Tag Archives: Proprietary

Industry Highlights

shutterstock_3131553NACS recently published the 2016 Retail Fuels Report, and it is full of fun statistics highlighting our great industry. Intevacon is proud to work with so many hard working, smart business men and women who keep gasoline flowing around the nation.

Many of you already know the numbers reported below, whether it be through an intuitive hunch or an objective observation. Here are a few industry highlights noted by NACS:

Price Per Gallon

  • Over the last five years, the annual average retail mark-up was 19.7 cents per gallon.
  • On average, it costs a retailer 12-16 cents to sell a gallon of gasoline.
  • Over the last five years, the typical petroleum marketer averaged about 5 cents of profit per gallon of gasoline sold.

Payments

  • 72% of consumers use plastic at the pump.
  • Credit card fees comprise about 2-3%, and up to 4%, of a total purchase.
  • Credit card transaction and bank processing costs continue to exceed convenience store profits.
  • The average gross margin on fuel has averaged 6.2% before other expenses are considered.
  • The average credit card fee is about 6 cents per gallon.
  • Most merchants only make a few cents per gallon in pre-tax profit, sometimes even losing money on a fuel purchase.

Consumers

  • Price is the main consideration for 64% of customers who need fuel.
  • Gasoline purchases account for 4-5% of consumer spending.

Convenience Store Numbers

  • Convenience stores account for 34.2% of retail outlets in the US (according to Nielsen).
  • There are 124,374 convenience stores selling motor fuels in the United States.
  • There are more than 154,000 convenience stores across the US.
  • Major oil companies only own about 0.4% of the 124,374 US convenience stores.

EMV Compliance

  • In 2014, the industry reported profits of $10.4 billion and credit card fees of $11.4 billion.
  • Liability shifted to merchants in October 2015 who were not able to accept EMV cards.
  • Fuel island terminals are required to accept EMV cards by October 2017 to prevent liability.
  • The average cost per store to become EMV compliant is about $30,000, and the industry will pay more than $3.9 billion to move to EMV.

Intevacon has also had a big year. We partnered with a record number of new customers, growing our site count to over 2,200 across the US. We also started testing the Intevacon Fuels Network with select customers. In 2016, we plan to roll out the full capabilities of our network, implementing an “Everywhere, not Everybody” approach, as well as providing full ACH payment capabilities to allow our customers to streamline their accounts receivables process.

We hope 2015 was a good year for you as well, and we trust that you are also excited about a big year in 2016. If you would like to reach out to us to discuss automating your fleet cards or getting involved with our network, please call 678-739-4450 or email us a moreinfo@intevacon.com.

Automating House Accounts

houseThe term HOUSE ACCOUNT connotes relationships, trust, and repeat business. Our business facilitates this important function by automating house charges and making it easier for you to grow your business and focus on your customers. Intevacon is the leading software company to provide real time proprietary payment card processing.

Below are a few of the benefits you will find in automating your house charges:

  1. Centralized communication and updates: the Intevacon system is real time and allows updates to accounts, cards, drivers, and merchant sites from one central host. This means that all updates are immediately recognized across sites and your customers experience consistent service everywhere they fuel.
  2. Increased security: only authorized drivers are able to fuel by enforcing PIN at the pump and register. Additionally, other prompts and/or product restrictions can be enforced to further manage the transactions that occur.
  3. Purchase management: offer product restrictions to your customers to help them manage their fleet. Also track driver and vehicle ids for each transaction.
  4. Pay at the pump convenience: your customers can use their cards to pay at the pump or they can go inside for purchases. Improve the customer experience and reduce transaction time for your store clerks.
  5. Streamline billing processes: invoice your customers directly out of our system. We provide full controls for you to bill on your schedule and give your customers detailed transaction information on their invoice. We also provide a transfer file to upload directly to your accounting system for quick reconciliation.
  6. Customer Access: give your customers online access to view their activity and manage their fleet account. This gives your customers the autonomy to make simple changes to their account and reduces the requests that you have to fulfill. Reports and invoices are also accessible to your customers with online access.

There are many more benefits that Intevacon provides by automating your house charges. We’d love to talk to you about how to partner together to grow your business.  Find out more about the Intevacon Fleet Card System by reaching out at 678-739-4450 or emailing moreinfo@intevacon.com.

