A variety of companies offer an arrangement in which they use their online resources to link customer with a network of independent oil dealers. The goal is to provide additional volume with a low acquisition cost. Fuel Oil News interviewed Andy Scirri, COO of SmartClick Energy ‘ a company notable in this space ‘ to discuss their business model and how it can benefit an oil marketer or dealer. SmartClick Energy does business in some 3,000 counties in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. The play is to offer the online customer an effective pricing and reliable delivery proposition while offering the oil dealer in incremental increase in business. SmartClick Energy “owns” the customer in this relationship.
FON: There are several sites out there that promise to do something similar. What is your specific value proposition?
Scirri: We distinguish ourselves compared to some of the sites out there, which are strictly lead generation sites. We have a network of heating oil dealers throughout the Northeast down into the Mid-Atlantic, and the customer can order heating oil online through us 24/7. We generate the customer acquisition, we handle the entire payment process and customer service and the dealer through our portal receives an order for delivery with the dealer having no out-of-pocket cost. There is no registration fee or anything of that sort. When the dealer receives an order it is typically an ad-on to the orders they are currently delivering. So a dealer might be making 40 to 50 drops, or north of 100 depending upon their scale, and we will incrementally add several drops to that total. So basically we’re just handing them an extra order.
FON: How do you negotiate the price component of your offer with your dealers?
Scirri: We negotiate fees with the dealers for those deliveries and we reimburse them for the fuel and there are other incentives and the standard delivery fees that we have developed over time. With the number of dealers that we work with, we have to make sure they are pleased with the arrangement on the payment side. Their payments are independent of pricing, meaning when we set the price, they are essentially paid a delivery fee for making that delivery. So if we choose to price more aggressively in one area that does not change the reimbursement rate for the dealers. They are reimbursed on a routine schedule and we provide summaries of all the information through our portal. So it’s a pretty clean, neat way to add incremental volume.
We have really great dealers of the network. We are very much interested in them being happy with the arrangement that we have, and we have received great suggestions from our dealers to help improve our operations. That’s been one of the gratifying things about our model is that we get to work with some really great dealers. I absolutely mean that. And we work very hard to help make them successful.
FON: How do you promote your business on both the dealer and customer sides?
Scirri: On the dealer side, we’ve done a combination of things, but the most successful has been to reach out through our industry contacts to make introductions. We’ve also attended various shows and made contacts and connections there. And another interesting thing that is happening is that as we are looking to expand, we get recommendations from dealers that are network who do not cover those areas.
With respect to customers, we’ve done both traditional and online. We’ve used FaceBook promotions and mailings and newspaper ads; things of that nature. We’ve tried a number of different approaches to build up the business and what ends up happening as well is that we end up getting customer referrals.
FON: What are you looking for in terms of your dealer partners?
Scirri: We look for high quality, established dealers with good reputations. We look for operations that are a decent size starting at, say, six trucks. To get back to it our focus is on quality and we look to get the best folk that we can in the network. As you can imagine it’s important for us that the deliveries be made in a timely manner and that they are made safely. We know the types of dealers that have worked well and as part of our process we visit with the dealers and make sure that they are well-run operations.
FON: The industry involves more than just oil deliveries including the entire HVAC side from maintenance to the installation of new heating appliances. Does that integrate into your business model?
Scirri: We do have some areas where (we do offer HVAC service), but that is in an early stage at this time and we consider it a larger future piece. Our primary focus initially is oil and that’s where we put most of our promotion.
FON: A large part of your pitch to the customer is an attractive oil price, but given the volatility in the marketplace today I would imagine that is a challenge for your operation as it is for the oil dealers themselves.
Scirri: We closely monitor what’s going on with oil prices so that we can adjust our prices to make sure that everybody wins. It does take a bit of effort to do that. Because we tend to look for quality partners, they tend to be good at sourcing their oil and managing their businesses. The better they control their costs the better this works for them. I can’t overstate the importance of our dealers and how well we’ve been able to work with them to make this successful for both of us. We feel that we are bringing value to them and we certainly believe that they are bringing value to us.