circle-apr-3

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THE INTERVIEW

Q1. How much flexibility do you have to make Picture to the left: Floor plan design with Mexican food shop to the left and station POS
changes in the station? desk to the right.
Picture to the right: Modern interior design. Sitting placed in far left corner under the
First Einar explains about the Circle K station statistics: windows.
• Total # of stations in Norway: approx. 300
• 50 owned by Circle K Q2. We see that you provide both fuel and
• 250 Franchise stations electricity. What are your experience with the
two types of customers?
There is limited flexibility in how the station floor plan is rolled out:
• HQ creates the floor plan, which then is updated 3 times a year. Locally WE HAVE TWO CHARGER OPTIONS:
The older charger in the back is owned by Circle K (See right picture on
at the Station we only make minor adjustments, but in general have to following page). We get a higher margin on that one, but it’s not modern
follow the floor plan to the point and you cannot pay with your mobile. The benefit is that the customer must
• We do decide on placement of brand products in the coolers (brand walk into the station with the opportunity to up-sell more or at least have a
products are products with the Circle K logo printed on it) conversation.
• The Station provides free wifi.
The station has solar panels on the roof, and produce enough to cover for
52 10% of the electricity, resulting in even better margins on their own charger
station.

The new charger is provided by a partner, selling electricity, maintaining the Electrical chargers revenue: 10.000- 20.000 NOK per charger per month.
charger etc. This partner offers an app, and therefore the customers do not
have to go into the station. Q3. How do you use loyalty programs at the
station?
Einar would like more electrical chargers on his station, but this requires
a business case approval to get funding for establishing the additional
chargers.

Picture to the left: Station layout with Fuel pumps. El chargers. Car wash in the back. Picture to the left: Einar Valbjørn Heisum & Henning Treichl in front of the new coffee
Bench sitting out side windows. island, equipped with new high quality coffee machines.
Picture to the right: Electrical charger for charing cars. Two chargers in place: one Picture to the right: Discussing how the loyalty cup and the coffee machines are not
owned by Circle K and the other one owned by a partner delivering charging services. connected. Einer asks the retorical question: “What if a chip would tell the coffee
machine who the loyal customer is and offer personalised messaging and promotions?”
ELECTRICAL VS. GASOLINE CAR CUSTOMERS:
Customers with electrical cars stay longer at the station - it takes longer ABOUT THE LOYALTY PROGRAM AND COFFEE:
time to charge. It’s Einar’s perception that customers with electrical cars
place smaller orders per transaction, compared to gasoline driven cars. Loyalty program for customers buying more than 1,000 liter of fuel per year
- Get a Circle K coffee cup and free coffee for a year. Loyalty program scope
Einar does not have exact statistics on this, but following the station are per business unit - e.g. not cross boarder between countries.
revenue and observing customer activities, he is pretty sure about this Would be great if the coffee cup had a chip to ID the customer, so the
difference in commercial behaviour. display at the coffee machine to give a personal message, promote relevant
offers and keep track of how often the cup is used. Maybe supported by an

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App for personal settings. Picture to the left: Einar in his office at his desk. Having access to surveillance cameras
and IT systems to run the station. One of the main systems for managing employees
Loyalty program is not executed on all screens/ interfaces on the station. is logging into Zalaris to get access to app launch site with access to systems like:
Einar suggest the opportunity with targeted messaging, if he could Succesfactor (training) and Heat (case loggin).
leverage: Picture to the right: Einar telling about a custom spreadsheet he is using for planning
weekly staffing. He needs this to get the full overview of employee schedules, time
• the screen at the fuel station (only mass communication) off, type of tasks (for job rotation at the station) etc.. None of the other HR/ time
• the screen at the electrical charger (only system interface) registration or employee apps offer this overview and insight.
• the screen at the coffee machine (only system interface for selecting
Q5. How are the employees using the systems?
product)
• the screen at the POS Cash Register (primarily for transactions, limited There is no good mobile access to the systems. Station manager has a PC
with all systems installed on it. This is provided and supported by Circle K IT
personal engagement impact) Station workers do not get their own device at the station, but they do have
• card interface is used to collect phone numbers for B2C prospects that a login.

