New strategy connects propane retailers, homebuilders at local level

Homebuilders are struggling. In recent years, families have chosen to stay put, choosing smaller remodeling projects rather than building their dream home off the grid.

The weak economy and foundering housing market have forced builders to slash their budgets, including their participation in national trade shows.

That means, says Bridget Scanlon of the Propane Education & Research Council (PERC), it’s going to take a different strategy to reach builders and sell them on the benefits of propane in homes and commercial buildings. Glitzy commercials, flashy billboards and fancy trade show presentations coordinated through a national campaign aimed at large builders may not be as effective as they once were.

Instead, she says, it’s time to hone PERC’s focus on the smaller, local builders who are part of the same communities in which propane retailers are living and working.

“I think it’s really critical to realize how localized the residential world is,” says Scanlon, PERC’s new director of residential and commercial programs.

As a former executive vice president of the Home Builders Association of Bucks/Montgomery Counties near Philadelphia, Scanlon has a great deal of experience working with locally based builders. She says working within these smaller associations can more directly reach decision makers, increasing their awareness of and appreciation for propane.

And, she says, there’s a lot that local builders have in common with propane marketers. For many builders, these are multi-generational businesses, started by one man and handed down to children and grandchildren. Builders in a given region are competitive but friendly, and their children grow up together, attending the same industry and community functions. Builders and propane marketers attend the same churches and schools, and their kids play on the same soccer teams.

“The importance of those relationships is essential, especially when the economy is as bad as it is,” Scanlon says.

Plan of attack

This year, with a $2.1 million budget to address the residential and commercial markets, Scanlon hopes to leverage those relationships to help marketers initiate dialogue about building with propane. She wants to hold training courses as part of regional builders’ association events and invite builders to attend propane training sessions.

The key, she says, is networking – not only with the National Association of Home Builders (NAHB) and being part of their trade shows, but specifically with its Executive Officers Council, of which she was a member. The council includes the executive directors of some 800 state and local associations representing more than 140,000 members nationwide.

These executive directors communicate directly with their members to strategize, highlight important events, promote their businesses and offer continuing education.

“They’re the gatekeeper, and they know their market,” Scanlon says. When she was in that role, “my builders knew me and knew I wouldn’t have put something together for them if I didn’t see it had value,” she explains.

Gaining the trust of the executive directors will help PERC funnel information directly to builders. For example, she says, in January she talked with her former counterparts in New Jersey to explain and promote the use of propane generators, given the massive power outages when Hurricane Sandy knocked out utility lines.

She plans to purchase ads in these associations’ membership directories, giving a direct link between local propane marketers and builders and advertising the availability of PERC’s online and in-person training modules. She is encouraging state gas associations to invite professionals from the NAHB and American Institute of Architects to joint components of their events to educate these construction professionals about the advantages of propane. And she is working with Stuart Flatow and PERC’s safety and education team to develop a training module for plumbers, which she hopes will be available in 2014.

Matters of experience

It’s a strategy that has the support of others within PERC. Scott Brockelmeyer, chairman of the PERC Market Outreach and Training Working Group and Ferrellgas vice president of corporate communications and marketing, says Scanlon is using her experience to take the propane message directly to those in a position to make an impact.

“She knows what resonates with those local builders,” he says. “So, to make it a primary focus in 2013 to be engaging propane marketers with the construction pros at a local level, I think it’s a smart approach.”

In the past, Brockelmeyer notes, PERC had made an effort to mingle with the 20 Club members – builders in non-competing markets who gathered to discuss ways to improve their operations. The new strategy will engage builders in the same market, including those who didn’t have the resources to join a 20 Club.

“We’re focusing on builders at a local level rather than some of the largest builders,” Brockelmeyer says. “I think it’s going to give us an opportunity to get in front of a lot more people.”

PERC President and CEO Roy Willis says the revamped strategy has merit.

“Where propane has been successful in the residential market historically is in those custom-built homes,” he says. “The decisions are made builder by builder at the local level.”

The strategy might be particularly attractive given that Scanlon’s budget is less than half what it was just two years ago. In 2011, PERC allocated $4.5 million for developing the residential market; that number dipped to $3.7 million last year before the group slashed $1.6 million for this year.

The reduction comes as a result of some vendor changes and the discontinuing of some advertising approaches, Brockelmeyer explains.

But Scanlon says the reduced budget forces her to zero in on the most important and cost-effective strategies for growing the residential market, which she says is the “bread and butter” for marketers.

“Hopefully we can grow the budget back by making it work for the marketers,” she says. “It’s the industry’s money, and we have to spend it wisely.”

Propane as a solution

Given the difficult times homebuilders have experienced in recent years, they – like propane marketers – are searching for new ways to grow their businesses. That means they may be more willing to learn about the advantages of propane now than perhaps ever before, as they search for their competitive advantages.

“All signs are that builders are open to more energy solutions,” she says.

Scanlon wants to seize the opportunity to show them the many ways builders, remodelers and other construction professionals can use propane – in the home for drying clothes, heating water and cooking, but also in fleets, lawn mowers and other equipment.

“When we’re talking about residential, we have to talk about new construction and existing residences,” Scanlon says. “In both worlds, we have significant opportunities.”

The message may be well timed, as the housing market begins to show signs of a rebound. In December, the U.S. Commerce Department recorded a surge in new housing starts to an annual rate of 954,000 units – the highest it’s been in four years but less than half of the 2.27-million-unit rate recorded in January 2006. The Commerce Department says groundbreaking for single-family homes, the largest segment of the market, climbed 8.1 percent last month to a 616,000-unit rate.

“We’ve been bearish as an industry about residential gallons. Given what we’ve seen in the housing market in recent years and the downturn in residential gallons, it’s understandable to be pessimistic, but it’s an industry that was built on the residential segment,” Brockelmeyer says. “We’d be foolish to take our eye off of it, and PERC’s taking some meaningful steps to ensure that we’re not.”

Scanlon can use the research in which PERC has invested over the years to take the propane message down to the local level, directly to the builders, Brockelmeyer explains.

“I think that approach is smart, and I think it’s right for the industry,” he says. “From what I’ve seen, the market is starting to rebound a little bit. It’s an important time to be having these conversations at that local level as their activity starts to ramp up.”

Photo courtesy of PERC