LP Gas

The benefits of implementing a level-pay program

Author: pictures of money / photo on flickr

Performance-minded propane marketers continuously pursue solutions that improve customer service and productivity, in order to make their company and propane the preferred energy source.

Few solutions offer more advantages than the level-pay program for the residential customer. The level-pay program, which is also called budget pay, spreads the customer’s payment over multiple months instead of requiring the customer to pay the propane invoice within 30 days. Level-pay programs are common with utilities.

Yet, in spite of the level-pay program advantages to the customer and propane marketer, many propane marketers who offer it struggle to convince customers to sign up and then remain on the program.

The struggle is evidenced by the low percentage of customers who are level pay. Generally, only 25 percent of a propane marketer’s residential customers are level pay. An Ohio marketer with 50 percent of its customers on level pay is the highest percentage I’ve heard.

Level-pay benefits

The benefits a level-pay program creates are listed within this column. It’s clear from these benefits that a win-win situation is created for both the customer and the propane marketer.

For starters, the negative perception of propane as being too expensive is muted. According to the Propane Education & Research Council, consumers rank a perceived high cost of propane compared to other energy sources as the top negative for the fuel. While propane’s price spike during the 2013-14 winter hurt its price perception, the $500-plus invoice due in 30 days hurts as well. This burden, placed on the consumer, makes the propane-buying experience negative.

Effective level-pay practices

When establishing a level-pay program, the propane marketer should follow these practices:

 

Randy Doyle is CFO for Blossman Gas in Ocean Springs, Miss. He can be reached at rdoyle@blossmangas.com.