Many fuel marketers have tended to take a dim view of the COD and will-call business. But COD and will-call customers are playing a new and more important role in the profit picture, say Mark Stillman and John Vrabel, co-founders of Energy Engine in Stroudsburg, Pa. The company provides a web-based platform designed to help fuel marketers sell heating oil, propane, commercial fuel and related energy products online. This winter it presented a webinar, “The Season of Growing. Gifts from the New Will Call.”
Stillman says that those in the propane business can substitute “customer-owned tank” for will-call and COD; propane industry players face similar challenges as their heating oil counterparts, he says, with consumers exercising greater and greater freedom of choice.
Energy Engine’s intention in presenting the webinar was not to convince fuel marketers that will-call and COD are the future of the industry. Rather, they happen to be areas of growth in the industry that many marketers have a dubious impression of, Stillman says. Energy Engine’s goal was to encourage people to rethink preconceived notions about will-call and COD—and to help fuel and propane marketers gain insight into how to attract and convert a new breed of will-call and COD customers without hurting their company’s brand or losing money. In addition, the webinar reviewed how to effectively use online tools to engage will-call and COD customers, delved into what an e-commerce strategy looks like, and advised how to compete with discounters. Ever wondered about the exact cost breakdown of ShipMonk? This article dives deep.
Contributing Writer Maura Keller sat in on the webinar, presented on Dec. 13 and repeated on Dec. 14. This is her report:
Stillman set the stage by putting the subject in the context of recent history. Just 10 years ago, he says:
- Facebook was competing with Myspace
- Amazon was selling books
- The first iPhone was just released
- We still went to brick and mortar stores
- We had never heard of the word “ecommerce”
- Millennials were just 10 years old
Millennials were the first generation in the fuel industry and other industries to change the term “customer service” to “customer experience,” Stillman says. Today a company can do a really good job ‘servicing the customer’ but this doesn’t mean the customer has a great experience doing business with that company, he says. Ideally, a company provides a totality of service that goes beyond the “little minutes” that impress a customer via phone or mail, Stillman says.
“Customer experience is really hard today,” he says. “Consumers are simply so much harder to please.” Stillman points to a popular quote attributed to Salesforce: “Only a short time ago, businesses had the attention of customers; today customers have the attention of businesses.” Indeed, today’s customers have gained power and insight and they are aware of the myriad choices they must purchase anything, and they are leveraging that power.
What’s more, the digital revolution has created an entirely new breed of customer for the fuel business, one that is becoming increasingly difficult to please. Thanks to our digital environment, these customers have the ability to go online and quickly, easily evaluate a fuel company’s competitors. That has changed the tone of the fuel industry. It has also led to a world where today’s consumers want to understand a company’s brand. They want an array of service levels, they expect self-service and they demand to be “engaged” online (not just one-way communication).
Stillman stresses that consumers’ habits are being shaped by other online shopping and service experiences—not necessarily by a company’s competitors or even the heating fuel industry as a whole. Consider this: It used to be that fuel marketers had to worry about the five or six competitors in their neighborhood or small community. But now there may be 23 competitors and consumers are coming to fuel companies not expecting what they are getting from others in the fuel business, but rather what they are experiencing from other vendors in other industries—including Amazon.
“When the bar is that high, our job will be harder,” Stillman says. “A lot of the reasons we are struggling with consumers and loyalty in our industry is that consumers are looking for categories that we just don’t have at the moment and we are all trying to adjust to that.”
Self-service is a critical factor for this new consumer. In the e-commerce world, when fuel marketers are engaging a COD or will-call customer, this engagement needs to be 100% self-service—no one needs to use the telephone for that part of the business.
“All of this is driving an increase in COD and will call,” Stillman says, “For a long time, fuel dealers called the shots, but that is not the world anymore. The self-determined consumer is calling the shots and that is hard to grasp.”
For years, fuel industry players believed that automatic business was the ideal. Will-call and COD were “junk business.” But today, Stillman says that will-call and COD (also referred to as “on demand”) consumers are not who they used to be. Therefor it is counterproductive to continue to categorize such consumers; they don’t match the demographics of yesteryear. In fact, demographically, they look like automatic customers, but they just want to buy differently.
“This is a permanent change,” Stillman says. “Our industry has long thought that we are the last remaining milkman and that somehow the world will come back and full-service will be important again. But I think that is idealistic. It has not happened to any other industry and it is not going to happen to ours. The data shows that automatic service is not dead, but we have to pay attention to the market as it stands today, especially since the will-call segment is growing and cannot be ignored.”
