Crm at Fuel Stations

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CERTIF ICATE

This is to certify that this is a report on “CRM PRACTISES IN FUEL RETAILING INDUSTRY” submitted by Mr. Sunil Sethia, Ms. Soumya Achanala, Ms. Sruthi Raju, Mr. Kunal Barghav & Mr. Ujwal Patnaik (PGP/SS/2007-09) as a part of the curriculum for the third trimester. The work has been undertaken and completed under the guidance of Prof. Amit Baruah and is satisfactory.

Prof:

Date:

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ACKNOWLEDGEMENT

Throughout the course of study, as we analyzed and compiled this report, innumerable people have given suggestions, encouragement, complaints and opinions, all of which have been in some way or the other contributed to the final report. We think it is essential to thank all those who contributed to our understanding of the subject and helped us through the duration of the project.

We thank Prof. Amit Baruah, under whose supervision and guidance this report was completed successfully.

We would also like to thank our parents and friends who rendered their whole hearted co-operation in the successful completion of the project work.

Finally, we are thankful to all the people who willingly responded to our questionnaire and whose contribution has been invaluable. This project would not have been completed without their participation.

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PREFACE

The primary objective of this report is to provide the readers the insight into CRM Practices followed in Fuel Retailing Industry, Behavior of consumers towards it and different opinions generated out of such practices.

We hope that the report has made the text interesting and lucid. In writing this report, we have benefited immensely by referring to many publications and articles. We express my gratitude to all such authors and publishers.

Any suggestions to improve this report in contents or in style are always welcome and will be appreciated and acknowledged.

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DECLARATION

We hereby declare that all the information that has been collected, analyzed and documented for the project is authentic possession of us.

We would like to categorically mention that the work here has neither been purchased nor acquired by any other unfair means. The data and information existing in this report are accurate and update to the current data, to the best of our knowledge.

However, for the purpose of the project, information already compiled in many sources has been utilized.

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CONTENTS OBJECTIVE OF STUDY

Pg. 08

INTROSDUCTION TO CRM

Pg. 09

EMERGENCE OF CRM PRACTICE

Pg. 10

ARCHITECTURE OF CRM

Pg. 13

OPERATIONAL

Pg. 13

ANALYTICAL

Pg. 14

COLLABORATIVE

Pg. 15

KEY PRINCIPLES

Pg. 16

WHO NEEDS CRM?

Pg. 17

ADVANTAGES OF CRM

Pg. 18

CRM RELATED SURVEY FACTS

Pg. 20

STEPS TO SUCCESSFUL IMPLEMENTATION OF CRM

Pg. 22

CHALLENGES IN IMPLEMENTATION OF CRM

Pg. 23 Page | 6

SUMMARIZING CRM ACTIVITES

Pg. 24

FUEL RETAILING IN INDIA OVERVIEW

Pg. 25

PROMISING ROAD AHEAD

Pg. 26

NEW COMPETITORS

Pg. 27

RETAIL SITE HEADACHE

Pg. 29

CRM PRACTISE IN FUEL RETAILING BUSINESS

Pg. 30

CROSS INDUSTRY CRM PRACTISE (ICICI)

Pg. 34

RESEARCH SURVEY

Pg. 41

QUESTIONNAIRE & FEEDBACK FORMAT

Pg. 42

RESULT AND ANALYSIS

Pg. 47

SUGGESTIONS

Pg. 56

SPECIAL FOCUS ON CUSTOMER RELATIONSHIP

Pg. 59

BIBLOGRAPHY

Pg. 60

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OBJECTIVES OF STUDY The CRM implementation process involves defining business objectives, business processes, organization structure, customer hierarchy, and management needs. It is essential that the project team consist of business owners, business users, an executive sponsor, a project lead, a CRM system administrator, and CRM domain experts. The project team will work together to plan, design, configure, implement, and support the CRM solution.

It is important to understand that a successful CRM project evolves as the business grows. Planning for change is essential for success. Regardless of the size of the project all stages defined should be used for every CRM project.

GOALS:

Document high level business processes and requirements. Conduct a CRM readiness assessment. Create a vision scope document. Create a CRM project proposal. Present a CRM project proposal. Gain consensus to move forward.

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INTRODUCTION TO CRM Customer Relationship Management (CRM) can be widely defined as company activities related to developing and retaining customers. It is a blend of internal business processes: sales, marketing and customer support with technology and data capturing techniques. Customer Relationship Management is all about building long-term business relationships with customers.

Different organizations define CRM differently. In today’s economy, there is no single undisputed definition of CRM. Here is what we believe CRM is:

CRM is an alignment of strategy, processes and technology to manage customers and all customer-facing departments & partners.

Any CRM initiative is and has the potential of providing strategic advantages to the organization, if handled right.

Most CRM initiatives begin with a strategic need to manage the process of handling customer related information more effectively. For beginners it could simply mean better lead management capabilities or sales pipeline visibility. However, as organizations mature in their CRM initiatives, they begin to look at CRM as tool to acquire strategic differentiators. Despite the immense benefits that the CRM solutions can deliver, they are not entirely without their share of problems. Page | 9

THE EMERGENCE OF CRM PRACTICE Looking back at a snapshot history of marketing, we can see the following clear developments and progression over the last four decades:

1960’s – the era of Mass Marketing, when Gibbs SR toothpaste began the first marketing of this kind with its black and white campaign. 1970’s – saw the beginning of segmentation, direct mail campaigns and early Telemarketing (such as publishing). 1980’s – where Niche Marketing made millionaires of those who were best at it. 1990’s – Relationship Marketing. The explosion of telemarketing and call centers all set up to develop relationships with customers.

