LP Gas

Is it time to diversify your product offering?

Your current propane business model may need an overhaul to keep pace with today’s marketplace.

Offering complementary products and services can help you stay in touch with your customers and increase your revenue and profitability. It may be time to sideline that no-frills propane approach. You should be thinking in terms of what your next growth engine should be and how you can get that engine started.

Diversification in the propane business can mean a lot of different things. The most popular avenues by which you can diversify are residential propane equipment sales and propane for on-road and off-road engine use. There are many other diversification choices out there, including other heating fuels, other engine fuels, water treatment equipment, and the list goes on. Look for and consider products and services that your customers may be buying from somewhere else and for products or services your customers could buy but don’t.

Let’s look at residential propane equipment sales, for example. There are lots of approaches to this opportunity, and specialization can be a good choice. For instance, you may want to develop a space-heating business, but you are concerned about all of those heating and cooling contractors who are currently sending you propane referrals. You can likely specialize in propane zone heaters, such as wall furnaces, space heaters, hearth stoves and gas logs, and not raise conflicts with your trade allies. In this scenario, they sell home-heating systems and you “cure cold spots.” It is also a good way for you to displace some of those electric space-heater sales.

No matter how you decide to diversify your propane business, there are certain basics to which you need to pay attention. The scope of your ambitions determines a great deal about the planning and resources you will need. You need to own the success of this new part of your business. Are you going all in, or are you just sticking your big toe in it? Your employees will sense that and settle in at your level of commitment.

It all starts with the development of a business plan that ties back to your objectives, serves as a foundation and gets you started in the right direction. In some cases, I’ve seen this set up as a separate division and in other cases it is blended in with the current operation. Both of these scenarios can work, but they can also backfire. You can end up with silos, lack of synergy and conflict on one hand, or no one really driving the success on the other, just feeling stretched beyond your comfort zone.

Should you try to hire someone with experience to run the effort or adapt a homegrown staff member to avoid getting someone else’s problem child? Of course, all of this needs to be thought through carefully.

How you market this new part of your business is a key to success. Is the projected scope and size of the business important enough to consider a name change, addition of a new byline or alternate logo look for different advertising efforts?

Name changes and logo design changes are a lot of work, but they can be worth it. Common sense should prevail. If branding and logo changes are warranted, the changes need to be complete, from your website URL, your email address, signage and truck identification.

Marketing tools such as email, newsletters, direct mail, bill inserts, outbound phone calls, stickers, handouts from service techs and customer surveys can be cost-effective ways to get the news out about the expanded scope of your propane business. You don’t have unlimited resources for this new part of your business, so think through carefully how to leverage your efforts for maximum effect.

Diversifying your propane business can be a game-changing, company-saving, moneymaking, business-preserving decision, or it can be a frustrating, expensive, resource-draining endeavor. Even when done right, you can expect to hear for years to come, “Oh, I didn’t know you sold that.” That’s just a buying signal to move in and close the sale.


Tom Jaenicke is vice president of propane marketing services for Warm Thoughts Communications. He can be reached at tjaenicke@warmthoughts.com or call him at 810-252-7855.