Oil and gas giant BP has implemented a new system that allows it to turnaround product offers within four weeks in order to fend off competition from brands that could pose a future threat such as Amazon.
Speaking at the Festival of Marketing this morning (5 October), BP’s global strategy manager Matt Rich said: “What happens if Amazon starts playing in fuel retail? Amazon has got about a gazillion customers, let’s say they take 10 million of those customers in the UK and say to them ‘how would you like to be able to buy the cheapest fuel in the market and we can guarantee that for you?’ Customers would say yes.”
Given fuel is often seen as a commodity consumers are not too fussed about which brand they use so even if Amazon asked customers to pay on a monthly basis – as they do for gas and electricity – it could be a model that is quickly adopted, he said.
“All of a sudden Amazon has 10 million customers who are interested in a really low price and are happy to pay for fuel over a period of time. They are then in a position to come to a BP or a Shell and say ‘we’ve got 10 million consumers who are interested in coming to your forecourt but we need to talk about price’. I’m not saying BP would go for that but it is a real possibility. It’s a really attractive proposition. I’m not saying it will happen but that’s the type of thing we should be thinking about.”
In order to protect against this type of disruption and future proof the business Rich has implemented a new process which allows BP to put offers on forecourts in 20 working days.
Test and learn quickly
“The idea is to get out onto forecourts, show consumers our ideas, get feedback and start iterating really quickly so we’re in better shape to make decisions about what we should and shouldn’t do. It is a consumer-led decision making process rather than a PowerPoint-led process.”
BP starts by pulling ideas in from all areas of the business – from operations, marketing and sales to procurement and legal – before putting it through a systematic process of assessment based on what consumers like, what the business benefits could be and the ease of implementation. Ideas are then ranked and a local market ‘sponsor’ is assigned to work on the concept with the central team.
The first five days of the four-week process are spent creating a ‘scope document’. The remaining three weeks prototyping the offer.
“If you think about how we were working before, which was a huge, long, arduous project management process, we would probably spend months and months in cross-country meetings and creating huge decks of PowerPoints before we got anywhere near the consumer. This way we sign off the scope document in five days,” he explained.
“We’re not letting procurement or legal get in the way, we’re not having huge multi-market conversations, we’re just getting on with it.”
Matt Rich, global strategy manager, BP
On day eight of the process BP is out on the forecourt with the offer getting live reactions from consumers. The business has a coder on site so if consumers express issues with a certain format within half an hour a new version can be tested. The brand aims to get prototypes to a stage where they are 70% right before then rolling out a pilot in five of its 1,200 forecourts.
Rich admits it’s not easy to get businesses to commit to change on this scale especially when senior management is happy with how things are currently operating.
“How on earth do you take a big retail business, or any business for that matter, and persuade them what to do and help the business choose what decisions to make? The truth is it’s quite easy for execs that hold the purse strings to ignore some of these challenges because it is so difficult to make a call. It’s quite easy [for them] to persuade [themselves] that what they’re doing is OK and the business ends up making small incremental changes based on its existing offer rather than trying to invest in something else.”
Implementing this process has made the business “much more aware of the threat” of potential rivals which it wouldn’t have been if it had stuck with its old way of working. Rich advises brands, therefore, to be “really realistic” about where threats will come from so they can plan for any potential disruption.
As petrol stations are “right slap bang in the middle of how consumers live their lives” Rich see “huge possibilities” going forward to re-evaluate what BP offers.
He said: “We’re in towns and cities, motorways and airports, so we’re pretty central to the way people are running their lives. If you think about what the forecourt experience could look like and what petrol stations could do for you, I think it’s pretty encouraging.
“Imagine if the forecourt experience was actually one where you could pick up your pharmacy prescription, a parcel you missed at home and you’re dry cleaning and while you’re at the pump someone brought you a coffee. These are the things we should be doing and we’re certainly working towards at BP and I’m sure others are as well. That level of transformation is coming.”