Customer Number One

blogIntevacon is in business to equip petroleum marketers with the best proprietary fleet card in the industry. We define our success by our customers’ success, and this means that we stay focused on the Petroleum Marketer. Merchants are  critical to transaction volume, which one would also think makes them a big influencer in the payments cycle. Interestingly, merchants don’t always receive the priority that they merit.

Apple recently announced its much-anticipated iPhone6, complete with the Apple Pay capabilities of near field communication. Already, there is a waiting list for consumers wanting to get their hands on an iPhone 6; however, there are concerns that there may not be adequate merchants to satisfy this new purchasing tool. A NACS article titled “Apple Built It—Will Merchants Come?” notes the potential added expense for merchants to adopt a new payment system. In a Wall Street Journal article published last week, the CEO of Crone Consulting is quoted saying, “Apple has rallied the issuing bank side, but not the merchant side.”

Another article recently posted in PYMNTS.com also cites similar disregard for the role that the merchant plays when it comes to networks. In a discussion about bank-owned networks, the article says, “[…] the networks actually forgot that they had more than one customer group to serve and that was the merchant.” The world of payments is changing, and merchants seem to be doing a lot of the leg work without reaping the benefits or having any influence.

While other entities may neglect the influence and respect due to merchants, Intevacon continues to build its success on the success of our customers. There are several key elements to Intevacon’s business model which point to our commitment to serve Petroleum Marketers. Our system was designed with our marketers in mind, so we provide a system that empowers marketers to create and manage their fleet accounts according to their own business rules. We maintain that Petroleum Marketers are best fit to manage their own fleet card accounts and manage those relationships. After all, it is those relationships that cultivate loyalty and repeat business at merchant sites. We appreciate all of our Petroleum Marketers, and we commit to continue creating opportunities to help them grow in success.

Partnering with Businesses Increases Stability

The Intevacon Fleet Card offers a business solution to comp$ensate for consumer ups and downs. Consumer optimism is a fickle thing these days, with an August 2014 survey reporting that fewer than 39% of consumers are optimistic about the economy.  In July, just a month prior to this report, consumer optimism was at its highest for the year at 46%. Often, gas prices are cited as a barometer for consumer optimism, but that didn’t seem to be the case over the last few months. August saw gas prices on average lower by 15 cents over the past month.

When consumer optimism fluctuates, it tends to also affect the frequency that consumers drive their cars, which in turn affects fuel volume for petroleum marketers. Partnering with businesses that fuel their fleet cars is a strategic way to navigate inconsistent consumer optimism and create a new avenue of revenue that brings repeat business. The Intevacon system provides online user access and powerful reporting tools to better equip fuel managers and create a mutually beneficial relationship between buyer and seller.

Petroleum marketers provide a service to the businesses in which they partner by offering the Intevacon fleet card with all of its controls. Businesses save money when they utilize a fleet card to enforce product restrictions and credit limits. If consumer optimism is flagging, businesses will be grateful to control costs and manage their driver and vehicles expenses. The Intevacon fleet card offers real time authorization and credit limits, as well as special pricing options. Product restrictions can be as specific as a bag of ice or a fountain drink, and specific fuel grades can be restricted at both card locks and retail sites. Other card restrictions can be enforced, such as dollars per transaction, transactions per day,  gallons per day (card lock), dollars per day (retail site), and location restrictions. Drivers can also be prompted for PIN, odometer, vehicle number, etc. This helps keep the card secure, and it better allows the business owner to manage his/her fleet.

A 2010 fleet management article describes a few ways that fuel managers can save money: restrict to particular grades of fuel, limit the number of transactions per day, and restrict from specific non-fuel items that are not required for vehicle maintenance. An article published in 2012 by Convenience Store Decisions reports, “With fuel costs again on the rise, a fleet card network can attract new business while offering fleet managers the safety, security and reporting tools they need to be successful.” Later in the article, it is quoted that fleet cards are a very stable business. This stability is important when consumer optimism shifts with each month. The Intevacon Fleet Card offers a business strategy to capture loyal, repeat business each month.

