It’s safe to assume that filling stations will be drastically different in the year 2040. At the moment, demand for petrol products is still going strong, but there’s change on the horizon, threatening the status quo between drivers and forecourts. Fuel retailers need to focus on the future and grab every opportunity to strengthen their relationship with customers and foster brand love, or else they won’t survive the transition to a more service-focused era. Today traditional fuel rewards might cut it, but they won’t live up to the customer expectations of tomorrow.
Fuel Forecast 2040: Brief Growth, Followed by a Sharp Dive
After peering into our crystal ball and analysing the reports of numerous energy companies, it became clear that the landscape of fuel retail will change in the following decades.
According to the 2019 Global Energy Perspective of Mckinsey & Company, the global demand for fossil energy most likely start stagnating around 2030, and the failing production in mature basins keep on accelerating, too.
However, the warning signs are obscured by the prosperity of our current economic situation. As the BP Energy Outlook 2019 pointed out, the energy demand for transport is indicated to be stipulated by oil in the upcoming years, but the dominance will most likely be penetrated by the rapidly growing popularity of electric vehicles. The forecast also suggests that the demand for oil and other liquid fuels might plateau around 2030.
“At the moment, the demand for fuel is increasing, but this growth isn’t sustainable. The shortfalls coming from failing production and the emergence of electric cars will be compensated by retail products and services.”
Fuel Marketing Expert
For a brief amount of time, fuel retailers might continue to see increased profits from the forecourts, but the tides are no doubt turn in a couple of decades. So what steps should you take in this thriving market environment, in order to stay in business 20 years down the line? I present you three viable strategies:
Electric Charging Stations: Miss Them and You’ll Miss Them
One possible option, which is quite a straightforward one, is to embrace the inevitable rise of electric cars. Convenience and necessity are going to force drivers to switch to electric vehicles, and they’ll expect to be served by their favourite station. Furthermore, the limited lifetime of the battery promises a steady stream of customers who will stop at your station for a recharge.
Unfortunately, drivers are more likely to power up their car at home, or power up free of charge at the restaurant, gym or hotel they’re visiting. In this sense, fuel retailers are not only competing against each other, but also against other service providers – and even family homes.
“In 8 years, lithium battery prices dropped by 80% while the specific energy of the battery increased significantly. As a result, we can expect affordable electric vehicles on the market with a driving range of above 400 km. There is an exciting e-mobility future in front of us.”
Joeri Van Mierlo
Professor at Vrije Universiteit Brussel – MOBI
On the other hand, forecourts simply cannot afford to discard the idea of establishing a charging station for electric cars. Refilling is deeply rooted in their profile, and people surely expect to be able to recharge their electric car while on the go. The only way to stay relevant in customers’ eyes is to offer top-of-the-line fast chargers, allowing customers to save time by stopping at your station.
Charging stations are a hygiene factor: something you should do in order to remain competitive, but at the same isn’t unique enough to give you an edge. For that, I have two more ideas to share.
Fuel Stations as Safe Havens: Turning The Customer Service Up to Eleven
“Forecourts aren’t just a place where you can refill your tank anymore: they’re a safe haven for drivers where people are offered a comprehensive service package“ explains Boglarka Nemeth. Indeed, avid commuters and travelling families all expect high-quality bathrooms and a wide assortment of grocery products on the shelves.
Stopping at a forecourt should be seen as a pleasant experience that drivers seek, and not a necessary evil. Here are a few ideas to do so:
- Family-friendly stations where people can stretch their legs, kids can run around, and babies can crawl
- Grocery shops, or a place to restock your supplies – both while on the road and for everyday life. For example, Austrian oil company OMV has already introduced Spar Express stores at its stations.
- Package delivery – if no one’s at home, choose your favourite pump station as a safe destination for your order, and pick up your package at the end of the day
- Pet-friendly stations and a room where their owners can play with them after a long ride in the car
- Winter tyre hotel – store your customers’ wheels during the summer months
- Coffee pre-ordering service for fast pickup
- Have convenience goods delivered right to the car when customers are stopped at a pump, so they don’t need to leave the forecourt – like the drive-thru at a fast food restaurant
Raising the bar for your fueling stations is a surefire way to retain old customers, but if you wish to reach a new target demographic – or engage existing ones in new situations – then it’s highly recommended to extend your portfolio by offering new services.
