Hi everyone, I hope that you're all well and staying safe. Welcome to our How Fuel Retailers Demand Capture episode. We're here to talk about how fuel retailers can accelerate their success as the pandemic forces a new normal and the role that customer-centric strategies have to play. I'm Kirk Wilson, and I'll be leading the discussion today here from London, and I'm joined by my colleagues Masood Haq, Senior Vice President, Energy at Epsilon, and Karl Madafari, Senior Vice President at Epsilon. So, thank you everyone for joining us. You can type your questions into the Q&A box at the bottom of the screen. And if we can't get to your question today, obviously we'll try to follow up with you afterwards. So, the COVID-19 pandemic has left no industry unaffected, but for fuel retailers, the disruption caused by the pandemic has been especially acute. So, Masood, I'll start with you. Why are fuel retailers especially impacted right now?
Yeah, thank you, Kirk. So, what is happening this year is quite unprecedented in the sense that we've seen in the last couple of decades, we've seen quite a few oil price crashes, and the industry has been able to recover from that in due time. But what's different this time is not only is there an oil price crash, but there is a demand collapse because of the pandemic. And we've seen in gasoline, it's up to 50% reduction in demand. In jet fuel, in some areas, it was about 90% reduction. So, that's quite drastic on top of the price collapse. And we don't expect to see a quick recovery. So, this is going to be a slow recovery and a long run. So, it's having a huge impact on the industry. Initially, the first couple of months, we did see the profits were protected because price also dropped. But once the fuel prices catches up with the crude prices, that profit cushion will also disappear.
Sure. And Karl, one for you. How easy will it be for fuel retailers to actually deal with these challenges?
I think the biggest challenge for industry leaders will be to accommodate the fact that traditional consumer behavior is disrupted. And it's more than just the demand note that Masoud mentioned. It's not just that consumers are staying home. Consumers are acting in a different way. So, they're no longer behaving in a way which is to choose the station closest to home or the one on the way to work or the one with the lowest price. A new normal is the consideration of safety at a location. So, while retailers are thinking about how to preserve their dividends and their cash and how to reduce costs and inventory, they now have to think about personal health and safety concerns as a priority. Do you have contactless service and payment available? Are you efficiently managing traffic flow? Adding to all of this is that this has just been the first six months and that definition of the new normal shifts every day. So, that adds a degree of difficulty for sure.
Sure. And Masoud, there's a lot of pressure in the industry at the minute. How would the industry feel about these challenges? And from your experience, where do you see the opportunities for fuel retailers?
Yeah, that's a great point, Kirk. While this is very painful and for the industry, it's a negative outlook, it is also an opportunity for the industry because as Carl mentioned, the consumers are behaving differently. And if you think about the consumer behavior in terms of worrying about their safety, their health, et cetera, and the fuel companies thinking about their revenue, their profit, and in some cases, their dividend, the question becomes, how do you bridge that gap? And the way to take advantage of this situation is to be able to bridge that gap because as Carl mentioned, the consumers are behaving differently. And if you think about the consumer behavior in terms of worrying about their safety, their health, et cetera, and the fuel companies thinking about their revenue, their profit, and in some cases, their dividend, the question becomes, how do you bridge that gap? And the way to take advantage of this situation is to be able to bridge that gap by personalizing to the consumer needs and worries is the key here.
Okay. Brilliant. And Carl, let me return to trip this one over to you. Masoud mentioned personalization there. From your experience at Epsilon, how does personalization help?
