Propane retailers tap into residential growth opportunities

Growmark joined the Propane Education & Research Council’s (PERC) Market Outreach and Training Working Group to improve its presence in the residential market.

After gleaning information from committee meetings, Growmark developed a residential research team and performed sales campaigns to achieve better marketing results. Still, the company’s efforts weren’t initially as effective as Growmark had hoped, says Becky Hornblower, the company’s propane marketing and technical services manager.

“We’ve been putting together a sales campaign on an annual basis,” she says. “But with that process, we were marketing a little blind. We weren’t getting in-depth knowledge on the best houses to target.”

So when a PERC representative asked Hornblower in January whether she would be interested in reviewing a new resource to help retailers gain customers in the residential market, she jumped at the opportunity.

PERC debuted its resource – the Residential Opportunity Insights portal and reports – to the industry in April at the Southeastern Convention & International Propane Expo in Nashville, Tenn. The free resource serves as an online tool to show retailers the strongest areas around them for residential growth, along with the best marketing strategies to reach those potential customers.

Bridget Kidd, director of residential and commercial programs at PERC, helped to develop this tool over the last couple of years. PERC partnered with Hanley Wood’s Metrostudy group to gather information from 381 metropolitan statistical areas across the United States, gleaning valuable metrics on the housing market and consumers in those areas.

“We’ve wanted to offer something like this for a while, but it wasn’t until recently that we’ve had the capability to gather this research to put together a program like this,” Kidd says. “Now, the program is a reality.”

Compiling data

Propane retailers have experienced a series of challenges gaining and retaining residential customers for much of the last decade, due in part to a slower economy and housing market, energy competition, customer conservation and appliance efficiency gains.

Considering the challenge of growing residential gallons, propane retailers regularly ask PERC representatives how to build their businesses in the residential market. Questions retailers ask are: How can I reach residential customers? How can I find target markets?

These questions prompted PERC to develop the Residential Opportunity Insights portal and reports to help retailers navigate the residential market. The service provides retailers with a variety of maps and charts in four categories: local propane retrofit activity, local consumer insights, local media insights and local homebuilder prospects.

Metrostudy compiled information about U.S. households and geocoded existing home deeds and natural gas transition pipelines. From there, the group identified segments that prefer gas appliances and could replace their heating source with propane.

“The key driver of this report is to figure out which segments have the highest likelihood to use propane, which ones will use propane retrofits and where they are located,” says Toby Morrison, former national sales manager at Metrostudy. “The end result was a complete picture for the retailer.”

Here’s a breakdown of the Residential Opportunity Insights portal and reports by category:

Local propane retrofit activity. These materials include heat maps and a composite index to forecast whether the residential market is growing in specific regions. According to Hornblower, these materials have been among the most useful features for Growmark.

“The maps and indexes rank households based on how far they are from a natural gas pipeline,” she says. “Then an overall composite index shows information from these households to help us see if they need to upgrade appliances.”

Local consumer insights. Metrostudy also partnered with Scarborough Media to determine key consumer groups with which retailers should connect to grow their gallons in the residential market. The companies divided consumers into nine demographic categories to determine which demographics are most likely to use propane and constructed best marketing messages to share with those demographics.

Local media insights. The reports in PERC’s local media insights section integrate various demographics from the local consumer insights section and then share which types of media work best at reaching those nine demographics, along with which local radio and TV stations and publications retailers should use to promote their products.

Local homebuilder prospects. Additionally, the reports include information on homebuilders in various metropolitan areas to help retailers determine which builders are most likely to use propane appliances in new homes.

“We were running lists showing 2,000 builders in one area we serve,” Hornblower says. “But PERC’s research shows us that rather than reaching out to all 2,000 homebuilders, it shows us the top 25 we need to reach.”

In addition, PERC includes a number of marketing resources for retailers in the online portal. Retailers can choose from materials on water heating to space heating to contractor outreach materials to share with potential customers. Kidd adds that all resources can be customized based on the retailer’s needs.

“It’s great in that the retailer doesn’t have to develop these,” Kidd says. “They don’t have to spend time on resources to make these.”

On target

Big and small retailers have signed up for PERC’s Residential Opportunity Insights since the council unveiled it at the Propane Expo. Kidd estimates about 400 retailers currently use the service.

Brian Buschur, manager at McMahan’s Bottle Gas in Dayton, Ohio, learned about the program at the Propane Expo and registered for it not long afterward.

“It tells me who my customers are, what TV stations they watch, what radio stations they listen to,” Buschur says. “That gives me the ability to reach out to the people we advertise with to have them build me an advertising program around those facts.”

Since the program’s debut, Kidd says, a couple of minor issues have surfaced. With the massive amounts of data included in the reports, Kidd has received a few questions from retailers about how to decipher some of the materials. She adds that some retailers are struggling to determine which metropolitan statistical area report best suits their company.

“There are certain parts of the country that have more data than other parts based on building activity and the availability of data,” she says. “We don’t have an equal amount of data for every ZIP code. But if someone can’t find the right market for them, we can help them find what’s closest to them.”

Dan Richardson, an owner of Conger LP Gas, also tested the Residential Opportunity Insights a couple of weeks before the Propane Expo. He says one shortfall is that it doesn’t always provide the best information for companies located far from a metropolitan statistical area. Despite that issue, he suggests retailers use the tool to figure out possible growth areas in the residential market.

“The retailers who are going to be successful in residential are going to be looking at things like this and taking advantage of it,” Richardson says. “They’re not going to be the ones waiting for a phone call like we did in the old days. But this is something that gives you ammunition to go out and get business.”

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Using Residential Opportunity Insights

The Propane Education & Research Council (PERC) plans to host a webinar at 11 a.m. EST on Aug. 31 to teach retailers more about its Residential Opportunity Insights reports. During the webinar, Mark Gianopulos, regional director at Metrostudy, will review the reports and discuss how the current national housing outlook influences the residential business of propane marketers. The webinar will cover the Midwest market, surrounding Chicago, Indianapolis, Minneapolis and St. Paul, Minn.

To use PERC’s Residential Opportunity Insights tool, propane industry members can visit www.residentialmarketgrowth.com and sign up for free.

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More on residential growth opportunities:

• Customized mapping
• A look at residential consumers