Relationship-based Loyalty

saleAttracting customers is the goal of all retailers. The effort to attain this position can be costly depending on the methods employed. A study by COLLOQUY published in a recent NACS article states that the typical American household carries membership to about 29 loyalty programs, while only being active in 12 of them. What’s more, the convenience and fuel retail industry saw a 3% drop in loyalty program participation by the end of 2014. The cost of hosting a loyalty program, as well as potential additional discounting, means that some loyalty programs really do come with a premium.

The whole point of loyalty programs is to achieve customer loyalty with repeat business. Sometimes the cost of a loyalty program is worth the expense if a truly loyal customer relationship is achieved. And then sometimes, the retailer attracts a deal-seeker on one specific day, never to see that customer again. An earlier article published by NACS titled “When It Comes to Loyalty, Agree to Disagree” states that about 73% of consumers believe that loyalty programs should be a way for brands to show consumers how loyal they are to them as a customer. Many retailers think that the relationship should be the other way.

Intevacon likes loyalty too, but we have a different approach to achieving this end. We equip our customers to foster relationships with their customers. Our petroleum marketers gain exclusive loyalty by offering a fleet card at their sites. This card offers the benefit of fleet management such as driver and vehicle allocations, product restrictions, and real-time controls. User access is also available if petroleum marketers want to offer this added benefit. Special pricing is available for the petroleum marketer who wants to give his/her customers cost plus or cents per gallon discounts. Our loyalty comes with repeat business every time your customer uses his/her fleet card at your sites.

An article in PYMNTS.COM titled “Bread, Bananas and Building Better Customer Retention” describes the loyalty program cycle perfectly in this statement: “They are product shoppers – looking for a specific item on a specific day – sort of like the daily deal seeker. They may not come back, which means there is some possibility that the effort spent acquiring them may have only netted one – sometimes deeply – discounted sale.” At Intevacon, we hope that you capture the loyalty of every customer who comes through your doors. Even better, we want to help you gain the relationships that sustain both you and your customers in business.

If you want to find out more about Intevacon or talk to someone on our team, please call 678-739-4450 or email moreinfo@intevacon.com.

Finding the Right Legacy

shutterstock_2122894A recent article published by PYMNTS.com titled “Why Worldpay Is Changing The Payments Conversation” highlighted an interesting facet of our ever-expanding world of technology—legacy systems. While the term legacy is often favorably attributed when it comes to family history, this is a negative word when it comes to technology. The article starts by reminiscing the 1980s with its permed hair and shoulder pads. That’s ok, everything has a season. But then the article talks about old business languages that have remained entrenched with businesses long after perms and shoulder pads went out of style. This picture of business operations makes Intevacon thankful to be a product of the 21st century where legacies can be delegated to family history instead of old software.

The Worldpay quote below might be all-too-familiar to programmers in the industry:

“What most [companies] have done is basically built a cool little tool that sits in front of legacy Base 24 [system] that’s run by Global [Collect] or First Data. And then [they say] ‘don’t ask me to do any more than what’s in that ISO 85-83 interface and don’t call me up and ask for help, because [all] I’ve done is create a simple API that makes it easier for you to connect to the legacy world.’ So it’s a translator that sits in front of the legacy [system],” Tony Catalfano, CEO of Worldpay US told MPD CEO Karen Webster in a recent interview.

An article published by Deloitte in the Wall Street Journal says, “Legacy systems’ lack of business capability, combined with the retirement of the baby boomers who developed, implemented, and maintained them, will likely force CIOs to address them. And as they consider future technology investments, they should look to confirm they’re making decisions that won’t imprison their companies tomorrow.”  Intevacon understands that petroleum marketers may be operating on legacy systems, and our platform can interface with these systems for customers who want to get a bit more mileage out of their current equipment investment.

As stated earlier, Intevacon was founded a little later than the 1980s—2010 to be exact. Our business may be relatively young, but its foundation started in 1984 when the founder, Kerry Myrick, started working in the industry. We have the wisdom of age and the flexibility of youth. One great thing about being young is that our business is built with the most innovative design and the most current technology. Our system is completely web-based, and all transactions are processed in real time. Intevacon customers are able to log into our system from any computer anywhere in the world, and everything runs smoothly. Our greatest legacy will be the people who make Intevacon great.

If you want to find out more about Intevacon or talk to someone on our team, please call 678-739-4450 or email moreinfo@intevacon.com.

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.

plot

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.

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.