When the barrel-chested man from the ’80s sitcom “Cheers” walks into Sam Malone’s bar, everyone in unison shouts his name: “Norm!”
The familiar cheer, what we call the “Norm effect,” instantly personalizes not only the affable patron, but also the place itself. To all, it was clear that Cheers was not just another bar. Interview c-store executives and they’ll quickly tell you their stores are more than just candy bars and energy shots. Theirs, so they believe, are familiar havens for the most loyal of customers, where, as the Cheers song went, “everybody knows your name.”
Of course c-stores aren’t taverns, and clerks aren’t bartenders. But the combo of great service and great offerings is often a potent elixir many a bar would envy. And today, the supposed impersonal world of technology is helping to make c-stores into convenience Cheers.
For Greg Parker’s business, a 24-store chain out of Savannah, Ga., his employees became more connected with customers just a few months ago after starting tests with LIFT Retail Marketing Technology Inc., Atlanta. LIFT involves two display screens and a hosted application that puts relevant sales information on both sides of the counter.
The result for Parker Cos.: Where other c-store cashiers may or may not remember the marketing calendar or what item to push, his employees consistently upsell promotions and affinity products based on sales history, market-basketanalysis and even time of day. In a CSP exclusive, LIFT shared aggregated data from Parker’s and other customers piloting the LIFT upselling program. Some findings:
Bottom-line average in-store sales climbed 3% to 5%.
50 new upsells per day generated a 3% in-store lift.
It took fewer than 20 new upsells a day to pay back the investment in LIFT.
But for some operators, equally important to the hard sales upside is store-level interaction with consumers and building customer loyalty. “Our No. 1 expense is people,” says Parker. “We’d better be sure to pay a lot of attention to sales per labor dollar and sales per labor hour.”
Parker began tests with LIFT soon after he found the company at the NACS Show in 2009. LIFT had a management history in c-stores, with its founders homing in on the gap between the promotional message and the cashier communicating that message to a customer. “We saw an opportunity ... to give a message to customers based on what they’re actively buying,” says Doug Kruep, CEO and founder of LIFT.
Customization at Retail
The software, which in a sense marries upselling with customer intimacy, is unique in the c-store channel. And while Parker was the first to pilot the technology, he is not alone.
A growing number of operators are installing the device, including Ricker Oil Co., Anderson, Ind.; and Tri Star Energy, which operates under the Daily’s brand, Nashville, Tenn. Officials with the technology provider say about 100 LIFT-equipped stations are in the field “and growing every week.”
“It blends well with other targeted technology we have recently adopted,” said Steve Hostetter, CEO of Tri Star, in a release. “We believe it’s a great solution to an age-old puzzle.”
Another retailer, Pilot Flying J, a 550-location chain in 46 states, has been testing the LIFT system at four sites since the beginning of the year. Officials with the Knoxville, Tenn.- based company say they “will continue to [test] until we can make a determination on whether or not to broaden our use of this technology.”
For North Salt Lake, Utah-based Maverik Inc., the digital messaging and customer interactivity were obvious fits to the active, adventurous lifestyle themes that it promotes in its stores, says Justin Mitchell, store technology supervisor for the 227- store chain. “We have a lot of digital signage already in the stores, so visually, it made sense,” he says.
Maverik began testing the system at three stores this past spring with positive results so far. The scripts that appear on the cashier screens help with upselling, especially when promotions change. He says clerks may not have been at the store when the promotion rolled in, and the system brings them up to speed from the start.
“For us, it’s all about adding value for the customer,” Mitchell says. “We want them to know about promotions and deals and see it as a value driver.”
A month into the test, Maverik added a customer satisfaction survey using LIFT’s shopper touch-screen feature, which Mitchell believes is a plus: “The more we can keep the customer engaged at the site, the more they can do; the more they can see what we’re doing with our brand, the better.”
Describing the installation process, Mitchell says he had gone through the chain’s most recent POS upgrade, so he had an idea of what needed to get done. “You do have to get into the wiring, but LIFT has made it easy to integrate into our system,” he says.
The chain will continue to test the LIFT systems and will decide after the process whether or not to proceed. “There’s always opportunities to add [technology] … and as it evolves, there’s just going to be more and more,” Mitchell says. “It’s hard to say what we should add, but [LIFT] is a compelling product. Time will tell.”
Over the year and a half since LIFT formally entered the market, Wells Burke, president and co-founder, says it has evolved from strictly an upsell solution to more of an interactive, relationship-building tool. It’s a combination of software and hardware that not only enriches the clerk-customer experience, but also ties those efforts to tangible metrics, he says.
Where LIFT started by merely displaying promotional items on screens facing the customer, client feedback forced a new setup that replaces the display with an interactive touch screen. Customers can now complete the transaction themselves, order additional promotional items or move past the transaction itself to rate the cashier, enroll in the chain’s loyalty program, sign on for text messages, or donate a dollar to a local charity.
The scenario continues through to corporate, where much like online transactions, c-store retailers can now track a multitude of things from how many times clerks made the upsell offer to how many times the offer converted into dollars.
For the first time, the industry can relate customer purchases to the promotion, cashier and time of day, Burke says: “It provides deep insight into every aspect of the store at the point-of-sale (POS).”
