Case Study
Introduction to Hindustan Oil XtraPower Fleet Card Program:
About 50% of high speed diesel sales of the transport sector are through highways. This was a
thought which brought about the concept of gaining loyalty from this segment of customers
capable of giving huge purchases from Indian Oil Corporation Limited (IOCL).
The introduction of fleet cards and network loyalty programs was meant to be an extension of the
pre-existing customer loyalty program. Even here B.P.C.L. was the pioneer, launching
SmartFleet in February 2001, followed by IOCL’s Power-Plus in January 2002. These programs
gave fleet owners the option of giving drivers pre-loaded cards which allowed better MIS,
transaction tracking and points earning.
With the launch of a co-branded card with MyShoppe, a network loyalty program with a number
of retail chain affiliates by IOCL, network loyalty came into the picture. The IOCL XtraPower
Fleet Card was launched in March 2004 and at present accounts for 10% of the company’s diesel
sales, 13% of the sales on the highways and 22% of the fleet market share.
XtraPower Fleet card program is the largest fleet card program in India with around 12.25 lakh
cards issued till March 07. It has a total of 3.2 lakh customers under its umbrella. Regular users
are less than a lakh. The average customer usage is less than two per cent. A large amount of
resources have been deployed for this program since it is one of the biggest revenue generators
for India’s highest ranked fortune 500 company.
No other oil company offers such a vast network as Indian Oil. This makes the Indian Oil
Program a clear winner amongst fleet card program in the country bringing it a revenue of more
than 25 crores a day.
Rewards Obtained by Hindustan Oil XtraPower Fleet Card Program:
On every purchase of fuel/lubes through Xtrapower fleet card (except for cards with interest free
credit limit facility), the owner earns Xtra points. With the points accumulated by a card, the
member can redeem a choice of reward items from the Xtrapower rewards catalogue including
fuel/lubes. For every Rs.100 one earns five Xtra points which gives 40 paise as a reward value. It
means for every purchase of Rs.10, 000 the member earns Rs.400.
Inspite of all these benefits the program leaves much to be desired. In the entire program only
21.5 % cards are active out of the total of 12.25 lakh cards issued till March 07. Lack of
knowledge to the customer about the program benefits is a constraint which has to be overcome.
Also the fact that in terms of benefits there is not much to choose between the fleet card
programs of various oil companies in India, this would require a major customer communication
program.
Indian Oil Xtrarewards is India’s first on-line rewards program that seeks to inculcate the habit
of redeeming points. The loyalty program rewards customers who pay 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 by participating at Indian Oil retail outlets.
Additional points can also be earned outside the Indian Oil network, covering prominent FMCG,
food, automobile, travel, entertainment, apparel and hospitality sectors. Xtrarewards is currently
active in Mumbai, Ahmedabad, Bangalore, Mysore, Coimbatore and Chennai. It will be shortly
available in other markets like Delhi.
Apart from redeeming the accumulated points instantly on fuel/SERVO lubes at participating
retail outlets, the card holder can also redeem the points to get some exciting gift items from a
catalogue.
The redemption on gifts can be registered either from the participating retail outlets or from the
comfortable confines of one’s home through the 24 x 7IVRS Help Line number. The program
continuously provides the cardholder with privileges, benefits and offers from alliance partners
like Domino’s Pizza, Subhiksha, Rediff Shopping, Kumaran Silks, Dhabba Express, Chennai
Corporate Club and Archana Sweets.
As loyalty programs become ubiquitous, some interesting dynamics will evolve in the loyalty
marketplace. Companies will continue to look for ways to differentiate their loyalty programs,
while balancing program revenue and costs to achieve favorable economics. How will the loyalty
program evolve? It has been slow but future economic, demographic and legal landscapes could
accelerate company attention to customer retention.
Questions:
1. Discuss the Marketing strategy for Hindustan Oil.
2. Elaborate the CRM strategy for Hindustan Oil.
