Brand, and the Petrol Station Experience

The former CEO of Shell, John Hofmeister, has some interesting insights about the power of negative customer experiences on the brand of Shell and oil companies in general, from a customer centred perspective:

Every day, tens of millions of people around the world stop at a retail gasoline station. For many, it is the most negative experience of the day… A retail customer has to stop, get out the car, figure out the pump, pay in advance (like a suspected criminal)… pump the gas (trying not to acquire the smell of benzene on their hands)… and decide whether to chance the restrooms (probably locked with a key attached to a giant tag, a double sign of distrust). For this delightful experience, consumers pay a price that they don’t understand or feel is justified, to a huge company of which they have at best a faint knowledge…

When the major oil companies run their retail businesses in such a consumer-unfriendly manner, why are they surprised to have a bad reputation?

John Hofmeister – Why We Hate The Oil Companies: Straight Talk From an Energy Insider

Hofmeister continues to explain that retailing fuels is not the main focus of an oil company’s activity: it is essentially a necessary evil to dispose of the product it has spent significant time and money producing. The gross margins on gas stations, even with convenience stores, can be as low as 12-13%, as opposed to 35-45% in a clothing retailer. As the retail side of the business is the least valuable, the companies have shifted ownership to local business owners who purchase supply and branding rights (for example, BP exited all retail store ownership in 2008). Top executives spend almost no time looking at the retail end of the business – you have to typically dig four to five layers down in the management hierarchy to find a role focussed purely on this.

He also talks about visiting a range of Shell gas stations, seeing a huge disparity between those run well (friendly cashier, customers liked the staff, always found it clean) and those run badly (rude manager, disgusting toilet, filthy store with the counter piled with trash, old newspapers… playing too loud music, coffeepots empty…).

To the outside world, it seems incongruous that an oil company, having spent so much effort getting the “product” out of the ground (and in some cases, like BPs in recent weeks, to the tune of tragedy and environmental catastrophe), should let go at the only touchpoint with the customer. Yet from an organisationally-centric point of view, they are still selling the gasoline, people still need to stop and buy it. For both organisation and customer, it becomes a necessary evil.

In fact, not only do many oil companies not own their branded retail stations, any more, but the petrol coming to that station is not necessarily petrol taken out of the ground by that oil supplier:

According to the U.S. Energy Information Administration, purchasing gasoline from a given company does not mean the gasoline was produced by that particular company’s refineries.

After oil companies such as BP extract crude oil from the ground, it is sent to the company’s refineries to be refined into gasoline. The gasoline is then sent through shared pipelines or shipped in batches to storage terminals.

Anyone who wants to retail gasoline, such as grocery chains, can purchase this gasoline from BP’s terminals as “unbranded” gasoline. It only becomes “branded” when BP injects its own additives into the gasoline, which is then sold to retailers.

CNN – BP boycotts hurt local stations; gas giant offers help

So it can be seen that the point of sale, as far as the oil company is concerned, is not with the consumer of their product, it is with the provider, acting as a middle-man.

That said, oil companies are extremely proactive about branding to consumers. Many of them have regular major advertising campaigns, and the franchise rights over their brand to local business owners must remain a lucrative business. It also, importantly, connects consumers back to the brand, as Hofmeister notes.

No one says this better than BP themselves, in the aforementioned CNN article where BP spokeswoman Sherry Boldt says that the local business owners “are the face of BP on the street.”

So despite margin being low, it is clear that having a positive brand is in fact an important and, in the long game, profitable exercise from an oil company’s point of view. As such, if they truly wanted to make an impact, they should enter the retail business and get serious about the customer experience.

Rethinking The Journey and Experience

It has to be said that in the UK, it is rare to find gas (or petrol, as we like to call it) stations of the poor quality described in some of Hofmeisters examples, although that is not to say they do not exist. And certainly, there is a lot that can be done to make it a higher quality experience. So, let us assume that that Big Oil Co. has decided to buy out its local business owners and relaunch its retail approach, and wants to think about how to create a better customer experience whilst increasing margins and profit.

It knows it can do this by selling more petrol, even if that petrol it not necessarily the petrol it refined. It is still a core product, and is branded Big Oil Co.

Let us first take a step back and quickly consider the journey that leads you, the customer, to a gas/petrol station. It is probable that you are en-route to somewhere else, and may have had to detour slightly or significantly to get to the station. Your aim is to get to their destination, without any problems or hassle, as quickly as possible. Getting gas for the car is a chore: you have to do it, or the car will not function. So, you go to a station. At this point, you either (a) want to fill up and get away as soon as possible, or (b) want to fill up but could do with getting something from the convenience store.