We've been talking personalization for years, and I think everybody gets the concept and the value prop of being customer-centric at the 50,000-foot level. I think for us, this pandemic, this crisis has allowed everybody to see personalization in a new way, as a way to bridge the gap between the company and a consumer's needs. Obviously, to get there, it's a little trickier. Consumer requirements are evolving at a more granular level. So we're not just talking about a region by region or city by city adjustment. Every individual has been impacted by this in different ways. Are you able to stay home? Are you an essential worker? Are you sending your kids back to school or choosing not to? That doesn't happen regionally. That happens in an individual or household level. So you've really got to understand the behavior of the profiles of the consumer that the company can identify so that you can get those trends, create those personalized messages that go hand in hand with the products and services that an organization offers. So we mentioned safety being important. All retailers have had to rethink their offers to satisfy customer safety requirements, and Fuels is no exception. But how do you get that to your consumers? Do you advertise that you've got contactless payment available? Do you keep your consumers updated about their safety measures and through text messages or email? That is what we partner with a lot of our clients to help them build that capability. We've been doing that for years, and what we've done recently is sort of gone from this concept of building a marketing engine to building a marketing flywheel. So the flywheel is that part of the engine that allows you to shift gears quickly as you need to. And that is really what's needed in an environment like this, is the status changes as your consumer needs change, as your business needs change. You've got to be able to shift quickly, and that's really where we're aiming our clients. So as you start to get that knowledge of the customer, as you think beyond your core products, you can seize other opportunities when you have a flywheel-type thinking. Traditionally, fuel retailers have attracted customers by offering discounts other than new services, but now you can look at, can the convenience store attached deliver groceries to somebody at their home or when they're there fueling up? Obviously, data is the key to all of this. So understanding whether your consumers are interested in stocking their pantry or filling their tank or doing it together, that is really what marketers and business owners need to understand. We're really getting outside the mindset of trying to get a share of wallet of a consumer and think more about getting share of life.
Yeah, that share of life piece is very powerful. It kind of goes without saying that for that level of personalization, you need data, as you mentioned, and as our data expert, what are some of the data approaches fuel retailers should be thinking about right now?
In the fuel industry, as in other verticals, there's different levels of maturity, but everybody's got at least some investment in first-party data, whether you're taking your point-of-sale data and centralizing that in a database, or if you've got a loyalty solution that ties those transactions and builds that in, or just an email platform or marketing lists. Most people have that first-party data. What's important also in this space is understanding what you can see about your consumer outside of your brand experience. And typically, this has been in the form of demographic data or panel data or surveys. Now what's available is the ability to connect and see what your consumers are doing online. How are they behaving? What are their attitudes and sentiments? And to get that, what most people are using to connect with is a cookie-based identity. And obviously, that works. That out of the gate gave people a connection to their consumers that they didn't have before. But without a persistence, an ability to keep that over time, you don't have that longitudinal connection, and that's lost. So you really need something that's persistent when bridging that offline and online. And it's really important to unlocking those data profiles and understanding the consumer base. So while traditionally cookies have been used, I think modern technologies are far more robust. For example, we at Epsilon have built a platform we call PeopleCloud, and it really allows us to connect at levels that conservatively in this space, we've seen 55, 60, 70% matching at a conservative level, going all the way up to 80s and 90% for other retailers where there's a strong e-commerce connection. And that accuracy is really critical in tying that data together, bringing it together in a central decisioning hub that you can then build everything else around. In the US, we've built this out for about 200 million consumers, and we've got that in Western Europe and Canada and other locations that are obviously GDPR compliant because privacy is obviously critical in this internal discussion as well. So we see. We've spoken a bit there about data and about personalization. What are the other elements that need to come into play once you have your data?
Yeah, absolutely. So let me build on two terms that Carl introduced. He talked about the flywheel and he talked about the share of life. So when you think about bridging this gap to the consumer and their needs, the things that you have to think about are not just the communication. So one part of it is understanding the consumer through the data that's visible or can be visible to the fuel retailers. Second is the communication. But beyond that, you also have to think about the holistic experience. And that's the online and offline experience. So online experience could be, can I do a contactless payment? Can I do an eYou can then start to think about two things. One, how do I evolve my offers? Are the offers I have out in the market working? Like for example, I've seen some feelers who, in addition to putting out hand sanitizers, they put out rubber gloves and it's a very expensive thing to do and nobody used it. So how would you make sure that you don't spend that kind of money without actually some validation from data as an example? And then part two of it is thinking about this communication and the digital experience, meaning once you have decided what those offers are, how do I now bring it to life? How do I start incrementally executing to that and having a plan for that and start building it?
Okay, brilliant. So Carl, I'll take this one to you. What are some ideas for an approach to data that will deliver rapid results?
