Why Loyalty and Payments Are the Perfect Pairing for Retail

When it comes to fuel and convenience retail, loyalty and payments are like peanut butter and jelly. Sure, they’re great on their own. But when you combine them…that’s where the magic happens.

Before exploring why loyalty and payments are the perfect pairing, it’s helpful to review why both are important on their own.

First, let’s first talk about loyalty

To cut to the chase, a loyalty program is the #1 factor that influences a customer’s decision to visit a c-store.¹ This is why loyalty programs have become table stakes in the hyper-competitive fuel retail market.

While everyone has their own ideas about loyalty, and every retail loyalty program is unique, there are three core characteristics of any successful loyalty program:

Actionable: Loyalty should provide personalized, valuable experiences for customers to drive desirable behavior and brand affinity. This requires a strong commitment to marketing and staff training, which are important for attracting, engaging, and retaining your loyalty customers. (It doesn’t hurt to remind non-loyalty customers what they’re missing out on.)
Measurable: When customers go from anonymous to measurable, you can collect first-party behavioral data then use it to identify and target customers individually, measuring which loyalty offers and tactics are most effective. This approach also provides scoreboard metrics to track program performance, such as Loyalty Penetration Rate (% of total transactions tied to loyalty). On average, identified customers visit your site 1.5X more and spend 29% more per visit.²
Valuable: Consumers join loyalty programs to be rewarded for their loyalty. That’s why it’s so important to understand what types of offers and rewards your customers want (and the perceived value of these rewards).

Based on PDI’s loyalty experience, the three most influential loyalty offers include:

Acquisition offer: A strong introductory offer that motivates new members to reach the “tipping point” of their fourth loyalty transaction.
Everyday fuel offer: Consumers receive a cents-off-per-gallon discount or earn points/rewards for every gallon (fuel savings is the top motivator to join a c-store loyalty program).²
Everyday spend offer: Consumers earn points or rewards for every dollar spent (the recommended value exchange is a 4% reward value per each dollar spent).

Now, let’s talk about payments

A payment solution enables retailers to accept their own method of payment inside the store and at the pump. The two main components of a payment program are Mobile Payment Processing Application (MPPA) and private label debit:

Mobile Payment Processing Application: The gateway between payment services and the retailer’s POS, which enables payment processing at the pump.
Private label debit: The retailer-branded payment card and/or mobile app that’s linked to a customer’s checking account. It works just like a credit card—but with no interchange fees, the cost per transaction is lower. The lower transaction fees can quickly add up to significant overall savings.

This is where loyalty and payments complement each other so perfectly. They both exist to help you build brand relationships and drive positive customer behavior, leading to higher profit margins.

Loyalty members visit more often and spend more per visit. Private label debit customers also visit more often and spend more per visit.

What’s the recipe for success?

When you combine loyalty and private label debit for fuel and convenience retail, the success metrics are even higher.

The model for private label debit savings is rather simple. The more transactions you process, the more savings you realize. You can then reallocate these savings to fund more attractive loyalty offers (for example, 3¢/gal).

By offering additional incentives (for example, +2¢/gal) for loyalty customers who are also using your payment solution (card and/or mobile), you’re enhancing the overall value proposition. In turn, that builds customer loyalty and increases your payment transactions.

Once you’ve fully integrated your payment solution with your loyalty program, you and your customers see everything as one cohesive program. This creates synergies for marketing, site execution, training, reporting, management…everything, really.

Better together is the smart choice

The next time you make a sandwich, will you opt for an all-peanut butter sandwich or an all-jelly sandwich? Or are you going for the “better together” option that most of us would choose?

The same applies to your loyalty and payment programs. They’re each good on their own. Together, they can be awesome!

Take control of your customer data and start building deeper relationships through personalized, customer-centric experiences with PDI Loyalty solutions.

Discover how payment-driven loyalty programs incentivize your highest-value customers to spend more with PDI Payment solutions.

¹ 2023 Convenience Store News Realities of the Aisle Study
² PDI Technologies, Inc.
³ PDI Tracking Convenience Report, March 2023