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By Barbara Grondin Francella
HOUSTON -- Shell-branded wholesalers are responding favorably to a package of goodies offered by Shell Products US meant to keep the major brand competitive while helping overwhelmed marketers meet the payment card industry's data security standards.
The bundle includes a new Shell gasoline, a branded payment card that reduces merchant fees and a variety of point-of-sale technology initiatives. The technology package, dubbed Shell Site Systems Solution (S4) and worth approximately $20,000 for the average wholesale site, would allow more of Shell's 500-plus wholesalers to take advantage of Shell Rewards, a consumer loyalty program now available at more than 1,200 Shell-branded locations, and help them become PCI compliant well ahead of the payment card industry's June 2010 deadline.
"The National Association of Shell Marketers commends Shell’s new marketing initiatives and incentives and applauds their forward-thinking in providing marketers with additional tools they need to not only survive these difficult times, but to help grow the Shell brand," said Darrell K. Smith, president of the National Association of Shell Marketers in Washington, D.C., which represents approximately 300 Shell marketers.
Shell Oil Products US has more than 12,500 marketer-operated branded locations.
The programs, unveiled at the Shell National Conference and Trade Show in early November, are intended to reaffirm to wholesalers and retailers that Shell is the right choice to grow their business, thereby increasing Shell volume and market share, Karyn Leonardi-Cattolica, Shell's external affairs manager, told CSNews Online. The Houston-based oil company is ranked No. 1 in brand preference, brand share, premium gasoline share, consumer credit card deck, commercial credit card deck and gift card sales, according to company’s research.
The new gasoline, to be offered in 2009, features an all-new proprietary cleaning system exclusive to Shell and designed to "stop gunky build-up" in all three grades.
The product and supporting marketing campaign will continue to help differentiate Shell from hypermarkets and other high-volume retailers by using easy-to-understand consumer language to communicate that the difference in gasoline brands is real, Leonardi-Cattolica said.
"Shell will support the launch of the new gasoline with an unprecedented level of marketing spend utilizing a multi-faceted marketing campaign to communicate our story to the consumer," said Leonardi-Cattolica, noting the oil company will spend more than $100 million to support the brand in 2009. The campaign will include extensive site-level support, new TV commercials, radio, online and outdoor advertisement, point-of-purchase (POP) signage, public relations efforts and more. POP material will include new, more permanent elements.
E-Checks for Everyone
The Shell $aver Card, meanwhile, is a new e-check payment option that allows consumers to tie the card directly to a checking account. The flat fee associated with the ACH transaction, handled by First Data Corp.'s Telecheck arm, may be 50 percent lower than those associated with third-party credit or debit transactions, depending on the price of gasoline.
The card, available to consumers starting Jan. 5, carries no application or annual fee. Card users will receive 5 cents off per gallon of gasoline or diesel until June 1, and 2 cents off thereafter, according to Elizabeth Hudson, U.S Consumer Cards, Shell Oil Products US.
Rather than an instant rollback at the pump, which would require some operators to upgrade their pumps, the discount is applied when the transaction clears and shows up on the customer's statement. A $20 purchase, for instance, would show up as a $19 purchase on the customer's statement, with a note detailing the discount.
"The most significant force pushing this effort were the merchant service fees," Hudson said. "The other was helping wholesaler and retailers flying the Shell flag to offer a payment card for people who didn't qualify for one of our Shell credit cards. When you look at credit card approval rates in this industry they are around 35 to 40 percent," Hudson added. "This is a great opportunity to give people who don't quality for one of our other Shell credit cards a payment option. Then, when those people are eligible, we can upgrade them to a credit card. There are also other customers who just don’t want to use their credit cards anymore."
The ACH transactions clear in a few days. Unlike a debit transaction, no hold on funds is placed on the cardholder's account at the time of the sale. Based on results of a 2007 biometric e-check pilot, Shell expects to see as much as a 40-percent increase in customer loyalty among cardholders.
S4 is a package of software programs, support and monetary incentives that will help wholesalers and their retailers boost customer loyalty, meet PCI requirements and reduce credit card fraud.
