Service to the Fleet
FeatureOperations
Service to the Fleet
Proprietary cards aimed at the trucking industry help retailers increase volume and in-store sales, while fending off costly processing fees. By Michael Ferrari, Staff Writer
R
etailers are caught in an endless battle at the gas pumps—fending off high payat-the-pump processing fees on credit cards, while trying to keep their customers from floating over to lower-priced big-box competitors. To do this, retailers are taking advantage of a proven profit center that has withstood the test of time: fleet card programs. By concerting their efforts to attract these high-volume fuel consumers, which includes car and truck fleets, chains are growing a destination that is exempt from commercial processing fees and pricing wars. For example, United Refining Co. (URC) of Pennsylvania, based in Warren, Pa., is one company that is basking in the benefits of a strong fleet card service. The company operates 291 stores under the Kwik Fill, Red Apple and Country Fair banners, all of which accept the fleet card. The chain began offering the card almost eight years ago, after identifying a niche in the market that needed to be filled. “We wanted to find a way to keep our customers from heading over to the competitors,” said Peter Conley, vice 26 Convenience Store Decisions
l
September 2007
president of retail marketing for Kwik Fill/Red Apple. “At the time, there were a lot of businesses that needed to remove their underground storage tanks due to environmental regulations and liabilities, leaving them without their fuel supply.” URC realized dozens of fleet accounts were desperately trawling the streets—including to its competitors—for locations that accepted fleet cards. This is when the company decided that the best way to compete was to begin its own fleet program. Building from the Ground Up The program started off slowly. URC’s Kwik Fill stores offered companies a fleet card that could be used at all of its locations, which was a perk for fleet mangers based in the area. Each month, the chain would give its fleet customers monthly statements detailing the use of each card in the fleet, helping the company that purchased the cards make sure employees weren’t using them for personal reasons. The chain’s fleet card service has grown quickly, especially in the last year when it introduced its own proprietary “Kwik Fill” fleet card. On top of moving all of the pro-
gram’s processing measures in-house, the new card offered a key characteristic: a 5cent per gallon discount for all users. “We had to find a way to stay competitive, especially in the fleet market,” said Conley. “There’s always somebody out there who wants to have the lowest price, and by offering this discount, we have a way of not only competing with them, but also beating them.” To increase interest in the fleet cards, URC has made an effort to spread the word. The chain invests in signage as well as print and TV ads to help promote the card. The chain also encourages employees to push the card, rewarding them with $5 gift card for each application accepted and another $25 for each application approved. And it’s worked, w i t h C o n l e y s h a r i n g t h a t m o re than 10% of its fuel sales come from fleet customers. Fleet Loyalty Like URC, Knoxville, Tenn.-based Pilot Oil has also been able to reel in extra sales by implementing a fleet card program. The 325-store chain also offers various discounts to its fleet card users, the extent of
FeatureOperations which depends on the amount of volume a customer purchases. Pilot’s proprietary fleet program originated in 1985 at the company’s convenience stores as a way of clinching business from a niche that needed to be filled, much as URC did. The card was a success and was quickly worked into the company’s travel plazas, where it is now used by more than 4,000 customers that make up about 5% of the company’s volume. “What led our company to developing a fleet program was a request from our customers who were looking for a solution like this for their businesses,” said Jay Stinnett, regional sales manager for Pilot’s fleet card program. “We wanted to provide local business customers with a clear opportunity to use our products.” Though much of the fleet sales come from accepting outside fleet card services intended for large trucking fleets, the proprietary cards work to build local loyalty to the Pilot brand, as well as provide the chain with an opportunity to upsell to its customers.
“One of the most important parts of the fleet service is that it gives us an opportunity to bring more people into our stores,” said Stinnett. “We accept all the major billing fleet card programs, which make up the majority of our diesel business. But what makes it really important is that it gives us a chance to increase store sales.” Accepting outside billing fleet cards, such as Wright Express or Comdata, is a way for the chain to push large amounts of fuel while keeping the transactions fees low, since the fees are waved through the billing company. It has also helped to keep the niche profitable. Bye-Bye to the Big Boys Pilot recently made headlines when it announced it will no longer accept Visa and MasterCard over-the-road trucking diesel customers in the backend due to the high processing fees that come with the mammoth amounts of fuel it takes to fill trucks. Fleet cards have been a way for the chain to still accept an alternate payment while maintaining margins.
