Data—it’s a valuable tool for many facets of the convenience-store business, but how can retailers use it to increase profits? Instead of zeroing in on gaining new customers to drive sales, what if leveraging existing consumers is the answer? Retailers can draw upon customer data to tailor offers to customers that are shopping at the chain, regardless.
CEFCO, a convenience-store chain of 201 stores based in Temple, Texas, offers technology solutions not only to help retain customers, but also for employee efficiency. The chain has kiosks for ordering customizable food and digital menu boards that also serve to communicate promotions. The forecourt is home to touch-screen fuel pumps with video capability that Rachel Puepke, vice president of marketing and merchandising, hopes to utilize for ordering at the pump in the future.
- CEFCO is No. 37 on CSP’s 2024 Top 40 Update to the 2023 Top 202 ranking of U.S. c-store chains by store count. Watch for the full 2024 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
Technologies like these are valuable, especially when coupled with the strategy of leveraging the right offers to customers to drive transactions, not necessarily foot traffic, Puepke said.
“The easiest way for us to drive transactions is to drive frequency with our existing consumers,” she said. “There's a lot of studies out there that show that it costs more to acquire new consumers that don't go to your establishment, as opposed to just driving frequency with your existing ones.”
At the end of the day, convenience stores should focus on getting as many people in the store as possible to be recognizable, said Jake Kiser, chief customer officer at Stuzo, a software development company based in Philadelphia that works with retailers like CEFCO. Then, they should drive incrementality with promotions based on the history of what and how much they’re buying. It should be scalable for the business and financially benefit customers.
“I believe the technology exists to be able to look at even the most specific data in the receipt of a consumer’s transaction to understand exactly what they're buying,” said Kiser.
While transaction data can identify customer habits, it’s different from persona targeting, which doesn’t work anymore, Kiser said.
“You don’t have to have a predetermined strategy as a business that goes back to the decades-ago feeling of ‘I have to target Bubba, I have to target the soccer mom,’” he said. “I want to go and find people that pump gas, visit my c-store but never bought fresh food, and I want to give them a high-value offer until they buy fresh food, and then I want to get them attracted to more fresh food.”
Depending on the format of the retailer—a major oil company or an unbranded backcourt with a major oil forecourt, for example—the strategy of what to promote to gain more purchases from existing customers is likely to change.
One mistake that retailers make by not being invested in transactions, Kiser said, is running a promotion for a product that customers are going to purchase with or without the offer. A retailer might be surprised that while foot traffic was up and they sold more, but it didn’t result in profits.
“Well, you discounted it by 40% to people that would have paid full price, and they didn't buy anything else,” he said. “I think that's the piece that I'm most focused on with transactions. You can prove whether an increase in foot traffic is actually valuable because you'll see what they bought, how much they buy, you'll see whether you can attribute the offers that you're running and the promos that you're running to a specific purchase. And I think that's a good starting point for us as an industry.”
Loyalty Programs
Loyalty programs are a common strategy to collect data because members share their phone number, and their purchases are tied back to them. Convenience stores should encourage members to sign up for the program by asking for as little as a phone number, Kiser said. Then, they can build their profile progressively over time, but offer a deal immediately.
“Starting with the phone number widens that funnel so much that it increases the odds of getting people into the program, which comes back to how we measure all that," Kiser said. “We look at the loyalty penetration inside the store and the penetration of loyalty for gallons sold at the pump.”
Engagement rates with mobile websites to utilize the program are far higher than engagement rates with apps, he said.
But still, he said, it’s not as much about the percentage of new loyalty members, it’s about driving participation up. Then, the data can inform retailers where to focus and how to better create a program to engage their consumer in a meaningful way.
“Because if I can do that, then that becomes an extension of my brand,” he said.
And if a loyalty program is driving more valuable transactions and gallons, then it’s paying for itself, Kiser said.
