Loyalty 360 C Store Presentation (2)


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Loyalty 360 Webinar March 2010

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  • Thank you so much for your valuable time today – I hope the title of the webinar peaked your interest because you want to learn more about:The Convenience Store SpaceYou are a Loyalty practioner and you are curious how the loyalty schema is being applied in this convenience industryYou are curious how mobile marketing is being used today with the motoring public or the mobile consumer
  • Quickly without giving a commercial – I will just say that I am with MetroSplash Systems Group in Dallas Texas and we are a Technology Provider that specializes in fuel-based loyalty programs – Founded in 2003 we originally enabled grocery stores to offer fuel based loyalty programs but as the market has changed over the last decade we are now very active in helping Convenience Stores achieve the same types of programs for both the purpose of loyalty and/or customer retention but also for Sales lift or revenue growth.
  • So today’s agenda - I have divided our discussion into 4 main topics1. A primer of the C-Store Retail Channel – probably the largest retail segment, yet most understood2 A historical view of loyalty or continuity programs in the convenience store space3. The shifts we saw in JUST 2009 to the new c-store loyalty programs – you will be impressed with how progressive they have become4. Illustrate and show some example of the mobile and social marketing that is occuring in today’s convenience channel
  • As I lay the foundation or primer for the size and scope of the C-store market in the US I thought I would quickly site my friends at NACS the National Association of Convenience Stores to debunk some of the MYTHS that occur in the convenience store industry based on their surveys.Myth No. 1 is that large oil companies own local convenience stores.The reality is that only 2 percent of gasoline retail outlets are owned by large oil companies. There was a huge shift starting in the late 90’s and still continuing today where the major oils have truly divested in what they call down stream or retail – when you see the logo such as CITGO or Exxon – that is simply a brand of petro the retail merchant carries much like Coke and/or Pepsi. There are some exceptions – Hess for example – owns and operates all 800 plus of their retail locations.Myth No. 2 that convenience stores make large profits. In consumer surveys conducted by NACS, they reported that the public believes retailers make a profit of 40 cents a gallon after expenses when the realty is that the national average for the industry is 12 cents a gallon for cash purchases, and only 3 cents on credit card transactions. Myth No. 3 that gasoline retailers are to blame for price spikes and that stores somehow collude to control cyclical price fluctuations.There all type of regulations that really keep the retailer from setting any prices on their own – the price you see on the gas station signs are all a “trickle” downstream effect starting with the price of oil on any given day“Up like a rocket and down like a feather,’”
  • I love this slide because I think it gives the convenience retail channel the respect it deserves – for sheer magnitude alone 1 in 23 US Dollars is spent in convenience stores 4.4% of the country’s $14.3 Gross Domestic Product GDP comes from convenience stores Convenience stores are a destination for more than 160 millionAmericans every day COMPARE THAT to 10Million people that FLY every day according the FLYware.com http://flightaware.com 98% of AMERICANS shop at a convenience store at least once per month The industry serves 58 billion customers every year
  • So those are some big numbers – How big is this retail channel that it plays that type of role in the US economy? Almost 145,000 store locations in the US – that is 1 for basically every 2000 peopleLet’s compare it to the other competing retail channelsSupermarket/grocery approx 35,000 locationsWhile the mass dollar stores are growing - still only at 20,000 locationsMass Merchandise locations – like Walmarts and Targets – 6,600And the ever attractive wholesale clubs at basically 1200 locationsC-stores sell approximately 80 percent of the gasoline purchased in the US. Who sells the other 20%? The competing channels mentioned above – WHY do they sell FUEL? Because it ATTRACTS consumers –many times these channels will use the fuel as a loss leader just to ATTRACT consumers – we will discuss the “attraction” of fuel later
  • So back to NACS – again probably the best run INDUSTRY association I have ever come across – They serve as such good support system for the industry of this size and magnitude by educating best practices, benchmarks, standards, policy advocacy, etc.A reporter there coined a cute phrase “a Convenience Truth” – a pun on our favorite INTERNET inventor - The convenience truth explains Convenience retailing isn’t just a location or store type but actually a way of retailing where TIME is weighted the highest priority.convenient locations, extended hours of operation, one-stop shopping, grab-and-go foodservice, variety of merchandise and fast transactions.Again we are seeing some of the OTHER competing retail channels ADOPT convenience retailing:Giant Foods Stores – “Giant to Go” in PA 4,400 sq feet vs. 70,000 sq feetSelf service beverage bars in Drug Stores now (Café’W)
  • So we have learned the c-store channel leads in FUEL sales – in what other “categories” do the c-stores lead?Beer Sales: Nearly 80 percent of convenience stores sell beer, accounting for nearly one-third of all beer purchased in the U.S.Candy Sales: Candy is a high-impulse item in convenience stores. In fact, many shoppers (49 percent) report that their candy purchases were unplanned - Envirosell.Coffee Sales: More than three out of four adult Americans say that they drink coffee either daily or regularly, according to the National Coffee Association, and convenience stores are one of the preferred destinations for coffee drinkers. Consumers stop to buy coffee more than they fill up their cars, providing convenience stores with a great opportunity to build loyalty and repeat sales.Technology: The integration of technology into convenience stores continues at a fast pace. Over the past decade, the convenience store industry has gone from being a technology laggard to a technology leader in using new technologies to deliver convenience – I will expound on this more later in the presentationConvenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes. .Employee Turnover unfortunately the c-store space is plagued with unusally high employee turnover with averages some years over 120%
  • The problem with these type of frequent shopper programs is obviously FRAUD. With employee turnover tipping near 120% you can only imagine the opening for slippage.
