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For the past few months, I’ve made a point to buy gas at a nearby Chevron station because they gave me a customer loyalty card. After I fill up my tank ten times, I’ll receive a free “gold” car wash (a $5 value). By my calculations, this loyalty card ought to save me $.50/tank, or roughly five cents a gallon.
But I noticed something yesterday. While this Chevron is charging $2.66/gallon for regular unleaded, the independent station down the street is charging $2.60/gallon. On a hunch, I drove past several more gas stations. Another independent was charging $2.60/gallon, as was a Texaco dealer. Two Shells were each charging $2.62/gallon. A second Chevron was charging $2.64/gallon.
I’m not the kind of guy who’s going to drive out of his way to save two cents per gallon on gas. Even so, it seems pretty silly that my customer loyalty card will actually end up costing me a buck. If I’d been filling up at the local independent, I’d be saving about six cents a gallon over the Chevron station. After ten fillups, I’d have saved enough to pay for a car wash and have a buck left over to put quarters in the vacuum cleaner.
I wonder what the actual value of customer loyalty programs is. I know why the business do it — such promotions generate repeat business — but what’s the value to the consumer? Obviously there’s a perceived value: when we participate in a loyalty program, we believe we’re saving money. But are we?
Here are the other loyalty cards I have in my wallet:
- Safeway — I would shop at Safeway even without this card. It’s the only grocery store convenient to us. Thus, this card saves me money. (It also allows Safeway to track my spending.)
- Ace Hardware — Again, I would shop at this store even without the card. Our local Ace has a real “neighborhood store” feel to it, and I much prefer it to Home Depot. Kris and I often marvel that Ace makes any money on us at all. Because of their program, they’re always mailing us $5 coupons and other discounts. Another winner.
- Oregon Book Company — Buy twelve books, get $5 off your thirteenth. In other words, save 39 cents a book. Since all of the books are at full retail price, this loyalty program is almost worthless. I like to support local merchants, but this isn’t much incentive.
Ultimately, it doesn’t make a difference to me. This Chevron is convenient on my trip home from work. I’ll continue to buy gas there. I only wish my loyalty wasn’t being “taxed”.
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January 10th, 2007 at 4:05 pm
You failed to take into account that the quality of the gas at Chevron is higher than all the other stations you listed other than Shell, unless the independents you mentioned are on the list in the link below. By purchasing gas from chevron you are extending your engine life, saving you money in the long run
http://www.toptiergas.com/retailers.html
January 10th, 2007 at 5:14 pm
Another way to look at is that it’s actually your convenience that’s being taxed, and the loyalty card is getting you a bit of a refund.
Loyalty programs exist to serve the retailer and only the retailer; they are marketing programs pure and simple (just like TV exists only to make us buy things).
My local coffee shop has loyalty cards - you know, the 10th latte’s on them. Most of the customers leave their cards at the shop, alphabetized in a box on the counter (easier than keeping it in your wallet). On the rare occasion I buy coffee there (I try to keep my Latte Factor to the barest minimum) I like to pick a card at random for the clerk to punch. See, I’m just sooo generous. (/halo)
January 10th, 2007 at 5:37 pm
Your Safeway card is not designed for your convenience or savings. It is designed to collect information on your purchases. Safeway has a powerful consumer information database and actually makes more money selling statistics to marketing companies than it makes profit on groceries.
January 10th, 2007 at 6:13 pm
I agree with Susan. You go where it’s convenient. If you were bypassing other gas stations to go to the Chevron, you’d be a schmuck. If you were fickle, you’d go where the gas is cheapest (not overly out of your way though) and then go to the cheapo car wash down the road that only costs $3, but is DIY.
January 10th, 2007 at 7:44 pm
I buy my gas at Speedway.
It works out so that I get a discount of 7-10% (and 12% to start out with) in exchange for paying in advance. It works like this:
- I got a Speedway MasterCard (from Chase), which has 8% rewards for the first 60 days and 4% thereafter on all purchases at Speedway. Purchases made at other places give me 1% rewards.
- I enrolled in the Speedy Rewards program.
