000 for an average family car including depreciation. This does not include fuel costs, repairs or parking fees or road tolls.
“We have seen a huge rise in member numbers since fuel prices started to go up,” said Paul Johnson at Zipcar’s competitor Streetcar, Britain’s largest car club with 35,000 users and cars available from £3.95 per hour.
Free fuel from Sunoco
Sunoco is repeating its “Free Fuel 5000” summer promotion for the fourth consecutive year.
The program rewards customer loyalty with free gas prizes during the summer season, the company stated.
“Sunoco is excited to bring back the Free Fuel 5000 again this year and reward our loyal consumers throughout the summer months with free gas as well as provide one lucky Sunoco customer with 5,000 gallons of free fuel,” Chris Buitron, manager of brand marketing for Sunoco, said in a statement. “It’s our way of thanking our customers for their continued support.”
To enter, consumers can stop at one of more than 4,000 participating Sunoco stations and pick up a free Sunoco/NASCAR decal, then display it on their vehicle. The decal is the same as those featured on every car in NASCAR, the company stated.
To reward customers, Sunoco will deploy professional spotting teams to catch drivers displaying the decal at or near a Sunoco station. Once spotted, customers will instantly win a gift card for free gas, the company stated.
Customers can log onto www.gosunooco.com for the official rules, to find participating locations and also view photos of the winners as they are spotted, Sunoco stated.
Petro-Points teams with Canadian CAA
The Petro-Points rewards programme and CAA (a not-for-profit organization that delivers automotive, travel, insurance, advocacy and associated products and services) have teamed to offer joint member benefits.
* Earn 1,000 bonus points upon registration as a joint CAA and Petro-Points member
* Exchange Petro-Points for CAA dollars or redeem Petro-Points for a CAA Membership
* Earn 20 percent more PETRO-POINTS on all fuel and convenience purchases at Petro-Canada retail stations.
“This is a great opportunity to help people to get more out of their memberships,” says Phil Churton, VP, Marketing, Petro-Canada. “By signing up as a joint Petro-Points and CAA member, you get the benefits of both programs, plus the opportunity to earn Petro-Points faster than before.”
The CAA began as a motoring league in 1903, with some 2.2 million CAA members in Ontario and 4.8 million members in Canada. Petro-Points was launched in 1995.
Ford brings back employee pricing on trucks
Chrysler stole the limelight last month with its Let’s Fuel America program in which the automobile manufacturer promised that new car buyers (with some caveats and restrictions) wouldn’t pay more than US$2.99 per gallon for up to three years or 12,000 miles per year.
This month, Ford joined the fray by bringing back a 2005 initiative called Employee Pricing.
“Ford will offer its trucks to US consumers for the same price it charges people who work for the company,” it said in a statement.
In June Ford sold only 42,973 trucks, a 30.6% plunge against June last year.
Conversely, Honda saw its best-ever sales month in June when it sold 53,299 Civics, a 28.3% increase. Kia, Subaru, Hyundai and Mercedes also posted best-ever months in May.”
Employee pricing on 2008 F-series trucks was due to run until the end of June but it is thought the offer may be extended.
Let’s Fuel America
The Chrysler initiative, which started the American price bandwagon, guarantees that program participants won’t pay more than US$2.99 per gallon of gas for a maximum number of gallons depending on the model of car purchased.
To qualify for the program, customers had to purchase or lease an eligible Chrysler vehicle from May 7 through July 7, 2008, and have a valid MasterCard or Visa credit card or check card.
When a customers bought a qualifying new 2008 or 2009 Dodge/Chrysler/Jeep vehicle, they tell Chrysler the Visa or MasterCard credit card they use to pay for gas.
* Chrysler then issued them a Let’s Refuel America card to use to buy gas in each of the next three years.
* Each time a customer buys fuel with that card, their credit card will never be charged more than US$2.99 gallon—no matter the pump price.
The Let’s Refuel America Card is valid at approximately 97% of gas stations in the US.
Fuel incentives used to bolster employee loyalty
A study by marketing consultancy Fresh Marketing has argued that concern over oil prices and growing environmental awareness can be directly harnessed by employers to build their employer brand – but that most have very little idea how to go about doing this.
At the same time, US firms are reporting increased interest in programmes or initiatives that can help employees deal with the current fuel crisis.
As meeting the monthly mortgage bill, paying for groceries or filing up with gas has become more of a challenge, so saving the planet has dropped down the list of priorities for many workers.
Nevertheless, employers are recognising that if they do things to help their workers with the rising cost of living and getting to work it will not only be a good thing to do morally but a great way of boosting loyalty and their employer brand.
A report for the US Society of Human Resource Management has pointed to gas prices now hovering around the US$4 a gallon mark, while research by the website.
CareerBuilder.com has argued that nearly half of workers say they have had to cut back somewhere else to afford the gas needed for their daily commute.
What this has meant is that forward-thinking employers are starting to look at ways to help their employers cope with the high cost of fuel.
The SHRM has cited a website from The Families and Work Institute that has been sharing innovative approaches between employers.
Initiatives have included offering incentives for not driving, allowing people to commute on alternate days, offering retention bonuses to those with long commutes and creating website listing an organisation’s green initiatives and commuter options for employees, including the use carpools.