In recent years however, several factors have contributed to the rapid development and evolution of CRM. These include:

1. The growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with end-customers. For example, in many industries such as airlines, banks insurance, software or household Page | 10

appliances and even consumables, the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular. Databases and direct marketing tools give them the means to individualize their marketing efforts.

2. Advances in information technology, networking and manufacturing technology have helped companies to quickly match competition. As a result product quality and cost are no longer significant competitive advantages.

3. The growth in service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of the middlemen.

4. Another force driving the adoption of CRM has been the total quality movement. When companies embraced TQM it became necessary to involve customers and suppliers in implementing the program at all levels of the value chain. This needed close working relationships with the customers. Thus several companies such as Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and customers to practice TQM. Other programs such as JIT and MRP also made use of interdependent relationships between suppliers and customers.

5. Customer expectations are changing almost on a daily basis. Newly Empowered customers who choose how to communicate with the companies across various available channels. Also nowadays consumers expect a high degree of personalization. Page | 11

6. Emerging real time, interactive channels including e-mail, ATMs and call centre that must be synchronized with customer’s non-electronic activities. The speed of business change, requiring flexibility and rapid adoption to technologies.

7. In the current era of hyper competition, marketers are forced to be more concerned with customer retention and customer loyalty.

8. As several researches have found out retaining customers is less expensive and more sustainable competitive advantage than acquiring new ones.

9. On the supply side it pays more to develop closer relationships with a few suppliers than to develop more vendors.

10. In addition several marketers are concerned with keeping customers for life than making one time sale. There is a greater opportunity for up selling and cross selling.

11. The globalization of world marketplace makes it necessary to have global account management for the customers.

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ARCHITECTURE OF CRM

There are three parts of application Architecture of CRM:

1. OPERATIONAL - automation to the basic business processes (marketing, sales, service).

2. ANALYTICAL - support to analyze customer behavior, implements business intelligence alike technology.

3. COLLABORATIVE - ensures the contact with customers (phone, email, fax, web, sms, in person and Post).

OPERATIONAL CRM Operational CRM means supporting the "front office" business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to resources responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.

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Operational CRM provides the following benefits: • Delivers personalized and efficient marketing, sales, and service through multichannel collaboration. • Enables a 360-degree view of your customer while you are interacting with them. • Sales people and service engineers can access complete history of all customer interaction

with

your

company,

regardless

of

the

touch

point

ANALYTICAL CRM In analytical CRM, data gathered within operational CRM and/or other sources are analyzed to segment customers or to identify potential to enhance client relationship. Customer analysis typically can lead to targeted campaigns to increase share of customer's wallet.

Examples of Campaigns directed towards customers are:

Acquisition: Cross-sell, up-sell Retention: Retaining customers who leave due to maturity or attrition. Information: Providing timely and regular information to customers. Modification: Altering details of the transactional nature of the customer’s relationship.

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COLLABORATIVE CRM Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured, conversational, and/or transactional in nature.

Collaborative CRM provides the following benefits:

Enables

efficient

productive

customer

interactions

across

all

communications channels. Enables web collaboration to reduce customer service costs. Integrates call centers enabling multi-channel personal customer interaction. Integrates view of the customer while interaction at the transaction level.

CRM is based on the premise that, by having a better understanding of the customers’ needs and desires we can keep them longer and sell more to them.

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KEY CRM PRINCIPLES

DIFFERENTIATE CUSTOMERS

All customers

are

not

equal;

recognize

and

reward

best customers

disproportionately. Understanding each customer becomes particularly important. And the same customers’ reaction to a cellular company operator may be quite different as compared to a car dealer. Besides for the same product or the service not all customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer.

What CRM needs to understand while differentiating customers is?

 Sensitivities, Tastes, Preferences and Personalities.  Lifestyle and Age.  Culture Background and education.  Physical and psychological characteristics.

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MAXIMIZING LIFE TIME VALUE

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase potential. Thus the single adults shall require a new car stereo and as he grows into a married couple his needs grow into appliances.

INCREASE LOYALTY

Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service offerings to its customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve.

WHO NEEDS CRM? Putting it simply, CRM is ideally embraced by that organization which besides making and retaining clients also makes serious effort to optimize their revenue potential. This organization is one that aims at organizational growth through sharp focus on CUSTOMER RELATIONSHIP MANAGEMENT.

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ADVANTAGES OF CRM • Provide better CUSTOMER service. • Increase CUSTOMER revenues. • Increase CUSTOMER Lifecycle Value. • Discover new CUSTOMERS. • Cross Sell/Up Sell products more effectively. • Help sales staff close deals faster. • Make call centers more efficient. • Simplify marketing and sales processes.

Many companies are turning to customer-relationship management systems to better understand

customer wants

and

needs. Customer Relationship

Management applications, used in conjunction with data warehousing, E commerce applications, and call centers, allow companies to gather and access information about customers' buying histories, preferences, complaints, and other data so they can better anticipate what customers will want and how to best retain them.

The adoption of Customer Relationship Management is being fuelled by recognition that long-term relationships with customers are one of the most important assets of an organization, providing competitive advantage and improved profitability. Page | 18

CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers & boost their business efficiency, thereby increasing profit and revenue generation capabilities. In most businesses, the cost of acquisition of customers is high. To make profits, it is important to keep the customer longer and sell him more products (cross sell, up sell, etc) to him, during his lifecycle. Customers stay, if they are provided with value, quality service and continuity. CRM solutions enable’s to do that.

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THE SURVEY FACTS Growth Strategies International (GSI) performed a statistical analysis of Customer satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by Infoquest.

The conclusions of the study were:  A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer.  A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer.  A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business.  By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from industry to industry.