Today, approximately 10 percent of Shell's wholesalers and retailers’ sites offer Shell Rewards, a loyalty program that serves as the foundation of Shell's promotions. Loyal customers are identified by any credit card used and are offered promotions such as instant gasoline price rollbacks, car wash discounts, free cups of coffee or other receipt-based deals. Customers accept the offer via the pump's pin pad, but currently, the promotions are communicated through pumps equipped with a 4- by 5-inch screen.
Part of the S4 package is a free software enhancement that would enable Shell Rewards messages to be offered via one-line screens, according to Carolyn Yapp, Shell's North American payment and loyalty manager, allowing virtually every wholesaler and retailer to participate.
Shell Rewards' debit prompt results of approximately 65 percent savings in merchant fees per debit transaction vs. third-party card usage, she noted. An average 100,000 gallon location saves approximately $150 per month in fee savings due to increased debit transactions.
Shell Rewards also targets third-party card customers for Shell MasterCard and Shell Card acquisition and communicates the benefits of each card. The program reminds existing Shell MasterCard customers of the savings they earned during each transaction by using their Shell MasterCard.
"This software enhancement will save retailers money and every marketer can take advantage of the program now, without technology upgrades," Yapp said. "Also, it allows them to offer Shell Rewards inside the store, not just at the pump."
While the software upgrade is provided free, wholesalers must pay a technician to come to the site to install it. Under the S4 program, the cost of a technician call—which could be $500 to $1,000 per site—can now be paid through use of Shell's co-op dollars, traditionally used for product promotions and advertising campaigns, according to Scott Taylor, wholesale technology advisor of Shell Downstream Inc.
The other major component of S4 is PCI compliance, according to Walt Gothard, North American retail change and S4 manager. Merchants who do not meet PCI standards by June 2010 risk being fined or possibly losing the ability to accept certain credit cards.
"Our [marketers] use different versions of Gilbarco and Verifone point-of-sale hardware, some of which the manufacturers will not support upgrading to PCI standards going forward," Gothard noted. "We want to help all wholesalers get to the upgraded levels. In some cases that means they must buy new equipment; in other cases, installing software upgrades. We wanted to give wholesalers an end-to-end strategy."
To persuade marketers to become PCI compliant sooner rather than later, Shell is offering a penny-per-gallon discount for 24 months, starting upon completion of the POS upgrades, if done no later than the end of 2009.
Wholesalers may take the first 12 months of the cent-per-gallon discount as a lump-sum advance if the improvements are made before June 2009, according to Gene Goll, wholesale operations manager. Advance payment would be based on 2008 calendar-year volume.
In return, the wholesaler would give Shell another two years of brand terms on their incentive contract, he said. A wholesaler under a current incentive contract scheduled to expire after 2010, for example, would sign a two-year addendum to the existing contract.
Other improvements to operations offered by S4 include a better service contract for marketers using satellite dishes to connect to the credit-card processing network. The current contract provider offers maintenance Monday through Friday. Beginning in January, marketers will have seven-day service coverage at no extra cost. In fact, service fee was reduced from $125 per month to $115.
"Our system can accommodate limited time outages in credit card processing, but some of the busier sites couldn’t go the whole weekend with transactions queuing up," Taylor noted.
To battle credit card fraud, approximately 3,500 Shell sites now use software that requires customers to enter their zip code before pumping. Shell is extending a program that offers stores in high-risk areas free software upgrades and pays the cost of the technician to do the upgrade onsite.
In another fraud-protection initiative, store operators who have satellite dishes positioned in areas that could be easily knocked off line, allowing someone to commit certain types of fraud, are being offered reimbursement of costs to either move to a DSL or other broadband system or, if the satellite is easily accessible, relocate the satellite to a more secure location onsite. S4 and its suite of programs is the product of efforts between Shell's staff and the Shell National Wholesale Council's technology working team.
"These developments are a testament to Shell’s commitment to the wholesale class of trade and its desire to maintain a positive relationship with its dedicated marketers in these challenging economic times," NASM's Smith told CSNews Online. "Initiatives like these help drive the small businesses that make-up the majority of Shell marketers and are vital to keeping the brand competitive.
"We look forward to future programs which demonstrate compassion and understanding for the challenges facing marketers who have tied their fortunes to the Shell brand."