  • There has been another historical role c-stores have played in Loyalty Programs and that is as REDEMPTION OUTLET for grocery fuel programs – when you see a grocery and supermarket offering a fuel program – many times they have PARTNERED with a c-store chain to honor their fuel savings. We at MetroSplash have served as the host technology for many such partnershipsBut as I stated earlier in the webcast there is a big shift occurring starting in early 2008 where C-stores are beginning to want to claim the benefits of a fuel program for their own business and their own sales lift. Where as before they simply burned rewards a shopper EARNED at grocer they are now offering their OWN rewards on items inside their own stores. I will share with you some chains that are doing so later in the presentation.This shows an article written in Oct 2009 where 100 organizations were polled on the the grocery/c-store partnership vs. c-store offering their own. You can see from the PIE chart almost 60% of respondants believe c-stores should run their own stand alone programs.This article is from CSP which is an outstanding monthly publication for the Conveneince Store Petroleum industry hence the name CSP
  • Hopefully throughtodays presentation so far you have all been thinking through you own interactions/transactions with the conveince stores channel – how often you shop there, which ones you prefer, what products you buy at the c-storeThe c-store which was known as the GAS STATION in the past was often a place to stop for gas only and perhaps access to a public restroomWhat happens at today c-store is completely different:Many of today’s stores offer full Deli – quick serve or hot serve food itemsThey are NewstandsThey offer Financial Services – Fund Wiring, Gift Cards, ATMS, Check Cashing – and much moreThey offer Telecommunications servicesThey offer Fresh Produce and Flowers – some chains even have private label brandsThey OFFER Video Rentals – the blockbuster kiosk and the red boxThey now rival the mass merchandisers in Just in time inventory practicesCentral Distribution Centers – the Larger chains have CDCs that deliver baked goods, dairy and other store branded products
  • So we are all familiar with the Loyalty Census Colloquy publishes – this one is from April 2009Obviously as a “loyalty token” the flyer mile is the clear winner and the cash-back or credit card rewards program running a close second.I point out to the membership in the Fuel/Cstore segment and then ask you to compare that penetration rate to the numbers you heard earlier in the presentation to get a true sense for the TAM or the Total Available Market for loyalty in the C-store channel.
  • I won’t spend a lot of time on this but I want to assure you that c-store industry is quite aware of their demographics or what some might term as stereotypes – I got the term and definition of bubba directly from a NACS presentation – (I chose the dukes of hazzard photo as the graphic) - It is NOT this demo (psycographic) that they are looking to build loyalty programs for….they have this consumer and bubba is loyal.It is these other consumers they want to attract moving forward with the Soccer mom front and centerThat is the beauty of using a FUEL reward as their loyalty token as it appeals to each of these psycographics.
  • Now when the rest of retail was learning how to take commerce to the WEB with online shopping that technology phase kind of passed by the convenience store – everyone struggled with how does a marketplace that is so high-touch, brick and mortar by definition interact with consumers over the internet – originally there weren’t a lot of options – the big chains offer static corporate sites but NOTHING interactive or real-time was happeningThen came MOBILE – who is MOBILE? The Motoring public which is virtually everyone. Even if you are pedestrian you are mobile and you are a candidate for needing something impulsively and convientiently from a c-store.
  • You can’t really mention MOBILE or LOYALTY without acknowledging the TeensToday’s teens are the GENERATION that CPGs developed full blown brand loyalty in – BUT because they are so SOCIAL and MOBILE - Location LocationLocation and TIME is also paramount to them which makes the CONVEINCE retailing THE IDEAL retail outlet for them.
