Fuel Card Programs Undergo Strategic Revitalization
Fuel card programs have long been a strategic offering of energy companies, fostering customer loyalty while providing an important service for fleet, freight forwarders, bus and truck, leasing companies and small business customers.
While energy companies continue to view these offerings as an important tool, they’re facing definite challenges in maintaining effective and competitive fuel card programs.
What’s driving change in the industry can be summed up in three broad themes:
- Innovation in payment systems and products has lagged in the energy industry when compared to that in other industries. Fuel card leaders recognize the need to catch up.
- Financial oversight authorities have taken an interest in the industry. Fuel card programs now face a growing range of rules, regulations and reporting standards.
- New technologies that lower barriers to entry have made it easier and more attractive for new market entrants. With lower infrastructure and overhead costs, these new competitors often focus on small, specific segments that add up to a growing share of the overall market.
Perhaps the most radical change, one that provides a significant impetus for revitalization, is the recent and rapid increase in customer expectations. While customers still embrace the primary benefits of fuel cards — to control and track spending — many are looking to gain more from the experience. Customers have expressed preferences for:
- Programs and networks that give them access to a wider range of products and services, while reducing the number of devices they need to carry. This can be accomplished by expanding the acceptance of a card and increasing the number of functions the card can perform.
- Programs that offer a broader range of value-added services. This may include companies in adjacent markets, including hotels, restaurants, airlines and vehicle maintenance. It could also include links to different payment systems (for example, the ability to pay a balance with reward points earned in another card network).
- Mobile access and management options. It’s becoming increasingly important for customers to be able to perform account functions through a mobile interface, as they turn to smartphones for a growing array of everyday tasks.
Industry challenges coupled with changing consumer preferences are causing many companies to reexamine their payment systems and processes. They’re looking for alternatives and new approaches that can help reduce program cost, improve regulatory compliance and deliver new, innovative services to customers in existing and new markets.
To remain relevant, fuel card programs need to evolve from a card-driven environment to a customer-centric view that pulls together a range of mobility services. But in some cases, it can be too expensive and complicated for individual energy companies to meet these needs with existing internal infrastructure and resources.
STRATEGIES FOR SUCCESS
If maintaining an in-house program is becoming a less viable strategy, what options do companies have? In our work with clients, we’ve seen a few different approaches. Companies that earn the greatest degree of success have a few things in common:
They begin with a clear-eyed view. As a company extends networks and services, it needs to conduct an honest assessment of its value proposition to customers.
For an example of this, look to the insurance industry. Automotive insurance companies have reinvented their value proposition and business models to reflect two big trends: advances in telemetric vehicle technology and shifting consumer preferences. They are developing new classes of usage-based insurance products and driver-incentive programs based on the data generated by onboard vehicle telematics. Similarly, onboard data can be used for predictive analytics applications, such as maintenance, or localized services and offers.
They use the fuel card transformation to benefit other parts of the company. When planned and implemented correctly, fuel card improvements can impact other aspects of the enterprise, from the products and services offered to the invoicing process to how services are delivered.
As a company takes a holistic view of services, it can see how transformation will affect other enterprise functions. For example, a company may first implement a modern service management capability in the fuel card business, then expand into other areas. An application developed to optimize routes for a customer based on fuel pricing and consumption could be applied to other capital-intensive industries.
They approach regional adaptations with caution. Some companies have attempted to expand or adapt programs from one region to another. Notably, American programs have been introduced in Europe. Success has been limited because of the vast differ- ences in usage customs and the complexity of dealing with different currencies, value-added tax (VAT) rules and regulations.
They recognize and address organizational and cultural change. For example, it’s been common practice for companies to develop custom solutions, such as special pricing or reporting, in order to gain business. But revitalized programs require some standardization and simplification. Thus, added value to customers will have to come from a wider range of sources. This will require new thinking and a better approach to sales.
Further, as companies become more digital, it’s important to protect the customer experience. Customer interaction today often takes place via call centers. Companies must ensure that any digital substitute for this interaction also be highly personalized.
They vet end-to-end solutions carefully. Frequently, offerings billed as “end-to-end” actually have some gaps in service. Many providers offer parts of the solution, and then require fuel companies to fill in the gaps with their own resources and people. A true end-to-end solution is needed to avoid this challenge.
PARTNERING FOR A SOLUTION
Today’s fuel card industry is a complex environment to navigate. Consider, for example, a high-level view of the most common components of a modern system:
- Infrastructure that is secure and capable of high-volume transactions; available wherever customers need to do business
- Card management systems
- Fully integrated front-end payment acceptance systems
- Service management layer
- IT operations for updates and upgrades
- Application services
- Integration services based on the intellectual property of the company and its partners
- Testing services
It can be difficult or nearly impossible for a single company to handle these components alone, and no one company can provide a complete end-to-end solution.
A different approach is a partnership that itself builds on other partnerships.
CSC has developed deep working relationships and strategic partnerships with leading technology and service providers. We combine that expertise with our own knowledge in areas such as payment acceptance, card issuance and management, international transactions and e-invoicing. Our solutions are deployed on a next-generation infrastructure that eliminates the need for a company to build its own data center or acceptance network. In addition, our capabilities in areas such as identity manage- ment, cybersecurity, big data and the Internet of Things offer opportunities to build program capabilities with an eye on the future.
As energy companies realize they must transform to maintain their stake in the fuel card industry, CSC and our partners offer expertise in a wide range of systems, processes and technologies that can handle this large-scale revamp.
Energy companies won’t tackle today’s many industry challenges by continuing the business-as-usual approach, but rather with a committed partner who can manage the strategic revitalization needed for success now and into the future.