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Fuel Management

Consistency Counts

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Last summer, a major fuel retailer decided to build a new convenience store right at the entrance to my neighborhood. I watched with anticipation as the massive holes were dug, underground tanks were installed, lines were run, and dispensers began to be installed. I got really excited when I counted 6 fuel islands, anticipating a high volume, low price operation that would be very convenient for me and my family.

When the station opened, I was happy to see that its prices were a full 5 cents lower than the nearest alternative. Yee Ha! (I’m from Texas) Like many c-store customers, the price of fuel is my main purchase criteria, so I tried it. My truck (I did say I was from Texas) seemed to like it just fine, too. Fearing that this pricing was just a “new store special”, I kept an eye on prices. After about 3 weeks and considerable price fluctuations, this new c-store was still always the lowest around. Then, I let my guard down.

One day after filling the tank at my new favorite c-store, I was on my way to work and did a double-take as I drove by the gas sign for the grocery chain where I used to purchase fuel. Their price was a full 10 cents lower than what I had just paid! I had been betrayed. Even though I only paid $2 more than I could have, my trust was lost. I returned to my old favorite, the grocery store, on the next fill-up.

I still check the prices when I drive past the new c-store. They actually have the lowest prices around occasionally, but I don’t go there. With price volatility being the norm, even if the new c-store seems to have the lowest price, I’m thinking that it may still be lower elsewhere, so I don’t stop.

Sometimes I wonder about the pricing policy underlying the pump prices I see. In the case of this new c-store, I just can’t figure it out. They are sometimes the lowest, but other times the highest. Maybe I’m just not in their target market. More likely is that their pricing policy is not the issue, but they have problems in execution. Inconsistent pricing policy compliance is a common problem for c-store managers today (check out our recent white paper on The Seven Deadly Sins of Fuel Margin Management).

Building and retaining customer loyalty is a key strategy for most c-stores. Customers may decide whether to trust you based on a single day’s drive-by on your location. Inconsistent pricing sends a message that your c-store cannot be trusted. For a c-store owner, the pricing of fuel can affect more than just the margins for that particular day—it can drive loyalty or drive them away.


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