Strategies in Fuel Commercialization-The Panagora Blog

 

Strategies in Fuel Commercialization

There are three primary emerging trends in the commercial oil and gas sector today that will have an even greater impact in the near future: evolving customer expectations, emerging digital technologies, and the rise of advanced mobility. Moreover, the oil market is extremely dynamic, with frequent price swings, requiring high-level attention on downstream channels in order to capture strong margins and gain market share.

Selling refined petroleum products to business and commercial customers has moved higher on the business agenda as digital technologies have pinpointed where and how to create value. The traditional binary choice—whether to own service stations or franchise them—has been replaced by a complex array of strategic channel choices driven more by regional supply and demand fundamentals and netback analyses.

Evolving Customer Expectations

The average fuel consumer has specific expectations and attitudes that should be top of mind for retailers today. According to BCG research, fuel consumers care most about:

·        Convenience. More important than price and brand, convenience is king.

·        Positive Customer Experience. Drivers don’t enjoy buying gas, but they do it frequently—especially professional drivers. A positive experience is key.

·        Being Ecoconscious. Consumers increasingly care about the environment and think of fuel as a necessary evil. Health-conscious, environment-focused drivers sometimes look for alternative forms of transportation.

·        Their Family and Kids. Parents transport their children by car more often now than ever—and need to feel that their kids are safe in the car while they buy gas.

·        Convenience Store Brands. Most consumers are not aware of or interested in different brands of fuel, but they are beginning to develop awareness of convenience store brands. Loyalty programs increase that awareness.

·        Their Time. Consumers appreciate any efforts that make fuel buying faster: pay-at-the-pump options, easy in and out, no waiting in lines.

To turn the shifts in consumer attitudes into future opportunities, retailers must reinvent the customer journey and launch digital solutions.

Digital Opportunities in Oil Retail

Players must embark on a digital transformation in order to create sustainable competitive advantage in oil retail. There are four primary ways in which retailers can use digital to revitalize the customer journey and bring lasting impact:

 

Mobile apps can help to increase the number of transactions, encouraging customers to visit specific gas stations and establishing an interface for loyalty programs. Mobile apps have the potential to increase retail EBIT by 1% to 2%.

 

Digital solutions can help to open new revenue streams. Targeted advertising, promotions, and offerings from retail partners have the potential to bring in additional revenues of $15 to $30 per customer per year.

 

Improve the margin of transactions by incentivizing customers through mobile technology, loyalty programs, and other digital offerings to pay by debit card—thereby reducing credit card fees. Such incentives can shift 5% to 15% of customers away from using their credit cards.

 

Use big data and analytics to increase revenue per customer. Targeted promotions, such as cross-selling convenience store offerings and car washes to fuel consumers, can lead to an increase in retail EBIT of 2% to 4%.