To further protect profits as well as quell the complaints it’s received from truckers affected by the Visa/MasterCard ban, Pilot has just launched another proprietary fleet card intended specifically for small diesel truck fleets. The card not only provides a payment alternative to customers, but it also helps to further insolate Pilot’s margins thanks to the low costs involved. “With our private label cards, everything is taken care of in-house,” said Stinnett. “The processing fees are minimal, and by doing all the work ourselves we’re able to save money by avoiding costs.” Shell Oil is another chain that has been using an in-house fleet card to strengthen its brand and increase its volumes. “One of the advantages of our card is that we have the single largest national footprint, which makes it attractive to a lot of fleets because of our vast station coverage,” said Bob Butler, manager of credit card development. “Good coverage is a big selling point to these fleets because if they’re paying workers by the hour, the last thing they’ll want to do is have the
Computer Solutions for the Petroleum, Propane and the Convenience Store Industry. Providing a full spectrum of “best of breed”products and services for our customers. RAVEN – Take your office computer to the fuel
delivery site! Raven is a PC small enough to fit in your hand, but big enough to process every phase of a delivery at the touch of a finger.
SYSTEMS ADVANCED DIGITAL DATA, INC. Flanders • Montreal • Orlando • Providence • Toronto
Our Famiily of Products
PEGASUS – Service dispatch monitor and wire-
less on-board hand-held computer. Increases dispatcher efficiency while increasing the amount of service calls per technician. Pegasus allows you to extend a flat rate POS invoice or leave a printed job ticket with customer.
ADD ENERGY – Comprehensive back office sys- POWER*STORE2 Oil, Propane, Lubricant and s. It is a management system for ery, service and inventory.
– Store Manager’s Workstation designed around a “task pad” concept. The system has been designed to automate the store manager's daily activities in order to improve efficiency and productivity.
PAMS ntegrated back office software solution for the Petro oleum and C-Store industries. It POWER*SCAN – Handheld scanner manages encompasses the re etail, wholesale, home heat and control of: inventory at the store, vendor charges financial accounting g necessities of the industry. and vendor tickets for payables. Contact our National Sales office at 1-800-922-0972 or visit us on the web at www.addsys.com w y .
Circle No. 63 on the Inquiry Card 28 Convenience Store Decisions
l
September 2007
FeatureOperations worker driving around for an extra hour just to find a station that accepts the fleet card.” The chain sells more than 700 million gallons in fleet fuel per year. Because of the vast amount and variety of fleet customers, it offers two different fleet cards to accommodate them. The standard card offers consolidated billing and reporting information to help the retailer control purchases, while the chain’s Fleet Plus card offers a much more detailed method of billing, as well as a rebate that allows customers to earn 3% of up to $10,000 a month. Offering rebates and keeping the fleet customers happy are vital to Shell’s overall success, Butler said. “What’s attractive about fleet customers is that they tend to buy more gallons per visit,” he added. “Our average customer buys about 11 gallons per visit, while our average fleet customer buys more like 19 gallons.” Butler added that like Pilot, a major perk of the fleet card comes from the increased in-store traffic. “Convenience stores offer a lot of meals
and items that are considerably appealing to a fleet worker,” Butler said. “Our stores become a fuel destination for fleet card users, and this gives us an opportunity to take advantage of the other products they’ll need on the road for themselves and their crews.” Conley, of URC, also feels that becoming a destination for fleets is vital to a company’s long-term viability. He contributes a lot of the chain’s fleet card success
not only to the consumer’s desire to pay the minimum per gallon, but also the ability to buy from a fuel brand they trust. “It used to be that a lot of customers would gravitate towards the bigger-named, better-known retailers, but now a lot of them are more interested in buying from the place where they can get the best price, the best service and the best convenience, and we fit that niche for a lot of people.” CSD
Circle No. 64 on the Inquiry Card September 2007
l
Convenience Store Decisions 29
Service to the Fleet
Proprietary cards aimed at the trucking industry help retailers increase volume and in-store sales, while fending off costly processing fees. By Michael Ferrari, Staff Writer
R
