Innovating Refuelling Experince

OMCs are the big brands owning the gas stations where we go to refill our automobiles. These OMCs or Oil Marketing Companies can either be selling the products such as petrol, diesel, and lubricants which are processed in their own refineries or they could be reselling the products by purchasing them from a refiner. In both the cases, the profit margin remains low as the operational cost of maintaining and running thousands of gas stations comes with its own financial burden. This is due to a very simple reason that all the Fuel stations do not receive the same amount of traffic.

As in all retail sector business, the oil and gas brands also have a large competition. The differentiator here becomes the cost, quality of product, convenience and level of service. Discussing in context of the Indian petro retail sector, cost of products remain mostly same for all brands as 90.99% of the retail fuel stations are owned by government-owned companies namely, Indian Oil Corporation Ltd. (IOCL); Bharat Petroleum Corporation Ltd. (BPCL); and Hindustan Petroleum Corporation Ltd. (HPCL). The rest of 9.1% stations are owned by private player namely Reliance Petroleum; Nayara Energy (formerly known as Essar Oil) and Royal-Dutch Shell. The price difference between all the players is in a range of Rs. 1 – 2.5, depending upon the location and brand. Quality of product is highly regulated for unleaded petrol and diesel. These standards are strictly adhered to by all the brands. The slight variation if any is mostly attributed to misconduct at the dealer’s end. In terms of convenience i.e. location, IOCL has the biggest benefit with more than 60,000+ retail stations across the country, making them biggest player in the game. The factor that becomes a great differentiator is then the level of service.

Service becomes the biggest differentiator in terms of the behaviour of staff and the protocols used by companies & dealers.

In the Indian market there is no concept of self – service petro retail stations hence, the quality of services provided becomes important in creating a greater experience for the customer.

All the companies try their best to provide an experience that is unique to their brand in the quest to retain the customers. Customer retention becomes important for companies to sustain profitability from the business. It is this search for a unique experience where the use of technology comes into the picture, both to market themselves and at time of refuelling. The ability to adapt or innovate on current technology creates a path for companies where they are foreseen as a technologically advanced firm creating loyal customers.

The further discussion will be based on two scenarios; first we discuss the case where the IC engines become more efficient and are still in use; and second where Electric Vehicles take over the roads due to a complete ban on IC Engines.

SCENARIO 1:

The current model of cars is becoming highly efficient and smarter with the advent of time. Companies such as Daimler Mercedes to Ford all are actively innovating to provide customers with the best of comfort and safety equipment. In the very same creature comfort list comes a device called In-car entertainment system also called In-car Infotainment system by many automobile manufacturers. By definition, it is a collection of hardware and software which provides the driver and occupants’ entertainment services such as audio & video streaming, radio and connectivity with their smartphones mainly Apple iPhone and Android devices. On the information side, the driver is provided with the navigation system and various data from the car computers. All auto manufacturers use different hardware and software, for example, the industry leader in Infotainment systems BMW product is known as iDrive, Ford has SYNC and MyFord Touch and Toyota provides there customer with Entune.

Fig.1: Example of In-Car Infotainment Systems (On Right: Honda Link by Honda Motors; On Left: BMW iDrive system by BMW)

The technology I discuss can be implemented with a simple upgrade of software and a sticker. Now as we know all the vehicles have a fuel gauge which tells us about the amount of fuel present in the tank. So, imagine the next time my car directly provides me with an on-screen alert to refuel. At this point, there are no huge marketing opportunities. But, as we know all the petro retailing companies run some sort of loyalty programs, where they provide discounts and cash back to customers. Now if my car knows my preferred brand and level of fuel at which I refill the tank (everyone doesn’t wait for the needle to hit the empty sign and hence have a preference) it can prompt the same to me. The system becomes much smarter when we push in our destination address in the sat-nav and the car calculates the fuel needed basing on the live traffic data and gives me the information of the cheapest petro-retail station on the route (the station would also be decided on the basis of my loyalty card). Here the retail companies have the opportunity to retain their customer by providing the best services and compatibility of data with such a smart car system.

Fig. 2: Simplified flow of process for the car to show suggestion for refuelling.

