February 24, 2021
Software companies and station owners. Same, same, but different?
As a SaaS (software as a service) business selling into a retail market, you’d think striking comparisons between EdgePetrol and our customers is a difficult task.
Slowly, but surely I’ve drawn comparisons and wondered if we could do what our customers do. Run successful fuel retail businesses. Back in 2018 I even travelled down to Plymouth once to visit a site for sale. Too much competition I decided. As if I had any idea then!
The thought process has given me a shortlist of comparisons I have built over the last few years:
Great software companies are customer centric. So are great station operators.
I didn’t know this before starting EdgePetrol. You go to a station for price or convenience and then you are on your way, right? Wrong. Fuel retail is ALL about the customer experience.
It’s no secret that in the UK, supermarkets are cheaper than independents. It’s why they pick up so much volume. But, over 6500 UK stations still run great businesses. Sometimes it is location, but more often than not, the retailer has thought about their brand, site layout, food offering as well as minute details like placement of bins and other facilities.
Many of them are family businesses that have started with one station (or still have one station) and have used the experience of being in and around the forecourt to build fantastic businesses where the customer is thought about every step of the way.
Both have recurring revenue streams (sort of).
The heavy focus on customers is because we both have products that rely on a good customer experience as we need repeat business to survive. We at EdgePetrol put huge emphasis on Customer Success and are hoping to achieve ‘zero churn’ (no customers lost) in 2021.
As a SaaS business, 70% of your revenue should come from existing customers, and this is no different to many retailers. I know I have one station that I fill up at. Our CRO- Mark Truman- also has a favourite. Neither are the cheapest in the local market we both happen to live in. We are repeat customers and the quality of the forecourt along with the way we are looked after as customers is what is making us come back.
Software is tricky. Running stations is tough.
The thing about software is there is so much that can go wrong. One line of code out of place, or a connection that drops can ruin a day, a week or even a month’s work.
This is, however, very different to running a station. Drive-offs, leakages, pump outages and roadworks can happen at any time, impacting volumes and profits either slowly or within minutes. The cost of product moves weekly if not daily and your competitors are changing their prices regularly too. Then you have the convenience store to consider along with cash flow considerations for booths sides of the forecourt. Running one site must be tough...imagine running hundreds or thousands!
More often than not, organic growth is too slow.
This is all too relevant in today’s market, especially within EdgePetrol’s customer base. Our customers are growing and more often than not they are funding that growth with outside investment.
The M&A world is very much alive and kicking and funding in both SaaS and fuel retail is extremely available. Private equity and venture capital love our businesses because we are focused on the customer, have repeat business, and know how to navigate tricky waters. This leads us on the path to the golden goose: EBITDA.
I feel as if this is why we have been able to understand our customer base and develop solutions that work for them. Hardly anyone at EdgePetrol has worked in the fuel retail market before, but through our relationships with our customers we have listened, learned and strive to run our businesses with the love and passion that you put into yours.
Long may that continue.
Get our best content on fuel pricing and retail in your inbox weekly.