An important facet of CRM is “customer selectivity”. As several research studies have shown not all customers are equally profitable (In fact in some cases 80% of the sales come through 20% of the customers). The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to “outsourcing of some customers” so that a company better utilize its resources on those customers it can serve better and create mutual value. Page | 20

CAN CRM DRIVE REVENUE? The important considerations of any organization looking forward to incorporating a CRM are understandably, more business related than technical. All the different objectives that are fulfilled through CRM, by default; revolve around increasing the top line revenue.

CRM is not just a guarantee for quicker growth and bigger revenues but also a means to keep up with competition. Through CRM, you can determine the Customer Lifetime Value or in other words, the present and projected business worth of a customer to your organization. This once known, acts as the basis on which you can formulate marketing strategies targeting customers individually.

Customer intelligence and CRMs predictive analysis capabilities help’s to generate a highly accurate demand forecast which leads to better and more informed inventory management, thus, curtailing significantly, the internal costs through new and efficient processes.

Further, the simplification and streamlining of the sales process, significantly reduces the time spent by sales reps on their paperwork and administrative engagements, and lets them focus on selling instead. The ROI gained out of implementing a CRM is what makes the experience worthwhile. It is best measured by comparing the past and the present customer acquisitions, enhancements in customer value/worth, long-term customer retention, etc, all of which contribute to the organizations revenues. Page | 21

5 STEPS TO SUCCESSFUL IMPLEMENTATION OF CRM

Many organizations have burned their fingers trying to implement the technology and manage costs. To successfully undertake CRM initiatives it is essential to Clearly define the management objective & strategy. Evolve the right process around it. Identify the right software solution for implementation. Understand the hidden costs and hurdles. Back it up with good training and support.

CUSTOMER RELATIONSHIP MANAGEMENT is a strategy, not a specific software or hardware; but it encompasses the technology and strategy needed to completely integrate a business in order to get a holistic view of customers and their relationship to the entire enterprise. The software that links the back office to the front office, the technology needed to make the call centre customer-friendly, and integrating each component seamlessly with the customers' point of contact, web-based or other means, are all part of Customer Relationship Management.

There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.

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KEY CHALLENGES IN IMPLEMENTING CRM SOLUTIONS Companies around the world have leveraged CRM strategies to gain competitive advantage. As more and more companies rush to implement CRM, precautions must be taken to do it right. It is approximated that 50-70% CRM implementations fail, depending on the Industry vertical. Hence, it is essential to identify the key challenges, address risks and build a strategy that can make your CRM successful. CRM is full of talk about strategy, but at the end of the day, someone has to lead the way and implement, even if operations report that the network is operating perfectly and services are running normally, your customers may not be happy, leading to revenue shortfall and increasing levels of churn.

UNLOCKING THE VALUE OF CUSTOMER SATISFACTION SURVEYS In today's business environment companies cannot afford to lose a single profitable customer. By effectively leveraging results from a customer satisfaction survey an organization can respond to their customer's needs in ways that increase revenue as well as improve customer and employee, satisfaction and loyalty. Many companies perform customer satisfaction surveys, but don't receive full value from their investments to administer the program. Too often survey results are used simply for monthly reporting on "how we did last month". GAP MODEL There is a gap because of which a market goes up or come down. What the company perceives and what the customers perceives is different. It is this gap which identifies a product of the company as product centric. The customer has a different point of view. He may focus on the price. Page | 23

SUMMARIZING CRM ACTIVITIES The CRM cycle can be briefly described as follows:

 Learning from customers and prospects, (having in depth knowledge of customer).  Creating value for customers and prospects.  Creating loyalty.  Creating profits.  Acquiring new customers.

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FUEL RETAILING IN INDIA

OVERVIEW

1976, India barred the private sector from participating in fuel retail and nationalised the local businesses of international oil companies. Brands commonly seen at petrol stations elsewhere in the world - Shell, Esso and Caltex -disappeared from the Indian market. Shell, for instance, became Bharat Petroleum and Esso metamorphosed into Hindustan Petroleum.

In 2002, however, the government made a U-turn, allowing multinationals and other private players to re-enter the market. The policy shift sparked a rush of service station openings as both private and public companies positioned themselves to sell to the nation’s growing, increasingly mobile middle class.

While the private sector welcomed the liberalised market, in practice it came with several strings attached. Private players were required to invest at least 20 billion rupees (around $500 million) in refineries, pipelines or other energy-related assets in the country, limiting the number of new entrants. And although the government abolished formal controls on fuel prices, it continued to dictate them indirectly through the pricing policy of India’s national oil companies (NOCs). These factors have slowed the evolution of the sector – at least for the moment.

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PROMISING ROAD AHEAD The Indian market for transportation fuels holds a lot of promise. The country’s aspiring middle class, recently estimated at 40 million households by consultancy McKinsey, is becoming increasingly motorised. Small towns are expanding at a rapid pace, sparking investment in roads and other infrastructure. The largest express highway project in India, for example, aims to link the cities of New Delhi, Mumbai, Kolkata and Chennai with a system of four- to six-lane highways.

Automobile sales, which today number just over a million vehicles a year, could reach 20 million a year by 2030, predicts US-based consultancy Keystone, making India the third-largest automobile market in the world after China and the USA.

Moreover, the fact that many of India’s service stations are poorly designed and congested leaves a natural opening for newcomers who offer a better alternative. Typical old-fashioned Indian service stations feature long queues, cars jockeying for position, oily forecourts and hand-operated petrol pumps that may not accurately measure the volume of each sale. They also lack convenience stores or other facilities.

