Is Customer Loyalty Possible With Today’s Fuel Customer?February 17, 2020 | By: Energy Engine
Fuel dealers look for ways to bolster customer retention
Let’s face it, your customers are spoiled. And not just when it comes to buying fuel. Whether shopping for clothes or looking for a new bank, consumers have endless choices literally at their fingertips. It has never been easier to find an alternative to anyone we do business with, something that has ushered in an era defined by decreasing loyalty rates across industries.
So how do dealers cope with this emerging challenge? The choices seem obvious. Focus on innovative strategies to strengthen loyalty or grow as you’ve never grown before (accepting that losses are inevitable).
Hint: it’s not the latter option. Too expensive and too risky.
It is actually far less work to GET a customer these days than it is to KEEP one.
And that is new to the energy industry.
There was a time not long ago when new customer gains consumed 100% of dealers’ sales and marketing budgets. All that mattered was finding ways to attract and bring on business. Price incentives, free service contracts, gifts, you name it. For a while, this led to growth. But around the turn of the millennium, things changed dramatically.
The advent of low-price competitors and a suspicious consumer mindset quickly caused mass customer defections for dealers who used to brag that they never lost anyone. Suddenly, all the gains were simply offsetting an equal number of losses. That changed the fuel business forever.
Dealers were not well equipped to handle this dynamic, mainly because retention had always been fairly easy. Not anymore.
Smart dealers are now putting increased focus on their Loyalty and Customer Experience initiatives.
In fact, many are building specific functional areas fully dedicated to customer retention. Don’t think of the old fashioned “save department”. That idea went out of style with the bag phone and MySpace.
The objective is to identify changes to brand and business strategy that foster loyalty and create customers who will evangelize on behalf of your business.
Since the cost of acquiring a new customer is estimated at 5 to 10 times what it costs to retain an existing one, nurturing loyal customers is not only becoming a top priority, it is quickly becoming essential to your long term viability.
Let’s take a look at what is currently driving Customer Loyalty. Some of this may surprise you.
Rethink customer strategy. If you don’t have a customer strategy, then you need to create one. This involves mapping out the journey your customers take with you and ensuring that you are doing everything you can at each stage to satisfy them. Marketing, sales, customer service, operations, communication.
This sounds far easier than it actually is. In reality, this may be the hardest job you have in today’s ultra-competitive world because it forces you to inspire greatness from your team. Otherwise, you will look like every other generic fuel dealer out there and that won’t cut it.
Customers will trade you in at the drop of a hat unless you consistently wow them.
Instant Everything. We live in a world where everything is accessible right at our fingertips. There is nothing that cannot be done from a smartphone in seconds, even the most complex tasks. So, waiting is no longer acceptable to your customers. Waiting on hold, waiting for you to be open, waiting for questions to be answered. Consumers have zero patience and that can be a problem for fuel dealers who still rely on traditional engagement methods.
We think personalized service is positive while customers see it as a waste of their time.
Omnichannel Business Models. This might sound like a buzz word, but you need to pay serious attention to what it really means.
First and foremost, do not confuse it with “multi-channel” business models, which is what is already used by most fuel dealers. Multi-channel offers the customer a variety of touchpoints like phone, online ecommerce, portals, email, and traditional mail. But they are not connected.
What happens on the phone does not align with a portal…the bill someone gets in the mail is not the same one they see online…messages and processes are often entirely different.
Omnichannel unifies the Customer Experience. They can bounce from one touchpoint to another and the journey feels familiar and seamless. An ecommerce journey to buy fuel has the same flow that it would by phone. Except it’s much easier. Integrating touchpoints is not an easy task. Take the time to learn how technology can help.
But don’t take our word for it. According to recent research by Aspect Software, 80% of Americans believe that companies need to make big changes to how they deliver customer service. The same study showed that businesses that adopt omnichannel models have a 91% better customer retention rate than those that don’t.
Tiered Offerings. Customers hate being put in a bucket. They hate it even more when there are only one or two buckets to choose from. Which is why they will force their own hybridized buckets when they want more choices.
The fuel industry has historically offered one and a half buckets. One for Full Service and a half for the lower value Will Call and COD customers. That is no longer sustainable. It might be hard to hear that, but customers now demand tiered offerings from you. Picking and choosing the value add services you provide. Will-Call has changed entirely. These are mainstream customers choosing a way to buy from you that gives them more control. Do not ignore this trend.
Ecommerce. Although obvious in our Amazon world, ecommerce has been slow to gain traction in the fuel industry. How can that be when we all shop and gather services online every day without ever talking to a human being?
We all loathe the telephone, so why are you forcing customers to use it? Part of it can be chalked up to a misunderstanding of what ecommerce is. Dealers say “we have a portal that can take orders”. We say, that is not ecommerce.
Ecommerce allows automated communication and digital relationship building. It behaves like a virtual CSR, expertly guiding customers from order to cash and beyond. It validates customer behavior, it tracks their habits, and it thanks them all along the way.
Ecommerce is also delivering astounding loyalty rates from the most unlikely of places.
Will-Call and COD customers. Previously viewed as low-class citizens and one-delivery-wonders, this growing group of fuel buyers is evolving by the day. Proving that, if you give them a great online ordering experience, they will reward you with the loyalty that comes very close to your Full-Service automatics.
Sounds crazy right? An analysis of ecommerce fuel orders showed that in 2019:
- On-Demand customers bought 75%-90% of their total annual consumption from a single dealer. Thus, debunking the myth that they always shop around.
- On-Demand customers returned to that dealer the following season 75% of the time.
- Loyalty increases over time. Once On-Demand customer gets to their second season and beyond, they are as likely as Full-Service customers to stick around long term.
Loyalty is definitely not a thing of the past. We may be living through an age where customers have endless options but they still value a brand that stays in touch with their needs.
Since most of those needs must be met online, fuel dealers who embrace a digital ecommerce strategy will gain a huge advantage over competitors. But time is now a more volatile commodity than the fuel you sell.
Waiting will frustrate your customers. Take action today. The future of your company may depend on it.