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Talking Points: What to Tell Customers about Heating Oil

By Stephen Bennett

 

Fuel oil dealers and fuel oil customers don’t see fuel oil the same way.

That’s one of many findings from a survey of dealers and of heating oil customers conducted earlier this year by Warm Thoughts Communications, a research and marketing firm in Clifton, N.J. The survey results are the basis of “The 2015 Consumer Research Study,” funded by the National Oilheat Research Alliance.

Oil dealers were asked to answer the survey questions as they thought their customers would answer them, said Richard Goldberg, president of Warm Thoughts. When the dealers’ answers were compared to the answers of 2,579 fuel oil customers “some really big variances” came to light, Goldberg said.

“The fuel dealers substantially overestimated how important it was to the customers that they’re dealing with a local, family-run oil company versus a utility,” Goldberg said. “That just doesn’t show up as a big deal” in the customers’ responses, Goldberg said.

Even customer service–long seen as a trump card for and by dealers–isn’t rated by customers as one of the most important benefits of fuel oil, the survey showed. (Goldberg emphasized that despite customers’ responses, exceptional customer service remains fundamental to dealers’ business success.)

Fuel oil dealers underestimate customers’ expectation that converting to a different fuel will result in improved efficiency and savings, according to the survey, Goldberg said.

Bashing the natural gas industry might make fuel oil dealers feel better, but Goldberg said customers indicated that they paid scant attention to criticisms of natural gas.

“There is a whole line of thought that we can gain ground by focusing on the dangers of natural gas to the environment,” Goldberg said. But that issue “is completely inconsequential” to customers, he said.

Evoking anti-fracking sentiment, concern about methane leaks, and supposed preference for purchasing from local businesses rather than a “giant” utility–“all that stuff that finds its way into association-sponsored advertising isn’t where this battle is going to be won,” Goldberg said.

Of the reasons people choose to stay with oil, rather than convert, only one percent of surveyed customers cited the potential danger of natural gas, Goldberg added.

For more details on the genesis of the survey and how it was conducted see the accompanying sidebar to this article.

The key “take-aways” that Goldberg identified from the survey are:

  • The oil industry needs to create a clear and focused message, and be disciplined in not including all variables
  • More testing of messages
  • A targeted appeal to the younger audience/homebuyers
  • Need to embrace Bioheat and Low-Sulfur oil and increase awareness
  • Oil companies need to get behind and amplify positive messaging for the industry

Customers’ attitudes to converting away from fuel oil varied by state, Goldberg said. In Connecticut, only 3% said they were “extremely likely” to convert. In Maine, New Jersey and Rhode Island it was 10%, Goldberg said.

“But what was consistent across the board is that it was the younger” consumers, age 18 to 35, who were much more likely to say they were going to convert,” Goldberg said. “So, from an advertising perspective” messaging needs to be aimed at that younger set, he stressed.

Another important takeaway is that the industry has “a really big vulnerability” when people move into homes, Goldberg said. Surveyed customers who were in their homes for less than a year were far more likely to say they were planning to convert, compared to people who were in their homes longer, he said. That finding underscores the importance of reaching people as they are getting into a home, Goldberg said. Programs that focus on realtors and home inspectors–“engaging them to tell a better story about oil heat to customers who are buying homes”–are ongoing in various degrees in Maryland, Massachusetts, New Jersey, New York and Pennsylvania. Warm Thoughts conducts most of the programs, Goldberg said. “Realtors can be really good allies,” he noted. “We give them materials to hand out to buyers.”

Goldberg said, “Maybe the biggest surprise of this survey was the potential impact of Bioheat on the mindsets of consumers.”

While customers “overwhelmingly” are making the decision to convert for economic reasons–saving money through lower fuel bills or because they expect other fuels to be lower-priced–their secondary reasons are environmental, “and it’s really substantial among the younger buyers,” Goldberg said. “And it’s because oil heat has a bad brand right now, “even among the people who say they want to stay with oil.”

Most such customers, asked to rank the reasons they wanted to continue using fuel oil, said that converting would be “a hassle” or that it “cost too much.” The price differential in fuels wasn’t significant enough to justify converting, others said. “I’m happy with the product,” as a response, ranked below those other answers, offered by less than one-fifth of respondents, Goldberg said.

