Since its launch in mid-2015, the Plenti coalition loyalty program has received a fair amount of press throughout the loyalty industry. Billed as the first coalition loyalty program in the U.S., Plenti has recently endured difficult times as several participating brands have opted to exit the coalition, leaving its future in doubt.
But, as many loyalty experts have questioned the viability of a coalition loyalty program in the U.S. due to Plenti’s vicissitudes, Fuel Rewards stands as a shining example of an American coalition loyalty program that has thrived and prospered. What’s more, Fuel Rewards, which Excentus launched in 2012, was the first coalition loyalty program in the U.S.
Loyalty360 talked to Jeff Hassman, Chief Marketing Officer at Excentus, about the highly successful Fuel Rewards program, why it has resonated so well, and his thoughts about Plenti.
“Our journey began in 1996 with the rollout of fuel control technologies that eventually led to innovative ways to offer consumers cents-per-gallon rollbacks on fuel, right at the pump,” Hassman explained. “By 2002, we incorporated real-time fuel-saving rewards into point-of-sale systems across the U.S., and two years later, we began offering a fuel-based loyalty program to U.S. grocers. Continued growth, adoption, and expansion into other retail categories and our investment in new technologies led to the 2012 launch of the Fuel Rewards program. It offers a unique and near universal loyalty currency—fuel-saving rewards or the ability to save on fuel—that U.S. consumers value more than any other reward. Contrast the Fuel Rewards program’s growth with the stagnation of other U.S. loyalty programs during this period, reinforcing the power of the currency and everyday value that’s driving growth and popularity.”
In 2017, Excentus achieved two major milestones: Growing its Fuel Rewards loyalty program to 13.1 million members and helping U.S. consumers save more than $1 billion on the cost of fuel.
The Fuel Rewards program has a simple value proposition: Members earn cents-per-gallon rewards at the pump when they make everyday purchases across all spending categories, including grocery, restaurant, retail and entertainment. The Fuel Rewards program has a direct impact on consumers’ everyday lives, saving money where it matters most, and adding value to everyday transactions. According to Excentus’ 2017 Road to Rewards survey, fuel savings rewards have surpassed cash-back as the rewards currency with the highest level of engagement.
Since its launch, the Fuel Rewards program has rewarded participating brands with double-digit growth year after year. The program continues to grow with more than 160,000 new members joining each month.
“As the first national coalition loyalty program in the U.S., the Fuel Rewards program has proven that coalition loyalty can succeed dramatically, in contrast to Plenti’s results so far,” Hassman said. “The customer experience has continued to evolve, introducing multiple new retailers and reward-issuing participants in the travel, hotel, insurance, automotive, pet supplies, telecom, dining, grocery, financial, and general retail categories. The Fuel Rewards program has also developed sophisticated consumer targeting strategies, providing members opportunities to earn in ways that are relevant and meaningful to them while driving revenue and profit back to retail participants. It’s a win-win-win for retail participants, members, and the Fuel Rewards program.”
Hassman weighed in on the Plenti program.
“If Plenti is a story of problems, difficulties, and wrong turns, then the Fuel Rewards program is just the opposite—a coalition loyalty success story,” he explained. “The Fuel Rewards program serves as an important counterpoint to the current discussion around why some retailers are re-thinking their participation in coalition loyalty. The backing of Amex and other major brands with wide reach has not guaranteed success for the Plenti program—not because coalition loyalty is unworkable, but because Plenti has gotten away from what makes coalition loyalty successful. The Fuel Rewards program might not have the size or reach of Amex, but it was able to do what Plenti hasn’t done—build a successful coalition loyalty program from the ground up, reaching double-digit growth year after year.”
Coalition loyalty, Hassman believes, is a multi-merchant approach and each partner has its own goals and interests.
“The Fuel Rewards program makes it as easy as possible for retailers to participate, whether they want to use the Fuel Rewards program as their own loyalty program, become an affiliate brand, or even just adopt the currency itself,” he said. “This flexibility makes for a successful coalition, allowing merchants to achieve their own results without bearing responsibility for the program’s success. The value proposition is the rewards currency itself, not any single brand.”
The demand for and need of fuel makes the program’s currency, Fuel Rewards savings, a unique, near universal and valuable loyalty currency that consumers love and prefer over cashback and other rewards, Hassman noted.
