By Nicholas Upton
Thriving in the heating oil business is a tough job these days, but when you’re selling to a market that is incredibly environmentally focused, it can be even tougher. Yet Steven T. Clark at Genesee Fuel & Heating Company in Seattle is thriving through smart marketing, innovation and growing through close industry involvement.
The company has a storied 86-year history, dating back to a bygone era of home heating.
“The company was started by my grandfather Gordon Clark and his brother Russell Clark in 1929,” said Clark. “ And they first delivered wood and coal.”
He said diversification started early in the company history.
“In World War II, heating oil furnaces were marketed and popular so they started selling oil,” said Clark, who continued to diversify into new market segments. “About three years ago, we started selling propane as well. And we also have a HVAC division.”
He said working in the Seattle area has its unique prospects and pitfalls.
“In the Seattle city limits and the vicinity just outside of Seattle, heating oil is maybe 8% of the market. It’s being taken over by natural gas for the most part,” said Clark. “In the rural areas, where there is no natural gas, it’s a decision between heating oil, propane, electricity and wood. There are pockets that are really good for propane.”
As the oil business fluctuates with new competing technologies, Clark said that propane delivery has become quite a successful part of the business.
“Propane has been the one that’s growing and creating a lot of excitement here. The large national propane companies have a difficult time with customer service, so there’s a lot of frustrated propane users out there that seem to like our homegrown, right next door, be-right-over approach,” said Clark, who is using the lessons learned as a regional delivery company to give customers a friendlier choice. Noting that their pricing was another benefit. “We’re also priced better than a lot of those companies.”
But that’s not to say the team at Genesee has written off heating oil. Clark thinks it could even bounce back in his region with new cleaner fuels that turn old ideas of heating oil on their head.
“When I first took over in 1993, cleanliness was the big issue. That’s why people wanted to switch. Price partly, but people had this perception of heating oil being just dirty, nasty stuff,” said Clark. “But now with biodiesel, that’s just not the case anymore along with the efficiency and cleanliness of newer oil burners.”
He said the new perceptions of biodiesel and Bioheat are attractive to his current and prospective customers in the “very green-minded” Northwest demographic.
“I’m optimistic about biodiesel – I’m on the NORA board – and I know NORA is really going down the path of Bioheat,” said Clark. “So I’m still optimistic that heating oil can make a comeback here in Seattle.”
Clark said he is considering going to B5 as a standard fuel, but currently offers standard heating oil and several blends to make oil burners more attractive for his urban clientele.
“We offer 25% 50% and 99% biodiesel,” said Clark. Out East, people will offer B5 to everybody. The route we chose was instead of offer b5 to everybody was to offer regular heating oil and different blends of Bioheat if they request that. We did quite a lot of marketing early on.”
Speaking of marketing, keen tactics have kept Genesee relevant to there prospective customers.
He said a couple of local companies made his green marketing especially easy.
To grow their propane coverage, Genesee is using a few different marketing tactics.
“There are two companies over here in the Seattle area that make biodiesel from recycled cooking grease,” said Clark. “That has a lot of marketing sizzle in this area because you can literally talk about how the grease from your burger two months ago is now heating your home. So it’s a good story. We have not had any quality problems and the price is pretty close to soybean-based bio.”
He said getting that great story out is more difficult than it seems because so much of the budget spent on traditional advertising is wasted on people that will never use heating oil or propane.
“Because the heating oil market is so small, you can’t really do radio TV – 90% of people that are hearing that message don’t even have heating oil,” said Clark. “So for the most part the marketing is direct mail and web marketing – making sure our website is organically visible but also pay per click marketing as well.”
He said by tracking calls, they’ve seen first hand what just about every marketing expert is saying: A company website is the foundation of the marketing puzzle.
“Now we have tracking numbers for all our numbers including our website. The calls that come in via the website far outnumber any phone book or anything else. We’ve reached a critical mass where our website is our number one marketing tool for the company,” said Clark.
He said the website and online ads work great in the tech-savvy Seattle area, but when looking for new propane customers in the rural outskirts around the city, they needed a different strategy to drive people to the site and create new customers.