Liberalisation prompted Indian companies such as Reliance and Essar to aggressively enter the fuel retail market. Reliance, for instance, expanded its network rapidly, building more than 1,200 service stations, with plans for up to 6,000. However, Reliance stopped at around 1,300 stations when it started to lose money, due to the government’s policy of influencing prices. Page | 26

Shell is so far the only international oil company to enter the Indian retail market. The company’s development of a liquefied natural gas terminal and regasification facility at Hazira allowed it to meet the government’s call for investment. In 2005, after an absence of nearly three decades, Shell opened a new petrol station in India. Run by a former Pizza Hut manager with a track record of good customer service, the station - on Dr. Rajkumar Road in Bangalore - quickly became a landmark thanks to its team of efficient attendants directing traffic, cleaning windshields and pumping petrol. Today Shell operates 35 stations in southern India.

India’s NOCs dominate the market that the newcomers have entered. Bharat Petroleum, Indian Oil and Hindustan Petroleum have vast networks of petrol stations across India - approximately 30,000 in all. Many of these petrol stations were inherited from the old multinationals or established when land prices were much lower than they are today.

NEW COMPETITORS For almost 30 years the government strictly controlled public-sector companies, dictating prices, and directing the expansion of their dealer networks. While these companies had retained the infrastructure of the nationalised multinationals, their reason for being changed dramatically. Objectives such as job creation had taken precedence over purely commercial goals, including profitability when running the business.

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The move toward liberalisation brought a sudden shift in priorities as the public sector companies prepared to face the new competition. “We’ve actually grown more in the last four years than we had in the last 30,” says Tejbir Singh Sanghvi, Deputy General Manager of Highway Retailing at Hindustan Petroleum. “The government has given us more flexibility in terms of expanding our dealer network. We’ve also had to develop a lot in order to compete. There are new initiatives, new physical standards and new technologies. Fuel retail used to be a seller’s market. Now the focus has shifted to the consumer.”

Newcomers to the Indian market face several challenges. For one, the government has an indirect hand in pricing policy through its national oil companies. The policy takes into account factors such as inflation and the proximity of upcoming elections. For example, between 2002 and 2006 the price of petrol in the international market increased one and a half times. During the same period the retail price of petrol in India only rose by about 50%.

The government subsidises India’s NOCs to compensate for below-market prices. Between April, 2005 and March, 2006 subsidies totaled approximately $3.6 billion, according to a government advisory committee report. Since state-owned oil companies command some 80% market share, private-sector competitors must match their artificially-low prices to stay in business.

“It was assumed that after the APM (Administered Pricing Mechanism) was dismantled in 2002, there would be a genuine free market in India for transportation fuels,” says Vivek Srivastava of Reliance. “But the APM never really faded away in practice, thanks to political reality.” Page | 28

RETAIL SITE HEADACHE Securing prime retail sites is also a headache. Real estate prices remain high and the process of acquiring real estate is mired in red tape. Moreover, land titles in India tend not to be clear, lead ing to delays. And construction can be challenging – schedules aren’t adhered to, quality needs to be closely monitored, and safety consciousness has a long way to go.

However, the outlook for newcomers is starting to improve. Government policies are becoming increasingly liberal and market-driven, and there is an overall cultural shift towards greater professionalism in Indian business. While there does not appear to be any imminent movement on the government’s approach to fuel pricing, the economy in general is moving towards greater deregulation. Tax reform promised in 2010 could significantly improve the outlook for private players in the oil sector through a simplified indirect tax structure. This could allow the government greater room to introduce free pricing.

Meanwhile, fuel retailers in India are gradually adopting the practices already used in international markets, which plays to the strength of newcomers who are building their networks from scratch. Fuel retailing in other parts of Asia, such as Singapore, has moved towards providing convenience stops for customers, following the model that prevails in Europe and North America. India is likely to follow in the same direction, especially in cities. However, the pace of change and the speed with which newcomers gain a foothold in the Indian market still depend largely on government policy. As long as market forces do not determine prices and subsidies to NOCs continue, these companies will have an advantage. Page | 29

CRM PRACTISE IN PETROL RETAILING BUSINESS The definite answer would be NO. There has been no Customer Relationship Management program followed at a Fuel Retail Station anywhere in the world for various reasons, but a significant change has been observed with Oil Companies which are into retailing going in for ERP & CRM implementation in the organisation but restricted within the company, connecting to suppliers and distributors but not at all the END CONSUMERS.

Reasons for NO CRM at Fuel Retailing Stations: High Cost of Implementation. Lower Margins on sales. Huge Customer Base. Geographically Widely Spread. CRM a pretty new concept to be tested. Few Driveway Attendant’s. (Western Countries Usually) Customization not possible. Sales Boost not predicted in developed countries.

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THE NEED FOR CRM AT FUEL STATIONS IN INDIA This project is exclusively done on all the leading petrol bunks in the city of Hyderabad. The main reason for choosing this sector is that, there is not much of customer relationship is being maintained with the bunks & the end user as such. To bridge the gap between the customer & the dealers so that an effort is being made to make a customer a brand loyal.

CONSUMER’S INCREASING EXPECTATIONS

With growing competition in the petro-retailing sector, today’s consumer is becoming more and more demanding. The emergence of new psychographic segments in petro retail market bears the testimony to this fact. A closer look at these segments tells us what exactly a consumer is looking for whenever he goes to a fuel station to purchase fuel. He looks for-

 Quality & Quantity assurance  Quick filling and efficient forecourt service  Rewarding loyalty  Premium fuels  Cashless transactions  Non-fuel services

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NEW PLAYERS IN PETRO-RETAIL SECTOR The deregulation of the marketing sector has led to the grant of marketing rights to Reliance Industries (5,849), Essar Oil (1,700), ONGC (1,110), and Shell (2,000). Anticipating the immense competition ahead in the petro-retailing, the existing oil marketing companies has geared up and the following are the changes that have occurred in recent past since the deregulation of downstream oil industry.