 

Building the future of relationships with technology

shutterstock_2128837“Something—or rather, someone—has got to give.” This was the message in a recent CSPnet.com article that was published last week referring to the projected decline in gas consumption, which may decrease by 24% from 2014 to 2040. Businesses that grow have always known that “something has to give” in order to be successful. In the case of the convenience store industry, petroleum marketers must re-evaluate their business models to adjust to the prospect of significantly less gas demand. The petroleum industry has seen shifts like this in the past—economic downturns, environmental regulations, and war—as have other industries. One thing that we know is that our petroleum marketers are a tenacious and sharp bunch.  The key is to be flexible and innovative while finding the right solution.

According to CSP, the c-store industry continues to grow in number of sites, increasing 21% over the last decade. With declining gas consumption in mind, the new thinking is that marketers will need to find other ways to improve profitability. Our favorite response to this impending dilemma was stated by Tom Robinson, CEO and president of Rotten Robbie in California: “As volumes decline, the question is: Can they decline less at your stores than competitors’ stores? You can do that by spending money on stores, trying to upgrade programs, trying to upgrade your offering, trying to use technology as a way to build connections or relationships with consumers.”

Intevacon can help with the technology and relationship piece of this debacle. Our technology provides a payment solution that builds connections and relationships with customers, while also protecting margins by reducing swipe fees. In a future where loyalty is a premium, capturing fleet business is a valuable strength.  We’ll continue to develop valuable tools for our petroleum marketers to help them grow and increase profits. This is the rewarding part of our operation—we succeed when our marketers succeed.

To find out more about the Intevacon fleet card or prepaid card, call 678-739-4450 or email moreinfo@intevacon.com. We are excited about the future of the c-store industry, and we look forward to seeing how our marketers succeed.

Making the Case for Fleet and Prepaid Cards

A few weeks ago we compiled five case studies describing the success of our customers and illustrating how the Intevacon system has benefited their businesses in different ways: increasing repeat business, reducing swipe fees, capturing more diverse customers, and gaining back control of customer accounts for future growth.

Below is a featured case study highlighting an issuer using both fleet and prepaid cards.  To view the complete case study series, click here.  We’ve changed the names of the petroleum marketers and left out any identifiable details in each of the case studies.

CASE STUDY: GROWING PREPAID BUSINESS TO MATCH 35% OF FLEET DOLLARS

The Intevacon Prepaid card was made available in the fall of 2013, and adoption of this alternative form of payment has been growing each month. Intevacon has one customer in the southeast who has been using the Intevacon system with a consistent number of fleet users since October of 2011. Clairmont Petro Brothers offered their fleet users the benefits of online account access to the system, but they decided not to offer any special pricing. Profile2

Towards the middle of 2013, Clairmont Petro Brothers started noticing that while they were able to maintain their fleet business, a lot of cash users were going across the street to use a competitor’s prepaid card. The timing was perfect for Clairmont Petro Brothers to start using the Intevacon Prepaid card in concert with the Intevacon fleet card. Both fleet and prepaid card transactions can be accessed and managed through the same Intevacon web portal. With pricing for the Intevacon prepaid card starting at $20 per month, this was an easy decision.

Since October 2013, Clairmont Petro Brothers have focused on growing their prepaid business to the unbanked customers in their community. The convenience of offering a card that can be loaded with cash and then used at the pump or at the register is a big selling point to their customers. The prepaid card is sold for $0.50 and then it can be reloaded as many times as the customer wishes.

In the last month of transactions for Clairmont Petro Brothers, they loaded $52,000 onto prepaid cards and sold $99,048 in fleet transactions. This means that 35% of the transactions processed in the last month through Intevacon were cash payments made by loyal customers.

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There are a number of reasons that fleet programs vary in robustness, but the two most common attributes of our most successful fuel marketers are:

  1. They actively recruit fleet business.
  2. They manage their cash flow with their invoicing so that they can self-fund larger dollar volumes.

