Think like a fuel customer: How each decision affects your profitability

Understanding how your customers think will help you go beyond tweaking fuel sign prices to maximize profit. Here’s what you need to know.

Slashing prices across the board, especially on inelastic goods like fuel, only eats into already razor-thin margins. To profitably win new customers and keep them coming back, fuel retailers need a better understanding of consumers' buying behaviors to anticipate their future choices. Let’s unpack how customers make fuel purchasing decisions and how the right platform can help you navigate, and even dominate, your market.

Buyer choices and competitive opportunities

Factor #1: Price

While several factors influence customers’ final buying decisions, gas station prices are a major determinant. Currently, prices are at the forefront of everyone’s minds, and even though the last few months have seen a fall from 2022 highs, inflation continues to be a dark cloud hovering above the market.

However, dropping prices for all your customers creates a race to the bottom. Lowering prices may win you some new customers in the short term, but you will also discount the customers who would have paid full price and cannibalize your profit.

Factor #2: Location

Consumers factor in location and ease of entrance and exit when deciding where to fuel up. Whether or not a station is convenient for their commute is a critical piece of a consumer’s final purchasing decision.

Since retailers can’t just change their locations, they need to use digital platforms to increase their visibility and leverage that wider reach by drawing in new shoppers with personalized incentives, thereby overcoming the barriers of their locale. When choosing the right advertising method, fuel retailers also need to consider how they will be able to prove a platform is driving a profit and, ultimately, whether that investment is working to change customer behavior.

Factor #3: Time

A recent National Bureau of Economic Research analysis found that consumers value their time at an average of $27.54 per hour. When drivers consider whether to travel out of their way for lower gas prices, the amount of money they will potentially save needs to outweigh the time it takes to get there.

Factor #4: C-stores

Fuel customers are also interested in purchasing more than gas, stopping into convenience stores to pick up products and use the amenities. Now 5% of drivers say in-store purchases are their primary reason for selecting fuel retailers, and that percentage doubles for consumers ages 18 to 34.

Targeting personalized promotions to potential customers is the key to changing their behavior. By using a platform that offers hyper-specific promotions on c-store items to appeal to each customer, fuel retailers can leverage an underutilized asset to influence customer behavior and drive profit.

Upside makes you part of the customer’s routine

Upside can influence new customers to choose your location and bring occasional customers back over and over again. Our platform brings retail partners a massive, built-in user base along with their anonymized transaction data, providing a resource for fuel retailers to more deeply understand and individually target a wider customer set.

Upside then generates personalization promotions that consider customers' different considerations when buying fuel. This means strategically offering cash back to price-conscious shoppers without cannibalizing profit, convincing customers your station is worth a detour, and offering convenience store incentives that boost sales at both the pump and inside your c-store. In doing so, Upside drives new and recurring profit straight to your bottom line.

Read more here to see how Upside helps you better understand your customers.