 Shifting focus from the urban to highways and sub-urban areas.  More communication with the customers in the media and onsite.  Building PFS, Club HP, Q&Q as a brand.  From fuel dispensing to multi product selling.  From commodity selling to brand marketing.  From executive level sales management to intermediary supervisory cadres.  From direct controls to third party audits – these certifying agencies require their own infrastructure.  From dealer proprietor to reputed companies from other sectors making forays into petro-retail management.

Given today's open & competitive environment, oil marketing companies, both existing and new entrants, are going full steam ahead to capture the largest share of the pie. While the PSUs have added more than 3000 retail outlets to their network Page | 32

in last three years since deregulation, the private players have added only a little over450 retail outlets. However, we can say that with 30,000 petrol retail outlets expected in the next 5 years, up by 30% from today, there is going to be a downward pressure on profit margins and revenues per outlet which will push the industry to reinvent itself.

And in order to reinvent; the industry will either face cut throat competition, Consolidation or a sure path to increase customer loyalty by higher customer satisfaction & increasing brand value through future vision thinking.

INITIATIVES TAKEN SO FAR

Strict Implementation of Programs to avoid Fraud’s.

Automation of Fuel Dispensers.

Establishing new Fuel Stations at Convenient Locations.

Revamp of Old Outlets.

ERP & CRM implementations at Company level.

Marketing for Brand Recognition.

Launch of New Products & Related Goods & Services. Page | 33

CROSS INDUSTRY CRM PRACTISE

Implementing a Technology - Based CRM Solution The ICICI Experience

ICICI set up as Development Bank over four decades ago to provide products and services for the corporate segment, diversified into the retail segment of the financial markets in the early 1990s. In 1994, it established ICICI bank as a commercial bank that is flexible, innovative and prompts in meeting customer requirements. In addition to the bank, the retail initiatives include Prudential ICICI AMC, ICICI Personal Financial Services, ICICI Capital Services, and ICICI web trade, Prudential ICICI Life Insurance, ICICI Lombard General insurance. This apart the retail initiatives also include a plethora of web based businesses including city portals and various other utility sites such as billjunction.com, icicimoneymanager.com, and magiccart.com, among others.

THE RETAIL STRATEGY

As part of plans, it is implementing various projects to establish world class CRM practices, which would provide an integrated view of its customers to everyone in the organisation. CRM at ICICI involves increased communication between the virtual universal bank and its customers and prospects, as well as within the group itself. The underlying idea is to enhance every instance of contact with the Page | 34

customer. ICICI believes that a true customer centric relationship can only be accomplished by considering the unique perspectives of every single customer of the organisation. Hence the pressing need to put in place a technology enabled CRM solution.

THE CRM ROADMAP

CRM, at ICICI, is viewed as a discipline as well as a set of discrete software technologies, which will focus on automating and improving the business processes associated with the customer – face –to-face, call Centre, ATM, web, telephone, kiosk, bank branch, sales associates, etc – so as to allow ICICI to carry out cradle-to-grave customer management more efficiently. It should allow ICICI to engage in one-to-one marketing by tracking complete customer life-cycle history. To begin with it will automate process-flow tracking in the product sales process, and be able to generate customized reports and promote cross selling. It will also enable efficient campaign management by providing a software interface for definition, tracking, execution, and analysis of campaigns. From an architecture perspective, the enterprise-wide CRM solution should seamlessly integrate non-transactional related customer information housed in the front-office with the transactional information housed in the back office.

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IMPLEMENTING CRM

A very detailed and comprehensive CRM action plan was developed based on the understanding that CRM will require enterprise wide transformation.

Interviews with key individuals throughout the organisation helped identify different initiatives that have been launched, all focused on CRM.

The next step in the planning process was a Gap Analysis. This analysis essentially compared current stage against optimal relative to the five aspects of business, to identify and specifically describe the gaps.

THE CRM BUSINESS CYCLE

Understand and Differentiate

Develop and Customize Interact and Deliver Acquire and Retain

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Successful customer retention is based very simply on the organisations ability to constantly deliver on three principles:  Maintain interaction; never stop listening to customers.  Deliver on customer’s value definition. Remember that customers change as they move through differing life stages; be alert for the changes and be prepared to modify the service and value proposition as they change.  Prioritizing Changes; because there might be many gaps, therefore many changes that an organisation will need to make, prioritization is critical.

The evaluation of each of the strategies identified to resolve the gaps at ICICI were based on: Cost to implement – including initial one time costs, as well as anticipated ongoing expenses. Overall benefit – some changes may have higher impacts on an organisation’s ability to increase customer value and loyalty. Feasibility – based on the organisation readiness, data and systems support, resource skill sets and a number of other factors. Time Required – including the time necessary for training and addressing “cultural” change management issues related to a specific strategy. Creating an Action Plan. Page | 37

The next step in the planning process was the development of a very detailed action plan. While the complete plan might span three or more years, it was based on three-month phases with clear deliverables that will demonstrate both progress and quick hits or measures of success. The plan identified interdependent activities and should comprehensively detail the time and resources required for each activity. Another key factor for the planning process was the Leadership Action Plan. Advancing on the CRM transformation map required significant organisation change. This part of the action plan helped assess the drivers and restraints of change and the organisation’s readiness to assess the change.

Selecting and Implementing a Technology Based Solution Technology

The successes of the CRM initiatives were contingent on various decisions pertaining to technology. Some of the key issues were: Make or Buy: - The decision to buy was based on an evaluation of an identified set of criteria. Some criteria were Functionality, Flexibility, Scalability, Fit with existing architecture, etc. was decided to purchase an off-the-shelf CRM solution and customize it to suit ICICI’s requirements. From whom to buy: Some Criteria included were CRM expertise, Retail Finance Experience, Credentials including financials, client list, life history, etc. A detailed Request for Information (RFI) was sent to each of the shortlisted companies. After receiving the RFIs, another round of evaluation was done. After short listing two product vendors and system integrators, reference calls were made to several of the past clients of all shortlisted companies. Page | 38

PROCESSES All processes were mapped on to product by understanding the details. During the course of the process mapping, several opportunities for improvement were identified and implemented.

