The fuel retail market faces a number of disruptive threats that are spurring massive change and a relentless focus on customer experience.
Kelly Brown explains why fuel retailers are shifting their focus from the vehicle to the customer, and how to remain relevant.
Three forces of disruption are changing the game for the fuel retail business: the rise of alternative fuels, emerging mobility models and sky-rocketing consumer demands for digital and personalised services.
While global demand for fuel will continue to increase over the next decade, this growth is not sustainable. The traditional fuel industry is on borrowed time: energy demand is expected to plateau around 2030 as the world shifts to renewables, and traditional sources of revenue will eventually evaporate and profitability dwindle.
How are fuel retailers innovating to survive?
The most innovative fuel retailers recognise that to unlock new business models and revenue streams they need to shift their focus from the vehicle to the customer.
Historically, fuel retailers have been focused on fuelling and servicing vehicles. While they also sell snacks and convenience goods to consumers in stores, the business is still centred on the vehicle, not the driver or walk-in customer.
In addition, fuel retailers have relied on convenient physical locations - “build and they will come” - rather than on inspiring their customers to visit them. Some have effectively given their customers (in the form of data and opportunities for relationships) to third party loyalty and payments providers, and to the brands they sell, like Coke.
The future business of fuel will be less vehicle-centric, and more focussed on the customer.
Today’s consumers expect brands to deliver fast and frictionless experiences through compelling interactions across all physical and digital touchpoints.
For fuel retailers, that means re-imagining the customer experience to become the place that people want, rather than need, to go to. It’s about becoming a neighbourhood hub, with more of what customers want. And it’s about extending your relationships outside the service station with digital channels and partnerships.
The fuel retailers that fail to recognise and seize this opportunity, will be the businesses left behind.
What steps can you take to revamp your customer experience?
Here’s a two-pronged strategy that will help offset the future decline in traditional income streams
1. Lock in your customers now
Focus on the end-to-end needs of your customers and revamp the customer journey to expand your relationship beyond quick visits to service stations.
That means enabling fast, digital, contact-free purchases, transforming your convenience stores with new products and services, and personalising your customer communications, offers and experiences. To do that you’ll need to create true omnichannel experiences that seamlessly integrate physical and digital channels to create an array of engaging customer experiences using your own brand, in conjunction with the third parties' customers value.
Case study: Our client Z Energy replaced a third party loyalty scheme with its own loyalty strategy and programme. Pumped is now Z’s cornerstone for innovation, with the ability to deliver the unified and personalised experiences its customers expect.
2. Embrace complexity to build new capabilities
To revamp your business and aggressively embrace innovation and new technologies, you’ll need to develop new expertise and capabilities. That will introduce more complexity into your organisation, with sales channels becoming less physical and more digital.
You’ll need to embrace agile working to innovate and get products to market faster. You’ll want a retail platform that connects your physical and digital channels to let you deliver customer experiences that go beyond the novel to become meaningful. And by using APIs, you can create an ecosystem of partnerships to deploy new apps, services, channels and devices.
Case study: Z Energy is transforming its business to pursue growth opportunities and deliver award-winning customer experiences, including a world-first innovation – a virtual fuel tank called Sharetank.