“My personal opinion is that millennials are changing consumer habits. They generally seem to be more cautious on spending, more open to sharing and more socially aware. Not to mention that we are more mobile-driven than ever, which blurs the traditional industry limits, helping the appearance of very small target groups.”
Head of Group Integrated Platforms and Solutions, MOL
In its 2030 strategy called ‘Enter Tomorrow’, Central European fuel company, MOL Group, listed a strategic objective that 30% of its EBITDA should come from consumer services. In MOL’s case, we are talking about more than just the shops inside the stations.
The company has launched two new services that are detached from forecourts, yet still remain in the comfort zone of transportation: MOL Bubi, a bicycle sharing network, and MOL Limo, a car rental service where users can book both electric or gas-powered vehicles.
By entering new segments, MOL not only guarantees that its profits keep growing regardless of the demand for fuel, but they’ll also stay relevant in the eyes of the public.
Recognising the Customer: Drive Motion Through Emotion with a Loyalty Program
Loyalty programs and fuel rewards have been a staple of forecourts since the early 1990s. It just makes sense: fuel is a commodity good, plus there is frequent repeat purchase with a relatively high basket value. Therefore, fuel chains wanted to differentiate themselves by providing something unique.
These initial programs were either simple earn & burn style affairs that failed to reach their full potential or coalition programs that don’t provide enough data to the partnering companies.
“It can be argued that today these schemes have generally become ‘part of the paintwork’. The time is now to look at your current programme or future launch and ensure it has a value position, and not just a discount for future spend. You need to have a strong consumer value proposition that brings emotion to the experience of filling up.”
Instead of a horizontal loyalty model (aka coalition programs), fuel retailers should focus on a vertical approach that increases customer lifetime value by enhancing the driver’s journey. As Mike Brinn put it: deliver a value proposition on travel, because motion drives emotion.
“Fuel retailers have a fantastic opportunity to fuse data from various incoming streams – from filling-up behaviour, to purchase choices within the forecourt shop. Equipped with this knowledge, they can start tailoring special offers to consumers and creating compelling loyalty offerings to entice customers to visit again soon.”
Director of energy and natural resources, South Africa at Wipro Limited
But what features should be used to make people fall in love with your program, and inspire them to support their favourite forecourt when it introduces new services? Here’s a list to begin with:
- Gamification – Implement loyalty elements that go beyond simple discounts, like experiential rewards. Grant uniquely designed badges for drivers who reach certain milestones, try quizzes with gamified profiling, or offer double points to those who manage to stop at a round figure while refilling.
- Tiers – Design a ladder system where drivers rank up based on the frequency of their visits or their overall spending volume. With each tier, they unlock new perks, like a free trip to the carwash.
- Mobile Passes – According to Boglarka Nemeth, 70% of non-identified purchases come from customers who left their physical card at home. Switch to digital cards that are always available from the phone – something people always have on hand.
- Advanced Geolocation – Understand driving patterns and identify opportunities to attack competitor spend. Trigger personalised offers to make people aware of a station near them and thus change customer behaviour in the process.
- Personalised Alerts – Send personalised news and messages for loyalty program members, like weather forecast-related notifications or reminders to change winter tyres.
The Future Is to Step Beyond Simple Fuel Rewards
In the coming years, the fuel retail industry is most likely demonstrate the most grandiose transformation. In order to survive, re-defining customer loyalty and customer service can be just as important for forecourt companies as branching out, providing fuel rewards and more.
Fuel companies need to learn about customers as much as they can, either by following MOL’s example and offering new services, or by encouraging customers to share more about themselves – something a loyalty program can help with. Customer data will be crucial to surviving in 2030.
If you wish to hear more about how we can help your company reach the next level with a 21st-century loyalty program, we are more than happy to help. Book a personalised demo or request a consultation session with our loyalty experts.