LESSONS SO FAR FROM THE ICICI EXPERIENCE

If CRM involves optimizing product, price, place of distribution, promotion, sales and service, why are so many companies struggling? Hasn’t anyone really mastered the art and science of CRM, and if not, why is it so difficult?

CRM is difficult because it is an enterprise wide initiative.

CRM is not a technology initiative. Many have confused CRM as a technology initiative, and assigned the CRM implementation project to their information system or information technology group. CRM conferences often equate to technology exhibits and demonstrations. Technology is needed in order to implement CRM – particularly the customization part – but technology is not the driver of CRM, or the solution to success ful CRM implementation.

CRM is not exclusively a marketing initiative. Many organisation have merely equated CRM with customer focused marketing, or datadriven/database marketing. CRM results in more effective, data driven Page | 39

marketing efforts; CRM requires marketing experience. But CRM is strictly not a marketing initiative.

CRM is not exclusively a sales initiative. Similar to marketing, CRM is often lodged within the sales department. The sales-force, after all, is extremely close to their customers understanding their needs and wants, and trying to fulfill them. Sales, however, is just one functional area that can benefit from CRM, and that is necessary for effective CRM.

CRM is not exclusively a service initiative. As with sales and marketing, customer service

is

one

functional aspect of successful CRM

implementation. But customer service is not the sole driver of the process. CRM involves marketing, sales, service, and technology, as well as the other inner workings of the organisation. Having even one “broken spoke in the wheel”, one area of the organisation that is less than committed to CRM, can make the difference between success and failure.

Page | 40

SURVEY In order to get a real outlook regarding a need for CRM implementation at Retail Fuel Stations, a lead of various Primary, Secondary Research & Methodology has been designed.

Some Parts of the Lead being:

Questionnaire. Interviews. Observation. Feedback. Enterprise Policies. Case Studies. Statistical Tools. Marketing Concepts.

Page | 41

CUSTOMER FEEDBACK OFF – SITE CUSTOMER SURVEY

1. Which Fuel Station do you usually go to get your vehicle refueled? __________________________________________________________________ 2. Do you visit? a) Only One Fuel Station. b) More than One less than Five. c) Any fuel station. 3. What is the reason for selecting the Fuel Station? a. Close/ on the way to your Residence / Office. b. Have Loyalty Card. c. Quality of Fuel. d. Driveway Attendants. (Service Rendered). e. Vehicle Water Servicing. f. Other Services (IF, THEN WHAT___) g. All the Above.

4. What all services do you avail at the Fuel Station? a) Only Vehicle Refueling.

b) Tyre Air Pressure Check.

c) Vehicle Oil.

d) Convenience Store.

e) ATM.

f) Vehicle Water Servicing.

g) General Clean Up (Window Panes etc.) Page | 42

5. What is the usual Mode of Payment? a. Cash b. Credit / Debit Cards c. Special Credit cum Loyalty Cards d. Petro Cards

6. Do you trust upon the Fuel Quality & Quantity purchased by you at Fuel Station of your Choice? a) YES b) MAY BE c) NO d) Does not Matter

7. Do you prefer any other services to be provided in the petrol station? a) YES b) NO c) No Idea

8. Do you find any difference in the Quality of Fuel at different Fuel Stations? a) YES

b) NO

Page | 43

9. Prioritize your Needs for Selecting a Fuel Station? (From 1 to 10, 1 Being Top Priority) a. Quantity & Quality of Fuel. b. Driveway Attendants. c. Convenience of Location. d. Convenience Store. e. ATM. f. Provision of Loyalty Benefits. g. Free Glass Clean Up. h. Vehicle Water Servicing. i. Variants of Fuel. j. Other related Products & Services {Oil, PUC, Tire Air Pressure Check etc.} k. Others (Please Specify and Rate) _______________________________

NAME:

Profession:

Vehicle Held:

Avg. Predicted Age Group:

Avg. Fuel Consumption per Month:

Page | 44

ON SITE CUSTOMER SURVEY: {SHELL STATION (SOMAJIGUDA, AMEERPET)}

1. Do you often Visit Shell Fuel Station. How many times per Month?

2. Why do / did you visit Shell petrol station?

1. Quality & Quantity of Fuel. 2. Brand Name. 3. Convenient Location. 4. Driveway Attendants. 5. Others 6. Refuel was required on priority.

3. Are you satisfied with the services that are rendered to you at Shell? a) YES

b) NO

c) Partly satisfied

4. Do you believe in the Quality & Quantity of Fuel that is provided in here? a) YES

b) NO

c) Can’t Say

5. Do other services like CAR WASH, CONVENIENCE STORE, Good Drive way Attendants attract you towards this station? a) YES

b) NO

c) MAY BE Page | 45

QUESTIONNAIRE

MANAGER AT SHELL & RELIANCE FUEL STATION

1. What is the Station’s major Factor making customer drive in?

2. What extra services do you provide for your customers?

3. How much usual storage of extra fuel is always there at station?

4. What is Max Storage of Fuel at the station?

5. Does customer come here only for refueling or any other service?

6. Do you maintain complaint book?

Page | 46

RESULTS / ANALYSIS OF SURVEY AND OBSERVATION The following are analysis obtained after scrutinizing the Feedback from customers, and comparing various bits from cross industry CRM practises and also from the Interview with Manager. SURVEY RESULTS Off – Site Customer Survey Results (Survey Size 100)

1. Which Fuel Station do you usually go to get your vehicle refueled? Various, the highly visited fuel station being Indian Oil petrol station at Panjagutta, & Greenlands intersection (Full Moon Service Station) 2. Do you visit? a. Only One Fuel Station

(61%)

b. More than One less than Five.