are interested in joining *Circle K EXTRA Club* (the loyalty program) Employees get access to the system typical via Station managers screen or
...not used for collecting B2B prospects ...Einar wonders why not?!? a shared PC currently placed in the corner of the Einar’s office. It’s not used
...it would lower the barrier and result in more leads, compared to now, that often and sometimes it does not work.
where the station sales person needs to spend time asking about details Employees have Access to training programs, Job openings, the Circle K
to be filled into a form to be submitted o Salesforce intranet (Inner Circle) etc.
• B2B lead data from form is used by HQ to calculate an offer and send to
the customer (typical small business)

Q4. Let’s talk a bit about being an employee at
the station in Økern.

The station is open 24/7 and has 25 employees:

• 10 full time
• 15 part time

Hire mainly university students who typically stay for 2-3 years

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EINAR BRIEFLY RUNS THROUGH SOME OF THE SYSTEMS THEY USE THE We have employee development conversation 2 times per year.
MOST AT THE STATION: As a station manager, I have daily talks with the Station Market Manager
(SMM) and we get a monthly visit to go trough the accounting books, to
No single sign for the systems - Einar has to log in separately for each app coach, discuss focus areas, and development conversations.
he opens. Employees use the Case system HEAT to Log cases, Admin, Circle K is running a 2 year talent program covering Sales, Service &
Report problems with Pumps, etc (typically Einar does this). Economy. This is really good.
Technical support is outsourced to a 3rd party handling all field service HOW DO YOU SEE THE FUTURE FOR A FUEL STATION?
partners. The smaller stations with fuel as the main income, will most likely close.
For larger stations like this, the parking area will be bigger, N
Intranet “Inner Circle” with a access page for HQ and a access page for no roof covering pumps, more electric chargers, good food - meaning it will
Stations. New system to be rolled out in EMEA. The 9 stations in the district be better than McDonalds fast food but not like a very good restaurant, and
have a common Facebook group to collaborate. maybe not with the sames range of seating.
ON THE WAY OUT FO EINAR’S OFFICE WE STUMBLE UPON THIS
Besides this there is not cross station collaboration. Einar sometimes phones DIPLOMA AND ASKS WHAT THIS IS ABOUT?
and talks to the other station managers for specific issues he would like
their opinion on. Besides this, knowledge sharing goes through the Station Well, we have an ongoing award, where stations doing more the 1 million
Market Manager (SMM). NOK in a year are awarded . Økern got this award in 2017
The SMM is responsible for running the stations in the nearby geographical Due to the investments in the modernisation and implementing the Mexican
area. Typical 7-9 stations. Food offering, we do not expect to perform equally good this year.

Training is mostly provided via video - to be moved to a Circle K only 55
Youtube channel.

Would be nice with only 1 App for registration of Hours, for salary, for
Scheduling. This would make it more accessible for the stations workers.
Also if they could use their own devices for it.

Employees request more information both from HQ and from the Station
Manager. Like campaign info etc.

Q6. How do you manage career planning at the
Circle K station in Økern?

INTERVIEW
08

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Jørn Madsen “ LOCATION // OSLO
TENURE // 1998 - PRESENT
EVP Central East
Europe & Ireland About me TBC

“ We must create 57
a movement
supporting our
unified global brand.

CHALLENGES • Higly segmented market with a wide fan of demographic profiles and
even country specific preferences, that will demand our products and
services to comply to our SUPER GLOBAL brand, and at the same time
delivering to the expectations of the SUPER LOCAL customer

Q. What are some of the main challenges facing Jørn shows a map of the areas he is responsible for.
Circle K at the moment?