Ultimately the driving force behind this ongoing change will be customer expectation. “You’re more likely to shop where the store can customize the experience to you,” he says, citing how online shopping has created a personalized experience that people will start to want at retail. Retailers want to totally empower the cashier, and solutions such as LIFT are becoming more and more accessible.
Step by Step
At the store level, customers bringing product to the cashier notice the new screens facing them, but are not privy to the behind-the-scenes analysis that results in the LIFT interaction. (See “Step by Step with LIFT,” left.) The system allows for variation. For instance, a customer may agree to a promotion but wants a Sprite vs. getting another Coke. The system can show the Sprite option so customers see it and know they have a choice.
Over time, the software program builds upon its initial analysis, says Kruep, “learning” affinity by store, by day-part and by day of the week. “If [a customer] comes in the morning and you scan a coffee, it might suggest breakfast or a Danish, or in the afternoon, water,” he says. “At night, buying patterns move to pure caffeine, and so energy shots show up as a top affinity product.”
In addition to affinity products and the chain’s marketing calendar, margins are also a factor. Though declining to name a percent, Parker says his stores—already profitable against national numbers—experienced sales increases. Kruep adds speed-of-service to the mix, saying that at peak times, the system will not offer items or options that slow down lines.
Touching ROI
Cost of the system in terms of hardware and monthly subscription fees differ from company to company, Kruep says, with variables including size of chain, program options and support. As a result, he says, it is difficult to share anything concrete.
That said, the company goes through many return-on-investment (ROI) scenarios with potential clients, the most popular analysis being that retailers can make their money back by reaching 20 new upsell transactions per day.
“We believe retailers need to increase shopper conversion by 10% to pay back the program,” he says, emphasizing that thus far aggregate clientele are comfortably hitting 25%, with some doing substantially better. “That’s roughly 20 upsells a day, but we have seen 50–80 conversions a day with our customers. We’ve also seen retailers grow their promotionalconversion rates by 40%.”
Their numbers have identified no difference in results based on characteristics such as story type or demographics, but have anecdotally noticed that stores with a lower average check seem to have shoppers with less money to spend and potentially less likely to agree to an upsell.
The real driver is customer count, Kruep says. “An average daily customer count of 880 transactions needs to achieve a 1.2% increase in in-store sales—or 20 new upsells a day,” he says. “A lower customer count raises the ‘hurdle’ rate.”
The numbers for touch-screen interactivity are also impressive, Burke says. The first time the company launched customer-satisfaction ratings for newer customers, he received 300 responses in a 24-hour period at two stores.
The activity is more measurable than other messaging options, including signage, ATM displays and TVs in the pump, and creates a “stickiness” of interactivity that could possibly lead to greater loyalty.
“To achieve that number of independently motivated [actions] is quite a difficult proposition,” he says. “But from a strategic technology point, that’s an indicator of just how much customers want to engage around relevant, captivating content—in this case, a promotional offers tied to [things they want].”
Positive Reinforcement
On the other side of the counter, cashiers may find benefit in how evaluation metrics can change, Burke says. With the system, managers can review store clerks on positive contributions to sales vs. anything negative.
“You can make an efficient cashier by minimizing error corrects, no sales and voids—with those [employees] you know are doing a good job by not stealing from you,” Burke says. “But not how many times you asked to upsell and converted. Now you can say to a cashier, ‘You converted all promotions at a 35% rate this month vs. 25% that month.’ ” Despite the increasing role of technology at the counter, LIFT officials say they have no intention of replacing the person at the register. In the ideal world of customer experience, there’s a cashier who is a fast and friendly; greets customers; suggests appropriate, relevant product; executes the sale; and thanks the shopper.
“We still have that as a principle tenet,” Burke says. “But we are going to give [clerks] everything they need to be a ‘star’ salesperson.”
Looking Closer at LIFT
A Q&A with Doug Kruep, CEO and founder of LIFT Retail:
CSP: What kind of sales increase can operators expect when using your program?
DK: It depends on the chain. A key learning during these recent tests is the importance of goal setting and operations reinforcement. If a retailer does not set up a daily upsell goal … and cannot reinforce/reward/elevate cashier behavior, then store results can be nominal. However, for chains that know how to use data and performance measures to drive selling behavior, these operators have realized a 25% to 40% increase in shopper conversion.
CSP: Is there any demographic more favorable to upselling based on what you’re seeing (rural/urban/suburban, affluent/working class, etc.)?
DK: We have not identified any databased differences in store type, though anecdotally it seems stores with a higher average check have more shoppers willing to be upsold.
CSP: Does store size or the number of registers at checkout influence the success of upselling?
DK: The real driver is customer count. To achieve a 3% increase in in-store sales, an average store needs 50 new upsells per day. That’s only 6 out of 100 customers.
Calculating LIFT
Several key numbers have come from analysis of about 100 stores equipped with LIFT technology in the field.
20 new upsells The number needed to cost-justify the system and service subscription
50–80 new upsells The number LIFT officials say they’ve seen with some clients
25%–40% increase in conversion rate What LIFT officials say some customers have achieved in turning upsells into actual purchases
100 The number of LIFT-equipped stores in the field
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