Our goal is to help our marketers grow their business and enhance their relationships with their customers.  We’d love to point you to a list of our references if you want to have a conversation with someone whose story is similar to what you read in one of our case studies.

 

Probability Distribution—Going after the long tail

Being the most popular choice with the average customer is a coveted spot. Popular is the low hanging fruit of a sales activity. A recent article was published by Convenience Store and Fuel News which reported that consumers prefer to fill their tanks at grocery stores and wholesalers instead of at traditional convenience stores. This can be formidable news to the average c-store operation, but it doesn’t have to be. Strategic petroleum marketers know that there are opportunities to capture repeat, loyal fleet customers.

There is a statistics term called probability distribution in which a larger share of the population rests within the tail of the power curve. See the plot below for an example. The music industry is a great example where the long tail applies. There are the top ten billboard music artists who comprise the head of the power curve, and then there are the niche artists who comprise the long tail. The niche artists create the same amount of revenue collectively as the one hit wonder billboard artists, though they may have to generate buzz one fan at a time.dpc

So how does this probability distribution translate to the convenience store industry? Think of the head of the curve as the customers who are looking for the best deal and the most convenience. It would be great to capture that customer base of business. But there is equal opportunity in the long tail. Pursue the fleet card customers who want to manage their business fueling activities through the Intevacon system. Every cardholder that you sign up with a fleet account becomes a repeat customer, often with multiple vehicles to fuel. Government accounts, commercial accounts, consumer accounts—these are all opportunities in the long tail with fleet. When high value retailers are winning on price, leverage your local relationships with a comprehensive fleet system.

The fuel landscape is shifting in the convenience store industry, but with the right business model, this shift can be viewed as an opportunity. By cutting swipe fees and introducing a proprietary fleet and prepaid card, you can grow your business and gain a valuable partner in Intevacon.

Respond instead of being Re:swiped

registerSwipe fees recently made another public appearance in the news. Retailers have petitioned the high court to reconsider its March 2014 decision, which upheld debit card swipe fees at 21 cents per transaction as reasonable. This has been a hot topic for all retailers, with NACS being a large player representing the convenience store sector in this battle. Petroleum marketers want the limit lower than 21 cents for obvious reasons. Swipe fees—credit card and debit card—are reported as the second largest operating cost for petroleum marketers, just behind the cost of labor.1

The legal battle with swipe fees has been centered on the Dodd-Frank law passed in 2010 regarding debit card fees. The overall battle with swipe fees, however, encompasses more than just debit card swipe fees. Credit card fees were about 7 cents per gallon in 2011, averaging about 2% per transaction.1 PayPal has an even higher rate starting at 2.9% plus $0.30 per transaction.2

Margins on petroleum in this industry are already small, so any percentage “swiped” by credit card processors has a big impact to petroleum marketer operations. Mastercard and Visa have been named in the current swipe fee lawsuit, but they are by no means the only card processors in the gouging game. Nearly three quarters of all transactions made at the pump are made with plastic—think about how that equates in total swipe fees.3

Intevacon is a proprietary card processor but we offer more services to the petroleum marketer than the standard credit card company. More important to your bottom line, our pricing lets the petroleum marketer keep his/her margins. Convert one of your current Mastercard or Visa customers to a local house account and automate the process through Intevacon.  We offer an online system that empowers the petroleum marketer with all of the controls needed to manage and grow his/her fleet accounts. We also provide the petroleum marketer an advantage to capture loyal fleet accounts by offering the option of online access to the cardholder. Intevacon succeeds when our customers succeed.

Converting cardholders who currently pay with a standard credit card or debit card to the Intevacon fleet card or prepaid card reaps huge savings every month. If a petroleum marketer converted $1.5 million of his current monthly business to the Intevacon fleet card, the savings from a standard credit card transaction fee of 2% would be approximately $340,200 a year or $1.36 million over four years. The higher the dollar volume on the Intevacon fleet card, the greater the savings from swipe fees. Supplement the fleet card with the prepaid card to get even higher returns and increase cash flow.table

Swipe fees may be a necessary evil for a certain percentage of fueling customers, but there is a large cohort of cardholders who would benefit from the advantages of carrying a fleet card. Get to know your customer base and grow your business with Intevacon.