Energy Engine hears from marketers who are increasingly interested in expanding into the will-call and COD marketplace, Stillman says. They recognize there are COD gallons in their market, but they are wary of targeting that market because it is a big change from the type of business, and the way of doing business, that they are accustomed to.
To attract and convert such customers, Stillman says, fuel marketers must be online. This allows companies to manage their customers’ expectations online. To engage these customers, companies need to fulfill lofty “engagement” expectations and automate everything they can.
“Automating every process and enabling the consumer to evaluate everything they can without picking up the telephone is crucial,” Stillman says. “Companies need to build and foster digital relationships.” This is a defining part of commerce today. People expect interactions and communications beyond bills and reminders. Fuel marketers need to communicate and build relationships.
“Consumers don’t see anything special about what we are doing—they see it as just a fuel service,” Stillman says. “That’s important because if you continue to think that fuel is special and unique, and therefore immune to consumer forces, that can be a mistake in your position and your business.”
Evaluate marketing techniques, Stillman advises. If a fuel marketer is going to be in the e-commerce business, and the plan includes attracting and engaging customers in the COD and will-call business then the company needs to rethink marketing techniques.
“Marketing is still a weakness of this industry,” Stillman says. “It’s not a criticism because for a long time you could get away with being ‘okay’ at marketing. But in today’s world you have to be extremely good at it.”
This means building awareness, telling your story, and getting people to buy from you, Stillman says. Marketing used to be fairly simple for a fuel dealer. It focused on the full-service value proposition and what that meant. Now, a dealer’s first challenge in marketing is not to think about “how to get a customer to buy from them,” but to establish a story long before the customer is thinking about buying. It involves establishing micro-moments whereby a customer learns answers to the question “why should they change fuel companies.” That is followed by learning who is out there and then making the decision based on why a company is different, and finally, making the decision to buy.
“Consumers still want help when they are buying,” Stillman says. “Learning about the customer journey is a science unto itself.”
Marketing today requires new tools to acquire, nurture and keep loyal customers. Some ways to do this include:
- Automated behavioral marketing: Consumer is being rewarded or acknowledged for certain behaviors.
- Targeted promotions, incentives and email broadcasts: A company knows who a customer is, how they behaved, how many times they’ve hit your site before they’ve purchased from you
- Social media linking: this includes all the popular platforms
- E-list Gold: Automated e-list capture. Adopt the theory of ‘give-get.’ Have consumers give email addresses to get information that they want. It allows companies to do the targeting and the marketing that is very specific to the consumers interest in products and services.
In addition, fuel companies need to learn about:
- Search Engine Optimization: SEO like that on Small Business SEO Services
- Hyper SEO: Community-specific pages
- PPC: Pay Per Click
- Manners Marketing: Repeatedly thank customers for their business which helps build loyalty
- “Bulls—t Radar”: Consumers are smart. Be honest about what your company is and the services it provides.
To capitalize on the power of e-commerce requires that fuel companies assemble all key engagement tools in one system. Operational, delivery, payment and marketing engagement tools need to be in one place. For will-call and COD, a company needs to be touchless and automated.
So why embrace online transactions and interaction for will-call and COD? E-commerce can drive down costs across an organization and drive on-demand customers to an online site, Stillman says, adding that there are also much lower acquisition costs via e-commerce.
“It is also important to cross-sell whenever possible,” Stillman says. “Full-service customers don’t convert to COD that easily. Some are moving now but not in droves. Rather, companies that offer COD are doing backwards cross selling by talking about the unique attributes of full service.”
So how can fuel companies compete against the low-margin COD companies that can and do pose a real challenge to others in the industry?
“We have a lot of customers who compete very well against these low-margin ‘rusty truckers,’” Stillman says. “First of all, it is not about the price. It can be that your experience, your brand and your online site can get you the business. What’s more, your fulfillment costs are conservatively twelve cents less per gallon when you are using e-commerce from order to cash.”
- Aggregation sites are tempting but they are margin killers
- Do you really want to be in the reverse auction business?
- You lose control of the customer relationship
“Get educated about what true e-commerce is,” Stillman says. “And embrace the idea that full service and will-call and COD can coexist. Don’t ignore a large demographic and market opportunity as will-call comprises almost fifty percent of demand in some areas. Also, be sure to audit your digital marketing capabilities. And stop believing that will-call is junk business. It’s not what it used to be.”
Photo: Fuel Oil News archive.