While people are driving this 4th of July holiday week, some are saving significantly at the pump thanks to a loyalty program operated by Excentus Corp., Dallas, Tex.
Excentus owns and operates the Fuel Rewards Network, which has an expanding array of retail and business members, who use the network as part of their marketing programs. By making purchases from some 700 network members, consumers earn gasoline discounts at the Shell stations across the country.
“Shell has more than 15,000 stations; they are a superior marketer,” said Brandon Logsdon, Excentus president and CEO.
Shell’s interest in the rewards program was driven by changes in the fuel industry retail business over the last several years, Logsdon explains. At one time most people bought their gas at a station displaying the sign of Shell or of one of the other major brands. But in the last several years, Sam’s, Costco, Wal-Mart and others have begun selling gasoline as part of their “one-stop shopping” strategy, often offering a discount to “club” members.
“They’ve become a real competitive threat,” Logsdon said. “So as astute marketers, Shell knew it has to offer more than just superior fuel.”
Additionally, the industry has gone from one where a large percentage of gasoline stations were owned and operated by the major brands to one where all of the stations are operated by franchisees and the brands are distributors. So the franchise owners will flip from one brand to another if they can get a better deal, such as increased customer volume from a loyalty program such as the Fuel Rewards Network, Logsdon said. “Shell is offering this as a competitive difference to their franchisees.”
Volume is important because actual gasoline usage is actually trending down in the U.S. due to better fuel efficiency of newer model vehicles, Logsdon added. Higher gasoline prices, high unemployment and other economic factors may be other contributors to lower gasoline consumption.
For the business partners such as JC Penney, Home Depot, Barnes & Noble and several others, the program is a good business driver because “rollbacks at the pump” is a tremendous reward, Logsdon said. Consumers can stack rewards from different network members – the amount from each varies – to the point they can actually pay nothing for up to 20 gallons of gas, Logsdon said.
Another attraction for consumers is that they can tell exactly how much of their spending at each retailer will save them per gallon on their next Shell purchase.
For example, the latest retailer to join the program, Jewel-Osco, is currently promoting the 5 cents off per gallon a Jewel-Osco rewards member can earn after accumulating $50 in purchases.
According to Logsdon, most of the 173 Jewel-Osco stores in the Chicago area are within three miles of the nearest Shell, and the average distance is five miles.
“With the typical points program, there is ambiguity in the currency of the points,” Logsdon said. “This offers more convenient redemption. With our program, consumers know exactly what they get and they can see the pump price roll back in real time when they buy gasoline. It’s like Las Vegas.”
With the average household spending $368 a month on gasoline (based on 2011 figures) filling the tank a couple of times a week, the rewards take on meaning almost immediately, said Logsdon, who expects consumers to save 15 percent or more on their gasoline purchases through the program.
The Fuel Rewards Network is continuing to expand both in terms of capabilities – with a mobile app on the horizon – and business members. Logsdon’s goal is to enable consumer members to eventually be able to make as much as 75 percent of their household purchases through network merchants.