“Consumers’ eyes are always on gas prices,” he said. “It’s a daily conversation in the news, and consumers usually remember how much they paid on their most recent fill-up. With the Fuel Rewards program, all roads lead to real savings on a commodity that most consumers need on average 1.2 times per week. This emotional connection to fuel prices, coupled with consumers’ fuel purchase frequency, makes the currency of the Fuel Rewards program so appealing. Conversely, the Plenti program offered multiple ways to earn and multiple ways to redeem ‘points,’ a seemingly nebulous currency. On the surface, that sounds like a flexible program construct whereby consumers have multiple choices. However, the spend requirements and the true value of the currency may have not been well understood by consumers, potentially leading to their struggle with acquiring and maintaining active members and long-term retail participants.”
In today’s retail environment, brands are relying on loyalty programs more than ever to help drive profitable business outcomes, Hassman said.
“Across all retail sectors, our data reveals that 20 percent of customers tend to shop at stores where they can earn retailer rewards and rewards that help them save on fuel,” he explained. “This is even more pronounced among convenience retail loyalty program members, where 21 percent of respondents state that they redeem their rewards to save on the cost of fuel, and 18 percent state that they redeem on a combination of fuel and food and beverage products within the store. For retailers, who are struggling to stay relevant and increase foot traffic into their stores, fuel-saving rewards can lead to a significant boost in revenue.”
Despite their popularity, loyalty programs are incredibly hard to build and maintain—not to mention costly, “which means failure is not an option that retailers want to face,” Hassman added.
Excentus’ report, “The Road to Rewards 2017,” examines what types of rewards programs consumers engage with the most, what currencies they value, which approaches can influence their behavior, and what motivates their loyalty.
Here are some of the report’s findings:
- U.S. consumers ranked fuel savings as their No. 1 preferred type of rewards currency for the third year in a row.
- With a 5 percent year-over-year increase since 2015, 64 percent of Americans now belong to a rewards program that enables them to earn rewards they can redeem to save on the cost of fuel.
- Loyalty programs’ ability to influence customer behavior is on the rise, with 36 percent of consumers (compared to 26 percent in 2016) shopping more frequently at stores where they can earn rewards. And with 20 percent reporting that they shop specifically at stores where they can earn rewards that help them save on the cost of fuel, that currency may be the “supercharger” retailers need to accelerate their revenues.
- After location (44 percent), a loyalty program is the main reason customers choose a specific C-store (43 percent), even ahead of gas prices (31 percent). Most C-store customers shop more frequently or exclusively at a convenience store if they belong to that store’s loyalty program, and 21 percent cite the ability to save on fuel as their primary motivation to joining a rewards program.
“Consumers love the
idea of a loyalty program, but lose interest quickly when a program fails to deliver,” Hassman said.
Loyalty programs come in all shapes and sizes, Hassman noted, but any program that drives loyalty success will follow some basic rules of the road:
- Have a simple value proposition
- Be clear about how the program works
- Have a popular, high-value rewards currency
- Make it easy to participate frequently
- Allow customers to earn and redeem in short cycles
“With these success factors in mind, we can see why the Fuel Rewards program has succeeded where Plenti strayed off the road to loyalty success,” Hassman said. “The Fuel Rewards program is based on popular demand for Fuel Rewards savings, a loyalty currency that remains popular apart from brand participation in the program—success has been proven by the program’s year-on-year growth, and even in the face of gas price fluctuations (high and lower).”
Hassman talked about why the Fuel Rewards has resonated so well with the public.
“The demand and need for fuel makes Fuel Rewards savings a unique, near-universal and valuable loyalty currency that consumers love and prefer over cashback and other rewards,” he said. “The proof of loyalty success is in the results. The Fuel Rewards program has saved 13.1 million members more than $1 billion at the pump, which shows how much consumers value the ability to earn where they want to and where they already spend, and to redeem on an everyday necessity [fuel at the pump].”
Hassman said that coalition loyalty shouldn’t be discounted in the U.S.
“The difficulty of ‘doing loyalty’ was apparent when Plenti lost two major participating brands [AT&T and Macy’s],” he explained. “Because of Plenti’s lackluster results, some observers have called up a common stereotype about the multi-merchant or ‘coalition’ approach to loyalty, which is that coalition loyalty cannot and has not worked in the United States. The Plenti program has tried to ‘push its card,’ so to speak, and box retailers into their program. The Fuel Rewards program, on the other hand, gives retailers the flexibility of using Fuel Rewards savings as a value add for their existing programs—as opposed to the ‘all or nothing’ approach that Plenti is taking.”
Since 2012, Hassman added, the Fuel Rewards program has continued to introduce new methods to save for consumers, and innovative ways for retailers to seamlessly integrate the currency into their consumer value propositions.
“Since the initial launch of the program, the focus has shifted to mobile, payment, card-linked strategies, rich reward-earning opportunities, and overall consumer experience enhancements,” Hassman said. “The program is constantly evolving to meet the high expectations of both consumers and retailers.”