Crown cards will chart customers' purchases, loyalty

October 15, 1994|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Crown Central Petroleum Corp. will begin a marketing program today aimed at charting customer buying habits through a magnetic card system, company officials said.

The Baltimore-based refiner and gasoline station operator's "Road to Redemption Customer Reward Program" is one of the first in the United States, modeled after a European venture that has been used for years by various petroleum firms.

Crown is investing roughly $1.3 million in the effort, which will allow customers to collect points on a magnetic card similar to those used with automated teller machine systems. The points can then be redeemed for merchandise.

"The cost is substantial up front, but we realize that we have to make a commitment in order to increase market share," said Mark Rowe, Crown's manager of advertising and sales promotions.

Crown hopes the campaign, its fourth incentive program in four years, will boost sales in the same way promotions with Jiffy Lube International and Merchant Tire & Auto Inc. have, by as much as 15 percent in the past. Crown will need roughly a 5 percent sales jump to break even on its investment in hardware, collections and advertising, Mr. Rowe said.

But Crown also has undertaken the campaign as a way to determine consumer preferences and the frequency of purchases.

Crown will implement the program first in Maryland, Northern Virginia and southern Pennsylvania, and it has plans to expand into all of its 358 locations in seven states by next year.

In the first six months of this year, Crown reported net earnings of $1.4 million, or 14 cents a share, on revenues of $847 million. Those figures reversed a nearly $8 million loss suffered in the first half of 1993.

Crown's effort, similar to frequent flier campaigns that commercial airlines have relied on for years to create brand loyalty, brings to mind past campaigns in which gasoline stations and grocery stores gave trading stamps or gifts to customers. And supermarkets, such as Giant Foods Inc., have for years employed electronic bar code systems to chart consumer purchases.

Under the Crown program, conducted through a joint venture with Premier Points Inc., a Toronto-based firm specializing in electronic card systems, customers who purchase six gallons of gasoline or more will be credited with a point for each gallon.

When 225 points are collected -- about $250 worth of gasoline -- customers can redeem the points for $15 worth of food, automotive-related items or sports apparel, available through Crown stations, or retain the points for larger gifts. Gasoline will not be offered, because profit margins on fuel are slim and often unpredictable, Mr. Rowe said.

In addition to customer profiles and buying habits, the reward program also will provide Crown with information on service station performance.

European petroleum producers have for years employed similar techniques to cement customer loyalty, the result of heightened competition from other operators and discount "hyper-marts," said Steve Pfeifer, a C. J. Lawrence Deutschebank Securities Co. analyst who tracks the petroleum industry.

Oil conglomerates with operations on both continents have been reluctant to employ the card system in the United States because most Americans prefer convenience and speed when refueling, and the card processing is expected to add time to the purchase.

"If this succeeds, then competitors will take a hard look at it, and if it doesn't then we'll be the example for the industry not to follow," said Mr. Rowe. "But we see this as a way for people to be rewarded for something they're already buying."

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