By Stephen Bennett
Shane Sweet once worked for a heating oil company in southwestern Vermont that acquired a propane business. It was the mid 1980s and building was booming.
“For the first two years we didn’t run an ad in the paper,” said Sweet, now the executive director of the New York Propane Gas Association. That was because they didn’t need to. “All we did was put stuffers in our statements,” Sweet recalls. “We had all the business we could handle in our customer base.”
That approach is not one that can be taken by every fuel oil dealer who also has propane business, Sweet said. “I’ve heard marketers say you can’t build a [propane] business that way”–on the backs of existing heating oil customers–“and I agree,” Sweet said today.
Still, multi-fuel companies that acquire a heating oil dealer are often seen converting it to propane, “which makes sense,” Sweet said. “There’s a better chance of holding onto [an] account if you’re selling them propane–certainly over the past couple of years when [heating oil] was four and five bucks a gallon and the cost per million Btus was an issue.” Though that’s no longer quite the case–the price of heating oil has decreased because of a boom in domestic oil and gas production – marketing both oil and propane should be undertaken with short- and long-range plans that take into account the availability of natural gas in the area–now and eventually–as well as economic factors that influence consumers’ behavior, and the image of a company selling both fuels. Multi-fuel companies may not always identify themselves as such, Sweet points out. “Some companies have a separate [unit] just for the propane business,” Sweet said, “and you might not even be able to tell that it’s the same mother ship.” It’s common to see “ABC Fuel Company” buy a propane company and become “ABC Energy,” Sweet noted. “That’s the way most retailers are handling it right now,” he said. “Customers like one-stop shopping.”
The propane market in the Northeast–New England and New York–is growing at present, Sweet pointed out. He said he attended a recent meeting in which it was remarked that the new construction market not served by natural gas “is almost all propane. If you build a new house and you’re not on natural gas lines, you’re going to put propane in,” he said.
An example of a company that has marketed both fuels for a long time is D.F. Richard Energy in Dover, N.H. The company markets itself as a “full-service oil and propane company.” The family-owned enterprise was founded by D.F. (Dan) Richard in 1932 as a fuel oil dealer, and it expanded into propane in the early 1950s. Now owned by Dan Richard’s sons, Robert and Raymond Richard, and his daughter, Anita Corain, the company serves 15,000 customers in Dover and environs, extending into southern Maine.
Having supplied two fuels for more than six decades the company has developed a balanced, neutral, approach to marketing the two products. “When we market, we market both products,” Roland Lapointe, general manager, equipment and energy services, said. “We don’t single out one or the other. We give pros and cons of both.”
D.F. Richard Energy also sells oil and propane replacement equipment; handles conversions from fuel oil to propane; and in 2012 began operating as a dealer of Dr. Energy Saver services, about which more later.
When it comes down to people deciding whether to replace oil-fired equipment because it failed or simply because of age, “we give them options,” Lapointe said. Typically, the options are either replacing “like for like”–meaning staying with oil-fired equipment–or converting to propane. In keeping with the company’s overall marketing mindset, “we don’t try to sway them one way or the other,” Lapointe said.
The trend over the last three or four years has been to convert to propane, Lapointe said. He estimated that seven customers out of ten, faced with a choice of replacing oil-fired equipment or converting to propane, have opted for the latter.
When advising potential customers on what fuel and equipment to choose for their newly constructed houses the company takes a slightly different approach. “On new homes oftentimes we get called in and the consumer asks, ‘What do you feel we should do?’” Lapointe said. Because propane is “such a versatile commodity,” he noted, “the pros oftentimes outweigh the cons.”
In some of the larger New Hampshire cities – Portsmouth and Rochester, as well as Dover–there is some availability of natural gas, but the infrastructure is not far-flung, “and I’m thinking that it probably won’t be in the foreseeable future,” Lapointe said. “It’s not going to grow much bigger than it is now.” When an oil customer wants to convert to natural gas, Lapointe added, “We refer them to another company. We don’t want to jeopardize any of our existing oil customers to take care of a natural gas account.”
In 2012, D.F. Richard Energy ventured into a new line of business, becoming a dealer for Dr. Energy Saver Home Services, a company in Seymour, Conn., that trains its dealers in a “whole-house” approach to energy cost-savings–enhancing insulation and sealing and improving the integrity of ductwork.