That's a good question. Something we're doing a lot right now in relation to this, not just for retail, but actually in hospitality, theme parks, et cetera, there's this concept of canary data. So how can I understand what are my consumers' behaviors? Where are they in terms of their position to this pandemic? So looking at things like sentiment in social media, geolocation data on mobile devices, doing an analysis to understand are people staying home? Are they only traveling between home and essential jobs? Have they started to go out to restaurants and parks and those types of things gives you a sense of when it's time to start taking the right offers to consumers. And so that can have a big impact. Now, obviously when we talk about that type of data, something we haven't spent a lot of time on here, but it's really, really important is understanding how that data can be used. And while data can be used, should be used, those types of decisions are things that are not just data scientists, but are legal experts and those types of things help us make sure that vertical by vertical, we're aligning this data in ways that make sense and more importantly, respect and protect the consumer's privacy relative to it.
Okay, and we'll just take the last one here because I'm a little bit conscious of time. Masood, and I think this is one for you. How much appetite do you think there is in the industry for this level of change?
You know, the question about appetite implies there's a choice and the way I see it is it's not so much a choice, right? We, all of us in the world have been thrown into this pandemic in the current situation and we need to figure out how to navigate this. So the real thing is, the real question isn't, should I choose to navigate this or not? The question is how? And at the end of the day, the starting point is what you have and the focus is the consumer and their worries, because if you address that with your starting point, then the revenue and the profits will follow. So I think the idea isn't that you need to do a big, huge project and spend a lot of money. The idea is change the mindset, change, start with what you have, and then incrementally build towards where the consumers are evolving and follow that.
Okay, that sounds like good advice. And just before we wrap up, let me ask each of you, what is the number one thing that fuel retailers should take away from this conversation that will help them capture demand? Masood, should we start with you again?
Yeah, sure. Thanks, Karthik. So the main takeaway for me is the data, right? And historically, we've seen a lot of fuel companies, they think about consumer data to mean their name and contact information. But what we're really talking about is quite a bit beyond that, which is what are their day-to-day behaviors? Where are they shopping? Where are they going? What are they watching? What websites they're visiting? What are they searching for? What are they posting in social media? And getting that full view, and that view is gonna change day-to-day, week-to-week, and month-to-month. So keeping up with it is gonna be key. What I've seen a lot of fuel companies structurally have internally is they have somebody who's responsible for the technology, which is IT, somebody responsible for the communication, which is usually the marketing department, and then somebody who's responsible for the digital experience, and probably somebody for the physical experience at the pump in the convenience store. And what falls through the cracks in that kind of a structure is this idea of data as an asset. And having somebody owning that data and making sure that you're collecting and curating and sourcing all of that data, you have the right algorithms to do the matching, and then leveraging that data across all of these different functions, that's gonna be key, right? And then using it also to, as I mentioned earlier, to continually innovate. And over time, hopefully you've then built a flywheel that keeps the engine running over time. And as you're addressing those consumers, you're also addressing a share of their life, not just the share of their wallet of the pump.
Okay, and Carl, your one key takeaway?
Yeah, I think data is obviously critical, and because Masoud has spent some good time on that, what I would go to next is identity, that connective tissue that stitches the data together, that joins your third-party data to your first-party data, that allows you to take your first-party data and the profiles you've built and reach them in media or drive decisions on them from a personalization perspective. I think that is what's critical. Everybody knows data, more data, better data is important, but how that ties together is at the identity layer. And for us, as I mentioned earlier, this is the DNA of Epsilon. We've done this forever in the traditional offline identity, the name address, phone numbers, emails, account numbers, and then now more recently in the media side, taking beyond third-party and building our own media network that helps us build an identity layer that is 50, 60% on its worst day, relative to what you've seen a lot of media companies taking a 3% or 5% match rate and being happy with that. And that's really just scatter shooting with your media budgets. And when you take this to the type of identity that we're talking about, it's easy to see how that can give you a strong competitive advantage in a crisis situation like this or not. So I think identity is where I would go next in terms of priorities.
Okay, fantastic. Well, we're out of time at the minute. So I'd just like to thank you Masood and thank you Carl for sharing your perspectives in the conversation today. For those of you who still have questions that we weren't able to get to in the Q&A, please feel free to reach out to us directly to continue the conversation. Thank you for joining us in this edition of Demand Capture, the webinar and have a great day.