(23%)

c. Any fuel station.

(16%)

3. What is the reason for selecting the Fuel Station? a. Close / on the way to your Residence / Office.

(67%)

b. Have Loyalty Card.

(4%)

c. Quality of Fuel.

(21%)

d. Driveway Attendants. (Service Rendered)

(2%)

e. Vehicle Water Servicing.

(0%)

f. Other Services (Free Cleaning, Convenience Store)

(2%)

g. All the Above.

(4% & 42 of 100) Page | 47

4. What all services do you avail at the Fuel Station? a) Only Vehicle Refueling.

(93 out of 100)

b) Tyre Air Pressure Check.

(56 out of 100)

c) Vehicle Oil.

(18 out of 100) 2 wheeler oil

d) Convenience Store.

(4 out of 100)(Used, no more)

e) ATM.

(0)

f) Vehicle Water Servicing.

(2, At Tarnaka only there)

g) General Clean Up (Window Panes etc.)

(Would Take, if knew where)

5. What is the usual Mode of Payment? a) Cash

(72)

b) Credit / Debit Cards

(19)

c) Special Credit cum Loyalty Cards

(4)

d) Petro Cards

(5)

6. Do you trust upon the Fuel Quality & Quantity purchased by you at Fuel Station of your Choice? a) YES

(2)

b) MAY BE

(92)

c) NO

(5)

d) Does not Matter

(1)

Page | 48

7. Do you prefer any other services to be provided in the petrol station? a) YES

(Option for Mobile Battery & Account Recharge, ATM)

b) NO c) No Idea (97)

8. Do you find any difference in the Quality of Fuel at different Fuel Stations? a) YES

(33)

b) NO

(67)

9. Prioritize your Needs for Selecting a Fuel Station? (From 1 to 10, 1 Being Top Priority) a. Quantity & Quality of Fuel.

(2)

b. Driveway Attendants.

(4)

c. Convenience of Location.

(1)

d. Convenience Store.

(8)

e. ATM.

(10)

f. Provision of Loyalty Benefits.

(6)

g. Free Glass Clean Up.

(7)

h. Vehicle Water Servicing.

(9)

i. Variants of Fuel.

(5)

j. Other related Products & Services.

(3)

(33 = 1, 57 = 2, 12 = 3)

(67 = 1, 18 = 2, 17 = 3)

(47)

k. Others (Please Specify and Rate)

Avg. Fuel Consumption per Month: 68.3 Ltrs Page | 49

ON SITE CUSTOMER SURVEY RESULTS: {SHELL STATION (SOMAJIGUDA, AMEERPET)}

1. Do you often Visit Shell Fuel Station. How many times per Month? 21 – Yes

52 – NO (Sometimes)

27 – First Time

2. Why do / did you visit Shell petrol station? a) Quality & Quantity of Fuel

(52)

b) Brand Name

(17)

c) Convenient Location. (On way to work Place or Residence).

(42)

d) Driveway Attendants.

(19)

e) Others (Suggested to Visit)

(12)

f) Refuel was required on priority

(18)

3. Are you satisfied with the services that are rendered to you at Shell? a) YES

(42)

b) NO c) Partly satisfied (58 Never Availed All)

Page | 50

4. Do you believe in the Quality & Quantity of Fuel that is provided in here? a) YES (74)

c) Can’t Say (26)

b) NO

5. Do other services like CAR WASH, CONVENIENCE STORE, Good Drive way Attendants attract you towards this station? a) YES

b) NO

Avg. Fuel Consumption per Month:

c) May Be (Attendants) (29)

67 Ltrs

Mode of Payment (OBSERVATION): CASH higher than Credit Cards.

Page | 51

QUESTIONNAIRE RESULTS (MANAGER AT SHELL & RELIANCE FUEL STATION) 1. What is the Station’s major Factor making customer drive in? Ans: Its Location, Brand & Quantity & Quality of Fuel (Shell & Reliance.

2. What extra services do you provide for your customers? Ans: Lubricants are made available and for cars free glass clean up - Shell. Lubricants - Reliance

3. How much usual storage of extra fuel is always there at station? Ans: Roughly Around 15 to 20 thousand Ltrs per Day (Opening Stock)

4. What is Max Storage of Fuel at the station? Ans: Tanks Capacity (Including tanks for Variants). Avg: 4 Lakh Ltrs

5. Does customer come here only for refueling or any other service? Ans: Mostly for Fuel only, very rare for Lubricants only

6. Do you maintain complaint book? Ans: Yes, It’s always given to customer on demand.

Page | 52

7. Which the most frequently used mode of payment? Ans: CASH & CREDIT CARDS

8. Any future strategy to increase customer drive in? Ans: Station is company owned - all directives from Company – Shell. NO – Reliance

9. Do you prefer customer retention or new customers? Ans: BOTH

10. No. of Employees: Total 17 (12 in 1st Shift Rest in 2nd Shift) – Shell. Total 10 (6 in 1st Shift Rest in 2nd Shift) – Reliance.

