Loyalty program for SDCV customers SDCV1 is a customer segment which is markedly different from the other customer

classes. If a mapping is to be made of different customer segments BPCL2 or any other OMC3, the following broad segments can be clearly identified(This segmentation defines customers in terms of demographic profiles, geographic locales, lifestyle factors and product use patterns and hence is quite versatile);

Urban petrol and diesel customers: Cars, two wheelers, auto rickshaws etc. These are characterized by small fill size(volume per vehicle) and large numbers

Highway trucks, buses and cars. Primarily diesel vehicles. Large fill size and less in numbers than urban Rural markets. Small volumes but important for mass reach. Business hubs: These are the category in which SDCV customers are present. These include wholesale market complexes in large villages and towns, milk carrying vehicles, sugarcane transporters etc. The vehicles are usually self owned, with the owner having only one vehicle in most of cases. The segment is marked by the poverty, illiteracy and exploitation of the vehicle owners. The owners are sometimes debt ridden for vehicle loans.

As we see above, the difficulties in approaching such a segment and obtaining loyalty from them can be identified as; As these vehicle owners have low disposable income, they would like to purchase fuel on credit and then repay the amount once they get reimbursed for the transportation. So a prepaid system as in the case of Petrobonus would not work

The vehicle owners would also not be deemed creditworthy by most of the NBFC4, and hence it would be difficult to enroll them in Smartfleet.

These customers or prospects, typically do their fuelling from a single point due to the trust factor and maybe extension of credit by a certain outlet5. The network leverage as in the case of highway retailing cannot be used here.

In order to design a loyalty program the needs of this segment are to be identified very clearly. Our research identifies the needs as under; The vehicle owners want consistent business. As there is huge competition in the SDCV segment and trade is seasonal, the guarantee of consistent business is something which would be valued very highly by them.

A credit extension by the means of a credit card or any equivalent means. Training on basic maintenance and good driving practices, which would reduce the cost of maintenance of vehicles and benefit the vehicle owners

Basic healthcare facilities. Many of the times, the vehicle owners carry diseases which are not diagnosed in time due to strenuous work schedule and hence are not treated. If the diagnosis part can be taken care of, it would help them a lot.

Recognition in terms of plays, community get-together targeting this community. They seek role models and success stories in their own communities.

A loyalty program would involve introducing a Valuable Customer Card or VCC from BPCL. This card will give him an identity of his own. The card can be made to have different levels as platinum, gold, silver etc, which would depend upon his levels of purchase, contribution in events etc. The card should fulfill the need of recognition of the truck owners. To this effect, hoardings at outlets can be used for bold and startling promotion of the VCC, wherein the membership is shown as something of pride, a key differentiator. This card will also create a customer database of the concerned segment, which can be used later on for data mining, marking clear trends, aiding decision making. Further the data can be integrated with ERP system for accurate demand forecasting and product distribution. There should also be incentives for the customers for acquiring more VCC, either in monetary terms, or free gifts or recognition, based on volume and profitability analysis. Monthly get-together meets can be arranged wherein, the VCC members can meet and discuss and in general be a diversion from their routine work life. Such meets can also be used to leverage CSR activities in partnership with NGOs. As this segment is typically marked with poverty and illiteracy, a program for primary education of the children of truck owners, would serve as a very viable CSR activity. This can also be leveraged later on as a key differentiator in the IMC6 program. Such meets can also be used for some activities which would provide benefits to the existing customers, such as medical checkup, vehicular maintenance training, good driving practices, and benefits of branded fuels (this is optional and should be a decision based on the potential assessment of branded fuels at that particular location). A database of all industries of the locality (i.e. village or taluka) can be kept at the outlets and a team similar to Smart Fleet team or maybe even a member of that team, who is aware of the locale, can be assigned the job of partnering with industries and acquire business for the vehicle owners. The outlets can be used as an exchange for

