Tank monitors offer revenue-growth opportunities for propane retailers

June 16, 2015 By and    

In a previous article, we discussed using remote tank monitors for reducing costs. Growing revenues is another aspect to consider when deciding to use monitoring to serve your customers.

Hank Smith

Hank Smith

Over the years, I have dealt with more than 1,000 fuel companies that have deployed monitors, and there are almost as many ideas on how to increase revenues. But most revenue generation from remote tank monitoring can be put into a few categories:

No charge: A lot of propane retailers use monitors to reduce their delivery costs and do not charge their customers for monitoring services. They do this primarily because the cost savings from using monitors is substantial for them, the fuel supplier. Some suppliers new to propane are providing monitors on all propane tanks to ensure no run-outs and to maximize limited delivery assets.

Minimal charge: With a few exceptions, remote monitoring comes with some sort of monthly or usage charge based on frequency of reports and low-tank alerts. As a general rule, phone line, Internet and cellular are fairly close in the monthly charge for one or fewer daily tank-read reports. Satellite is generally more expensive because of charges by the satellite companies for every use of the satellite system. Regardless of what technology is used, retailers often charge their customers a minimal fee just high enough to cover the monthly service costs. There are systems available that have no monthly service fee because the equipment is connected to end-user management or computer systems.

Full charge: In this situation, the retailer recoups the cost of the equipment, installation, markup and service fees. Some companies sell the equipment to the end user in this situation; others rent or lease the equipment. I usually don’t recommend selling equipment to the end user if there is a monthly service fee associated with the service. If a customer wants to switch fuel suppliers, it becomes a little harder to make the move if monitoring is part of the service you provide. Selling standalone systems that provide no remote monitoring but give the customer visual reads on a display is often done, especially if the customer owns the tank.

The many variations in how revenue is generated are found in the differences in these three broad categories. Some no-charge situations are based on gallons purchased, or price per gallon paid, or tied to contracts for several locations, and so forth. I would estimate that 90 percent of my customers who offer tank monitoring provide monitoring to their very best customers at no or minimal charge.

Full-charge customers include those who want tank monitoring as a convenience but don’t purchase a lot of fuel. Many generator accounts fall into this category. We see pool heater accounts often in this category, unless the pool is kept heated and gallons purchased are significant.

Beyond tank-level monitoring, many remote monitoring systems can provide additional features that are valuable – and billable – to the end customers. Indoor temperature monitoring is a popular service offering that is included with some tank monitoring systems. This is popular for the second-home market, snowbird “northern” homes, rentals and other situations where a potential freeze-up is a concern. A few tank monitoring systems also offer external temperature monitors for use in large homes or buildings with zone heating. We have also seen the external temperature monitors used in freezers and coolers in restaurants and convenience stores where fuel levels are also being monitored.

Generator alarms, furnace alarms, burner lockout alarms and water-on-basement-floor alarms are other services that fuel companies are packaging with fuel sales. When competing for a customer’s business on the price of fuel alone, it can become a downward-pricing spiral. Being able to provide other services that your customer places a higher value on is one good way to separate yourself from the pack.

Like any of your products and services, it helps to let your customer know monitoring is available. Including tank monitoring and other monitoring services you offer in mailings, your website, call-waiting announcements and other marketing materials you use helps spread the message. Training your employees on the monitoring products is also beneficial. One successful method of increasing revenue from monitoring is having a sales incentive program for customer-contact employees.

Remote monitoring, whether it is for tank levels, temperatures or system alarms, is a great way to gain more good (and loyal) customers and to generate revenues from other sources beyond fuel sales.

Hank Smith is the vice president of sales for WESROC. He can be reached at hank.smith@itcmail.net or 352-633-3626.

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