- I buy discounted Speedway gift cards. They usually sell for $24 for a $25 card or $49 for a $50 card. They run this promotion for around a month long, every month or two. The discount multiplies every $25 or $50 you add, and you can simply add more money to an existing card. Sometimes, they offer extra reward points when purchasing gift cards as well.
- I earn points on both the gas purchases made with gift cards and the gift card purchases themselves.
- I redeem the rewards points for gift cards.
- Speedway occasionally discounts gas by $0.02 for rewards members.
January 10th, 2007 at 8:43 pm
If you take issue with Safeway tracking your personal spending habits, why not become a clone of Rob Cockerham?
http://www.cockeyed.com/pranks/safeway/ultimate_shopper.html
Also, no offense to ctsc in comment #1 above, but I’m pretty sure there’s not a significant difference in “quality” between different brands of gasoline.
The consensus at metafilter seems to confirm this:
http://ask.metafilter.com/mefi/23613
P.S. (I actually contributed a worthwhile–I hope–comment to a post that wasn’t related to housing! :^) )
January 10th, 2007 at 8:59 pm
I avoid the Safeway loyalty card like the plague. Instead of having my own, I enter the phone number “123-4567.” It works, and I have no idea who the number belongs to (although it is obviously not a real phone number). It is obvious that tons of other people do this too, because at the bottom of the receipt it always says something like “you have purchased 5 of 7 drinks towards your 67th free Starbucks drink!”
For me, though, I try to avoid Safeway in general. It is the closest grocery store to my house- it’s only three blocks away. But there’s a co-op 10 blocks away, and it’s worth the extra time for me just to shop at a local store. When I go grocery shopping, I often visit three different local stores because it’s the cheapest way to get the combination of things that I want.
January 10th, 2007 at 10:04 pm
Susan has a good way of looking at it. It’s not worth it to go out of your way to get a convenience card if there are better deals around, but if you find yourself using the same store over and over again, it makes sense to get their convenience card since you’re already shopping there frequently, despite the price differences.
That’s why I got my Shell MasterCard. It gives me 5% back on gas purchased at Shell (the 5% rebate applies only towards more gas at Shell). I simply found myself always going to a particular Shell station that I noticed always had a low price (it’s a bit far from where I live, but generally on my way to work on days when I drive to work).
After buying gas there several times (and noticing that Shell prices are generally competitive close to my house as well, although my neighborhood is generally more expensive than that of my preferred station), I decided to get the Shell card. 5% back at $2/gallon is 10 cents — and I don’t think I’ve ever seen a Shell around here priced a full 10 cents higher than a competitor. Most of the time it’s within 2-3 cents and maybe 1/3 of the time it’s the lowest price around. At my preferred station, it’s almost always the lowest. So it works out that I’m always better off using the Shell card. It’s also nice that there are no less than 4 Shell stations within a 1-mile radius of where I live. No matter where I’m driving, I’m almost guaranteed to drive past at least two of them (and make note of which has the lowest price). It looks like my gas-buying system is not quite as perfect as matt’s above, but it’s pretty good. According to my latest statement, I saved $162 on gas in the past 12 months.
I have a couple of the grocery store cards too. And of course I get “frequent diner” cards from sandwich shops, etc. Those are usually quite unobtrusive and generally require no personal information. Last year, Quizno’s wised up and changed their frequent diner cards, making them valid only from month to month. I.e., instead of buying 10 sandwiches to get a free sandwich (with no time limit) you get a free sandwich if you buy 5 sandwiches within a given month. Not nearly as useful.
January 10th, 2007 at 10:12 pm
The guys all used to go to one coffee shop. Now, though, one of the guys has switched to different coffee shop. “It’s a bit farther to walk,” he said, “but I like it better. They have more comfortable seats, so I don’t feel rushed. They remember my name. And they have a loyalty card, which gives me a little added incentive.”
I didn’t mention that I’d just posted this today.
January 11th, 2007 at 3:13 am
At least there is full disclosure in the higher price you’re paying at that Chevron. Price discrimination on the web is pretty rampant and not very transparent. As you’ve experienced, loyal customers are less likely to shop for better deals, and therefore, often unwittingly, end up paying more. It always pays to shop around.
