The battle for the share of wallet: the aftermath of Durbin

By Parker Burke

When the Durbin Amendment cleared its final hurdle on June 8, 2011 and the subsequent Fed ruling was made on June 29, 2011 limiting debit interchange fees to $0.21 and .05% per transaction, retailers across all industries were relieved at the reduced interchange, but disappointed that the Fed had not done more.  However, cutting debit interchange by more than half would no doubt save retailers a ton of money, wouldn’t it?

While many regard the battle for “swipe fee reform” as a draw, the new battle for the share of wallet is merely beginning. The card companies have already lobbed their initial salvos to change consumer behavior towards using credit for everyday purchases by enhancing credit card rewards and slashing debit card rewards and benefits.

Without innovative action to counter enhanced “credit card rewards” programs, retailers could actually lose out on the savings associated with debit swipe fee reform: fees will indeed be reduced, but incidence of usage may also decrease, driving consumers to higher cost credit cards. 

Creativity is the name of the game here and retailers that benefit from this legislation will be the ones who steer their customers towards lower cost forms of payment.  How can you be successful?  It may not be as difficult as you first imagine: first, determine what is important to your customers; then, take that information and provide them with something of value in return.  It is that simple!

-          2 cents off gas!

-          Free coffee!

-          Double rewards!

-          Free car wash!

As new payment technologies continue to emerge, successful retailers will also need to remain at the cutting edge of the payment experiences their customer’s value.  While still in its infancy, mobile payments will be one of these experience, allowing retailers to not only serve the demands of the growing tech-savvy market, but also steering them to lower cost forms of payment.

As the battle for the share of wallet heats up, what other methods do you think successful retailers can use to incent lower cost forms of payment in-store and at the pump?






Here's a great new article about staying connected via mobile payment: http://www.retailtechnology.csnews.com/top-story-constant_connectedness-283.html

Why don't you visit my neighborhood store?

By Scott Oakes

Remember the days of visiting the same corner gas station with your parents? I remember my dad never paid cash for gas; he used one of his two gas cards. In the 1980s we visited an unattended fleet fueling station that billed us monthly and was supposedly the “best deal.” The world has really changed over the years; or has it? Today according to a recent survey by Convenience Store News Market Research 2011, the top two factors dictating a buyer’s purchase was Price and Convenience (Brand was in third place).   

What drives you to stop at a certain store?  Their coffee? Maybe. Their food? Possibly. Their location?  Absolutely!! Especially if you are like me and you drive your car until the low fuel indicator light comes on.    The whole concept of customer loyalty has become a maelstrom of activity with everyone trying to get their card in your wallet. They promise free coffee, free sandwiches, and of course cheaper gas.

Have the days of being the community gas station gone away?  Knowing the cashier by name has been replaced by quick lines, self-serve kiosks, and more pumps on the gas island. Can family-run convenience stores survive in the loyalty-driven mentality where a penny per gallon can lose a customer forever? The good news for many of these smaller community locations is that most of the Point of Sale vendors and major oil networks are investing in scalable solutions that allow them to compete with the “big box” c-stores. I know it’s hard to resist the smell of new paint, free food, and Hollywood style grand openings, but eventually customers become numb to these efforts. 

Some smaller retailers have continued to offer clean bathrooms, good lighting, and a reasonable loyalty program that allow their customer to feel they get a good deal every time they visit their store. Some are offering discounted fuel for buying a car wash, some are driving their customers to use alternate payment methods, like branded fuel cards, prepaid cash cards, and ACH processed cards. Some successful retailers continue to offer discounts to local businesses through organized local fleet programs.

Many major oil marketers have adopted grocery programs. Some have become huge equalizers where customers view saving on gas above their double coupons on groceries. For grocery chains who are involved, they get an upper hand on their competitors who either have their own gas islands or do not have a convenience store partner. Over the past few years, I have spoken with some very creative people who have used a wide variety of methods to maintain their presence as the local convenience store – the kind my dad would still like to visit every week. 

For more on creative loyalty techniques go to the following places to read more about some great ideas see below:  Other Recent Articles on Loyalty

http://www.csdecisions.com/2011/06/13/empowering-loyalty-customers/            

http://www.csdecisions.com/2011/01/26/planning-the-convenience-store-of-tomorrow/

http://www.mobilemarketer.com/cms/news/database-crm/2769.html http://www.csdecisions.com/2011/02/19/customer-loyalty-done-right/ http://www.loyalty360.org/state_of_the_industry/digital_coupons_how_loyalty_programs_will_cash_in/ 

http://www.csnews.com/article-a_bigger__better_nice_n_easy-1628.html

Customer experience is in the toilet

By Albert Fernando

Typically when customers are indifferent to a brand they usually seek the simplest and most convenient path to get what they want. In terms of choosing where to fuel, customers most often select the location that offers the best trade-off between price and convenience. In contrast, when customers are “emotionally engaged” in the experience or somehow feel enabled by the product or service, the odds are greater that they will pay more for it and come back often.

Key takeaway is the customer experience, not necessarily the brand, can have a greater impact on your store's profitability and loyalty.

In today’s fast paced retail environment, it’s easy for us to get so caught up in the “selling” process that we forget our customer’s “purchasing” process. Our challenge is to suspend what we think we know about the customer and “walk in their shoes” to fully understand what stimulates their shopping experience. Only through that intimate knowledge can we start to intuitively match our selling process with the consumer’s view of how they want to purchase. Careful thought of what matters to your customer can truly create an impactful and memorable customer experience.

The ability to create an appealing and differentiated customer experience at your site can do wonders for your brand, drive site traffic and inside sales. Consider the following case study of Preem, a gas station / convenience store chain in Sweden. 

Preem was facing unfavorable market conditions and was struggling to differentiate themselves and create a connection with their customers. With stiff competition eroding fuel margins, Preem’s only hope was to drive the retail profitability of its c-stores rather than rely on fuel sales. Sounds familiar?

Preem realized that competing on completely rational product features was not going to win, so they decided to focus on something radical. Instead of trying to grab a larger part of the total fueling consumer market, Preem focused on attracting and appealing specifically to the female segment.

Specific focus was placed on areas where customers would really notice a difference and those that would reflect the radical market segmentation of women. Through research, the number one most important point of interface for women centered on the toilets. By redesigning their bathroom customer experience (ex. full length mirrors, framed pictures, vibrant colors and softened lightning), Preem became a talking point within social circles. Their toilets were a genuine point of differentiation among female customers, who happily shared their experiences through friends by word of mouth.

Preem didn’t stop there. They extended the same design elements into the rest of site (ex. forecourts were more brightly lit, food choices were fresher and healthier) and before long they transformed themselves from a dreary, rundown gas station into a vibrant, inviting social hub.

Preem pilot service stations initial YOY sales results saw a 28.8 percent increase in fuel volume and a 146.1 percent increase in fresh food sold.

Amazing what identifying and acting on your customer’s wants and needs can do for your business. I look forward to hearing your comments and other ways you’ve seen businesses transformed through enhanced customer experience. 

Read the Landor thinking article, Sex and the c-store, or getting the toilets right for more information on Preem.