What to do with Upside in low-margin fuel environments

Today, thousands of retailers use Upside to win more visits and higher customer spend at a positive, fully-attributable ROI.

May 8, 2024
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What to do with Upside in low-margin fuel environments
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What to do with Upside in low-margin fuel environments

We understand how hard low margins can be on fuel retailers — it’s really about survival. 

Because you have to keep competitive with stations down the road, it’s not possible to immediately hike sign prices when wholesale prices change. If you did, drivers would just bypass your station and choose to fill up at a cheaper pump nearby. For that reason, you’ve probably sold fuel at a loss in the short term in order to keep your customers. 

Today, thousands of retailers across numerous retail categories use Upside to win more visits and higher customer spend — all at a positive, fully-attributable return on your investment. 

For fuel retailers navigating low margins, doubling down on Upside’s marketplace offers four distinct advantages:

  • Less competition with the ability to block local rivals
  • More customers thanks to personalized cash back offers
  • More transactions and increased loyalty over the customer lifetime
  • More profit and an invested business partner 

All of these things are highly relevant in a low-margin environment. Let’s go through your journey with Upside and see how those advantages come into play.

Less competition: Exclusivity zones help you block out rivals

When margins are tight, it’s hard for retailers to compete — remember, it’s about survival. Retailers do what’s necessary to keep their customers and stay in business until higher margins come — again, even if that means selling fuel at a loss in the short term.

In order to ensure its partners derive value from the marketplace, Upside draws exclusivity zones around participating fuel retailers. When you join Upside, you block nearby rivals from doing the same. Securing that spot is critical, because Upside caps the total number of stations that can join the marketplace within each market. This exclusivity benefit incentivizes Upside users to choose a participating station over non-participating competitors, giving those drivers the value they seek without triggering a “race to the bottom” on price.

This edge is essential in low-margin times and remains as margins improve, allowing you to gain and keep the advantage in your neighborhood.

More customers: Profitable, personalized offers help you stand out 

Feeling the pinch of rising prices across retail, today’s customers are especially interested in value. In a recent Upside survey, 62% of respondents said they compare prices across fuel stations. So promotions or offers often make the difference between a driver choosing your station over a competitor’s. 

Loyalty programs are one way to offer that value, but one limitation with loyalty programs is that their offers are usually segmented or static. They don’t consider individual shopping behavior; they treat groups of customers the same, potentially cannibalizing the retailer’s profit by discounting for sales they’d make anyway.  

Upside’s AI-powered algorithm presents personalized offers that meet each individual consumer’s need for value. Personalized offers consider each individual user’s purchasing history, which differentiate them from static or segmented offers. Upside’s promotions also adjust dynamically with current margins — so they’re profitable with no human intervention needed.

The chart below plots the monthly change in margin per gallon against the average Upside promotion from January 2022 until the present. It shows how Upside’s offers reflect changing margins (and again, those adjustments happen automatically).

Upside is designed to ensure that all its partnered fuel retailers achieve meaningful results, including a positive return on investment. Its personalized, margin-bound offers are only part of that story. 

More visits and higher spend, now and in the future

One fuel retailer that sought to independently verify Upside’s impact conducted a test by putting a selection of its stations on the marketplace. Within a year, the stations on Upside experienced a 5% lift in volume. Upside brought over 500,000 new customers to the retailer while also increasing the number of visits from regulars; frequency among existing customers tripled after the introduction of Upside. 

Earning true loyalty from customers — which runs deeper than nominal membership in a loyalty program — is a major growth opportunity for fuel retailers, especially during low-margin times. Offering customers value in a time when they need fuel could help maintain those relationships for the long term. A gesture like that builds goodwill for future business with you, securing their visits even as margins get more favorable.

Earn profit, not just revenue

In the long term, Upside wants to be an invested, committed business partner to fuel retailers, pulling in the same direction to achieve mutually beneficial results.

Upside makes money by profit-sharing with retailers, a method that is very different from models like cost-per-click, and aligns business incentives across all market conditions. Said another way, Upside only makes money when the retailer does — it’s team success above all. That arrangement is especially valuable during low-margin times, when station owners don’t make as much per gallon and might be unduly burdened by a flat-rate subscription fee. 

Additionally, Upside reinvests earnings to grow its user base and bring retailers in the marketplace more volume. In 2024, Upside committed $100 million in marketing spend in dozens of key markets, all in an effort to drive more transactions to participating retailers. Additionally, Upside funds boosted offers to promote app usage — and those boosts come at no cost to the retailer.

With its multi-vertical marketplace of grocery stores, restaurants, and hardware stores, Upside is a partner that can operate outside the restrictions of fuel — not simply beholden to fuel margins, joining Upside offers an opportunity to add a teammate that can work differently for you.

What to do with Upside in low-margin fuel environments

Allison Baker

Linkedin - Upside

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