  • So let’s discuss this concept of FUEL as the LOYALTY CurrencyAgain comparing the Convenient Industry to the AIRLINE industry – the fuel reward is the new “frequent flyer mile” but even better because it appeals to a broader audienceWhile cumulation is attractive in any loyalty currency – there is also beauty in instant gratification – I earn it and I can immeadiately BURN it. - A fuel Reward offers this – especially in a card based program where the card is accepted at the fuel pumpFuel is emotional – it reflects the state of the economy in the consumers eyes – it is reported almost daily on the news – it is discussed at dinner parties – it is joked about on Jay Leno – the consumer very often percieves Fuel as greater value than cash itself.Fuel rewards can be offered in many ways but the two most popular are called Market basket and Item Level (or sku based rewards) With market basket or treshold rewards you can drive overall store trends like “INCREASE average ticket value” but with Item level rewards you can effect product level movement – which is very compelling – especially to your SUPPLIERS – we will dive into that more laterAlso – when you offer LOYALTY transactions along with your POS transaction which is how a Fuel Reward works you open up a view to a rich set of data that when analyzed properly can reveal very helpful trends and consumer behavior.
  • So MetroSplash – offers the FuelLinks program which is our standard out-of-box fuel-based loyalty program but most merchants who are pursuing a LOYALTY program are also interested in driving their own brand in the program – Which makes perfect sense which is why we allow our customers to completely private label our rewards platform to reflect their own branding….Here is an example of the Rutter’s Rewards program “powered by FuelLinks”Before I advance the slide – visually take in all the web 2.0 functionality Rutters has added to their rewards program – They used a very strategic partner of ours GasBuddy OpenStore to architect many of their social and digital media outlets that accessorize their reward program.
  • So here is a very modern example of a progressive c-store using social media and fuel rewards to (PROMOTE) or drive sales for their hot service food but also their video rental serviceThe praised the Oscar winning movies, listed which ones they have available for rental in their Blockbuster box then then you click on a ad for hot food worth triple rewards (which are fuel).
  • So same retailer, RUTTERS HQ’d in York PA also offer a mobile application for the iPhone – Blackberry and Droid which help you FIND their locations – give you real time pricing of their fuel - before I advance quickly note the far right iPhone – note the button in the lower right hand corner – it says RUTTER”S Rewards we will come back to that.
  • I can zoom in to my location and see a picture of that store – then I click the rewards button and it BRINGS up my Rutter’s Reward MEMBER number – with a barcode of my member number (the same barcode on my rutters reward card) and it states my current reward balance which is .20 cents per gallon savings – UP TO 20 gallons – then it will show me the current price at the rutter’s location I chose and then MY PRICE per gallon based on my rutter’s reward balance. Now that is instant gratification and I am not even at the PUMP yet.
  • So if you don’t have 3 g phone – Rutters offers all these other forms of Social Networking and mobile communication to reach you with their promotions. Remember I said suppliers are interested in the rich data that comes from a rewards program – hence – the Ads for promoted brands right on this page –
  • Again – when you analyze loyalty transactions in the context of the products being promoted with fuel rewards ALONG with the transaction long from your POS – loyalty transaction vs. non-loyalty transaction – you uncover a great deal of data that is very strategic to a C-Store Merchant and his negotiations with his suppliers. Many times when a supplier can SEE the affect that a fuel reward has on his product’s movement he will collaborate with the merchant to fund the fuel program.
  • When you truly analyze your loyalty data – You can measure the controls in your MARKETING/Merchandizing and how they affect your PROFIT and your SUPPLY CHAIN effeciences.
  • So quickly – because we are very near the end of our time – this is a topology of what we call the c-store rewarded community – and how the c-store can truly become the hub of earning and burning a community loyalty currency.I spoke thru most of these examples – Supplier collaboration, Grocery issuance, Social and Mobile with the consumer, Fuel Rewards in general but I will also add that there is a community model – which many of our mid size chains are using which is recruiting Community style merchants – dry cleaners, restaurants etc. to also issue fuel rewards to be redeemed at their storesThe final model I will mention is that of FLEX or the fuellinks exchange which metrosplash offers via another strategic partner POINTS.com which allows consumers to convert balances in other affinty programs – namely airline, hotel and retail programs into FUELLinks cash-for-gas. This has proven to be very appealing during our current economy – consumers taking current balances that don’t have enough equity to translate into a meaningful reward and converting them to the instant gratification of FUEL.