CEFCO loyalty members spend 30% more than non-loyalty members, on average, Puepke said. With the awareness of what they buy, Puepke said “they'll just appreciate us speaking to them about things that we know are relevant to them based on their purchase habits.”
For example, if a customer only purchases nicotine products or energy drinks, CEFCO shows them deals centered around those categories.
When CEFCO launched its loyalty program three years ago, its primary incentive was to gain members, but after establishing a base, Puepke said that Stuzo helps the chain provide continuous value to existing customers. CEFCO leverages its vendor partners and gives new members a free drink, and ongoing members can buy-one, get-one free. It gets people to sign up but also retains them, she said.
“We want to continue to give them value around the loyalty program, and that's what really worked for us with having highly engaged members,” Puepke said.
Customers can redeem their loyalty points to get dollars off in the store or at the pump. Members get five points per gallon pumped, 10 points per dollar spent and 250 points for completing a profile, in addition to the free drink.
“We see people who actually collect their points and redeem $15 or $20,” Puepke said. “And that seems to be a value to our existing consumers. We're continuing to see not only new members join, but also highly engaged members and then our percentage of loyalty transactions of the total just continues to grow significantly. We're seeing pretty aggressive growth.”
Logical Investments
As a mid-size retailer, CEFCO doesn’t have the budget to spend money on rich information in terms of where customers live, if they’re male or female, their age and their ethnicity, Puepke said.
“There are challenges for us to really paint a picture of who these consumers are,” she said. “We can only paint a picture based on what we know what they're buying, but we don't necessarily see a face to build profiles.”
Puepke said they don’t need all of that, though. The basic picture can still provide color.
For example, customers that continuously come in the morning are probably morning commuters. CEFCO would create offers that tailor to those customers fueling up in the morning or even promotions to try and get them to come in at a time that they normally don’t.
“We can give them a breakfast offer so they can try our food,” she said. “And then all the sudden they’re coming in not only for fueling, but they're also getting food. There's information like that that's really valuable, like time of day, what they're buying, and based on that we can influence purchases, regardless of who that person is or regardless of whether we can see or formulate an idea what type of person that is.”
CEFCO has a lot of blue-collar workers—military, construction, landscapers and truck drivers, Puepke said.
“We know that there's certain types of products that [are] skewed toward those consumers, and you can talk to your vendors [to] specifically target certain types of consumers. When you understand your consumers, there’s intuitively a lot of ways that [you can] speak to those consumers,” she said.
“The easiest way for us to drive transactions is to drive frequency with our existing consumers.” —Rachel Puepke, CEFCO
Curbside pickup and delivery fit into the strategy of driving transactions for some chains but not others.
If a store is in a rural market with a customer-base that drives 5 to 10 miles to get to the grocery store, they’re probably not ordering ahead or getting something delivered, Kiser said. College towns are a different story; in more urban and even well-populated suburban settings, it has been proven that order ahead and delivery have an impact. It also helps to have brand recognition and a technology team that is building things out.
“Most people are selling commoditized products and having those delivered, in some cases as an incremental opportunity for someone who otherwise wouldn’t buy it from them, so technology helps them take advantage of that opportunity,” Kiser said.
Other than widely available products, chains with their own recognizable food items have “opportunity to expand wallet share, to take trips away from your competitors, or even non competitors, like QSRs, by providing delivery of something that the consumer wants delivered,” Kiser said.
Above all else, Kiser said to make sure that it’s a profitable business to build, and make sure not to invest just because it’s something everyone else is doing.
CEFCO is an example of a chain that doesn’t do delivery because it “would have gotten lost” in the complexities of the technology and strategy, Puepke said.
CEFCO did try curbside, but “that was just one area where we knew that it was going to be a pretty big shift in operations, and we had some other things we needed to work through.”
Order ahead has always been on the agenda, Puepke said, and she is eager to solve for it with the new touch-screen pump technology. She said it’s something the company may tap into and explore.
“I think order at the pump might be closer than any of those others [amenities],” she said.
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