June 29, 2009 LOYALTY PROGRAMME AT IOCL

A
Case on
Loyalty Programme at IOCL

Submitted To: Prof. Akash Patel

Date- July, 7, 2009

Submitted By:

Deepak Goyal

Rejo Methew

Shashank Tiwari

Vishnu Mangal

1 School of Petroleum Management, Gandhinagar

 June 29, 2009 LOYALTY PROGRAMME AT IOCL

million) in refineries, pipelines or

Fuel retailing in India overview:
other energy-
In 1976, India banned the private related assets in the country, limiting
sector from participating in fuel retail the number of new entrants. And
and nationalized the local businesses although the government abolished
of international oil companies. Brands formal controls on fuel prices, it
commonly seen at petrol stations continued to dictate them indirectly
elsewhere in the world - Shell, Esso through the pricing policy of India’s
and Caltex -disappeared from the national oil companies (NOCs).
Indian market. Shell, for instance, These factors have slowed the
became Bharat Petroleum and Esso evolution of the sector – at least for the
metamorphosed into Hindustan moment.
Petroleum.
Company Overview:
In 2002, however, the government
made a U-turn, allowing
Indian Oil Company Ltd. established in
multinationals and other private 1959, Indian Oil Corporation Ltd. was
players to re-enter the market. The formed in 1964 with the merger of
policy shift sparked a rush of service Indian Refineries Ltd. (established 1958).
station openings as both private and IndianOil and its subsidiaries account for
public companies positioned 49% petroleum products market share,
themselves to sell to the nation’s 40.4% refining capacity and 69%
growing, increasingly mobile
middle class.
While the private sector
welcomed the liberalized market,
in practice it came with several
strings attached. Private players
were required to invest at least 20
billion rupees (around $500

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 June 29, 2009 LOYALTY PROGRAMME AT IOCL

downstream sector pipelines capacity in sales points for the convenience of large
India. Other companies in downstream consumers, ensuring products and
section are HPCL, BPCL, Shell, RIL, inventory at their doorstep.
and ESSAR. The IndianOil Group of
companies owns and operates 10 of The Retail Brand template of IOC
India's 19 refineries with a combined consists of XtraCare (Urban), Swagat
refining capacity of 60.2 million metric (Highway) and Kisan Seva Kendras
tonnes per annum (MMTPA, .i.e. 1.2 (Rural). These brands are widely
million barrels per day). These include recognized as pioneering brands in the
two refineries of subsidiary Chennai petroleum retail segment. IndianOil’s
Petroleum Corporation Ltd. (CPCL) and leadership extends to its energy brands -
one of Bongaigaon Refinery and Indane LPG, SERVO Lubricants,
Petrochemicals Limited (BRPL). Autogas LPG, XtraPremium Branded
Petrol, XtraMile Branded Diesel,
Marketing:
XtraPower Fleet Card, IndianOil
As the flagship national oil company in Aviation and XtraRewards cash
the downstream sector, IndianOil customer loyalty programme.
reaches precious petroleum products to
Introduction of Loyalty programme:
millions of people every day through a
countrywide network of about 34,000 In the present world where there is
intense competition,
it becomes very
necessary to retain
loyal customers. The
commercial benefits
of loyal customers
are well known by
the brand managers.
The cost of
acquiring a new

Table - IOCL Marketing Infrastructure (Sources- Official website) customer is always more than

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 June 29, 2009
retaining an old customer. With
increasing oil prices and competition
increasing at a rapid pace, many oil
marketing companies (OMC’S) like
IOCL, BPCL and HPCL are finding it
difficult to operate profitably in India.
BPCL introduced Petro bonus loyalty
programme with name of Petro Card
in Sep. 1999. Petro Bonus was a
unique program offering convenience
as well as security of paying for fuel
and convenience store purchases at its
'In&Out' stores through an electronic
purse, with the added opportunity to
collect valuable rewards and exclusive
benefits. HPCL introduced smart card
in 2005.
XTRAREWARD Programme at IOCL:
Indian Oil Corporation Ltd is no
exception to this reality. Thus to retain
its existing customers, many new
initiatives have been adopted by the
organization. One such big idea is
XTRAREWARDS Loyalty Program
which started in December 2007 in
Ahmedabad.
4 School of Petroleum Management, Gandhinagar
LOYALTY PROGRAMME AT IOCL
XTRAREWARDS is currently active in
Mumbai, Ahmedabad, Bangalore,
Mysore, Coimbatore and Chennai. It
will be shortly available in other
markets like Delhi.
IndianOil XTRAREWARDS is India's
first on-line rewards program that
seeks to inculcate the habit of
redeeming points. The loyalty
program rewards customers paying
by cash, credit and debit cards.
Each transaction is confirmed on-line
through a charge slip and customers
can earn points on fuel/lube
purchases at participating IndianOil
Retail Outlets. These points can be
redeeming for Fuel/lube or some
exciting gifts. (See exhibit 1)
The customer earns 1 point for the
purchase of Rs. 75 fuel or Rs. 25 lube.
The points are added in cumulative
nature that is if a customer fills his
tank with Rs. 50 petrol the charge slip
would show Zero points but the next
time when the customer fills his tank
with Rs. 25 the charge slip would
show 1 point earned. On 334 point
customer get Rs 100 worth of fuel.
(See exhibit 2)
 June 29, 2009 LOYALTY PROGRAMME AT IOCL