• Market share on fuel in Poland is only 5% and B2B business depends
on the size of the network. Hence in CEE approximately 70% of the
business is B2C

• Internal accounting processes makes it difficult to run a B2B loyalty
program

• Margins differ substantially across countries, which makes it difficult to
drive a loyalty program solely on discount benefits

• We still need to figure out how best to address the B2B customer when
in the role of B2C customer (Consumer)

• Top management still lack insight to the level of fulfilment on frame
agreements signed with fleet owners and large truck companies

• Need to improve on product development and communicating our
message to the market

• Cross team collaboration could be improved

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THE INTERVIEW • In between Statoil & Shell merged into Topaz and Esso was acquired as
well
Q1. Jørn Madsen started introducing us to his
part of the organisation. Q2. Please tell us more about the CEE markets
and their uniqueness.
Jørn is responsible for B2B and B2C in CEE & Ireland
• 6 countries - all markets outside Scandinavia Products are the same, but implemented with taste variances adopted to the
• Highly different experience in disruption in CEE compared to preferences of the BU (e.g. country), but for Ireland.
Ireland is the most advanced country in CEE when it comes to development
Scandinavia of food offerings:
• First fuel company present in the Baltic countries and Russia (part of
• Circle K is still branded as Topaz in Ireland and it is leveraged for driving
the territory, that is closest to Scandinavia) Food innovation within Circle K
• Established as Statoil Brand in the 90’s
• Bought stations in Ireland in 96’ - sold again and then bought Topz in • The stations have dedicated kitchens
• Ireland includes deli and cantina offerings
2010 • Ireland has 35% fuel market share delivered through 440 stations
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The Baltic too is very advanced on food & coffee: Circle K brand in Balticum
is like: “Starbucks of The Baltic”.

The business in CEE & Ireland is primarily driven as a B2C rather than B2B:

• Ratio B2C 70% - B2B 30% while Scandinavia is approximately 40% B2B
• B2B bigger in area/countries with a larger network of stations
• Market share of fuel in Poland is only 5%

Q3. Can you tell us more about the differences
in B2B vs. B2C in your territory?

Our TCO value proposition is more important to B2B than to B2C:

The TCO model for B2B is not about being the cheapest: We need to figure out how we best address the B2B customer when he/
she is in the role of B2C customer. Cross country the margins differs
• Focus on value substantially which makes it difficult to run a common loyalty program with
• MILES premium quality fuel build in discounts - also difficult to communicate to customer if adjusted
• Payment service depending on where used - but would be nice if possible.

Quality is especially important in Poland and The Baltic: Internal accounting processes also makes it difficult to run a B2B loyalty
program.
• The market have been used to very poor quality of fuel (like diesel) - so
people do not trust the local vendors Q5. What do you suggest that Circle K needs to
do to grow further?
• Therefore Circle K sells with different summer and winter specifications
in fuel quality to adopt to weather conditions First of all, the margen on B2C is higher than on B2B:

• Diesel winter quality resistent of temperatures down to -30 degrees • B2C highest margen
• Pumps “always work”, because they do not “clunk” due to freezing of • B2B Fleet Owner agreements medium margen
• B2B Large Truck agreement lowest margen
dirt in gas
• Run Arctic campaigns There are a couple of areas that will drive growth on short term:

• Pump-price is adjusted per quality and temperature - done offline! Most important is to create more traffic (both for B2C and B2B). We need
would be great to have online for automation to help the driver to make the decision to choose the Circle K station
Specifically for B2B: We need to have more “fleet managers” sign an
• Premium fuel product agreement.

Have seating areas on most stations: Lack insight in how much B2B customers fulfill the fuel volume agreed in
the frame-agreements.
• Some customers even call in advance to book a seat.
• Would create possibility to adjust discount according to alignment with
Q4. What about Loyalty programs, do you have agreed volume
that in CEE?
• Optimize opportunity based on agreement compliance.
B2B loyalty program is in pilot in Poland:
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Loyalty program: Poland EXTRA Club has been tested for 1 year now.
Loyalty concept: truck driver is earning loyalty points while fuelling and
buying convenience.

Few customers have a fixed price, most have a discount based on the daily Q7. How do you develop your business and roll-
listprice. Difficult to follow up on agreement & volumes. out new concepts?

