GasBuddy CEO: GasBack Is The New Cash Back

With about 220 million drivers on the road, gas is a commodity that nearly everybody needs. The average American fills up their gas tank three to four times per month, buying an average of 11 gallons each time.

Considering that everybody likes to get something for “nothing,” who could say no to a program that rewards them just for filling up their gas tank like they normally would? Last month, as many as 1 million people each day said “yes” to GasBuddy’s mobile app. The app helps drivers find the lowest price on gas at the most convenient locations on their route.

However, according to Sarah McCrary, GasBuddy CEO, it’s not all about the shortest distance between drivers and good deals on gas. The company launched its Pay with GasBuddy function last September and, as of June, that program has attracted 300,000 members and counting.

McCrary says that’s not just because it shows them where the cheapest gas can be found, but because it rewards them when they buy it, as well as applies rewards earned elsewhere through its new GasBack tool, knocking the price down even lower.

In a recent interview with Karen Webster, McCrary explained how GasBack will fit into GasBuddy’s roadmap, how the app is still attracting 600,000 to 700,000 new users a month, and why the platform still hasn’t reached its growth plateau.

Brand Vs. Price

In the fuel category, McCrary said, customers rarely shop by brand. Instead, they look for a combination of the best price and the best location. She said that’s why GasBuddy lets users collect and redeem points across brands, rather than constraining them to shopping at the same place again and again.

It may seem like nickel-and-diming when a customer drives another mile down the street to save five cents on the gallon. However, McCrary says that customers using Pay with GasBuddy in conjunction with the company’s mobile app realize an average of $340 a year in savings.

“That’s significant,” noted Karen Webster during the discussion. “That’s real money; you can buy something nice with that. It goes to show that GasBack truly matters.”

McCrary said that price sensitivity is so significant in the fuel category that it can influence customers to vary their routines and switch from their “usual” brand.

In a recent study, GasBuddy compared Brand A across two markets to see how heavily price could influence behavior. In one market, GasBuddy targeted users who showed a high frequency at Brand A and offered them an additional five cents off the gallon with competitor Brand B. In the other market, they targeted consumers who frequented Brand B and offered them the same deal for trying out Brand A.

In both cases, said McCrary, GasBuddy succeeded in moving the market share by 30 percent, proving the thesis that price sensitivity is sufficient to affect consumer behavior.

GasBack Is The New Cash Back

Fuel price is so powerful as a motivator that McCrary said other categories — brands, retailers and employers — are now looking to GasBack as a way to reward and incentivize their customers and employees.

Say that a fleet driver has a perfect safety record driving with his company. The employer could express its appreciation by knocking a few extra cents off the gallon when that driver fuels up, McCrary said.

That’s why, she added, Pay with GasBuddy has opened up opportunities for strategic business partnerships in addition to its functionality as a direct-to-consumer program.

GasBuddy’s first business relationship launch around its Pay and GasBack offerings was the “Shop Your Way” cash back and points offer with Sears Holdings, launched in March. Sears was looking for a partner to offer brand-independent fuel rewards because it wanted to offer gas points as a loyalty mechanism across the nation, knowing that different fuel brands operate in different regions.

McCrary said the early example of Shop Your Way showed GasBuddy the potential for tying fueling behavior to other types of shopping behavior. She noted the company is looking for additional ways to tie shopping and fueling behaviors together.

No Plateau In Sight

All things being equal, McCrary believes that GasBack will prove itself to be even more effective than cash back when it comes to attracting and retaining platform users. But McCrary says the reason GasBuddy has already seen such success with its Pay product is that it’s created a perfect funnel structure, leveraging its large and growing user base on the app into the smaller, but still significant, cohort using Pay with GasBuddy to fuel their fueling purchases.

McCrary explained that GasBuddy has been able to leverage its own assets, including media and its existing customer base, built up over eight years since the app first launched. People were already familiar with the brand and trusted it, she said, which put GasBuddy in a good position when it began its venture into payments.

But what about the top of the funnel — those 600,000 to 700,000 unique daily users, bolstered by roughly 20,000 new payment enrollments each month? McCrary doesn’t see that influx tapering off any time soon, for a few reasons, the most prominent being the recent increase in gas prices. The higher the price per gallon, she said, the better rewards GasBuddy can extend.

Even when prices are low, she added, there’s still a strong audience because people want to make sure they are not overpaying. Gas prices are cyclical, rising and falling like the tide, but GasBuddy’s user base has been steady.

It’s in support of that steady flow that the company has been building out its business partnerships and relationships, including an acquisition tool for rideshare drivers and delivery people, which represent more than 10 percent of GasBuddy’s user base.

Webster observed, “With the price of gas being what it is, and with more people coming into the funnel, the promotional engine to persuade those people to also take advantage of Pay with GasBuddy has a lot of additional appeal.”