Shell

Shell

Challenge

Home heating oil purchasers are notoriously promiscuous as a result of the way the product is traditionally sold and much of the cost of the product is not the oil but the cost of shipping it to the consumer. Relatively small and infrequent orders across a wide geography meant inefficient delivery runs and little customer loyalty.

Assessment

Our view was that the sales process could be ‘re-engineered’ to take advantage of the promiscuous nature of the consumer, use of automated/top up delivery to secure on-going more frequent deliveries and the introduction of direct debit to ‘lock-in’ customers. There was little and inconsistent margin to be able to incentivise sales on an ongoing basis, but we knew that by offering more product with each delivery and therefore low marginal cost, this would have least impact on profitability but greatest impact on sales. Furthermore, delivery costs would rise and efficiency fall if customers were recruited in many areas at the same time, and or areas that were not on existing routes or destinations.

Solution

A direct marketing customer recruitment campaign was established to give customers an additional FREE 100 litres as an incentive if they accepted 3 key aspects of prompted behaviour.

  • They were newly registered as a customer.
  • They signed up to a ‘top-up’ delivery system whereby tankers would call and top up tanks when they were in the area.
  • They signed up to a direct debit budget account so that a regular monthly payment was made, even if they had not ordered oil.

The mailing piece was targeted at personalised and named householders that Shell did not have on its customer database, and at existing infrequent or lapsed customers. All of these people were targeted in areas that were currently on delivery runs where people would see that their neighbours used Shell. An algorithm was established to prioritise and target postcodes with a specific density of existing customers vs non customers, the assumption being that if oil was being delivered to a postcode (average 15 households) then all of the other properties in that postcode would potentially also need oil.

Success

The direct mail piece delivered over 12% response consistently and for almost 9 months Shell was able to work through a prioritised list of postcodes so that it did not add more customers than the delivery fleet could manage.

The business was successfully then sold to Emo Oils where Shell contracted to supply the oil at a wholesale level where the profit margins are higher and more consistent.

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