 

  1. “Credit and Debit Card Fees.” NACS. Web. April 2014. http://www.nacsonline.com/Research/FactSheets/IndustryIssues/Pages/CreditCardFeesaGrowingChallengeforConvenienceStores.aspx
  2. Paypal. Web. June 2014.  https://www.paypal.com/webapps/mpp/paypal-fees
  3. “2013 Retail Fuels Report.” NACS. 2013. Web. May 2014. http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2013/Documents/CFR2013_FullReport.pdf

Changing Business Models: Learning to be Flexible

“One cannot alter a condition with the same mindset that created it in the first place.” -Albert Einstein

In today’s fast-moving society, businesses must adjust their bushutterstock_1561664siness models or face the risk of obsolescence. Western corporations are especially susceptible to relying on the methods that they instituted decades ago with a hope and a prayer that the economy will act in their favor. We still remember the luxury of big budgets, long timelines, and a structured approach to innovation. The 21st century, however, requires more of us. Corporations today succeed when they act fast, remain flexible, and manage frugally.

There is a lot of opportunity in our futures, and we can learn from the mistakes of corporations that have fallen away. Kodak was a pioneer in the film industry, but it failed to compete in the digital world. Barnes and Noble did not alter from their brick and mortar stores, hardly competition for the likes of Amazon. Entire industries have been trying to master the perplexity of marrying changing times with dinosaur innovation and operating methods. Big Pharma continues to increase the cost of R&D while producing fewer drugs. The auto industry required a bailout of the US government in 2008 in the amount of $62 billion, yet even with this second chance, they are still flagging against their foreign competitors. These bureaucratic, slow-moving business models are proving again and again to be unsustainable.

Hindsight is always 20/20, but there is much to be said of a proactive and flexible approach to growth moving forward. The convenience store industry has made great efforts to stay relevant in the retail space. Fresh, healthy foods are a new staple, complemented by every variety and flavor of coffee. Convenience is more of a premium than ever before, and petroleum marketers are meeting this demand with more products, cleaner facilities, and increased services. Social media is even being adopted as a way to stay connected to customers.

One area of change that directly affects petroleum marketers is that of the payment space. PCI, EMV, Chip and Card—the requirements keep changing and the fees and costs keep increasing. With credit card fees being the second highest expense to a petroleum marketer, Intevacon can offer a new approach to the payments game. There are several advantages in using Intevacon for your card processing. Our low rates are a good start when it comes to protecting your margins. Plus, our system keeps you in control and helps you manage your relationships to your cardholders. By offering your own proprietary card, you can increase the loyalty of repeat customers.

Intevacon continues to innovate and improve our business model. When we were founded, we made the decision to leave all of the legacy systems of fleet cards in the past. Intevacon is completely web-based, and we process card transactions in real time. The system is continually being improved as our R&D department functions in collaboration with our customers. In 2013, we introduced the Intevacon Prepaid Card to meet the emerging needs of our customer’s cardholders. Currently, we are developing the Intevacon Fuel Network to help link petroleum marketers across the nation and equip them to make their own business decisions.

In a world where technology changes so rapidly and information is abundant, it can be difficult to know which direction to dedicate resources. There is a Hindi word, jugaad, which translates ‘an innovative fix; an improvised solution born from ingenuity and cleverness.’While the U.S. is blessed with an advanced society, there is merit in evaluating the flexible practices being espoused by emerging markets that are forced to innovate out of necessity. Sometimes the best solutions are those that challenge our business models to shed the institutional constraints to which we have become accustomed. A flexible system with margin is much more likely to thrive in times of change.

 

1. Radjou, Navi, et al. Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. San Francisco: Jossey-Bass, 2012. Print.