January 11th, 2007 at 5:52 am
My local gas station offers a prepay card program where you prepay your gas on a card and then use the card at the pump (no personal information is required when you sign up). Originally it was supposed to save you 5 cents/gallon, but in the past few months I’ve noticed that it is actually deducting 10 cents/gallon (after you swipe the card the digital price above each grade changes).
The station is normally quite competitive, although sometimes it seems to be a cent or three higher, but I figure I’m still saving 7 cents per gallon.
In my opinion it’s a pretty excellent deal!
January 11th, 2007 at 7:46 am
my $.02 (pun intended) is that it entirely depends on the situation.
I have a safeway loyalty card, but if safeway wanted to know my spending habits, I buy extremely large quantities of beer on the holidays and the occasional bag of chips with salsa. I don’t care at all if they have this info. But it sometimes drops the price of the case from $12 to $9.99, well worth it for me.
I also have a buy 12 get the 13th free at Hamilton Deli by Columbia Universty. Getting that 13th free just remind me I have spent $70 on NYPD (no bacon) heroes, very depressing.
January 11th, 2007 at 8:11 am
I’ve found this website is pretty useful (although not always accurate) way to compare gas prices in the area.
http://autos.msn.com/everyday/GasStations.aspx
It doesn’t rely on user input (like GasBuddy) but instead some combination of credit card data and magic.
I wouldn’t go out of my way to hit the cheapest one on the list (especially since it tends to lag actual prices by a day or two), but it definitely helps to show what the average of the area is and if you’re being taken to the cleaners while filling up on gas.
January 11th, 2007 at 9:53 am
i dont get it. unless you are in a situation of extreme penny pinching, how is saving 5 cents per gallon worth the effort? even if you fill up 3 times per week thats a savings of about 100 bucks per year..
January 11th, 2007 at 11:23 am
Colour me a penny-pincher then, because to that I say: how is saving $100 per year *not* worth the minimal effort of keeping an occasional eye on the prices?
January 11th, 2007 at 12:25 pm
The Chevron gas is a higher quality with the Tecron additive. Over the last few years I’ve noticed a significant difference in engine performance (and therefore engine longevity); with the Chevron gas the engine runs better than with the discount independent brands, which don’t have any performance additives.
January 11th, 2007 at 1:47 pm
You’ll be better off in the long run if you *don’t* get the car wash. All of the automatic car wash machines slowly degrade your paint work. You’ll notice after a while of using them that you get small scratches in the paint. You’re better off doing it at home with a hose, bucket and a sponge.
January 11th, 2007 at 7:19 pm
When I had a car, I just let the rain wash it. I’d do a good scrubbin’ (by hand - soap in a bucket costs practically nothing, and I spent perhaps half an hour of my time) about once every summer. I did not notice any significant decline in my (used) vehicle’s appearance over the years.
January 13th, 2007 at 3:23 pm
Good call on the safeway card. We have one as well and use it nearly every time we go to safeway.
Best,
James H.
January 16th, 2007 at 2:56 pm
Most gasoline stations give you 5% rebate on purchases at their chain if you use their credit card. Discover card has a gas card that gives you 5% back on gasoline and auto repairs. Hess gives you back 10% for the first 90 days you have the card (I called and was told it’s actually 5 billing cycles)
If you aren’t getting 5% back, you are subsidizing everyone else who is.
If you have problems handling credit then it might be better to avoid credit cards - but unfortunately stores raise prices for everyone to pay the transaction costs for credit card users.
The grocery stores that have discount cards have to increase prices to pay for it. Go to every grocery store in your area and compare the prices for what you buy - I did and found one store that was consistently less expensive than any of the others. That’s where I shop.
(Chase has a card that gives 3% back on groceries.)
March 14th, 2007 at 3:51 pm
I buy gas at Chevron based purely on price. Not because it’s the lowest, but because it’s consistent - all Chevron’s within a ten mile or so radius are all relatively consistent. On the other hand, there are three Shell gas stations on a one mile stretch of street, yet the variance is typically about 10 cents a gallon, and occassionally as much as 19 cents a gallon. Do I always get the best price? Nope. But I appreciate not feeling ripped off when I pass the next station.