“We fix houses, basically,” Lapointe said. “We make them more efficient. Most fuel customers feel that their oil company doesn’t want to help them save on fuel. To the contrary, we care about helping our customers save.”
As a dealer for Dr. Energy Saver, the company covers New Hampshire and Maine. “It’s all based on lead generation through the internet,” Lapointe explained. A consumer doing an internet search for ways to save on fuel oil or propane, or on adding insulation to their house, would be led to information about Dr. Energy Saver services, which provides, as an initial step, a free “energy assessment,” Lapointe said.
The company has been building the energy-saving business at a deliberate pace, running announcements about it in the company’s quarterly newsletter to customers, for example, and producing a radio spot for D.F. Richard Energy that includes a mention of Dr. Energy Saver.
“We didn’t want to jump into this without having everything in place first,” Lapointe said, because whenever a customer can get something, like an energy assessment, for free” the response can be overwhelming. “We didn’t want to be inundated with hundreds of leads and not be able to support them,” Lapointe said. “But we’re at a point now where we’ve got two sales guys for the Dr. Energy Saver business and the vehicles and equipment, too.”
Besides starting to promote the energy-saving service in the newsletters, “we’ve targeted some homes that we feel might benefit from this,” Lapointe added. “We sent out a couple of hundred mailers promoting the program.”
Home shows are an opportunity to further spread the word: Lapointe said the company takes two booths at such shows, one for the oil and propane business, and another for the Dr. Energy Saver business.
“It’s worked out real well,” Lapointe said. “It’s like a one-stop shop for our customers. They can call us for their oil and propane needs, they can call us to make their homes more comfortable, less drafty, [and to] help them save on fuel.”
The energy-saving business has three vehicles with specialized equipment. Two box trucks are each equipped with a cellulose machine. “After we air-seal an attic we’ll add cellulose to bring the [house] up to the R standard,” Lapointe said. A third vehicle, a Ford 250 pickup truck, pulls a trailer that houses a high-pressure foam rig.
“We spray-foam the roof decks of the attics to make the attic a conditioned space, especially if they have duct work in their attics,” Lapointe said. Temperatures can soar well over 100 degrees Fahrenheit in some attics in summer, Lapointe noted. If ductwork is running through that attic space “you’re wasting a lot of energy cooling that air,” he said.
“We move the envelope,” Lapointe said, taking insulation from the ceiling of the top floor of a house and repositioning it to the underside of the roof deck. “We make the attic part of the conditioned space,” Lapointe said. “In theory it should be the same exact temperature as the rest of the house, if it’s done properly.”
Sidebar: PERC Puts a New Face on Propane
Propane received a new brand identity just last year, courtesy of the Propane Education & Research Council (PERC).
The new brand identity for propane is anchored by a new tagline: “PROPANE Clean American Energy.”
PERC says it conducted extensive research to arrive at the new brand identity, surveying residential users (current and prospective customers), landscape contractors, fleet managers, and propane marketers. The previous tagline was “PROPANE Exceptional Energy.” The change reflects changes in the marketplace, PERC says on its website, including development of new propane technology in a range of applications beyond home heating and cooking. Further, U.S. propane production has increased significantly, making the fuel truly “American-made,” the Council notes.
Suggestions for placement of the new logo and tagline include business cards, stationery, invoices, signs, company vehicles, tanks and uniforms, as well as on promotional items such as T-shirts, pens and magnets. It can also be used in print and television advertising, and online on social media pages such as Facebook, Twitter, YouTube and LinkedIn, the Council says.
The Council also created a version of the logo for propane autogas for use on vehicles, dispensers, and marketing materials. Displaying the word “Autogas” prominently, the logo helps distinguish propane autogas from propane used in other applications, and serves to build brand recognition in vehicles and fueling stations, the Council says.
PERC offers a Propane Marketer Resource Catalog (Propane MaRC), an online collection of materials it developed for use by the propane industry. The online catalog provides downloadable safety, research and development materials, as well as items available for purchase. The Propane MaRC serves as an industry tool to acquire all PERC-produced materials in one place, the Council says on its website.
To download copies of the logos and taglines for both Propane and Propane Autogas, and to access the Propane Marketer Resource Catalog (Propane MaRC), including usage guidelines for the logos, go to the website http://www.propanemarc.com/