Will Shell's re-introduction of service revitalise loyalty

There seems to be a never ending trend to automate and self-serve.

• Retailers are introducing self-scanning solutions.
• Train stations are introducing 24hr ticket machines.
• Health care has introduced self-service diagnosis such as NHS Direct
• Amazon has introduced automated delivery drones (well, not quite yet…)

There is less and less human interaction and an ever increasing expectation of getting what we want, whenever we want it.  From the companies point of view it reduces costs, increases availability, increases capacity - and for the customer, it may reduce prices (or suppress price rises) and increase availability.

So it was very strange to drive up to the petrol forecourt last weekend and be greeted by a smiling employee eager to fill up my car.  

This is something in the UK that died out in the last millennium.  In fact, we haven’t had forecourt attendants since the 1970s.  As small, owner operator forecourts closed and big, national brands dominated, the forecourt attendant was replaced with self-service pumps.

So why now - why has Shell re-introduced the forecourt attendant at a time when fuel prices are at their highest and fuel retailers claim margins are wafer thin?  Surely they’d want to continue cutting costs, automating processes and widening the roll-out of “pay at pump” technologies.

Well I think it’s for 3 main reasons

1. Customer Experience

2. Differentiation

2. Forecourt Margin

The first reason, customer experience, is an interesting one.  

On the one hand, customers want quick service and high availability/capacity at a forecourt - I basically don’t want to queue for my fuel or queue up to pay for it -  so this would seem then an obvious place to invest in automation so as to move customers through quickly.  On the other hand, with all fuels being pretty much the same and all forecourts offering the same services, the customer experience is pretty much the same across all brands - there is really no ability to create a stand-out customer experience.

However, with the new forecourt attendants, Shell would appear to be trying to change this, describing their role as:-

“[..] Designed to help drivers with advice on fuels and fuel efficiency, basic car care and safety tips… including checks on oil levels, screen wash levels, tyre pressure and tread. All Shell Forecourt Attendants have been trained by the Automobile Association (AA) to be able to carry out a range of car care tasks for Shell customers"

So this is moving Shell from simply being a outlet to re-charge the fuel tank into a destination to get re-acquainted with your car.

This ties nicely into the next reason which is differentiation.  

In a crowded market, with increased competition from supermarkets, what can a brand like Shell do to stand-out.  If your product/service is basically homogenised, as is the case with forecourt sales, you need to do something to stand out from the crowd.  Price is not an option as the brand leaders don’t have wider supermarket sales to fall back on.  Sales promotions have worked well, but they are hardly ground breaking or innovative and probably won’t reach the heights of the 1980s when people were encouraged to collect glasses or soup bowls.

Serviced fuel however creates a point of difference - and one which people will be more likely to value, helping to obfuscate other properties such as price or location.  Recognising this point of difference, Melanie Lane, General Manager of Shell UK Retail is quoted as saying:-

Across the industry, UK forecourts are generally not considered the most inviting and customer service-focused environments, and we aim to do something about that. The reintroduction of forecourt attendants will be a welcome addition for many of our busy customers.

I suspect however that there is also a revenue opportunity at the heart of this.  

One interesting aspect of the attended service is that I can’t actually pay for the fuel with the attendant.  Given I can pay for a burger with a virtual currency like BitCoin, it wouldn’t be a stretch to give the forecourt attendants the relevant technology to allow them to take payments.  However, this would remove a golden opportunity for me to wander about in the well stocked forecourt shop whilst waiting for my car to be filled or washer fluid topped up.  

Given that forecourts can be earning around 30% margin within the shop versus around 3-5% margin on fuel, it makes sense that Shell would want to get me spending less time filling the tank and more time filling the shopping bag.  I’d only need to spend £10 in the forecourt shop to double the margins earned on a £60 fill up - so this would seem a no brainer really.

This is not unique to Shell however - ironically, service is also being re-introduced due to automation in other sectors.  

Online supermarket sales for example now account for increasing percentage of all sales, with these set to double in the next few years and brands such as Tesco - the global leader in online sales - seeing around 8% of all sales being done online.  This means an increasing number of customers are very rarely setting foot within a supermarket store - and these are valuable customers, spending almost 3 times as much per shop.  For these customers the brand lives or dies based on the front line delivery drivers.  Like the forecourt attendants, these people are bringing a little last-century magic to the modern shopping experience.

