Propane marketers wield power necessary to remove barriers

March 5, 2013 By    

The defining question of our time is: What will it take to grow the propane industry?

The National Propane Gas Association (NPGA) responded with its Vision 2014 plan. The Propane Education & Research Council (PERC) has its strategy. But unless you are a Keynesian, neither the NPGA nor PERC strategies grow the industry. They facilitate growth. Industry growth happens when an energy consumer is converted to propane or an existing propane consumer adds a burner tip or engine. This organic growth transaction occurs between the consumer and the propane marketer. Therefore, propane marketers hold the key to the industry’s growth question.

Here are some things propane marketers must do and embrace to remove growth barriers:

1. Become the propane expert – The benefits of propane are made possible only through the design of the appliance or technology that uses propane. Propane marketers must know the appliance or technology to educate the consumer on propane’s benefits and be able to provide advice on the application that capitalizes on propane’s competitive advantage over other fuel sources, mainly electricity. We cannot count on big box stores or anyone else to do this for us effectively.

2. Make the benefits of propane known – That propane’s benefits are not known is a universal complaint. Lamenting about PERC’s inability to advertise will not fix this problem. Neither should we place our hope in PERC’s permission to advertise in the future. Instead, propane marketers should do their part to make propane’s benefits known through local advertising, community involvement and partnerships.

3. Direct sales – We cannot expect new customers to come to us. We must go to them. Each retail propane facility needs someone on staff with the time and talent to make sales calls, follow up on sales leads and close sales. Much of the industry’s direct sales staff was cut over the past 10 years, which has hurt industry growth. When nobody in the local retail store is charged with direct sales, it won’t get done because the normal daily duties of branch operations consume everyone’s time.

4. Partnerships – Marketers need partnerships with HVAC contractors, plumbers, homebuilders and remodelers, local appliance stores and technical schools to help educate the energy consumer on propane’s benefits. In addition, many in these groups hold a negative opinion about propane – which hurts us with the consumer.

5. Autogas – The industry’s gallon potential from a mature autogas market is significant. Propane marketers who have entered this market need patience and persistence to develop this market’s critical mass. Collaboration with the NPGA and PERC is vital to the development of autogas, especially for aftermarket conversion.

6. Employee revival – As a general rule, being a part of anything in decline can be demoralizing. Employees’ confidence in propane has probably been shaken by years of decline and hearing customer complaints about high propane prices. Employees’ confidence in propane needs revived. Educating them on propane’s benefits compared to other fuels is a good start.

7. Cost-effective operations – Our industry has relied on higher propane margins to make up for the lost gallons. The Energy Information Administration reports that average U.S. residential propane margins have more than doubled since 2000. We cannot continue to play the margin card if we want to grow. Instead, retail prices should be held in check, made possible by productivity improvements without sacrificing growth and customer service.

The good news is propane will continue to be an important energy source in many sectors of our economy because of its benefits. The better news is the propane industry has organic growth opportunities. It’s a matter of propane marketers becoming ready to develop organic growth opportunities.

For the marketer who removes his growth barriers, he should see customer base and gallons growth. Let’s hope for the sake of the industry’s future that propane marketers orient themselves to organic growth. However, if the pervasive response by the propane marketer is to do nothing differently, then we will see another decade of gallon decline or, at best, stagnation.

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

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1 Comment on "Propane marketers wield power necessary to remove barriers"

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  1. This article is spot on! We have a great product with potential for growth but as marketers we are not doing what is needed to move forward. Change is hard!