Why Some Gas Stations Give Discounts When You Pay With an App
A gallon of gas costs about $2.25, on average, meaning Americans are saving more than $1 per gallon compared with this time last year. Even with that discount, a retailer on the East Coast has figured out the formula for increasing gas sales and making customers more loyal: Offer even more discounts through an app.
Cumberland Farms, which operates about 550 gas stations and convenience stores in the Northeast and Florida, released versions of its mobile app in 2013 that connect to a customer’s bank account to facilitate payment at the pump and dole out coupons. Since then, the apps, including one for regular customers and another for businesses, have generated about $400 million in sales, said David Banks, Cumberland Farms’s chief information officer. “We are selling significantly more gas because of it,” he said. “Customers have become more loyal, and we’ve picked up more customers.”
As Apple, Google, and Samsung Electronics all chase a slice of the mobile-payment pie, some retailers are managing to find success with their own apps. The ones that garner the most attention are from large chains, such as Starbucks and Domino’s Pizza. The coffee giant’s mobile app represents 20 percent of transactions in U.S. stores, more than double what it was two years ago. Domino’s, Pizza Hut, and several other big fast-food retailers say their mobile apps are picking up steam as well. An added perk: The apps can often speed up lines in stores.
Cumberland Farms gives users of its apps a 10¢ discount on each gallon of gas they buy. The pennies come partly from the company’s savings on credit-card transaction fees, since the apps withdraw directly from bank accounts. To encourage loyalty, the apps send customers a coupon for a free drink at a Cumberland Farms convenience store after they purchase 30 gallons of gas. Some 45,000 people redeem the mobile coupons every week, said Banks.
Other gas stations are catching on to the opportunity. On Oct. 6, Chevron said it will introduce a new mobile-payment program at several locations. Exxon Mobil’s Speedpass+ app lets consumers pay for gas at certain stations. One reason the companies are embracing mobile payments: credit-card fraud. The pump is a fairly common target for criminals, who place skimmer devices on credit-card slots to steal people’s card numbers and use the data to clone cards. It’s much tougher to steal someone’s info off their phone.
Now that some customers are hooked on Cumberland Farms’s apps, the company wants to drive more gas guzzlers into its convenience stores. Later this year, the apps will start letting customers preorder food and pay through the phone. The clerks will prepare the food so it’s ready by the time the user enters the store, similar to what Starbucks does. “It’s a line buster for us,” said Banks. The goal is to sell more egg rolls and sausage Tornado tacos, which don’t exactly play to the venti latte crowd.