  • So how does it ALL work – it is true Software as a Service with our MetroSplash Host is providing Loyalty Transaction processing, a Promotion Engine and Reporting
  • An finally a quick acknowldgement of the our customers who we consider LEADERS in this new eLoyalty movement happening in their Convenient store space. Stop at their stores, join their programs, visit their facebook – EARN their rewards.
  • Loyalty 360 C Store Presentation (2)

    1. 1. Driving C-Store eLoyalty<br />Offering the Convenience Store retail channel a mobile and robust loyalty program<br />
    2. 2. Webinar Topic<br />Driving C-Store eLoyalty with the Mobile Consumer Using Digital Media and Rewards<br />Build eLoyalty with your mobile consumer by connecting with them on social networks and mobile devices—anywhere and everywhere.Bring consumers into your store, boosting in-store sales of merchandise and prepared foods by building your brand through targeted electronic promotions, coupons, rewards and through constant consumer contact.<br />2<br />
    3. 3. About the Speaker<br />MetroSplash System Group, Inc<br />Founded in 2003, MetroSplash Systems Group, Inc. provides a technology platform that enables businesses of all types to implement a supplier-integrated fuel-based consumer reward program (FuelLinks) or to monetize an existing affinity program toward the purchase of fuel. <br />The company offers the financial settlement and Loyalty as a Service (LaaS) infrastructure to bridge between merchants (reward issuance) and fuel retailers (redemption). <br />MetroSplash is a Dallas based firm<br />3<br />
    4. 4. Agenda<br />1. C-Store Industry Primer<br />2. C-Store Loyalty History<br />3. The New C-Store e-Loyalty<br />4. Mobile rewards for the motoring public<br />4<br />
    5. 5. The Myths of the Space<br />Myth No. 1 is that large oil companies own local convenience stores.<br />The reality is that only 2 percent of gasoline retail outlets are owned by large oil companies. <br />Myth No. 2 that convenience stores make large profits. <br />Public believes retailers make a profit of 40 cents a gallon after expenses when the realty is that the national average for the industry is 12 cents a gallon for cash purchases, and only 3 cents on credit card transactions.<br />Myth No. 3 that gasoline retailers are to blame for price spikes and that stores somehow collude to control cyclical price fluctuations.<br />“Up like a rocket and down like a feather,’”<br />5<br /><ul><li>NACS ONLINE Oct 2009</li></li></ul><li>Strength in Numbers*<br />1 in 23 US Dollars is spent in convenience stores <br />4.4% of the country’s $14.3 GDP comes from convenience stores<br />Convenience stores are a destination for more than 160 millionAmericans every day <br />98% of them shop at a convenience store at least once per month<br />The industry serves 58 billion customers every year <br />6<br />*NACS National Association of Convenience Stores 2009 State of the Industry<br />1600 Duke Street Alexandria, VA 22314<br />
    6. 6. Comparison<br />144,875 c-stores in the US 1 for every 2,100 people<br />Competing channels have far fewer stores <br />Supermarkets (35,394)<br />Drug Stores ( 37,700)<br />Mass Dollar stores (19,974)<br />Mass Merchandise (6,594)<br />Wholesale Clubs (1,184)<br />Convenience stores sell approximately 80 percent of the gasoline purchased in the US each year. <br />Who sells the other 20%?<br />7<br />
    7. 7. Blurring of the Channels<br />A Convenience Truth by Pat Pape NACS Magazine<br />Convenience Retailing – a way of connecting with today’s ever challenged customer<br />Convenience is Time vs. Money<br />convenient locations, extended hours of operation, one-stop shopping, grab-and-go foodservice, variety of merchandise and fast transactions.<br />Giant Foods Stores – “Giant to Go” in PA 4,400 sq feet vs. 70,000 sq feet<br />Quick serve meals in c-stores vs. fast food<br />Self service beverage bars in Drug Stores now (Café’W)<br />Drug Stores selling beer and wine<br />8<br />
    8. 8. Leading the Retail Industry<br />Beer Sales Nearly 80 percent of convenience stores sell beer, <br />Candy Sales<br />Coffee Sales<br />Speed of Transaction - Convenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes. .<br />Retailing to the UnBanked<br />Employee Turnover<br />9<br />
