States, retailers find success working with builders

February 1, 2008 By    

Retailers and state association directors who have been working with homebuilders for years say they believe the time is right to approach builders and pitch propane.

In Louisiana, continued rebuilding in the wake of Hurricane Katrina more than two years ago has prompted many homeowners to move farther inland, away from natural gas mains. Whole subdivisions are being built with propane as the primary fuel source, says Randy Hayden, executive director of the Louisiana Propane Gas Association (LPGA).

“Propane has become a hot commodity,” says Hayden. “Everyone in Louisiana is very interested in propane generators so they don’t have to go through another two to three weeks without electricity or any kind of power.

“There’s an awful lot of interest,” he says. “We’re seeing more and more homebuilders who haven’t been familiar with propane but are asking questions and getting in on the ground floor, building and designing these homes.”

To help retailers develop relationships with builders in their region, the LPGA has invested in memberships in all 13 of the state’s local builders associations and the state association. That way, propane retailers can attend meetings without the burden of a membership fee.

“We’re hoping that will give local marketers the impetus to meet with their local homebuilders as well as participate in local home shows,” Hayden says. The offer is good for large retailers like AmeriGas and Ferrellgas all the way down to the small mom-and-pop shops, he says. To hit the market from the top down, the LPGA will participate in three home shows this month, reaching the state’s three major markets with materials borrowed from the Propane Education & Research Council.

The state association is also reaching out to the manufactured housing industry with the hope that more dealers will keep propane-based units for sale on their lots. Too many do not, forcing those who prefer propane units to wait six weeks or so for delivery – and most customers cannot wait. LPGA joined the state’s Manufactured Housing Association this year to help develop that relationship, Hayden says.

It also has purchased PERC’s elaborate builder kits for retailers to take to shows or to give to builders who seem genuinely interested in propane.

“We’ve tried to make it as easy as possible to develop relationships with people who are building new homes and doing renovations,” Hayden says. “If they don’t take advantage of an opportunity like this, someone will do so, and it will probably be their competitor.”

It’s a strategy that Don Reinert of Reliance Energy Partners in Peabody, Kan., has been employing for years. Reinert has served more than seven years on the codes committee of his local homebuilders association – mostly as a watchdog on behalf of propane retailers to make sure codes aren’t established that would hurt the industry, but also to help develop relationships with builders and answer questions that arise.

“There’s a lot of networking there,” Reinert says. “I feel it’s so beneficial to your career to build a good rapport with the builders because they’re the first ones to have the homeowners’ (trust).”

His involvement is paying off. Although underground tanks have been available for more than 10 years, builders are more likely to choose to bury unsightly tanks for new customers than they once were, Reinert says.

He’s participated in the Wichita Home Show for three years, and has had “a good response” from it. He especially likes the materials he’s borrowed from PERC because they look professional and are easy to use.

“They have really slick advertising things instead of displays that you have to set up,” Reinert explains. “These things you just have to pull up and – voila – you’re done.”

Each year, he provides “a couple hundred” information packets for builders to give to prospective homeowners. He selects PERC-produced materials that he feels would match their interest level.

Even though the housing market remains fairly strong around Wichita, he makes an effort to be involved in every home show and Parade of Homes event.

“I think it’s very important for marketers to participate in those things,” he says.

In Maryland, Delaware and Virginia, the Mid-Atlantic Propane Gas Association has participated in home shows since 2006. “We’ve had great success,” says Chris Remell, a marketing consultant with the tri-state association, who has used the PERC materials to target builders. “The members are coming out to participate, and we’ve had a common goal. It’s been very fruitful for the association.”

This is the kind of success that Steve Ahrens, executive director of the Missouri Propane Gas Association and president of the Missouri PERC, hopes his members will find. The organizations are just starting to reach out to builders this year. A previous direct-mail postcard campaign to the manufactured housing industry had no measurable impact, so Ahrens believes a targeted, personal approach will work best.

“We’re really at the very beginning of it,” he says. “We think it’s worth exploring.”

Consumer rebates of $150 for furnaces and $300 for water heaters have proved popular in Missouri – about $500,000 is spent each year – so Ahrens plans to make sure builders, too, are aware of them. A typical home might have two water heaters and a furnace, he says, meaning a builder could pocket an additional $750 by choosing propane.

“At some point when (the housing market) rebounds, there will be a lot of new homes built, and it will be good for the industry if those furnaces were propane,” says Ahrens. “We think the timing is right to make that investment. We think homebuilders are looking for partners. We think they’re looking for solutions and building value for homes they will be building in the future.”

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