Loyalty Truth

The price of oil might be falling at the moment, and the parties to our economy with the greatest concerns seem to be limited to the big oil producers and the stock market. Not one consumer I have polled thinks that lower gas prices pose anything but relief from ever tightening budgets.

An old saw in the retail fuel loyalty business is that when fuel prices are in decline, loyalty programs matter less to consumers. I would only partially agree. For those that tout that “fuel is the ultimate reward”, cheaper fuel prices might mean that consumer eyes shift away from fuel rewards programs. On the other hand, when customer loyalty in convenience and fuel retail equate to cash, cash equivalents, free drinks and a better customer experience, then fuel rewards programs will always matter to consumers.

Cumberland Farms has notched a unique place in the convenience store (c-store) landscape with its Smart Pay loyalty program. Smart Pay is centered on two key pillars, a mobile app that functions without interruption, and an ACH payment backbone that reduces merchant processing costs and, in turn, affords customers a $.10/gallon price reduction on fuel purchased with the app.

Cumberland Farms promotes Smart Pay boldly in its stores. Getting the customer’s attention is the first critical task that Cumberland Farms can check off its list. I imagine however, that getting customers enrolled in the Smart Pay program is a bigger challenge. To join Smart Pay, a customer has to download the app, complete an enrollment form online, and then link bank account information to the account. A 2-3 day wait is required while the bank account is validated. While this is standard fare for an ACH payment program, some customers might be hesitant to endure the wait or just exit the enrollment process when they realize that bank account information has to be volunteered.

I endured the process for several reasons:

1. I’m a rewards junkie as well as a practitioner in the business.
2. I wanted to see how the program actually worked and joining was the only way to do so.
3. The convenience store landscape in my area is a disaster and the store opened by Cumberland Farms is by far and away the best gas/convenience combo in the area.

The good news is that the program is easy to understand and rewards can be earned right away. The program not only offers $.10 off per gallon on fuel, but also offers free drinks and / or food items from the convenience store every time 40 gallons are accumulated by the member. There are also welcome gifts and an occasional surprise gift that come member’s way.

The savings on each fill up are clearly displayed on the app, as are “lifetime savings” on fuel. There is also a notification shown for any rewards available inside the convenience store. Not only can the app be used to redeem rewards, it can also be used to pay for inside store purchases.

There are a few quirky aspects to the program:

1. The first time I attempted to redeem a free beverage, the process took over 5 minutes as the cashier was confused by what combination of drink size and container was the eligible reward. Cumberland Farms would be well advised to keep reward categories at a more macro level. Although SKU based rewards sound great in concept, they can create havoc in execution.
2. Each time a reward is selected for redemption, a timer is activated. The member has 15 minutes to redeem the reward. I’m not sure the timer creates any sense of urgency to buy more “stuff”, but does create the potential for customer disappointment. This is a feature I would consider eliminating from the program.

In sum, Cumberland Farms is playing a high risk / high reward game with consumer loyalty. The risk is that connecting a bank account to a rewards program is not for everyone. The reward is that, once connected, the best way to earn a continual stream of rewards is to fill up as often as possible at Cumberland Farms. Using a bit of game-play, Smart Pay displays the member’s progress towards the 40 gallon threshold, a tactic that can increase share-of-tank for program members.

Here’s the question I cannot answer at this time. How will Smart Pay fare as a competitive tool in a more competitive fuel / c-store market than where I live? Their new store layout was the principal reason for my first visit and is the glue that captures my continued visits. WAWA is opening two stores in the same vicinity in the next 12 months. Although WAWA is not showing much of a hand in consumer loyalty at the moment, their presence will surely shake up the local market further.