As Which? pointed out in a survey of online shopping, the delivery experience can be key saying:-

"As it’s my first time, he presents me with a free pack of Waitrose and John Lewis magazines and recipe cards — a nice touch. He also offers to unpack.  Items arrive in 11 colour-coded bags — green and white for store cupboard and bright blue for fridge and freezer. It makes unpacking a doddle"

Contrasted with another supermarket where the experience is less than perfect:-

"The driver rings just after 8pm to ask if he can arrive earlier. That’s fine — but when he asks me to come out and wave at him so he gets the right house, I’m a little less chuffed. It’s a cold, wet night.  Nine bags sloppily packed. The vegetables are lumped in with the eggs and dried spaghetti, and the washing-up liquid is in with the crisps"

Whilst there is no doubt that Shell will be looking to maximise margins on every customer visit, it can’t be denied that the nostalgic value alone in these austere times adds significant differentiation and a richer customer experience.  Both of these are critical to increased customer loyalty and provide a warm fuzzy feeling that a plastic card and points alone cannot achieve at POS.  

As retailers look to increase these one-to-one customer experiences - delivered by their front line staff -  it will be key that they are well managed to get the best loyalty value.  Based on my personal experience, I can certainly report that Shell seems to be doing a good job so far judging by their courteous forecourt attendant when I visited.  It will be interesting to see how this new service unfolds.

Remarketing - Loyalty's "Groundhog Day"

On February 2nd 2013, famous groundhog Punxsutawney Phil didn't see his shadow in Pennsylvania.

This apparently meant that spring would come early this year - although i'm not sure anyone actually told spring about that as we had a long, drawn out winter - but then I guess it's asking too much of Phil to predict the weather in the UK as well.

Regardless of how accurate this phenomenon is, it was immortalised in the popular film Groundhog day whereby the main character is forced to relive the same day over and over again until he learns to become a better person.  Recently though, you'd be forgiven for thinking the same phenomenon was happening to you.  

Here's the scenario - you're busy surfing the web looking at different products/brands and then all of a sudden wherever you go you keep seeing the same brand that you visited just a little while ago.  Maybe you'd never noticed them before, but now they seem to be popping up everywhere - and days later you're still seeing them all over the web.

Wow, you think to yourself - these guys are everywhere, they must be _____ (fill in the blank accordingly with... amazing, spending a fortune, just right for me, desperate).

You could be forgiven for confusing this with with another effect you see in real-life called the Observation Selection Bias.  When you buy a new car you suddenly see your car everywhere and assume - wrongly - that the frequency has increased; that everyone is now buying that car.  This is not however the case here.

It's actually no coincidence that you now can't fail to miss the brand - they're using remarketing.

Remarketing is a process by which you see personalised advertisements across almost any website that shows ads based on your previous surfing habits.  Google describe it as:-

Remarketing is a powerful way to stay engaged with your target audience. Presenting them with highly relevant ads and offers across the Web -- and making sure your brand is top of mind when they’re ready to buy

Remarketing (or retargetting as it's also known) helps by:-

• Targetting users who visit but don't purchase (up to 97%)
• Helping with brand recall - especially as they're possibly visiting competitors
• Combining branding and direct response techniques to target users across different stages of the buying funnel

Using remarketing, companies have seen a 600% lift in response rates versus standard banner display campaigns.  This is not really surprising given these ads are now targeted at "soft" targets - customers who have already expressed an interest in the brand by visiting the website initially.  It doesn't do away with the initial acquisition marketing to drive traffic, it simply ensures you make the best use of this by having a second bite of the cherry.

At it's heart though, remarketing relies on the the familiarity principle or mere-exporsure effect.  This is the psychological phenomenon by which people tend to develop a preference for something merely because they are familiar with it - it's what advertising is based on!  By using remarketing you continue to remind people of your brand and provide compelling reasons to come back and consider you.  If you're trying to acquire new customers, this alone becomes very powerful.  Research has shown for example that remarketing using personalised ads is 6x more effective than standard banner ads.

While remarketing is now firmly established in online acquisition marketing, I think there is also huge opportunity here for retention marketing.

At it's heart, remarketing is a one-to-one messaging solution based on customer behaviours and it's this that really makes it powerful for loyalty marketing.  Consumers now actively interact with brands via their online websites, making purchases, researching products, writing reviews.  From a loyalty context, they are also checking points balances, reviewing reward options and making redemptions.

Every one of these activities can provide a trigger point for remarketing.  While the messages (displayed as ads) maybe be relatively fixed, the timing of them is highly personalised.

Recognising when someone has checked their balance, has enough to redeem but has not looked at a reward gives you an opportunity to highlight relevant rewards and pull them back.  Members looking at rewards, but not redeeming provides the opportunity to pull them back in to redeem.  However, the opportunity is wider than this.  

It's not just about the single next best action, it's about the journey.  

Using a well designed remarketing campaign, it's possible to track the behaviours of both prospects and members and to tailor the right messaging based on this to deliver the next best action as part of an overall journey.