etailers are caught in an endless battle at the gas pumps—fending off high payat-the-pump processing fees on credit cards, while trying to keep their customers from floating over to lower-priced big-box competitors. To do this, retailers are taking advantage of a proven profit center that has withstood the test of time: fleet card programs. By concerting their efforts to attract these high-volume fuel consumers, which includes car and truck fleets, chains are growing a destination that is exempt from commercial processing fees and pricing wars. For example, United Refining Co. (URC) of Pennsylvania, based in Warren, Pa., is one company that is basking in the benefits of a strong fleet card service. The company operates 291 stores under the Kwik Fill, Red Apple and Country Fair banners, all of which accept the fleet card. The chain began offering the card almost eight years ago, after identifying a niche in the market that needed to be filled. “We wanted to find a way to keep our customers from heading over to the competitors,” said Peter Conley, vice 26 Convenience Store Decisions
l
September 2007
president of retail marketing for Kwik Fill/Red Apple. “At the time, there were a lot of businesses that needed to remove their underground storage tanks due to environmental regulations and liabilities, leaving them without their fuel supply.” URC realized dozens of fleet accounts were desperately trawling the streets—including to its competitors—for locations that accepted fleet cards. This is when the company decided that the best way to compete was to begin its own fleet program. Building from the Ground Up The program started off slowly. URC’s Kwik Fill stores offered companies a fleet card that could be used at all of its locations, which was a perk for fleet mangers based in the area. Each month, the chain would give its fleet customers monthly statements detailing the use of each card in the fleet, helping the company that purchased the cards make sure employees weren’t using them for personal reasons. The chain’s fleet card service has grown quickly, especially in the last year when it introduced its own proprietary “Kwik Fill” fleet card. On top of moving all of the pro-
gram’s processing measures in-house, the new card offered a key characteristic: a 5cent per gallon discount for all users. “We had to find a way to stay competitive, especially in the fleet market,” said Conley. “There’s always somebody out there who wants to have the lowest price, and by offering this discount, we have a way of not only competing with them, but also beating them.” To increase interest in the fleet cards, URC has made an effort to spread the word. The chain invests in signage as well as print and TV ads to help promote the card. The chain also encourages employees to push the card, rewarding them with $5 gift card for each application accepted and another $25 for each application approved. And it’s worked, w i t h C o n l e y s h a r i n g t h a t m o re than 10% of its fuel sales come from fleet customers. Fleet Loyalty Like URC, Knoxville, Tenn.-based Pilot Oil has also been able to reel in extra sales by implementing a fleet card program. The 325-store chain also offers various discounts to its fleet card users, the extent of
FeatureOperations which depends on the amount of volume a customer purchases. Pilot’s proprietary fleet program originated in 1985 at the company’s convenience stores as a way of clinching business from a niche that needed to be filled, much as URC did. The card was a success and was quickly worked into the company’s travel plazas, where it is now used by more than 4,000 customers that make up about 5% of the company’s volume. “What led our company to developing a fleet program was a request from our customers who were looking for a solution like this for their businesses,” said Jay Stinnett, regional sales manager for Pilot’s fleet card program. “We wanted to provide local business customers with a clear opportunity to use our products.” Though much of the fleet sales come from accepting outside fleet card services intended for large trucking fleets, the proprietary cards work to build local loyalty to the Pilot brand, as well as provide the chain with an opportunity to upsell to its customers.
“One of the most important parts of the fleet service is that it gives us an opportunity to bring more people into our stores,” said Stinnett. “We accept all the major billing fleet card programs, which make up the majority of our diesel business. But what makes it really important is that it gives us a chance to increase store sales.” Accepting outside billing fleet cards, such as Wright Express or Comdata, is a way for the chain to push large amounts of fuel while keeping the transactions fees low, since the fees are waved through the billing company. It has also helped to keep the niche profitable. Bye-Bye to the Big Boys Pilot recently made headlines when it announced it will no longer accept Visa and MasterCard over-the-road trucking diesel customers in the backend due to the high processing fees that come with the mammoth amounts of fuel it takes to fill trucks. Fleet cards have been a way for the chain to still accept an alternate payment while maintaining margins.