11. Completely Automated Filling Machines & Station.

Page | 53

ANALYSIS 1. The Consumers do not have a major requirement at the Fuel Station. 2. The Customer selection of a Fuel Station mostly depends upon the Convenience to them. 3. There Resembles no Brand Loyalty among the Customer. 4. Customers are tending towards Quality of Fuel & the pleasing Driveway Attendants. 5. Most of the consumers carry a no problem attitude, i.e. a very undemanding and careless attitude. 6. In the preview of entrance of private sector a definite Competition has been raised which would be tougher to fight once the Price Control and the subsidies given to PSU’s by Govt. is completely removed. 7. Due to the lack of Customers Survey Information, Customer Data and Huge No. of Customers; it became impossible for Oil Retailing Firms to come with any innovative strategy to tap the growing customer base & build a brand loyalty within the customers. 8. Retailers don’t bother of customer satisfaction or growing customer base, just because there margins are fixed on a very low rate, rather than thinking of How to Raise Revenues?, Utilize the Extra Space available with them.

Page | 54

SUGGESTIONS TO THE OIL RETAILING FIRM & RETAILERS: FUTURE VISION

1. Shift from retail outlet branding to corporate branding.

Ever since the market was deregulated, the oil companies are busy in bringing the branding concept in petro-retailing which was a commodity market for years with no differentiation. However, consistent efforts make them taste success with the advent of branded fuels such as Speed, Xtrapremium etc. Also, at the same time RO branding was initiated and PFS (Pure For Sure), Club HP and Q&Q outlets came into existence. But still the oil companies have not found the way how to make a customer say pointing towards a RO that as this outlet belongs to a particular company, it will be the best in Q&Q and others concerns. In other words, corporate branding is what on the cards in the future of petro-retailing.

2. Offer of range of premium branded fuels

Today, there are so many branded fuels of different oil companies in the market like Speed (BPCL), Turbojet (HPCL), Xtrapremium (IOCL) etc. But these fuels are more or less same with slight variations in the chemistry. Also, there is a lack of product assortment in this business of branded fuels. There is not much options to choose among. However, with high investment in R&D, things are not going to remain same and very soon we will see a full range of premium branded fuels like 93-octane petrol, 97-octane petrol, 125-octane petrol etc. Page | 55

3. Emergence of non-fuel services as a major activity at retail outlets

The dismantling of APM has removed the privilege of assured returns from the PSUs and thus, it has increased pressure on their margins, as to compete with the private players, who are with deep pockets, it is imperative to make huge investment in the services being offered at the ROs. Since the base product is same, the differentiating factor would be the non-fuel services. Also, the changing face of the Indian consumer is one of the main reasons behind the non-fuel services in petro-retailing. Today, he is looking at a one stop solution to all his needs – buying groceries, withdrawing cash from his bank, making utility payments, renewing his insurance cover, grabbing a quick bite, obtaining Pollution Under Control Certification and of course filling fuel in his car. On the other hand the driver on the highways is seeking a clean and hygienic place to relax and freshenup, service his vehicle and have a good meal at the restaurant in the pump.

4. Loyalty programs an integral part

The immense competition will make loyalty programs an integral program of the day to day functioning of petro-retailing. Of course, right now many such loyalty programs are being run by the petro-retailers like Smart Fleet (BPCL), Xtrapower (IOCL), Drivetrack (HPCL), Transconnect (Reliance), Petrocard (BPCL) and others. However, these programs are mainly focused at the bulk consumers and the small consumers are left unnoticed more or less. But in future, there won’t be such differentiation and loyalty programs will be there for every segment of consumers.

Page | 56

5. Attempt by all players to drive volumes to retail sites

In order to saturate the market before the private players can consolidate network, the PSUs are vigorously setting up new outlets. In the last three years, the PSUs have added more than 3000 outlets to their network. However, it will reduce the throughput per RO in long run. Hence in order to maintain the throughput, all players will strive to drive volumes to their retail sites.

6. Leveraging automation and communication for enhanced offerings

In the wake of the increased customer’s expectation, in future, retailing of petroleum products is going to be very sophisticated and highly modernized. In the pipeline, there is a slew of automation infrastructure solutions ranging from integrated point of sale terminals, aggregated data management system, fuel delivery management and fleet management systems that help customer selfservice, dynamic pricing, network planning, demand forecasting and so on.

7. Competition on price

Price was till recently not a differentiating factor in Indian market because prices were same for all the companies. However, with private players coming into the market, the picture has changed. Essar & Shell is a glaring example of this. In the future when the market determined pricing mechanism will come into full effect, we will see the focus of competition shifting from Q&Q to price.

Page | 57

8. Adoption of New Retail Skills

In the changed scenario, petro-retailers will have to take a look into the retail skills they have and accordingly have to make adjustments in that. Network optimization, Operations

Proposition/Brand Management,

Management,

Partner

Dealer

Management,

Management,

Customer

Site

Relationship

Management etc. are some of the skills that should be incorporated to succeed.

9. Alternate sources of Revenues

The growing competition will increase pressure on margins and therefore, the retailers will seek for alternate sources of revenue, taking examples of foreign experiences. To taste success in this, retailers need to develop a sustainable nonfuel model which should synergize with core fuel business and not detract.

However, strategic foresight is one thing but what matters most is the superior execution of those strategies and this is the factor which shapes core competency for a company that is hard to replicate by the competitors.

Page | 58

SPECIAL FOCUS ON CUSTOMER RELATIONSHIP

Though, the very basic implementation of CRM is very difficult at retail outlet but a CRM network would be easily setup with Enterprise and its various retailers, hence reducing burden on low margin ridden Retailers.

As a CRM implementation in itself is a lengthy & risky process, but few Customer driven, behavioral & management techniques should be used in order to achieve greater revenues and Brand Loyal customers so as to surpass the upcoming serious competition; stands bare essential.

Page | 59

BIBLOGRAPHY www.shell.com www.google.co.in www.e-retail.com www.managementparadise.com www.businessline.com Ministry of Petroleum & Energy. University of Petroleum & Energy Studies, DELHI. Managers at RELIANCE, HP, SHELL, IBP, BP & IOC Fuel Stations. Whole Hearted Response of Customers.

Page | 60