Discounts agreed on are typically linked to promise of certain minimum fuel HQ develops and creates the concepts:
volume consumption.
• All technologic development run by HQ
• Jørn Madsen did not know about this already been implemented for • All major category development is done by HQ
sales in Salesforce - seems like proper dashboards for managers and
VP-level is missing Local Market responsible for operation and execution:

• How to implement in JDE and invoicing? • Marketing and BCS managers
• Owns the operational as well as tactical responsibility for the plans
In B2B, 1st priority to drive growth is to increase chauffeur loyalty: Need to
create a loyalty program for the Driver. created by HQ Sales-& Marketing and HQ BCS (Line Aarnes & Lars
Gaustad)
• Currently Circle K can’t measure Chauffeur loyalty • The Business Units have the ultimate responsibility for P&L:
• Better connect the driver to Circle K
• Many B2B customers but a challenge to create driver loyalty, which • Margins and revenue is met
• Operation and executers
generates consumption and revenue • Solutions: responsible for large B2B signups, that don’t use the stations
• Must be driven by local BU owner, the market development director (e.g. construction sites with fuel tanks on site)

(category, marketing). BCS Sales responsible for an area:

Q6. What are your unique differentiators? • BCS: customer focus
• Retail & BCS sales responsible align to optimize and drive sales from the
Our real estate is our biggest asset.
stations
But, at the end of the day, we sell time: • At openings of new stations as well as adjustment of running stations
• Secure communications between stations in proximity where a B2B is
• Time for a break (get more time)
• Time for fast fuel (don’t spend too much time) expected to utilise their frame-agreement
• Time for convenience easy shopping (don’t spend too much time)
• But how do we earn money on time?

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Station Level: (at work, at leisure, at sport, in theatre etc.)

• Retail Sales & Operations - Station Market Managers (SMM’s) Become even more customer focused:
responsible for 10 - 15 Stations
• Also small initiatives, like wall pictures at the stations of the largest B2B
• SMM: Station focus customers to secure best possible service and thus utilization
• Stations have impact on innovation/ developing food solutions
• Develop new products within consumables for the next 30 min.
Q8. What obstacles do you see in regards to ...something customers need now, when at the station!
developing the business further?
There are plenty of innovation opportunities:
I see no big obstacles in regards to executing sales. The focus is on product
development and communicating our message value propositions to the Jørn Madsen would like a concept of smart App solutions like Payment etc.
market.
Be a logistic channel delivering goods to end-users. Be the #1 Internet
As part of the ongoing operating and developing of the business, the cross Package Delivery location.
team collaboration is taking place, but could be improved.
Package pick-up box at the stations
Q9. What are your thoughts in regards to how • Already at a few stations but create very little extra traffic
Circle K might look like in the Future? • Earn on space rent for the box

I think we should look for inspiration from: Mexican - Burgers - or other food. Require a very clear and easy understable
concept.
• App solutions (easy to get, easy to use)
• Mobile Pay solutions (solving a real need in a very easy way, and it’s Maybe provide delivery services through partnerships with companies, like
foodora (Norwegian food delivery service) ...they could also deliver Circle K
easy to become a customer) food as takeaway. Concepts based on partnerships - Rent - etc.
• Innovation Labs (drive innovation with speed)
• Look at companies pushing the borders of what we think we know - like, The Circle K brand in itself holds a great opportunity:

what is convenience ? The Circle K naming is still new, and this Jørn sees as a great opportunity to
• Volvo car have a concept of unified car-trunk opener/ key. This impact what the brand will stand for:
allows for services to deliver directly in the car, while car is parked
• Statoil Fuel & Retail not know for food, but Circle K can be

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• SUPER GLOBAL for the BRAND
• SUPER LOCAL for the CUSTOMERS
We will never become McDonalds:
• Much more segmentated
• Big Cities vs Transfer Traffic stations positions
• Large differences in marked expectations from country to country
Major Brand Pillars:
• Product for people on the move
• Fast & Friendly Service
• Easy visit
• Famous 4 Products

• Coffee
• MILES Premium Fuel
• Car Wash
• Polar Pops Snacks & Beverages (US)

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INTERVIEW
09

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“Hans-Olav Høidahl LOCATION // OSLO
TENURE // 2010 - PRESENT
EVP
Scandinavia About me TBC

“ We must create
a movement
supporting our
unified global brand.