“For propane, we’ve been doing a radius mailing strategy. So whenever we get a new account, we radius mail around that address,” said Clark. “We send out about 100 letters around there because we know if one person has propane, their neighbors likely have it as well. They’ve been pretty successful.”
Clark and team are also working to cozy up with the locals; which can resonate especially well in close-knit, rural communities that run on propane.
“Most of the more rural areas have a parade of some sort or a Snohomish County Days,” said Clark. “So our strategy is to sponsor anything we can for those sort of events so we can go after this approach that we are your neighborhood company.“
He said growing closer to the community puts the Genesee brand at top of mind when prospective customers are looking for a new delivery service.
Working for the Industry
Customers and county fairs isn’t the only place Clark gets cozy. As the president of the Washington Oil Marketers Association and on the NORA board, Clark has gotten close to many industry folks as they work toward a better business environment for oil heat.
Currently, he and his petroleum allies are fighting for a genuine way to make Washington more environmentally friendly.
“The majority of that work is legislative. So we go to our state capitol to fend off cap and trade legislation, the low carbon fuel standard that has been rumored in our state as well,” said Clark.
He said their biggest opponent right now is Governor Jay Inslee, who Clark says is running a disingenuous campaign that could harm the entire Washington petroleum industry.
“We currently have a governor that is extremely environmental minded. One of his stated goals is lowering the state’s carbon output. He has shown a willingness to do it whatever way he can, including executive action,” said Clark. “So that’s the biggest threat to not only my business, but petroleum in general in the state of Washington — it’s really damaging legislation that is mostly environmentally focused.”
He said that by no means does he not want to preserve the great state of Washington, but the way he’s going about it is not going to help anyone.
“None of the dealers in our group are opposed to lowering carbon output. We all love the state, we all love to see it cleaner and climate change is important to everyone here. However, what we see is that the method that our governor is taking is not only disingenuous, but it is also not really going to work,” said Clark.
Basically, the governor is working to create a cap-and-trade plan that targets the 130 larges polluters in the state.
“He’s pitching that to the state in a way that trying to tell residents in Washington that, ‘You won’t pay for this, just the 130 worst polluters are going to pay for this.’ Well, that’s nonsense. BP is not going to absorb those carbon credits,” said Clark. “They’re going to pass it along to me and I’m going to have to pass it along to my customers.”
He said that eventuality would not only hurt his business, but would force his customers to make tough choices.
“The people that are going to get hit the worst are going to be my heating oil customer, the old lady on a fixed income that now has to pay 35, 45, 65 cents more per a gallon because of these carbon credits,” said Clark. “So that’s why I say he’s being disingenuous.”
He said his group and the Association of Washington Business is working together to create some marketing ideas to tip the scale in their favor in 2015.
Consolidating Former Competitors
The collective efforts and his industry involvement came from Clark’s father, and like him, those relationships helped turn former competitors into business expansion.
“The acquisitions have been key to staying ahead of the market,” said Clark, describing the several competitors that Genesee has absorbed.
“Before I took over, my dad bought 10 or 12 competitors. So far, I’ve acquired six,” said Clark. “The key to that absolutely has been being part of our industry associations and the relationships that have been made there.”
He said getting to know his competitors outside of the day-to-day competition was essential to building those relationships. While working with competitors on state- and industry-wide issues, Clark learned to look past the day-to-day business and meet the real people behind the companies.
“You do talk to each other, and you realize that they’re not the nasty enemy you might perceive them to be. Once you get to know the, you know what, they’re pretty good people,” said Clark. “That’s the basis, so when they want to retire, they’re not unwilling to talk to our company.”
He said he was initially surprised that many business owners weren’t only looking to make good money on their sale.
“You know, it’s funny, you’d think in those situations a seller would really want to shop and just get the highest price they can, regardless of the makeup of the buyer,” said Clark. “But what I’ve found over the years is that most of these companies that are selling, the owners put their life blood into building the company and they don’t want to just give it to the highest bidder. They want to see it continue to thrive and succeed.”