Friday, February 23, 2018
Dave Honeycutt’s family started in the oil business in Maryland in 1932. Nearly five decades later, in 1980, it added an HVAC business that brought the company a new focus on service as one of its key benefits. This was then followed in 2000 with the incorporation of Tevis Propane’s locations in Westminster and Hampstead, Md., to the mix of businesses. 
From the beginning, Honeycutt deemed selling and servicing propane appliances and hearth products critical to the success of the propane venture. He recognized that adding burner tips to customers’ homes was the best way to increase propane load. “We built a 3000-square-foot showroom to showcase our propane appliances,” Honeycutt said. “With a staff of 30 technicians on the road with the HVAC business to service the water heaters, propane fireplaces, and other appliances, we are able to take care of everyone.”
“Many of our customers initially purchase a propane fireplace. Our hearth options tend to make customers associate propane with enjoyment rather than just another utility. Once they see propane in a positive light and associate propane with enjoyment, we are able to discuss other ways to further their enjoyment with propane. We ask if they know they can cook food and heat water with propane. This opens the door to adding more burner tips; we’ve done especially well adding water heaters.”
Industry Sales Have Declined
While there are a number companies like Tevis Propane that are selling and servicing appliances, the majority of retail propane operations aren’t involved in the appliance business. “Propane retailers selling cooking appliances and water heaters were more common in the 50s, 60s and 70s,” observes Randy Doyle, CFO of Ocean City, Mississippi-based Blossman Gas and a member of the Propane Education & Research Council (PERC). “Most retailers have gotten away from selling appliances and just want to deliver propane.” Doyle is concerned that propane is losing its advocates by not promoting the benefits of key residential burner tip products and not having a program to sell and service the appliances.
Blossman Gas, with a presence throughout many southeastern states, and Blue Star Gas (Santa Rosa, Calif.), which serves five states in the West, are examples of two companies that have forged a strong relationship with an appliance manufacturer, in this case Rinnai (Peachtree City, Ga.). This manufacturer of the top-selling brand of tankless water heaters in the U.S. is an advocate for propane appliances. Blue Star Gas president Jeff Stewart told BPN that, while partnerships with manufacturers are important, partnerships with service providers such as plumbers, contractors, and builders are paramount. “These are the people who, without any relationship with anyone in the propane industry, are likely to just slap in an electric water heater,” he said.
Mike Peacock, national director of energy business development, and Carlos Rodriguez, western energy business development manager, are two Rinnai representatives who work extensively with retail propane marketers. In addition, the two are also well known to plumbers and heating and air contractors. By utilizing the sales tools that his company provides marketers, Rodriguez maintains they should be able to focus their efforts on making customers aware of the products available, facilitate their installation, and then reap the rewards of a locked-in agreement to provide gas.
Today, with fewer retail propane marketers having product showrooms than in the past, and with their customers paying bills via the internet, phone, or by mail, the number of customers visiting propane offices has steadily declined. “This makes for fewer opportunities to sell products to customers,” Peacock said. Nonetheless, industry partnerships between manufacturers and dealers have proven successful. “It often involves getting marketing materials in the customers’ hands and making them aware of the benefits. We work with propane retailers to share the benefits, get the customers to our website, and provide a turnkey plan for quality efficient heating.”
Propane appliance sales have also benefited from rebate programs from both the national PERC and a number of state PERCs. The substantial savings available to end-users utilizing the rebates has strengthened sales, as has council funding of national awareness campaigns. However, despite all the efforts to draw attention to the benefits of propane appliances and the rebate programs, an 18-year summary prepared in 2015 by ICF International, a market data provider contracted by PERC, showed a steady decline in propane customers, burner tips, and internal combustion engines that use propane from 1998, the year PERC began. According to the report, since 1998, despite the national marketing efforts, propane had no growth markets: residential propane water heater gallons were down 33% and manufactured homes heated by propane were down 28%. The declines were taking place long before the PERC marketing restrictions began in 2009, indicating that consumer education alone was not the only missing component.
