Z Energy's digital future
Electric vehicles are becoming more popular and autonomous vehicles might be on their way, but the demand for fossil fuel won't be materially different in 2030 to what it is today. That's according to Z Energy, which has done a little crystal ball gazing in its annual report released today.
While there might not be a need to radically change the current business model, the company has identified three "future market spaces" and embarked on "modest experimentation". These are future fuels, mobility as a service, and 'last mile' opportunities around its retail network.
Apps for Z Energy and Caltex (the company also owns the Caltex brand) have 53,600 and 82,700 active users respectively. The Z Energy app enables customers to pre-order coffee at 117 sites and to buy fuel via the 'fastlane' pump on selected forecourts. This latter move is already paying off.
"We've learnt that customers using Fastlane buy more fuel compared to other ways of fuelling, and this product is attracting new customers we've never seen at our Z stations. So far we've restricted the application of this product to forecourt pumps, but the idea could easily be applied to carwashes and, when combined with the new cards we're developing for commercial customers, it could be a game-changer for our relationship with businesses."
The company has established a Business Accelerator Team to get new products into market faster and a Customer Experience Council to make the most of the data-driven insights surfaced via the apps and rewards schemes that Z Energy is part of. The company wants to move the customer conversation from cost to value.
"The market has become increasingly driven by customers seeking discounts and we see an opportunity to change this behaviour. By tailoring rewards to the individual customer based on their preferences, we can reward their loyalty with offers they value more highly than a discounted price."
Z Energy says its ambition is to become a "digitised company" and has appointed a Chief Digital Officer, set up a dedicated digital business unit and rolled out Microsoft Office 365. It hasn't all been a positive story however, with the report noting that "following a data breach in the Z Card Online system reported last year we made a number of improvements: we appointed a Managed Security Service Provider; we ensured continued vigilance around our own and our customers' digital assets; and we retained the services of a specialist security organisation to help us proactively identify security risks in our systems so they can be mitigated in a timely manner."
The report also references a couple of investments from previous years that are proving helpful in understanding future growth opportunities - the electricity retailer Flick and the Wellington-based car sharing company Mevo.
While this part of the annual report was about long-term sustainability, the main focus was on its short-term profitability and the accompanying dividend announced in the result. By all means head on over to the NZX for that announcement, which was well received by the market with Z's shareprice up over 2%.
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