Gilding the Lily
by Richard Rutigliano, PriMedia, Inc.
Odds are, if you are a full-service heating company or a wholesaler, transport service, or manufacturer, you offer a range of diversified services. Taking this statement a step further, if your company offers full-service heating — including will call and automatic delivery, sales, installation, repair, maintenance and service contracts — it has already diversified from a fuel delivery only model. And as so many established firms started by delivering coal … or ice … or grain … well, you get the picture.
Decade after decade, market conditions demanded that Oilheat and propane providers expand their services. Today, facing a potential industry resurgence with higher blends of Bioheat®, renewable liquid heating fuels and renewable propane alongside alternative green energies, visionary fuel marketers will take advantage of new opportunities.
For many, the question isn’t whether to diversify, but to what and how to integrate new services with current offerings. Once those decisions have been made, you will need to start planning your marketing strategy. Without a strong promotional campaign, you could be sitting with a business no one knows about! A tree falling in a forest may or may not make a sound, but your new business venture needs a megaphone, or it may not exist for long.
Broaden Your Customer Base
The American Consumer Survey for 2005 for the Northeast Region calculated that 32.3% of housing units were heated by Fuel Oil and Kerosene, 49.8% by Utility Gas, 11.7% by Electricity, 3.5% by Propane (listed as Bottled, Tank or LP Gas), and 0.02% by Solar. Fast-forward to 2017 (the most recent ACS available), and those numbers change to 21.6% Fuel Oil, 54.6% Utility Gas, 15.7% Electricity, 4.4% Propane, and 0.09% Solar. With more than 20 million housing units in the surveys, the drop of nearly 11 points represents more than 2 million properties lost by the fuel oil industry (and a 200,000 unit increase for propane).
The 2017 ACS, however, predates the Green New Deal and the rush to legislate net-zero carbon emissions. Renewable liquid heating fuels and renewable propane should give the industry a strong foothold in that future. At the same time, many companies — especially those already offering electrical services, ductless heat pumps, generator sales and services, and geothermal and/or solar installations — are closely watching state and federal legislation on incentives and carbon taxes.
Solar and geothermal services are only two diversification options. In the years between the ACS reports referenced above, many heating oil dealers opted to offer more value and capture new accounts in a variety of ways. A cursory, non-scientific survey of PriMedia clients reveals a virtual A-to-Z list of expanded home comfort service offerings:
• Air Conditioning Sales & Service • Backflow Prevention • Bathroom Remodeling • Construction/Handyman • Diesel • Duct Cleaning • Electric ESCO • Electrical Wiring, Repairs • Energy Audits/Efficiency Testing • Fire Suppression • Fireplace Inserts • Gasoline • Geothermal • Generators • Home Automation • Indoor Air Quality • Insulation • Kerosene • Marine Fuels • Medical Alerts • Natural Gas ESCO • Natural Gas Service • Oil-to-Gas Conversions • Plumbing • Pool Heating • Pool Open/Close Services • Propane • Security • Solar Heat/Hot Water • Weatherization.
Loyal Customers are Diversified Services Customers
When you start offering diversified services, focus on finding your first “new” customers from your current account lists. You already have brand recognition, trust and open lines of communications with these customers — three of the most difficult (and costly) aspects of the sales funnel. It is then much easier to convince these customers to try your new services.
- It costs at least five times more to acquire a new customer than to retain an existing customer.
- Success rate selling to an existing customer is 60%-70%; success rate of selling to a new customer is 5%-20%.
- Loyal customers are 7 times as likely to try a new offering.
Every interaction with your customers is an opportunity to cross-market, from your recorded on-hold message to a final tank reading report. Your sales team, naturally, needs to know all there is to know about your new services, as do your customer service representatives. It is well worth your time to hold meetings and training sessions with your staff, so they are all fully informed about any new service and promotions you are offering. Of course, you never want to take your customers for granted. You must provide the new services with the same level of excellence and expertise you offer on your primary services.
The marketing tools available on your account services portal can help you target specific customer groups, and broader communications can be used to promote the new service to your entire account list. Incentives help convince even the most loyal customers, so don’t forget to bundle services and promotions, offer bonus loyalty points, “try us out” special pricing, coupons and the like.
When PriMedia helped a client diversify with the addition of propane services, one of the first things we determined was the incentive — in this case, the tank fee was waived for one year with an automatic delivery agreement. The launch of the new service and promotion was announced in the company’s newsletter, and propane has been featured prominently in every subsequent issue. The company added an insert slip to every invoice and statement mailing, and every customer received an actual letter (yes, delivered by the post office!) announcing the expansion. The printed materials were augmented with banners on the company’s website, new content, social media announcements, email blasts and more.
These tactics built the new business on the foundation of the old, which leads us to one of the most important reasons to start your marketing with current customers. Because of your long-standing relationship, your customers are a valuable beta testing group. After any new work, follow up with them via a phone call or survey to find out what worked (and may not have worked) well, and don’t be shy about asking them to post reviews on Google, Yelp and Facebook. Recent four- and five-star reviews are strong indicators to potential customers that your company is qualified and reputable.
Beyond Your Account List
To grow your business you will soon need to go beyond your current account list. It is more difficult and more costly to acquire new customers, but they can quickly become well worth the investment as they start to utilize your diversified services.
Start with the marketing in place for your primary services, announcing the new product with a “call out” on existing materials. Then review your goals and the marketing budget outlined in your new services business plan.
The company we discussed above already had a robust new business marketing program in place. In year one, propane-specific print, search engine ads, digital display, social media and broadcast creative were mixed into the rotation of materials for the primary business. For the next few years, marketing campaigns focused almost exclusively on the new services. Now that the new business is well established, the campaigns have broadened to again feature the company’s full range of products and services.
Making a Plan
When considering the marketing for your new product, the options can be intimidating – and at the same time it is easy to get caught up in the excitement to do everything at once. Just as you turn to professionals for your legal and financial planning, you should turn to marketing professionals to determine the best ways to utilize your marketing budget. There are many questions that you and your marketing partner need to consider before finalizing your campaign, including:
- How will you measure the success of your efforts?
- Which communities within your service area are your primary targets, and which are secondary? You may decide to push hard in the primary neighborhoods, and build into the others after you have a strong base.
- Should you run a conservative campaign that will stretch your budget across the full year but offer fewer impressions each week, or would it be more beneficial to make a big splash and then silence your marketing for several months?
- What seasonal cycles do you need to be aware of, and how do you schedule your campaign to make the most of them?
- Which marketing channels will get you the most impressions per dollar, and how many of those impressions will become leads?
PriMedia has worked with many companies to help answer these questions and market new business ventures. Our programs combine a variety of tactics, from billboards, spot cable, and local radio to website development, search engine marketing, digital display ads, and geofenced mobile, as well as direct mail, door hangers, loyalty programs, lead tracking and street teams.
PriMedia has been providing strategic solutions to the home energy industry for more than 27 years. Contact us at 1-800-796-3342 or goprimedia.com to find out how we can help promote your new business division or update your marketing of current services.