It's a misnomer to think that 1-2-1 marketing means a single, personalised message for every customer.  Instead, it's about the right message to the right customer at the right time.  You may only have 7 key steps within the overall customer journey, but knowing which step a customer is at and which is the next right step is the key.  We do need to be careful however when myopically driving customers along a predetermined journey.

Knowing the customers journey, not your journey is more important

In a recent (2013) research study by Lambrecht and Tucker entitled "When Does Retargeting Work? Information Specificity in Online Advertising", it was shown that dynamically remarketing to customers based on their browsing habits only worked well if you understand where the customer is in their own journey.  

Based on an example with a travel provider, the study suggests that making the remarketing message highly personalised  - down to the product or product category level - can be less effective than more generic remarketing.   In the study they found that ads which feature hotels that a customer had previously browsed or were similar only prove more effective when the customer is known to be looking for something specific (narrowly construed preferences) and that this was best demonstrated by understanding their wider browsing behaviour with both review websites and/or competitor sites.

This isn't to say remarketing as a whole wasn't working, but that the message used within the remarketing, whether generic or highly personalised needed to be aligned to where the customer was within the buying process - something which may not be apparent from just the behaviours the customer has shown with that brand/site.

Given the wealth of data contained with a loyalty programme and the increasing requirement for loyalty programmes to bring together wider customer interactions, this provides a real and tangible opportunity to increase programme effectiveness.  Whether this is to directly target brand customers for repeat purchase or to more subtly drive up loyalty programme adoption and engagement, both approaches are like to provide compelling returns.

If Punxsutawney Phil comes out next year and sees your loyalty programme using remarketing as part of it's overall marketing strategy, I think he'll be predicting both a very early spring and a bountiful summer.

Is opt-in simply a cop-out?

When marketers talk about wider customer interactions they tend to focus on language about consumers "opting in” – letting consumers choose to tell you about their interactions, transactions and viewing habits in exchange for rewards – typically framed as “exclusive” discounts or some other carrot.

Indeed, in many markets the process of opting in is regulated, requiring the consumer to provide their consent to receive ongoing marketing communications from a company.

There are a number of new companies trying to make the process of opting in and sharing data completely transparent. Handshake for example lets you setup your personal data and then negotiate with companies that want to buy it. They say:-

“Through Handshake you’ll be able to see exactly what brands want to talk to you, what they want to talk about and how much they will pay you for that conversation”

In reality though, the majority of consumers don’t see their data in that way – they don’t even see data. In the consumers language it’s about different services being able to understand each other.

For example:-

• When a consumer is tracking calories they just wish that the products they bought at a store today were available for selection within their trusted calorie tracking application.
• When a consumer checks-in on Foursquare or browses for nearby restaurants, they are not necessarily looking for a deal, they are looking for somewhere nice to eat, somewhere that others rate, somewhere close by.
• When a consumer searches for a product on Google, they are not looking for an advert – they don’t want to “opt-in”. They are looking for a product. If an advert shows up based on their search criteria, previous search history, previous purchase history and this is an exact match, then the consumer is happy.

The consumer isn’t looking to opt-in, they want utility.

They want things to work together seamlessly, they want intelligent decisions to be made using their data; they want to reduce friction in future interactions; they want it to be relevant both in terms of content and transactions.

So this presents a challenge in that to be where the consumer is – to be aware of their search activity online or the check-in activity offline – we need the consumer to create relationships.

Note I didn’t say “opt-in”.

Consumers think in terms of things relating. If this service knew about that service then that would be useful.

We do this in real-life all the time when we make new acquaintances and friends. We may not actively think about the useful connections this new friend may provide, but we see synergies and we understand that things just work better when we establish more relationships.

Framing the language around interactions as creating new relationships or new connections is a much more positive language than opting in. It suggests that we see this connection as two-way – we both get value. It suggests that we may not yet know all the value we may be able to get from this relationship, but we can see there is value there.

Sure, we do actually have to get permission from the consumer, but this should be based on transparency, both in terms of what we want and why we want it.  Facebook for example, when speaking about Facebook Connect which essentially provides 3rd parties with access to a members Facebook details and interactions says:-

Facebook Login makes it easy to connect with people [and] functions as a trusted link between you, people using your app and their data.  The only way for an app to gain access to any of this is to transparently request each relevant permission from the person [with] each permission clearly explained to people [so they can] make the decision about whether to grant the app access

Notice they speak about connecting with people, providing access, giving permission and most of all, about trust - it's not opting in.

The aim then for marketers is not to try and simply get opt-in but instead to create more and more opportunities to make these relationships based on trust and permission and to provide useful services and utility value from them.