Once upon a time, a gas station was much like a pit stop: you would turn up, and people would come up to the car and fill it up for you. You would not even have to get out of the car. But now there are too many cars for this, and for many years the strategy has been to entice you in to the retail store to buy additional items as well.

Scripting

So, the “script” you follow is this:

1. Get out car
2. Unlock petrol cap
3. Choose gas/petrol option and take pump
4. Put pump into car
5. Squeeze trigger
6. Watch monitor (make decision about how much gas/petrol you want) and wait
7. Let go, pause, remove and put back pump
8. Close petrol cap
9. Lock car, go to shop
10. (shop for additional goods / use toilet)
11. Queue
12. Pay
13. Return to car

If I have option (a) in mind, this is time consuming. So, the trick is to see which steps could be eliminated, and simplified, and made better for all customers.

The easy win is eliminating the necessary journey into the store. Some gas stations now let you pay at the pump, which helps significantly, but this is still a fairly rare option. In addition, you are expected to authorise your card beforehand, which as Hofmeister notes above already starts the experience with the assumption you might be the kind of person who does not pay for the gas/petrol. I.e. it makes your script look like this:

1. Get out car
2. Authorise card (enter card, enter pin, take card)
3. Unlock petrol cap
4. Choose gas/petrol option and take pump
5. Put pump into car
6. Squeeze trigger
7. Watch monitor (make decision about how much gas/petrol you want) and wait
8. Let go, pause, remove and put back pump
9. Close petrol cap
10. Collect receipt
11. Return to car

This actually closes down your options as you may subsequently decide you want something from the shop, and need to essentially pay twice. More importantly, it goes against the grain of the order we tend to expect from retail experiences: get produce, then pay.

The advancement of number plate recognition systems now surely has to be a less in-your-face way of tracking payment? Short term car parks at airports now excel at this: if you have paid your ticket, the barrier automatically goes up when you approach it, cutting out that step of having to stop, wind the window down, put the ticket in, and get going again from ground zero. It does this by linking your number plate as you enter the car park to the ticket you are given by the machine. It would be surely simpler to match number plate to “cleared” payments at a particular petrol stop? This would allow you to put payment back where it should be: after having got the petrol.

A second step would be to look at eliminating the trigger on the pump. Consumers at this point probably make two decisions about how much petrol they want. One kind says: just fill it up, however much that costs. The second says, I want £50 / $25 of gas. Why not simply select that on a touchscreen and let the pump simply fill to the specified amount? It already knows how to cut out if the tank is full, so you would not be able to overfill. Better yet, the quick and easy option is “fill me up to the top”, which is surely the preferred option from a business point of view?

A third step, which may not be mechanically possible at this time, would be to have one pump instead of multiple pumps, having the pump intelligently recognise the type of petrol the car takes, and cutting out a step which many still manage to get wrong or find confusing. This would require major changes to both cars and petrol stations, however.

But let us daydream that those steps were implemented. Our script would now look like this:

1. Get out car
2. Unlock petrol cap
3. Take pump and put into car
4. Select how much gas/petrol you want
5. Wait
6. Remove and put back pump
7. Pay / collect receipt
8. Get back in car

I also have the choice at option 7 to go to the shop and continue my experience, paying there.

If we really had an opportunity to change things, you would ask: why get out of the car at all? The petrol pump has little changed in eighty years: as we look to the future, could things not be more automatic? Could I not just pull up at the station, and a robot arm extend out and fill up my car?

Unfortunately, this is an unlikely scenario anytime soon. But, and with existing technology, at least we could significantly reduce the waiting time whilst actually filling up – step five on our script. Formula 1 cars can be refilled at vastly higher rates: under five seconds. Although it is unlikely we need to go this swiftly, the flow rate is relatively slow, presumably dictated by the size of the nozzle and force of the pump.

Even with the script we have developed, we have streamlines the experience, made it more hassle free, and made it a less onerous task. Augment this with a friendly member of staff full time on the forecourt to help people, and suddenly you are having a very different type of interaction with a brand. There may be many other opportunities to improve it further, not least the design of the forecourt itself.

This may not be enough to stop people hating oil companies – certainly the damage BP has done recently make the customer experience pale into insignificance. But brand is a long game, taking years to build up and moments to destroy. It makes no sense to be interested in building a brand, but leave the only human point of interaction with that brand with other people. Get it right, and even the margins can be sorted out.

As Gideon Spanier says in the Evening Standard:

In the age of the internet and virtual reality, real-life physical interaction matters more than ever… as brands struggle to engage audiences with traditional messages.