business opportunities for the VCC members. This would involve additional cost in terms of manpower, but the manpower involved in this can be used for generating business volumes by catering to diesel requirements of the industry. When the VCC team member visits the industry, he looks at generating business for the vehicle owners and for BPCL by catering to the industries transportation and fuel needs. This provides the industry with an integrated solution and BPCL with additional business. One basic need of such transporters is the requirement of credit. Ultimately, the decision may be purely based on credit extension as it is fundamental to their business, and thus the single point fuelling tendencies. Thus credit has to be extended. The only factor which can be played around with is the amount of credit involved and the associated risk minimization. VCC has to enable them to take fuel on credit for at least one round trip. A system can be designed on the lines of current microcredit system being practiced by rural entrepreneurs, wherein the risks are shared by a SHG7 instead of an individual, minimizing the risks to that extent. In this case, credit can be extended to members for one round trip based on the condition, that the transporter form a group with 2-3 more transporters and all of them provide a guarantee on the individuals behalf on a prescribed format that the amount shall be returned in time, failing which, no credit shall be extended to any member of the group, and a penalty shall also be levied for delayed return. As the responsibility comes on the entire group, group dynamics and social pressure should ensure timely repayment. Acquisition and subsequent retention is an outcome of proper CRM8. A CRM program involves identifications of touch points. The touch points in case of SDCV customers are the outlets where the vehicle owners go for fuelling. However, as they usually go for single point fuelling and hence to acquire them, touch points need to be created outside the outlet. A key strategy would be to tie up with local cooperative banks, and do cross promotion. Another key touch points will be the industries/markets where these transporters ply. If such an establishment is already a customer for their fuel requirements, the relationship can be leveraged, else a VCC can be employed to acquire customers and generate business for BPCL in terms of industry requirement as well. Once acquired, the customer retention, as has been explained in this text can be handled in multiple ways. The key here is to differentiate among customers to understand the value associated with each customer. As we have already mentioned, the cards will have grades like platinum, gold, silver etc, which can be determined in terms of CLV9. MVC10 can be identified through CLV which can be ascertained on the basis of ABC11. ABC analysis will give a clear cut idea of the cost drivers and hence the NPV12 of all the future profits coming from purchases, margin levels (which might be different due to extension of credit to some customers) and referrals. There might be case that servicing a certain customer might not be profitable, when the analysis is carried out. As per the Peppers and Rogers CRM marketing model, data mining exercise of the above kind should guide us in creating a priority list of customers based on their value and thus narrow the span of focus. In case of fuels, customized product concept cannot be applied, but the differentiation can be created in terms of handling of customers.

The loyalty program can thus be summarized as under; 1. Introduction of VCC or Valuable Customer Card targeting the SDCV segment. These cards should only be used at specific outlets, which are strategically located. 2. The launch should be backed up by strong IMC in terms of hoardings and flyers
3. The card should have clear member categories like platinum, gold, silver based on volume of transactions,

timely payments, payments in cash etc. A point system can be kept which would give weight age to various aspects. 4. The card should have embedded memory which stores complete customer information and captures customer purchase data on every transaction and credits it to the customer account. 5. A successful referral brings additional points and that is added to the customer account

6. Purchase of associated products like lubricants, greases etc also adds points to the customer account.(For this the lubricants need to be sold through the fuel outlet) 7. The card can also be used for keeping medical data of the customer, which might be useful for medical checkups during the customer meets
8. The card acts as a media for credit extension. The credit risk, as has been explained before is reduced due

to group involvement and thus social and group responsibility. 9. A database of all the customers under VCC is maintained at outlets, which can have multiple uses. 10. Cost of acquisition can be allocated properly using ABC and thus CLV of customers can be found out to differentiate high value customers. 11. Marking of new touch points unearths new customer base. 12. Focus on interaction with industries by VCC officer serves dual purpose of generation of business for both BPCL and vehicle owners and gives integrated solutions to industrial firms.

Thus, we conclude that such a system if implemented properly can streamline the loyalty program involving SDCV customers, who are different from the customers covered under Petrobonus and Smartfleet, because of their low purchasing power, high frequency of fuelling and semi urban to rural lifestyle. It will also push brand BPCL to hinterlands where the reach of OMCs are still not complete.

GLOSSARY
1. SDCV-Short Distance Commercial Vehicle- A segment of customers identified by BPCL who are

characterized as people who oen the vehicles and ply within city limits or within 250 kms 2. BPCL-Bharat Petroleum Corporation Limited- A Fortune 500 Company into refining, marketing and distribution of petroleum products. 3. OMC-Oil Marketing Company- Organisations into retailing of petroleum products 4. NBFC-Non Banking Finance Company-Non banking companies which provide finance or venture capital for business. 5. Outlets-Retail chains where fuel dispensing takes place. Colloquially called petrol pumps
6. IMC-Integrated Marketing Communications-Integrated marketing communication is integration of all

marketing tools, approaches, and resources within a company which maximizes impact on consumer mind and which results into maximum profit at minimum cost 7. SHG-Self Help Groups
8. CRM-Customer Relationship Management-Methods that companies use to interact with customers 9. CLV-Customer Lifetime Value-It is the present value of the future cash flows attributed to the customer

relationship 10. MVC-Most Valuable Customer

11. ABC-Activity Based Costing-It is a costing model that identifies activities in an organization and assigns

the overhead cost of each activity resource to all products and services according to the actual consumption by each.
12. NPV-Net Present Value-It is defined as the total present value (PV) of a time series of cash flows.