Other innovative approaches have included providing preferential parking to employees who use van or car pools, giving talks on improving fuel efficiency and changing the production schedule so people are less likely to be commuting in fuel-heavy, stop-start traffic.
Some firms have even started giving employees movie passes or restaurant certificates to help offset budgets eaten away by travel expenses, promoting ride-sharing advertisements in their company online newsletter, subsidising train or bus passes and providing free commuter buses from the suburbs.
The Fresh Marketing research, meanwhile, has argued that many executives feel uncertain how successfully to address the environmental and social impact of their businesses.
Issues such as eliminating waste in the supply chain, reducing energy use and carbon footprints, ramping up corporate-wide volunteer programs, reducing toxins or harmful ingredients in products can all sound good on paper but knowing where to start can be a real challenge, it argued.
“It’s a new era for business. More and more business leaders recognize that their company’s future is increasingly intertwined with the needs and demands of society,” it said.
“What many executives don’t understand is how best to manage that changing relationship. Employees often feel like they are swimming against the tide,” it added.
Companies should look at range of approaches, including developing informational videos and podcasts, writing articles for company newsletters and hosting seminars, pointed out Shari Aaron, Fresh Marketing principal.
“But three-quarters reported that management is indifferent at best to helping gain the tools and knowledge they need to address these issues, and half said their company is poor at communicating with shareholders, as well,” she added.
Sustainability may have been around as a concept for many, many years, “but it is only recently becoming a highly vocal topic for many of today’s corporations”, she continued.
“Today, the conversation is seen as much more relevant to business growth and prosperity,” she added.
Key findings from the research included that just a third of businesses believe sustainability is an issue at the core of their organisation.
More than half of employees remain confused over how environmental and social impacts are addressed or feel that they are kept in silos.
Nine out of 10 also linked brand reputation to addressing environmental and social impacts, yet eight out of 10 firms had not fully incorporated their corporate responsibility performance into their business metrics.
Most employees wanted more education and resources on corporate sustainability, as only a tenth felt prepared to address such issues within their job.
Job changes likely to lessen commute
Rising fuel prices and worsening traffic are driving 26 percent of employees to consider changing jobs to improve their commutes, reports a study conducted by BusinessWeek Research Services (BWRS) and commissioned by TransitCenter, a nonprofit organization that provides tax-free transit benefits as a means to promote mass transit use.
The survey, entitled, “The Impact of Commuting on Employees,” finds that 48 percent of employees say their commute is getting worse. The increased frustration is building a bigger appetite for commute-focused relief in the workforce. Indeed, 65 percent of employees say they expect their companies to step up and take the lead in easing their commuting difficulties.
“Three years ago the price of gas wasn’t considered an HR issue,” said Larry Filler, president and CEO of TransitCenter. “Today, it’s starting to take its toll on employee loyalty and becoming a serious concern.” The study also found that nearly a quarter, or 24 percent of employees, say they’re late to work at least three times a month because of traffic, a drain on workplace productivity.
Geography is now a critical factor in the level of employee willingness to change jobs, according to the TransitCenter survey findings. Nearly one of three (31 percent) people who live in the suburbs or rural areas and travel to jobs in the city say they’re willing to consider taking another job to improve their commute. And nearly one in two employees (46 percent) who live in the city and reverse-commute, would also consider a new job for a better commute. When asked what commuter-related benefits would be most attractive in their new jobs, employees cite flextime (79 percent), telecommuting (72 percent), pre-tax commuter benefits (54 percent), and subsidies for their pre-tax commuter benefits (47 percent).
The study polled 1,048 respondents in Chicago, New York and San Francisco in October 2007. These cities were chosen due to their geographically dispersed markets and high concentration of commuters as identified by the US Census’ 2005 American Community Survey. The survey has a 95% confidence level with a margin of error of +/- 3%.
A copy of the TransitCenter and BusinessWeek Research Services survey report is available by contacting Charles Kim at email@example.com.
Fuel prices fail to increase online shopping, says Nielsen
Although rising gas prices are prompting consumers to cut back on driving and stay at home more, there has only been a slight increase in consumers shopping online this June compared to a year earlier, according to The Nielsen Co.
11% of consumers shopped more on the Internet in June, compared to 9% more in June 2007 over the previous year.
Moreover, nearly two-thirds of consumers are reducing their spending, up 18 basis points, or .18%, from June 2007 and up 14 basis compared to six months ago, Nielsen says. In addition, more consumers are combining shopping trips (78%), 52% of consumers are eating out less and 51% are staying home more.
Increased fuel prices also are prodding 32% of consumers to use more coupons as a way to save money, up from 25% in December, suggesting that retailers can attract customers by offering mobile or online coupons in addition to traditional discounts.
A March study by research and consulting firm JupiterResearch found that 30% of consumers would like to receive mobile coupons, but only 1% of advertisers offer them.
Another recent survey by ICOM Information and Communications found 58% of respondents favor electronic coupons delivered to loyalty cards online and the same percentage say they would use coupons more frequently if they could download a coupon from the web and have it automatically connected to an electronically swiped frequent shopper card.
The Nielsen survey was based on responses from nearly 50,000 U.S. consumers geographically and demographically representative of the total U.S. population. The survey was conducted during the first week of June, when regular gas averaged US$3.98 a gallon.