Can Sales Be Turned Around?
Doyle, Peacock, and other industry stakeholders have held meetings to discuss ways to support the industry’s efforts to reverse the decline of residential appliance sales. Doyle said he believes that, while a number of external factors can be identified, change begins with the individual retail propane marketer. External factors affecting sales include big-box stores becoming more aggressive in selling appliances, a tough economy for a number of years, recent downturns in the housing market, often unpredictable supply costs, marketing restrictions placed on PERC in 2009, and user conservation. Despite all of this, Doyle says the retail propane marketer can take several steps to turn the tide:
1. Business owners and managers must make burner tip growth a top priority.
2. Owners and managers must learn and train their staff on the basics of propane’s benefits.
3. Owners and managers must build relationships with builders, contractors, and plumbers.
4. Owners and managers must lead their staffs in actively marketing to existing customers the benefits of additional appliances.
5. Owners and managers must transform their retail image from an industrial look to a retail look.
Through consultation with associations and retail propane marketers nationwide, Doyle several years ago developed a Propane Marketer Customer and Burner Tip Growth Readiness Test. Available to any retail propane marketer upon request, the test asks participants to rate their company’s readiness to make the changes deemed critical to sell more burner tips.
The questions are in the categories of strategy and leadership, propane products and applications, marketing and promotion, facilities, customer offerings, existing customer base, employees, partnerships, marketer development, and manufacturer and distributor relationships. Some key items of the 26 categories for rating 1 to 10 include:
Growth Potential Is Real
While Doyle and others cite lackluster market development performance as a key reason for declining sales of propane appliances, they believe that all the other pieces are in place for successful growth. Doyle points to the clean, efficient, and abundant attributes of propane, along with the cost savings as keys to its success. “Propane leaders must step up to the challenge of becoming experts regarding every unique application. We must be our own advocates; we can’t assume somebody else is going to be our advocate. We can assume builders, contractors, and plumbers will sell what they best know how to install and service.”
A wealth of details on the benefits of propane for every application are available on the PERC website and in PERC collateral materials. Regardless of the application, customers are drawn to the clean, green, and efficient attributes — but the cost-saving features can really close the sale. “Customers really like a one-stop shop,” Jesse Marcus, PERC’s director of residential and commercial business development, pointed out. “If you don’t sell appliances, [make sure you] have a relationship with someone who does to help customers in the buying process.” Facts and figures can strengthen this reasoning: the U.S. Department of Energy (DOE) estimates that propane water heaters save at least $175 annually compared to electric water heaters and heat two and a half times the water with the same amount of energy; propane gas fireplaces produce twice as much heat as wood-burning fireplaces at about one-third of the cost. In fact, DOE estimates that propane fireplace systems cost 30% to 60% less per hour of operation than wood-burning models. “The benefits are real, and PERC’s role is to advocate, assist, and provide resources to help retail marketers add burner tips in customers’ homes,” Marcus said. “Propanecouncil.org has all of the resources needed to help marketers engage customers and raise awareness of propane’s benefits.”
And, after company owners and their staff are well-versed in the benefits outlined in the PERC materials, don’t forget the advice of Dave Honeycutt of Tevis Propane: “Once they see propane in a positive light and associate propane with enjoyment, we are able to discuss other ways they can find to further their enjoyment with propane….” —Pat Thornton
From the beginning, Honeycutt deemed selling and servicing propane appliances and hearth products critical to the success of the propane venture. He recognized that adding burner tips to customers’ homes was the best way to increase propane load. “We built a 3000-square-foot showroom to showcase our propane appliances,” Honeycutt said. “With a staff of 30 technicians on the road with the HVAC business to service the water heaters, propane fireplaces, and other appliances, we are able to take care of everyone.”