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CHALLENGES • Need to better integrate B2B and B2C loyalty programs

Q. What are some of the main challenges facing • No real use of text messages ,geo-location data and targeted
Circle K at the moment? promotions to the driver

• Not all customers are equally digital savvy. We have 1 million visits per • Cannot produce personalised offers
day in Europe and we need to make it an easy good experience to
everyone • Limited growth in number of stations as they are today, but maybe
extend the network (e.g. charger stations next to railway stations). New
• Throughout the lifecycle of a customer, the decision maker changes. staitons in Scandinavia will probably primarily be established in Inner
In B2B you start with sourcing or the fleet owner signing an agrement, Cities. Therefore Growth must be established through more traffic to
and later at the point of consumption, the decision power has shifted the stations.
to the driver of the vehicle. When it comes to B2C you may decide
as an individual but sometimes the role changes to a more complex • We need to simplify the procurement process for B2B and the payment(
household point of view when the whole family (spouse,kids and dogs) transactions at the stations
are on a trip
• Threats to growth are: decrease in fuel volumes, decline in
• Customer segmentation is too generic attractiveness and figuring out how to deliver convenience to the
customer on the road.
• Too silo’ed in way of viewing customers: Large truck driver fuelling is a
B2B use case based on Fuel Cards and connection to fuel stations, while
the same drivers in store experience buying food and convenience is a
B2C use case based on private loyalty programs not connected to the
B2B journey

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THE INTERVIEW • Stronger on operational KPI’s than Circle K
• Brand is perceived as more simple to engage with than Circle K
Q1. Hans-Olav, please tell us about your division • Addressing price sensitive customers
covering Scandinavia. • Low margin business
• Focus on optimal operation
Well, it’s very much structured in the same way as the organisation Jørn • It’s easy to get the product (fuel or car wash) and it’s easy to pay (100%
runs, just that we cover the Scandinavian countries. We have teams focusing
on: self service)
• Categories
• Sales Q2. What are your thoughts on your customers
• Marketing and increased digitalisation of your business?
• Finance
• etc. Circle K Europe has 1.000.000 customers visiting the stations in Europe per
Supported by: day.
• IT
• Shared Services • Important the everyday service is experienced simple and easy
• etc. • Not all customers are equally skilled in digital tools
B2B and B2C is executed separately, like the Circle K brand and the Ingo • No customer want to spend more than 15 seconds to log into a mobile
brand is run independently from each other.
Ingo will continue to be a separate entity in the organisaiton: app to self service when at the station - it has to be very fast and easy
• Circle K has the whole scale of skill levels in the customer base - from
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first movers to laggards
• A good example to be inspired by is the Vipps (https://www.vipps.

no/), a mobile payment service originally developed by DNB (Norway’s
largest financial services group).

Graphics created by Salesforce, based on the conversation with Hans-Olav. It was not
presented as part of the interview.

Q3. The 1 mil visits per day is a mix of B2B and There exists a large potential in improved up-selling and cross-selling,
B2C, can you please share your view on how if Circle K could improve on being even more personalised in their
B2B and B2C differs? engagement with their customers.

Especially the B2B customers is a very diverce group: Q4. Why do you believe that you do not harvest
• From large to very small companies that up-sales and cross-sales opportunity
• The small business customers are very much like the B2C customers in today?

behaviour and consumption Too generic in engaging with our segments:
• To understand the diversity, think of: lawyers, leasing companies, large • Able of doing a lot generically but not personalized

enterprises and large fleet owners in transportation We are too siloed in our customer view:
• The enterprise customers are more rational in their argumentation and
• No coupling of truck driver fuelling 1,000 liters of diesel on his truck and
selection of vendors his purchase of convenience in the store

Throughout the lifecycle of a customer, the decision maker changes, and we • The driver might use his fuel card for fuelling at the fuel dispenser, not
need to improve selling and market to the real decision maker: having to pay in the station store

Graphics created by Salesforce, based on the conversation with Hans-Olav. It was not • In the store the same person might use his personal payment card (that
presented as part of the interview. might or might not be linked to a Circle K EXTRA Club account)

• The systems and programs are not connected
• The person at the POS desk does not get any notificaiton about a good

B2B customer just having fuel at the fuel dispenser

Better integration of B2B and B2C loyalty programs. Improved use of SMS
and geo-location data to drive targeted personalized promotions. Would be
great if we could produce personalized offers.