One of the unique features of this In order to avail all this benefits the
program is that the company has ties customer needs to posses this card.
ups with different alliance partners. The MRP of this card is Rs.60 but the
Once the customer swaps his card he company has sold this card for free as
receives a charge slip which states his promotional offer during the festival
point’s earned and his total season in order to increase sales. The
accumulated points. With this charge cost to the company is Rs. 35 and it
slip he also receives discount at one of gives to the dealer the margin of Rs.
the alliance partner’s outlet. 25. But during the promotional offer
At present the company has ties ups the company used to bear the cost of
with some alliance partners in Rs.35.
Ahmedabad.

Issues and Problems which customers

Havmor Ice crème- 10% discount
pump attendants and dealer face:

Domino’s Pizza- Rs 100 discount

In the views of the customers:
Hello Taxi- Rs 25 discount
1. During the peak hours the
Planet Health- 10% discount server works slowly which
makes customers waiting at
Natraj depot – 10% discount
the pump.
The discount that the customer 2. Discounts are available on
receives from this alliance partners selective products only.
varies. For example Dominos Pizza
3. Normally customers don’t get
gives Rs. 100 off on its particular type
time to swap the card
of pizza. Havmor gives 10% discount.
But the most important point is that 4. Card was lost and a new card
no matter how much amount of was issued but the points were
purchase the customer has done he not yet transferred.
would receive this discount.
5. Few cards were issued but still
were not activated.

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 June 29, 2009 LOYALTY PROGRAMME AT IOCL

6. It’s a long procedure to get a A survey conducted on 400

new pin no. if it’s lost. people to know the reason for
not purchasing the cards.
7. The cost of the card is very
high and the returns are not
that attractive.

Pump Attendants:

1. There are a lot of hardware

problems in Tata phone. (TATA
is service provider for online
functioning)

2. The server goes slowly during Another survey conducted on

peak hours which makes the 500 people who have

customer wait for a long time. XtraReward card to know that

they are using discounts on
3. No benefit to the attendants
alliance partner or not.

Dealers:

1. No benefit to the dealers.

2. Need to pay monthly bill for

the usage of the phone.

3. It’s not helping in increasing

the sales.

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 June 29, 2009 LOYALTY PROGRAMME AT IOCL

Graph above reveals that 85% don’t IOCL sold 67045 cards. Out of that
have any knowledge about alliance company sold around 20000 free cards
partner. Only 10% person knows during different festival. Now
about the alliance partner and company’s target is to sell 1, 00,000
pleasing benefit. card in next financial year. So what
strategies/ suggestions you suggest?

Exhibits 1:

IOCL XtraRewards
XRPs Amount of Gift/Worth
Req. Petrol/Diesel to
purchased
Quick Rewards
Petrol/Diesel(any kind) 334 25050 100
LPG/CNG 334 25050 100
Alliance Partners Free
Cherished Awards
Dosa Tawa(Jaipan) 1055 79125
set of 3 non-stick items 3370 252750
Toaster 2905 217875
Titan 1650 123750 501
Tanishq 1700 127500 501
gillete set 2310 173250
big bazaar 1695 127125 500
Chandamama(annual 385 28875
subscription)

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 June 29, 2009 LOYALTY PROGRAMME AT IOCL

Exhibit 2:

Sr. No. Product Description XRP’s Required

1. Rs 100 worth of fuel 334
2. Rs 100 worth of petrol + oil mix 334
3. Rs 100 worth of Xtra Premium 334
4. Rs 100 worth of Xtra Premium + oil mix 334
5. Rs 100 worth of Xtra mile 334
6. Rs 100 worth of diesel 334
7. Rs 100 worth of auto LPG 334
8. Rs 100 worth of CNG 334
9. 500 ml servo 2T supreme 234
10. 40 ml servo 2T supreme pouch 20
11. 60 ml servo 2T supreme pouch 29
12. 1 litre servo super multi grade 20w-40 460
13. 500 ml servo kool plus 400

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