    9. 9. Punch Cards <br />Coffee Club<br />Hot Dog Club<br />Slurpee Club<br />Open to slippage<br />Open to fraud<br />4/16/2010<br />10<br />C-Store Loyalty History<br />
    10. 10. 4/16/2010<br />11<br />C-Store Loyalty History<br />
    11. 11. Not your father’s gas station<br />12<br />Of the 144,875 C-Stores over 90,000 are run by single store operators<br />The average C-Store sees 1200 plus consumers per day<br />
    12. 12. Not your father’s frequent flyer mile<br />Loyalty Census1.8 Billion Members in US<br /><ul><li>SOURCE: Colloquy 2009 Loyalty Census – April 2009</li></ul>13<br />
    13. 13. C-Store’s know their demographics <br />The industry's stereotypical customer profile Bubba<br />Age: 18‐55 years old<br />Cultural influences: Beer, NASCAR, pick up trucks, <br />cigarettes, beer, baseball, beef jerky, football, beer, dip, mom, hunting dogs…<br />Brand loyalty measured in: a lifetime<br />Drop‐In Daily customer, or the familiar "Bubba" who drops in daily as a break from work<br />The Loyalist Local, who thinks of the stores as the center of the neighborhood<br />The Over‐Stretched Mom, who shops on the way home from work to fill in the gaps<br />The Mobile Professional, who stops in during the commute for coffee and competitively priced gasoline;<br />The Highly Hesitant, who visits for snacks, but otherwise avoids c‐stores<br />The Long‐Distance Driver, who drives for a living and wants familiar brands of gasoline and clean bathrooms<br />14<br />
    14. 14. Skipped a generation – but caught up QUICKLY<br />Online retailing passed c-store by but MOBILE did NOT<br />Gen Y & beyond:<br />Born Between: <br />1977 and 2002<br />Age: 7‐32 years old<br />Cultural influences:<br />dot‐com bust, Internet, September 11, mp3, Iraqi War, Paris Hilton, Facebook, Twitter<br />Brand loyalty measured in: Days<br />15<br />
    15. 15. We trained them well<br />16<br />
    16. 16. The Fuel Reward<br />Fuel is to the C-store what the frequent flyer mile is to the Airlines – the loyalty TOKEN of choice<br />All inclusive – appeals to EVERY demographic<br />Instant Gratification<br />Very Emotional<br />Very Sticky – has equity<br />Market basket rewards or Item level rewards<br />Store Trends, Product Movements<br />Provides sales growth – boost sales 9-20%<br />Levels the playing field vs. the Mega Brands<br />Provides rich data for analysis – supplier negotiations<br />17<br />
    17. 17. Rewards and Loyalty<br />18<br />
    18. 18. Top of Mind Promotions<br />19<br />
    19. 19. Mobile with a Mobile Audience<br />20<br />
    20. 20. Per Store/ Per Consumer Dialog<br />21<br />
    21. 21. Mobile and Social<br />22<br />
    22. 22. Power of Loyalty Reporting<br />Common<br /> Language<br />Behavior<br />Trends<br />Data<br />23<br />
    23. 23. With Loyalty Data Comes Knowing<br />Profit Analysis<br />Category<br />Analysis<br />UPC<br />Velocity<br />Aggregated Views<br />And Decision Based<br />Operations<br />Inventory <br />Analysis<br />Store<br />Analysis<br />24<br />
    24. 24. CONNECTED and REWARDED Community<br />Supplier- Funded<br /> Rewards<br />SKU LEVEL<br />ISSUANCE <br /> Your C-Store<br /> FUNDING<br />PARTNERS <br />Creators<br />BRANDLEVEL<br />Critics<br />ISSUANCE<br />Merchant-Funded <br />Rewards<br />Collectors<br />MOBILE CONSUMER<br />Joiners<br />Reward- Loyal <br />Consumer<br />
    25. 25. Host Technology Enables<br />26<br />Reward Issuance<br />Reward Lookup<br />Redemptions<br />Reward Lookup<br />C-Store Issuance<br />C-Store 1<br />Redemptions<br />Redemptions<br />MetroSplash HOST<br />Supermarket 1<br />Redemptions<br />Reward Issuance<br />Reward Lookup<br />Supermarket 2<br />C-Store 2<br />
    26. 26. Leaders in Loyalty Programs<br />MetroSplash Customers – C-Store Leaders<br />MetroSplash Grocery Loyalty Leaders<br />
    27. 27. More Questions<br />Nicole Nunn Walker(nnwalker@metrosplash.com)<br />www.FuelLinks.com<br />www.MetroSplash.com<br />www.Ruttersrewards.com<br />On Facebook: http://www.facebook.com/#!/pages/FuelLinks/35864613939?ref=ts<br />28<br />