To further protect profits as well as quell the complaints it’s received from truckers affected by the Visa/MasterCard ban, Pilot has just launched another proprietary fleet card intended specifically for small diesel truck fleets. The card not only provides a payment alternative to customers, but it also helps to further insolate Pilot’s margins thanks to the low costs involved. “With our private label cards, everything is taken care of in-house,” said Stinnett. “The processing fees are minimal, and by doing all the work ourselves we’re able to save money by avoiding costs.” Shell Oil is another chain that has been using an in-house fleet card to strengthen its brand and increase its volumes. “One of the advantages of our card is that we have the single largest national footprint, which makes it attractive to a lot of fleets because of our vast station coverage,” said Bob Butler, manager of credit card development. “Good coverage is a big selling point to these fleets because if they’re paying workers by the hour, the last thing they’ll want to do is have the
Computer Solutions for the Petroleum, Propane and the Convenience Store Industry. Providing a full spectrum of “best of breed”products and services for our customers. RAVEN – Take your office computer to the fuel
delivery site! Raven is a PC small enough to fit in your hand, but big enough to process every phase of a delivery at the touch of a finger.
SYSTEMS ADVANCED DIGITAL DATA, INC. Flanders • Montreal • Orlando • Providence • Toronto
Our Famiily of Products
PEGASUS – Service dispatch monitor and wire-
less on-board hand-held computer. Increases dispatcher efficiency while increasing the amount of service calls per technician. Pegasus allows you to extend a flat rate POS invoice or leave a printed job ticket with customer.
ADD ENERGY – Comprehensive back office sys- POWER*STORE2 Oil, Propane, Lubricant and s. It is a management system for ery, service and inventory.
– Store Manager’s Workstation designed around a “task pad” concept. The system has been designed to automate the store manager's daily activities in order to improve efficiency and productivity.
PAMS ntegrated back office software solution for the Petro oleum and C-Store industries. It POWER*SCAN – Handheld scanner manages encompasses the re etail, wholesale, home heat and control of: inventory at the store, vendor charges financial accounting g necessities of the industry. and vendor tickets for payables. Contact our National Sales office at 1-800-922-0972 or visit us on the web at www.addsys.com w y .
Circle No. 63 on the Inquiry Card 28 Convenience Store Decisions
l
September 2007
FeatureOperations worker driving around for an extra hour just to find a station that accepts the fleet card.” The chain sells more than 700 million gallons in fleet fuel per year. Because of the vast amount and variety of fleet customers, it offers two different fleet cards to accommodate them. The standard card offers consolidated billing and reporting information to help the retailer control purchases, while the chain’s Fleet Plus card offers a much more detailed method of billing, as well as a rebate that allows customers to earn 3% of up to $10,000 a month. Offering rebates and keeping the fleet customers happy are vital to Shell’s overall success, Butler said. “What’s attractive about fleet customers is that they tend to buy more gallons per visit,” he added. “Our average customer buys about 11 gallons per visit, while our average fleet customer buys more like 19 gallons.” Butler added that like Pilot, a major perk of the fleet card comes from the increased in-store traffic. “Convenience stores offer a lot of meals
and items that are considerably appealing to a fleet worker,” Butler said. “Our stores become a fuel destination for fleet card users, and this gives us an opportunity to take advantage of the other products they’ll need on the road for themselves and their crews.” Conley, of URC, also feels that becoming a destination for fleets is vital to a company’s long-term viability. He contributes a lot of the chain’s fleet card success
not only to the consumer’s desire to pay the minimum per gallon, but also the ability to buy from a fuel brand they trust. “It used to be that a lot of customers would gravitate towards the bigger-named, better-known retailers, but now a lot of them are more interested in buying from the place where they can get the best price, the best service and the best convenience, and we fit that niche for a lot of people.” CSD
Circle No. 64 on the Inquiry Card September 2007
l
Convenience Store Decisions 29
