5 Important KPIs for Fuel Delivery Companies

by Marty Kirshner, CPA, MSA, Gray, Gray & Gray, LLP 

Using delivery data to improve company operations.

For a propane or heating oil company, monitoring and measuring the right key performance indicators (KPIs) is crucial for ensuring the success and growth of the business. Here are five critical KPIs to focus on.

1. On-Time Delivery Rate

This KPI measures the percentage of deliveries completed within the promised timeframe. It directly impacts customer satisfaction and loyalty. Track the number of deliveries made on time compared to the total number of deliveries.

• Definition: The percentage of deliveries completed within the promised timeframe.
• Calculation: (Number of on-time deliveries / Total number of deliveries) x 100.
• Importance: Consistently meeting delivery commitments builds trust and loyalty among customers. Late deliveries can lead to customer dissatisfaction and churn.
• Improvement strategies: Optimize routing and scheduling, ensure proper vehicle maintenance, and provide real-time updates to customers.

2. Customer Retention Rate

Measure the percentage of customers who continue to use your services over a specific period. A high retention rate indicates customer satisfaction and helps predict stable revenue. Calculate this by dividing the number of customers at the end of a period by the number of customers at the beginning.

• Definition: The percentage of customers who continue to use your services over a specific period.
• Calculation: (Number of customers at the end of the period / Number of customers at the beginning of the period) x 100.
• Importance: Retaining customers is more cost-effective than acquiring new ones. High retention rates indicate customer satisfaction and help predict stable revenue.
• Improvement strategies: The more services a customer uses from you (budget pricing, cap program, service contract, automatic fill, etc.), the higher the customer life and, in turn, the higher the retention rate.

3. Average Delivery Time

Monitor the average time it takes for your team to complete a delivery from the moment the order is placed until the propane or heating is delivered to the customer. Optimizing this KPI can help improve efficiency and reduce costs.

• Definition: The average time it takes to complete a delivery, from order placement to propane delivery.
• Calculation: Total delivery time / Number of deliveries.
• Importance: Shorter delivery times can increase customer satisfaction and allow for more deliveries per day, improving overall efficiency.
• Improvement strategies: Optimize delivery routes, streamline order processing, and ensure proper staff training and vehicle maintenance. Keep mileage down!

4. Margin per Delivery

Track the average margin generated from each delivery. This KPI helps you understand the profitability of your deliveries and identify areas for improvement. Calculate it by dividing total margin and delivery costs by the number of deliveries over a given period.

• Definition: The average margin generated from each delivery.
• Calculation: Total product and delivery costs / Number of deliveries.
• Importance: Understanding the profitability of each delivery helps identify areas for improvement and optimize pricing strategies.
• Improvement strategies: Analyze delivery costs, optimize truck capacity utilization, and consider implementing tiered pricing based on delivery volume or distance.

5. Safety Incident Rate

Given the nature of the liquid fuels
delivery business, safety is paramount. Monitor the number of safety incidents, accidents, or near-misses per a specific number of deliveries or work hours. A low incident rate indicates a strong safety culture and helps maintain a good reputation.

• Definition: The number of safety incidents, accidents, or near-misses per a specific number of deliveries or work hours.
• Calculation: (Number of safety incidents / Total number of deliveries or work hours) x 100.
• Importance: Prioritizing safety reduces the risk of injuries, property damage, and legal liabilities. A strong safety record helps maintain a good reputation and can lower insurance costs.
• Improvement strategies: Provide regular safety training, implement strict safety protocols, and maintain well-documented incident reports for continuous improvement.

By regularly monitoring these five KPIs, you can make data-driven decisions to optimize your operations, improve customer satisfaction, and ultimately grow your propane delivery service company. Remember to set realistic targets for each KPI and continuously track progress to identify areas for improvement.

Marty Kirshner leads the Energy Practice Group at Gray, Gray & Gray, LLP, a business consulting and accounting firm that serves the energy industry. He can be reached at (781) 407-0300 or mkirshner@gggllp.com.

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