How combining pump and store mobile payment experiences can fuel your bottom line.
With fuel such a central part of our everyday budgets, its price volatility has a quick and direct impact on consumer spending patterns. Consequently, when prices at the pump are low, consumers have more money to spend. The initial response is to buy a little more fuel to travel more. However, we also have seen a marked increase in purchases at convenience stores on the gas station forecourt. In fact, many fuel distribution networks have reported bumper profits recently due to the higher margins of in-store purchases – this despite gas prices running lower.
This is certainly good news for fuel retailers, but how can we sustain store visits, even when fuel prices rise?
Money in your pocket
The convenience store on most garage forecourts is a vital revenue generator, but the stores and the buying experience haven’t changed much in recent years. The same can’t be said of how consumers shop, however. The rise of mobile commerce has changed the game and looks set to continue to evolve for the foreseeable future.
The National Association of Convenience and Fuel Retailing (NACS) said the average household saved around $700 on fuel last year, due to lower prices. Some of this saving went into more fuel with gallons sold rising two percent in 2016. Meanwhile, convenience store food sales rose eight percent year over year.
That represents a promising gain. However, there remains a disconnect between a fuel purchase and any convenience store visit. Without combining the whole experience, end to end, the recent growth in store sales will likely be lost as soon as fuel prices bounce back.
Mobile payment convenience opens the door
Paying at the pump is undergoing major changes. The advent of EMV has dictated upgrading the fuel POS to accept chip cards with PIN. But many are looking beyond archaic card terminals to embrace the world of instant mobile payments through a dedicated fuel station smartphone application. This certainly simplifies the fuel payment process as everything is conducted automatically by the phone app in a frictionless transaction: no payment card, no separate loyalty card, no swiping, no PINs, etc. – it’s all handled through the app with little or no intervention.
In addition to simplifying the fuel transaction, the mobile app opens up a whole new channel to the customer. In order to drive more customers to a store, operators are encouraged to utilize their fuel app to promote in-store special offers, which encourage additional spending. By utilizing big data analysis, the offers can be intelligently targeted, based on customers’ past buying patterns and behavior. And once in the store, all purchases are processed through the mobile app, with no need to complicate the transaction via cards or PINs – just tap and go.
Loyalty drives repeat business
A special offer in the store may entice more people into the shop, and mobile frictionless payments make the transaction simple. However, without a sophisticated loyalty program that combines pump and store purchases, there is no reason to expect customers to return over and over.
Consumers are used to earning loyalty points at the pump, even redeeming points in the form of instant discounts on fuel prices. In most cases, though, the loyalty program often ends with the fuel. The forecourt store must be integrated, too, so points can be earned on food and other goods inside. And why not offer loyalty point redemption within the store in the form of an instant discount at the checkout? Such mechanisms greatly reduce the likelihood of points building up endlessly, as well as the associated risk of large numbers of loyalty scheme holders maintaining a high number of points.
Ultimately, this brings customer engagement front and center; consumers can use mobile payment, with loyalty, in an app that allows them to manage their account, check point totals and find participating gas stations – the entire end-to-end experience is captured.
The card-based POS is dead
The demise of card-based POS is long overdue. Why maintain an enormous network of newly updated terminals when all you need to transact and better engage customers is already on a device in their hands? Innovative mobile payment mechanisms are undeniably beneficial to both merchants and consumers, plus they simplify the experience. But without building out a meaningful loyalty capability, consumers remain unengaged. In a world where loyalty, mobile and proximity are key trends, it’s all about creating memorable ways for consumers to interact with your brand.
Fuel prices will inevitably increase. Without the benefits of a combined payment and loyalty experience – at the pump and store checkout – fuel convenience stores run the risk of losing lucrative revenue. That’s why now is the time to get your customers hooked, so they’re in the habit of spending when the good times end.