Micro campaigns can be planned and executed locally, but any larger
development and innovation is done at HQ and then deployed to the
business units. Like new type of products og brand campaigns.

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Q5. What wold you say are Circle K’s best acquisition was about acquiring a customer base and to get access to data.
assets? With Circle K it would be more or less the same.
Amazon would improve the technology wherever we have customer
Our strongest assets definitely are: touchpoints:

1. Our locations - we have the best networks and the better locations in • Improve customer experience and make it more personalized
Scandinavia compared to our direct competitors. • Improve on collecting data about our customers
• Utilize AI on all back office functions
2. Strong reliable operations - we have higher satisfaction scores on our • Locations would not be heavily changed, but food business would be
operations, which result in customers trust.
increased
Excellent operation is measured by Ipsos (https://www.ipsos.com/en): • Focus on simplicity
• The Circle K distribution network would be used better. Collect more
• How clean the station is
• Not being our of stok insight about customers and what to sell to them through customer
• Greeted by smilling faces visits and all digital engagements and integrations.

3. Loyalty program - perceived to be best in the region compared to fuel New products to sell more:
competitors.
• Electricity: only on stations or should it be extended to embrace delivery
• simple to join beyond station locations
• linked to multiple payment cards - not only loyalty card
• Country specific program model does not seem to be a problem for • Attractive on food offerings
• Food is very important for both B2B & B2C
B2C. Might be for B2B because they are used to fuel cards working
cross boarders. • Anybody who have the car as the working place from the sales rep to
the truck driver
Q6. Where do you suggest Circle K needs to • Make their everyday easier offering
improve to grow further? • Food - Seating/working place - Prober sanitation (toilet, shower
etc.)
Well, if Amazon were to acquire Circle K, I do not think they would change
that much, like they probably won’t do with Whole Foods. I think that The stations must be adopted to need of the customers, which is highly
linked to the location of the station:
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• Highway (more food)
• City (more groceries)
• Inner City (café)

We will see bigger differences btw the stations in the future, but will share a It would be something like:
number of profile core products
Also we will see adjustment at the stations related to the local society the • Convenience
stations is a part of - etc CPH develops/changes faster than Oslo. • Fuel
• Electicity
Q7. What about growth in Scandinavia • Gas/ diesel
specifically? • Food
• Office Services
There will be limited growth in number of stations: • Car Wash
• Standalone stores in the City
• Highway stations related to Parking location, Train Stations etc And then of course different setups within: convenience, food fuel etc.
depending on country and location.
New stations will primarily be in “Inner Cities”.
Q9. How do you see the difference between
Extending the charging network. Circle K in NA vs. EMEA?
• not necessarily with a full new station, but add charger stations next to
• NA: Typically larger station, but stores is more like a kiosk (tobacco,
train stations drink and snack.

More traffic through improved loyalty programs. • EMEA: Stronger on Convenience and food.
• B2B loyalty pilot in Denmark has not been a great success, but this
Q10, What are the biggest threats to increased
we should be able to fix. I’m not 100% into the details of the pilot in growth for Circle K?
Denmark, but it’s work in progress.
Some of the most important threats are:
Growth by getting alignment on concepts - like What is the customer
actually requesting and deliver on that. • Decrease in fuel volumes (this we can not control)
• Decline in attractiveness (this we must protect)
B2B being able to simplify the procurement process . • Figuring out how we can improve on convenience (this we can develop)
• Find the formular for convenience for customers on the road
Q8. If you were to look at a station like
something that could be configured, what 73
components would it have?

The competitors:
Today the main competitors are the competing fuel stations.
Future competitive landscape is more complicated, and not that clear how
it will turn out:
• Fuel Stations
• Grocery Shops
• Convenience Stores
• Food Stores
• Utility Companies
• Standalone food stations

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