“Many of our customers initially purchase a propane fireplace. Our hearth options tend to make customers associate propane with enjoyment rather than just another utility. Once they see propane in a positive light and associate propane with enjoyment, we are able to discuss other ways to further their enjoyment with propane. We ask if they know they can cook food and heat water with propane. This opens the door to adding more burner tips; we’ve done especially well adding water heaters.”
Industry Sales Have Declined
While there are a number companies like Tevis Propane that are selling and servicing appliances, the majority of retail propane operations aren’t involved in the appliance business. “Propane retailers selling cooking appliances and water heaters were more common in the 50s, 60s and 70s,” observes Randy Doyle, CFO of Ocean City, Mississippi-based Blossman Gas and a member of the Propane Education & Research Council (PERC). “Most retailers have gotten away from selling appliances and just want to deliver propane.” Doyle is concerned that propane is losing its advocates by not promoting the benefits of key residential burner tip products and not having a program to sell and service the appliances.
Blossman Gas, with a presence throughout many southeastern states, and Blue Star Gas (Santa Rosa, Calif.), which serves five states in the West, are examples of two companies that have forged a strong relationship with an appliance manufacturer, in this case Rinnai (Peachtree City, Ga.). This manufacturer of the top-selling brand of tankless water heaters in the U.S. is an advocate for propane appliances. Blue Star Gas president Jeff Stewart told BPN that, while partnerships with manufacturers are important, partnerships with service providers such as plumbers, contractors, and builders are paramount. “These are the people who, without any relationship with anyone in the propane industry, are likely to just slap in an electric water heater,” he said.
Mike Peacock, national director of energy business development, and Carlos Rodriguez, western energy business development manager, are two Rinnai representatives who work extensively with retail propane marketers. In addition, the two are also well known to plumbers and heating and air contractors. By utilizing the sales tools that his company provides marketers, Rodriguez maintains they should be able to focus their efforts on making customers aware of the products available, facilitate their installation, and then reap the rewards of a locked-in agreement to provide gas.
Today, with fewer retail propane marketers having product showrooms than in the past, and with their customers paying bills via the internet, phone, or by mail, the number of customers visiting propane offices has steadily declined. “This makes for fewer opportunities to sell products to customers,” Peacock said. Nonetheless, industry partnerships between manufacturers and dealers have proven successful. “It often involves getting marketing materials in the customers’ hands and making them aware of the benefits. We work with propane retailers to share the benefits, get the customers to our website, and provide a turnkey plan for quality efficient heating.”
Propane appliance sales have also benefited from rebate programs from both the national PERC and a number of state PERCs. The substantial savings available to end-users utilizing the rebates has strengthened sales, as has council funding of national awareness campaigns. However, despite all the efforts to draw attention to the benefits of propane appliances and the rebate programs, an 18-year summary prepared in 2015 by ICF International, a market data provider contracted by PERC, showed a steady decline in propane customers, burner tips, and internal combustion engines that use propane from 1998, the year PERC began. According to the report, since 1998, despite the national marketing efforts, propane had no growth markets: residential propane water heater gallons were down 33% and manufactured homes heated by propane were down 28%. The declines were taking place long before the PERC marketing restrictions began in 2009, indicating that consumer education alone was not the only missing component.
Can Sales Be Turned Around?
Doyle, Peacock, and other industry stakeholders have held meetings to discuss ways to support the industry’s efforts to reverse the decline of residential appliance sales. Doyle said he believes that, while a number of external factors can be identified, change begins with the individual retail propane marketer. External factors affecting sales include big-box stores becoming more aggressive in selling appliances, a tough economy for a number of years, recent downturns in the housing market, often unpredictable supply costs, marketing restrictions placed on PERC in 2009, and user conservation. Despite all of this, Doyle says the retail propane marketer can take several steps to turn the tide:
1. Business owners and managers must make burner tip growth a top priority.
2. Owners and managers must learn and train their staff on the basics of propane’s benefits.
3. Owners and managers must build relationships with builders, contractors, and plumbers.
4. Owners and managers must lead their staffs in actively marketing to existing customers the benefits of additional appliances.
