Convenience stores serve as a one-stop shopping and fueling destination for more than 160 million Americans each year, particularly in small towns and suburbs, and remarkable growth in the industry attests to their success.  In 1979, there were only 57,700 convenience stores in the US. There were 144,541 c-stores at the end of 2009, according to the National Association of Convenience Stores (NACS).  

Forward-thinking convenience retailers are building loyalty with their consumer, the motoring public. They are working with payment processing companies to create fuel rewards loyalty programs that will drive traffic to the stores and boost sales.

Loyalty marketers say that the motoring public is very sensitive to fuel prices and are always looking for ways to cut costs at the service station. They foresee the c-store as the hub of the fuel reward loyalty program and are creating sophisticated systems that issue fuel rewards at the point-of-sale (POS), according to Nicole Nunn Walker, VP Marketing, MetroSplash System Group.  Motorists get instant gratification at the pump when they watch the price of gas go backwards.

Walker presented the “Driving C-Store Loyalty” webinar, hosted by Loyalty 360 in March. She explained that the programs convert loyalty points to free fuel, with the average reward amount per gallon of fuel about 16-18 cents, making reward programs a strong bridge between c-stores and fuel companies.



Fuel Rollback Technology

Convenience stores, some of which are owned by fuel companies, and others by private operators, benefit from fuel saving programs by attracting new customers and affirming loyalty from existing customers. 

“Research from First Data clearly indicates that customers visit sites that offer fuel savings more often and spend more with those retailers because of the fuel savings they receive,” said Karen Kaukol, vice president of Product Management & Innovation at First Data. 

First Data offers a cents-per-gallon discount on fuel purchases and also offers rewards based on points earned or total dollars spent.  For example, spend $100, get 5 cents off per gallon or earn 500 points and get a 10% discount on fuel. 

According to Kaukol, c-stores are constantly looking at ways to drive traffic inside the store to purchase higher margin products.  By offering cents per gallon off at the pump and then points or other promotional offerings inside the store, First Data sees an increase in overall consumer spend on gasoline and in-store purchases.

FuelLinks, created by MetroSplash, offers two forms of fuel rewards: (1) Cents per Gallon - rolls back the price of gas at the pump and that is really a discount; and (2) Cash-for-Gas - which is true prepaid. 

Cash-for-Gas is issued as a stored value cash amount onto a transaction card. This type of rewards card can be used at the fuel pump and the total value of the sale is reduced by the prepaid amount of cash-for-gas accumulated on the card. Participating fuel companies include CITGO, Marathon, and BP. Private operators include Rutters Farm Stores.

CITGO has deployed FuelLinks as a “cash-for-gas” rewards system.  The loyalty program has been put in place at many retail locations, including fuel centers, grocery stores, c-stores and community merchants along with 575+ online retailers.  Card holders can purchase products and services from participating locations and other retail partners, both local and online, and acquire fuel discounts or “cash” rewards, applied to their FuelLinks card.

BP Products North America has a price rollback technology that awards instant cents-off-per-gallon savings at the pump, which is being expanded to BP gas stations nationwide. Powered by the Fuelperks gas discount system, created by Excentus, it rivals the rewards system announced by Kroger to be tried out at Shell Oil.  A patent dispute recently ended up in court. Excentus has developed programs with Minneapolis-based Supervalu Inc. and Pittsburgh-based Giant Eagle.

Maverick Network Solutions has partnered with Wilson Farms in the Batavia, NY market.  The Red Hot Rewards Card allows customers to earn 5% cash back on both fuel and non-fuel purchases and earn rewards as they shop.



Groceries and Gift Cards

It’s not all about groceries and auto accessories. C-stores are expanding their communities to enlarge their scope of services with dry cleaning, deli, and even financial services. Giant Eagle wrote gift cards into their successful Fuelperks gas discount program, which rewards customers of the Pittsburgh-based chain for shopping at participating Giant Eagle supermarkets and GetGo locations, as well as online at Giant Eagle’s dedicated Web portal, FuelperksMall.com.

Teri Llach, chief marketing officer for Blackhawk Network, said that Giant Eagle gives a 10-cent-per-gallon discount for every $50 purchased in gift cards.  If they buy $100 in gift cards, the discount is 20 cents-per-gallon, and so on. Customers can accumulate the discount and have 90 days to use it.

The program has helped to make Giant Eagle a destination for gift cards since customers on their way to the mall will stop by and pick up closed loop gift cards.  “Customers might as well earn credit for their fuel expenses,” remarked Llach.  “They get instant gratification watching their numbers go backwards at the pumps as they scan their gift cards.”



Marketing Metrics and Models

Does it really pay to set up a fuel rewards program?  In “The Economics of Loyalty Marketing,” published in NACS magazine, Roger L. Brooks wrote about c-store veteran Patrick Lewis who presented a simulated case study at NACStech about a typical loyalty program based on a points program and rewards.  Lewis and his partners operate a chain of convenience stores, Oasis Stop ’N Go in Idaho, and he is also the CEO of Kick-Back Points Rewards Systems, which he initially created for his own stores.

According to the article, Lewis used a secret formula to project Return on Investment (ROI) for loyalty programs.  Lewis gave an overview of detailed hard costs, ongoing expenses, and ROI associated with operating a typical loyalty program at a single location.  His financial assumptions came from the NACS State of the Industry Report (powered by CSX).

According to Brooks, Lewis’ rewards projections were conservative industry averages used to calculate the following:



•    Member participation: 40 percent

•    Rewards percent back to customers: 1.5 percent

•    Rewards redeemed: 85 percent

•    Monthly hidden costs: $370

•    Monthly support costs: $325

•    Program investment: 0.5 percent of total sales, or $2,063.20/month



The ROI formula took into account four areas: (1) Decrease in defection: 5 percent; (2) Increase in ticket average: 3 percent; (3) Increase in frequency: 5 percent; and (4) Increase in margins: (0.5 percent).

“The results projected an improvement in overall average customer loyalty of 4.3 percent, and the calculated ROI was an astounding 335.09 percent,” wrote Brooks.

Softer variables always come into play, and that brings us to the phenomenon of mobile and social media marketing. 

The fuel rewards loyalty game wouldn’t be complete without mobile and social media marketing.  Convenience retailers are using text messaging and communications through online social media to announce promotions and reward programs.

One way, for instance, is by finding a Rutter’s Farm Store location by map on a Blackberry or Droid. Members of the chain’s loyalty program can check their rewards on their mobile devices and look for promotions on Facebook and Twitter where they can interface and click on reward offers.

Rutter’s also works with GasBuddy, OpenStore’s social network platform.  The vendor recently developed an iPhone application and customers are able to track current gas price data in real-time for each Rutter’s store.

C-store operators know well how sensitive their customers are about the price of a gallon of gas and how they will make significant behavior changes for fuel rewards. So this retailing industry is in a perfect position to expand their customer base by developing a more elaborate community shopping model with a sophisticated fuel rewards loyalty component. Nicole Nunn Walker is right when she said, “Fuel is to the c-store what the frequent flyer mile is to airlines.”  Make the most of it.