In that context, “Bioheat is giving people permission to feel good about the product,” Goldberg said. But that is tempered by a finding that most people don’t know anything about it: Only 12% percent of survey respondents said they “really knew what bio was,” Goldberg said. Approximately 25% of respondents had heard of Bioheat but didn’t know what it meant; and roughly half of the respondents “had never even heard of it,” Goldberg said.

After respondents reviewed a brief description of Bioheat and its benefits, they were asked whether they would want to know more about it. They were also asked whether it would cause them to reconsider if they had been leaning toward converting. More than one-third of respondents answered “yes, definitely” or “yes, maybe” to those two questions, Goldberg said.

He cautioned against marketing the benefit of low-sulfur in conjunction with Bioheat. “It’s really hard to market low sulfur,” Goldberg said. “It’s just too much– too complicated for the consumer, is my belief. But this idea that there is a new fuel, better for the environment, cleaner burning, that allows for more efficient equipment–that’s what the focus needs to be” in communicating and marketing to customers.”

Thrown into the mix of challenges is that surveyed customers contemplating conversion expect oil prices to rise in the future “even though the survey was done after oil prices dropped last winter,” Goldberg said. “People see a couple of years of low prices [but] they don’t necessarily believe it’s lasting,” he said.

The marketing “formula” going forward, Goldberg said, “goes like this: Oil has changed and we can expect better prices for a good while to come. The gap between oil and other fuels isn’t just closing for now, but it’s closing for a while for a lot of reasons.

Oil is “a really efficient fuel and modern oil systems are really efficient;” together they can help customers save, he said.

Finally, “our fuel is new, and is cleaner-burning and much better for the environment.” Bioheat, he added, “is also made in America.”

Communicating those points to a younger audience – “people who are new to their homes, and also people buying equipment” are the core components of what the survey shows should be done, Goldberg said.

“The survey has helped identify the bull’s eyes,” he said, “but good advertising is now needed to hit those targets.”

To download “The 2015 Consumer Research Study” visit: www.warmthoughts.com/NORA.

 

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The ‘why and how’ of the consumer survey

How best to spend money allocated for the promotion and defense of fuel oil? That is a question state associations wrestle with annually, and Chris Herb, president of the Connecticut Energy Marketers Association, wanted more data to help answer that question. He suggested a survey of customers, and a project was born, resulting in “The 2015 Consumer Research Study,” covered in the accompanying article, “Talking Points.”

Though the initiative for the study started with the Connecticut association issuing a request for proposals, conducting interviews with marketing firms and choosing Warm Thoughts Communications to conduct the consumer survey, Richard Goldberg, president of the firm, took it upon himself to approach other state associations to see if they wanted in. Many did. They included: Fuel Merchants Association of New Jersey, Maine Energy Marketers Association, Massachusetts Energy Marketers Association, Oil Heat Institute of Long Island, and the Oil Heat Institute of Rhode Island. The National Oilheat Research Alliance funded the project. Fuel oil dealers and customers in each association’s turf were surveyed, Goldberg said. Ken Reese, director of research for Warm Thoughts, conducted the online survey in May and July.

Some findings could be anticipated, others were enlightening, industry veterans said. Herb said the advent of Bioheat “is clearly a game-changer,” and its potential–and the need to get the word out–is reflected in the survey findings.

“It’s an important step forward for the industry to have this knowledge,” John Huber, president of NORA, said. “The survey validated that [Bioheat] is our best opportunity to open up a conversation with our customers. We have to do that.” Noteworthy, too, Huber said, “is that we need to skew much younger–the 25 to 30 range, the first entrants in the house” in marketing and communicating heating oil’s strengths.

Herb said that many of the findings were similar from area to area, with a few telling differences. He said that the survey shows Connecticut customers, for example, think of one fuel when they think of converting: natural gas. In contrast, Maine consumers might consider as alternatives heat pumps, wood pellets and propane, Herb noted. Customers’ expectations of the benefits of converting to a different fuel struck him as overly sunny, Herb said.

Customers “significantly miscalculate” the savings and return on investment of converting, Herb said. Expecting payback in three years shows customers don’t know the true costs of conversion, Herb contended. He and others involved in the research project said that enlightening fuel oil customers about the true costs of conversion should be part of the industry’s effort to retain customers.

NORA “will be using the survey to help steer our messaging” to state associations and to consumers, Huber said, and “to communicate things that matter to the consumer.”

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