5. Owners and managers must transform their retail image from an industrial look to a retail look.
Through consultation with associations and retail propane marketers nationwide, Doyle several years ago developed a Propane Marketer Customer and Burner Tip Growth Readiness Test. Available to any retail propane marketer upon request, the test asks participants to rate their company’s readiness to make the changes deemed critical to sell more burner tips.
The questions are in the categories of strategy and leadership, propane products and applications, marketing and promotion, facilities, customer offerings, existing customer base, employees, partnerships, marketer development, and manufacturer and distributor relationships. Some key items of the 26 categories for rating 1 to 10 include:
- Burner tip growth is one of the top priorities of the company. The company’s business plans allocate sufficient resources in marketing, sales staffing, and employee education to grow the residential and commercial markets.
- The owners and executive leadership visibly support the priority to grow burner tips by their words and actions.
- Branch managers understand propane applications and execute a plan that develops and closes the burner tip growth opportunities unique to their market.
- Only quality appliances that deliver a positive customer experience are sold; only space heating, water heating products that fit the market are offered; the line creates differentiation from big-box stores.
- The company advertises in a cost-effective manner; creates consumer awareness of the brand; highlights propane’s benefits; invests at least 3 cents per residential gallon per year to create and sustain the brand awareness.
- Branch storefront—the exterior of the branch creates a welcoming retail look and feel; location has good visibility and easy entry and exit.
- Price — Appliances are priced to compete with local big-box stores, plumbers, and local appliance stores. The value for higher-priced quality products is explained to the customer in a compelling manner.
- Customer appliance data — maintains an accurate record of all appliances at each customer’s site.
- Knowledge of propane — employees ready to sell propane’s benefits with enthusiasm; able to close the sales.
- Plumbers and HVAC contractors — the propane company has win-win partnerships with qualified contractors that expands consumer awareness of propane and improves the ability to install appliances within one week of sale during any time of the year.
- Market development — the propane company understands the opportunities of the local market and effectively uses PERC resources and tools to develop the market.
- Education and training — the propane company receives effective product training and support from the manufacturer and distributor.
Growth Potential Is Real
While Doyle and others cite lackluster market development performance as a key reason for declining sales of propane appliances, they believe that all the other pieces are in place for successful growth. Doyle points to the clean, efficient, and abundant attributes of propane, along with the cost savings as keys to its success. “Propane leaders must step up to the challenge of becoming experts regarding every unique application. We must be our own advocates; we can’t assume somebody else is going to be our advocate. We can assume builders, contractors, and plumbers will sell what they best know how to install and service.”
A wealth of details on the benefits of propane for every application are available on the PERC website and in PERC collateral materials. Regardless of the application, customers are drawn to the clean, green, and efficient attributes — but the cost-saving features can really close the sale. “Customers really like a one-stop shop,” Jesse Marcus, PERC’s director of residential and commercial business development, pointed out. “If you don’t sell appliances, [make sure you] have a relationship with someone who does to help customers in the buying process.” Facts and figures can strengthen this reasoning: the U.S. Department of Energy (DOE) estimates that propane water heaters save at least $175 annually compared to electric water heaters and heat two and a half times the water with the same amount of energy; propane gas fireplaces produce twice as much heat as wood-burning fireplaces at about one-third of the cost. In fact, DOE estimates that propane fireplace systems cost 30% to 60% less per hour of operation than wood-burning models. “The benefits are real, and PERC’s role is to advocate, assist, and provide resources to help retail marketers add burner tips in customers’ homes,” Marcus said. “Propanecouncil.org has all of the resources needed to help marketers engage customers and raise awareness of propane’s benefits.”
And, after company owners and their staff are well-versed in the benefits outlined in the PERC materials, don’t forget the advice of Dave Honeycutt of Tevis Propane: “Once they see propane in a positive light and associate propane with enjoyment, we are able to discuss other ways they can find to further their enjoyment with propane….” —Pat Thornton
