Mobil speeds past the competition

Speedpass program makes fill-ups faster and customers more loyal.

By Neal Weinberg
Network World, 01/25/99

With its Speedpass program, Mobil has all but made its customers part of the network.

Diagram of how it works

The company is offering customers a quicker pit stop by giving them transponders to trigger credit card transactions at its gas pumps. Although the time Speedpass saves is ever-so-slight compared to using a credit card at the pump, it's enough: Speedpass customers are proving to be more loyal, helping Mobil drive up revenue.

Mobil isn't disclosing sales figures - it can't discuss financial information because of its impending merger with Exxon - but the company says Speedpass customers make one more fill-up per month than non-Speedpass customers. With more than 2 million customers signed on to the program since its launch in 1997, that's a lot of Texas tea.

Texas Instruments, which provides the radio frequency technology behind Speedpass, commissioned a study of Speedpass users and found they were twice as loyal to the Mobil brand as Mobil customers who paid with cash or credit cards. And some Speedpass customers stop into Mobil's Minimarts, further boosting revenue, says Patricia O'Shea, senior industry analyst at market researcher Frost & Sullivan, which has been tracking the Speedpass program.

In fact, Mobil's next step will be to extend Speedpass to the Minimarts so customers can buy milk and bread by passing the keytag in front of a credit card reader. Market trials in the St. Louis area are slated for early this year. There have also been reports that Mobil is looking to strike Speedpass deals with other retailers, such as fast food chains, but the company declined to comment on future plans.

The technology behind Speedpass is known as radio frequency identification (RFID). When you sign up for the program, you get a small transponder to put on your key ring or mount on your car's rear window. When the transponder passes in front of the pump, it activates a radio device inside the pump that queries the transponder for your identification number.

In the time it takes to get out of your car, remove the gas cap and respond to a prompt asking which grade of gas you want, your Speedpass ID number - not your credit card number - is sent via satellite to the Mobil data center in Lenexa, Kansas.

From there, a quick check is made to validate the use of the credit card you've preselected. The authorization is relayed back to the pump, and you can start filling the tank.

Before implementing the system, Mobil first had to convince its pump suppliers to retrofit their pumps to accommodate the transponders. Two suppliers, the Wayne Dresser division of Dresser Industries and Gilbarco, jumped on board.

The next issue was how to transmit Speedpass ID numbers for verification. Mobil opted to employ its existing very small aperture terminal satellite net, which is used to authorize credit card transactions at the pump and transmit point-of-sale information from cash registers to a corporate data center (see graphic below). Just before the Speedpass launch, Mobil upgraded the VSAT network to support additional traffic. "That was good capacity planning,'' says Bill Pragman, Mobil's manager of network and computer operations.

Speed counts

Mobil research studies on ways to improve customer satisfaction invariably point to the need for speed, says Susan Carter, a company spokeswoman. "Knowing that customers wanted a faster experience, we started looking for a technology to make that happen,'' she says.

So the company broke down the act of pumping gas to 14 different steps. Carter says Speedpass eliminates four of them: Fishing a credit card out of your wallet or purse; sliding the card into a reader; pulling the card out of the reader; and returning the card to your wallet or purse.

Admittedly, none of these steps are terribly cumbersome. But Carter says the service has nonetheless struck a chord with customers, especially because the Speedpass transponders are free and there's no charge for the transaction itself.

The idea for Speedpass came from a Mobil employee who spotted the transponder tags being used at tollbooths in Dallas and realized the same technology could be used at the pumps. Industry Analyst O'Shea notes that petroleum companies already use similar RFID systems to track the amount of fuel dispensed at distribution centers.

But Mobil was the first company to take the technology to the consumer and is still the only one with a full-scale rollout. Shell is the only other oil company that's testing a similar service, which is still is the pilot phase, O'Shea says.

"We're way out ahead of the pack,'' Carter says. She can't explain why Mobil's competitors haven't jumped on the bandwagon: "My view is that they just missed it.''

Within Mobil, the Speedpass program is considered a major success story. In his 30 years at the company, Pragman says, he's never seen a technology innovation take off like Speedpass. "It has exceeded all expectations. It's just really slick."