Fig. 3.1: Flowchart of process when car arrives at refueling station with smart suggestion system.

Fig. 3.2: Flowchart of process when car arrives at refuelling station with smart suggestion system.

In terms of experience, the technology can be easily carried forward with the use of IoT and barcodes. The companies can make the dispensing unit connected to a network by use of Internet of Things Technology. As soon a vehicle approaches the dispensing unit the staff scans a barcode that directly provides the vehicle details to the dispensing unit. The in-car infotainment system prompts the driver to enter the amount or quantity of fuel needed to be refilled. The staff just requires to insert the correct the nozzle in the tank and the dispensing unit automatically refills the required quantity of fuel. Payments are not required to be made as the system directly connects to the internet and deducts the amount to be charged from owners account and as the filling completes the customer is provided with a message on the screen providing the loyalty points added to his/her account and the current status of fuel present in the car.

The advantages of such a system to an Oil marketing company are:

1)   Opportunity for direct and personalized marketing.

2)   The real benefit from partnering with auto manufacturers by pre-loading a new car benefits loyalty card.

3)   Increases transparency by directly providing all information to the customer in an easier manner.

4)   The use of loyalty cards increases as the customer directly gets all the benefits without carrying any card or tag.

5)   Personalised sale of allied products such as lubricants, car-computers can directly prompt the staff to provide information on the need for lubricants and oil changes.

6)   The high amount of customer data that can be filtered and analysed to strategize in an efficient way both in terms of marketing and operations.

7)   Increases the level of personalized services creating higher value for money proposition.

The advantages of the same to a customer can be seen as:

1)   Ability to make informed decisions on the basis of price and ratings.

2)   Increase the use of loyalty card and hence gaining benefits that are majorly left due to the time is taken and need for carrying a card in a conventional method.

3)   Provides better information about the vehicle and hence having better maintenance cycles.

4)   Increased control of product selection and removal of distrust on the issue of quantity.

Technologies that are required for such a system:

1)   Well-developed User Interface software for the infotainment system, which most companies already have.

2)   The sensor that can be connected to the internet through on-board connectivity system, this is also present with most companies especially the luxury car makers that now have apps for owners providing all the status information on a mobile device.

3)   Retrofitting of dispensing unit with barcode readers and interactive display units, the cost of such a system will be low as almost 90% of the dispensing unit are under the process to be connected on an online system following a government of India order for better accountability.

4)   Unceasing high-speed internet connectivity, with the high coverage area of existing 4G network India doesn’t face any problem on connectivity issue.

 SCENARIO 2:

In a race to sustain a comfortable life on earth if all countries ban the production of IC engines and mandate the use of electric vehicles in a predetermined manner. The OMCs face their biggest challenge as more than 50% of liquid fuel demands is from road transport. In such a scenario the company shifts their business model to become a power producer and operator of battery swapping stations. This also provides them with a base to increase their customer touch points as they become service providers at public parking spots and commercial parking spaces. The same technology as discussed above becomes more relevant as the early adopters will always have range anxiety and if the car can help them in providing the complete detail of their trip in advance help in easing the issue.

The system will work in a similar manner instead of providing information on refuelling station the car will provide the driver to first choose between charging or swapping the battery and then show the best stop for the same.

Tough the use of such a technology seems advanced, but the speed of innovation and development provides the opportunity for the same to come true in near future. The technology for creating such a product is already present and it's up to the OMCs to fund and invest in such technologies to be prepared for the harsh competition. As the process of retaining customers become harder innovation and early adoption of technology are the major steps needed to be taken by companies. Almost all major oil and gas companies are investing heavily in research and development of new technologies in Exploration & Production (E&P) and more eco-friendly fuels. The same can be done for developing new marketing and customer relation services.

As the current usage of liquid fuels become stagnant in matured markets and the growth slows down in developing market such as China and India. The competition for gaining the biggest market share becomes intense at the same time developing the infrastructure to serve new customers who start using EVs. Innovation in the way of serving the customers can play a vital role in helping sustain the profits from sales of liquid fuels for the mammoth Oil and Gas companies.

The idea presented in the above article are of the author and any resemblance, if any will be given due credit if brought to the author's notice.