Q&A: Fuel Rewards Program on Partnership with Toys "R" Us, JCPenney and Olive Garden
A month after kicking off its winter promotion with several non-grocery merchants, the CEO of the Fuel Rewards program, Brandon Logsdon, talks about the strategy behind the promotion, plans for a program overhaul and what’s in store for 2015.
Fuel and food have long represented a prosperous partnership in loyalty marketing, so the Fuel Rewards program is testing how fuel combines with toys and clothing. So far, it is translating to thousands of transactions.
Fuel Rewards, a platform that rewards members cents off the gallon, on Nov. 3 kicked off a winter promotion with MasterCard, Toys "R" Us, JCPenney and Olive Garden that offers members additional discounts at Shell stations. In the promotion, members who shop these merchants using MasterCards linked to their Fuel Rewards accounts can earn up to 40 cents off per gallon in sign-up bonuses plus 20 cents per gallon for every $100 spent with the merchants during the promotional period. The promotion, called Winter’s 20, runs through March 1.
Winter’s 20 is largely possible through MasterCard’s card-linked service, which enables the Fuel Rewards program to use purchase information to send targeted offers via mobile – without requiring technical integration by the merchants partners.
“The biggest barrier we have faced (in) expanding outside of grocery has not been the lack of appetite, it is how do we leverage this currency without having to get involved in a large IT project,” Brandon Logsdon, president and CEO of Excentus, operator of the Fuel Rewards program (formerly Fuel Rewards Network) and its technology platform.
Logsdon talked with COLLOQUY about the new promotion, early results and his plans for an entire program overhaul. Edited excerpts follow.
What specific insights led you to believe a non-grocery partnership would work?
Logsdon: Our premise is rooted in two things. One is that consumers have responded phenomenally to fuel rewards. It permeates so many of the things loyalty should ... an emotional connection and high value. And a very good direct benefit is consumers redeem these rewards frequently.
On the merchant side, this has worked phenomenally with grocery – a lot of grocers have built their own fuel sites and have been able to leverage that benefit. But consumers told us, ‘We love the currency and we want to earn more of it.’ That was the biggest fundamental that said to us: let’s do this. Plus merchants would call us and say we love this, how do we do this? That’s where we were challenged, in the how.
How did you choose the partners?
Logsdon: We looked very specifically at the holiday season. Shell and its 14,500 locations create an incredible out-of-home media network (through on-site advertising). They came to us and said for the fourth and first quarters of 2014 and 2015 they wanted to put us on forecourt promotion (meaning all communications at and near the pump). From there we thought, what do consumers do during the holiday season? We wanted a good soft-goods retailer, so we looked at the data from our partner MasterCard. We wanted toys, and we also wanted to have consumption – a good restaurant. So it was a lot of triangulating the data.
Are the insights being shared across all merchants?
Logsdon: Absolutely. As with any coalition program the data and insights are key. We provide individual insights to (corresponding) individual merchants and aggregated insights across all merchants. The merchants can glean what was successful and the cross-shopping opportunities.
When do you expect to start seeing results?
Logsdon: We get daily spending reports and so far the spending attributed to the promotion is exceeding the model. Right out of the gate we saw thousands of transactions occurring at each retailer on a daily basis.
And have you seen a lot of redemptions?
Logsdon: Typically all of our promotions tend to triangulate to this: 75% of all rewards that Fuel Rewards members earn are typically redeemed in promotions and fuel savings. I would be very shocked if this promotion in particular doesn’t perform at that 75% rate or better.
What is the single biggest challenge to operating the Fuel Rewards program?
Logsdon: The card-linked (technology) eliminates a lot of the friction for both merchants and consumers, which has been a critical missing ingredient. The next step is how do we get to scale, and how do you get consumers to want to link their card? You overcome that challenge by making the experience as seamless as possible.
How do you do that? Do you have an example?
Logsdon: What we're doing right now is overhauling the entire program, and that includes a new mobile app launching in February. It will offer easier visibility to Fuel Rewards locations and a simplified sign-up, including similar functionality as the Uber app – shoot a photo of the card and all the information is captured. We'll have that same type of functionality and all of our offer content will be easily available. That app will be available for both Apple and Android in February.
What are three key qualities a fuel provider should seek in a merchant partner?
Logsdon: We have a national agreement with Shell, but Shell is no different than its peer group, the major oils. You've got a lot of voices in the room and a lot of expectations to manage. So we look for brands that we think would be accretive to the Shell brand; we look at merchants that are willing to fund material offers (cents off the gallon); and then, in the future, we'll look for merchants that are really willing to get behind the program.
Can you provide a hint of what’s next after the promotion ends in March?
Logsdon: In March expect to see several other merchants announced (as) we are planning another big promotion to follow. Expect to see us expanding beyond the categories we already offer, and we'll be extending, in the February-March time frame, these other offers to Visa cardholders as well.