Wednesday, March 9, 2016
By Tamera Kovacs . . . Typically when we think of utility bills we categorize them as the gas bill, the electric bill, the phone bill, and so on. We have become accustomed to thinking this way because those are bills we receive and pay. But instead of focusing on who your customers write checks to, think about maximizing your share of their utility expenses by increasing the number of propane burner tips at each residential customer’s home. 
Consider your customers’ bills in terms of usage by utility. Are you getting the utility dollars or are those utility dollars going to someone else? Primary examples are home heating, water heating, cooking, fireplaces, supplemental heat, fire pits, and outdoor or patio kitchens…and that’s just for residential users.
Adding burner tips for existing customers are some of your most profitable gallons gained. You already have a relationship with the customer, you already have a tank at the house, and you are already making their deliveries. On average, a cookstove adds 80 gallons annually and a water heater adds 200 gallons. If you have 2000 residential customers and 800 don’t utilize propane for water heating, you have the potential to add an additional 160,000 annual gallons. Multiply the additional 160,000 gallons times your gross margin (say 60 cpg) and you have added $96,000 to the bottom line annually. This increases the value of your company by $385,000 to $575,000.
But are you prepared to easily add those additional gallons? Do you have the information readily available to identify potential gallons upside by adding residential burner tips for existing customers? To successfully and economically target these 800 customers, it is critical to know all the appliances in the house and the fuel source for each. It is much more cost effective to mail 800 postcards advertising the water heater rebate program you offer rather than 2000. To target customers with the best potential for increasing their number of burner tips, do a survey. Ask if they plan to replace their water heater, or remodel their kitchen in the near future. This provides you the opportunity to promote the benefits of propane, the cost savings over an electric water heater, and the environmental benefits of propane versus other fuel sources.
A concern for many retailers is having information that is in a readily usable format or system. If the information isn’t in a form that’s easily managed to grow your business, consider creating a system. Consider hiring stay-at-home moms to work a few hours a day or perhaps a high school or college student. Develop the system, then be creative when solving the manpower issue.
Some retail propane marketers with no service department feel installations would be cost-prohibitive due to the expense of hiring service technicians. This creates a unique opportunity for building relationships with local HVAC or plumbing companies. Developing working relationships with other collaborative companies can pay dividends down the road. Not only will you be able to recommend their services when a customer’s furnace goes down, you’ll have an HVAC technician or plumber knowledgeable about propane and who can install appliances on your behalf.
Research and utilize any monies available to keep your costs down. In 2015, according to the Propane Education & Research Council (PERC) website, 24 different states offered various rebates for residential propane uses. The promotions varied from state to state. As of this writing, PERC rebates for the states have not been released for 2016. Contact your state association to learn about rebates. The rebates assist your customers in buying new, or making the switch to, propane appliances (adding more propane burner tips), saving your customers some money, and increasing your share of the customer’s utility bills.
Another consideration is when the bills are paid. Most utility bills are invoiced and paid monthly. Propane is one of the few utility bills your customer does not pay monthly (unless the customer has a meter or utilizes a budget-billing payment plan). Make sure you understand what your customers want and provide options. Providing payment plans can lock the customer into your services versus a competitor down the road.
Challenge yourself and your staff to think differently. Look at each customer as multiple burner tips, not just one customer. Could the customer have four burner tips rather than one? What are you and your staff doing to gain those additional burner tip gallons? Consumers are going to have utility bills. Your challenge is to maximize your share.
Tamera Kovacs is a financial and business consultant for Propane Resources, which provides financial and operational consulting, merger and acquisition services, supply, transportation, and marketing communications services for the propane industry. Contact her at (913) 262-0196 or This email address is being protected from spambots. You need JavaScript enabled to view it..
Consider your customers’ bills in terms of usage by utility. Are you getting the utility dollars or are those utility dollars going to someone else? Primary examples are home heating, water heating, cooking, fireplaces, supplemental heat, fire pits, and outdoor or patio kitchens…and that’s just for residential users.
Adding burner tips for existing customers are some of your most profitable gallons gained. You already have a relationship with the customer, you already have a tank at the house, and you are already making their deliveries. On average, a cookstove adds 80 gallons annually and a water heater adds 200 gallons. If you have 2000 residential customers and 800 don’t utilize propane for water heating, you have the potential to add an additional 160,000 annual gallons. Multiply the additional 160,000 gallons times your gross margin (say 60 cpg) and you have added $96,000 to the bottom line annually. This increases the value of your company by $385,000 to $575,000.
But are you prepared to easily add those additional gallons? Do you have the information readily available to identify potential gallons upside by adding residential burner tips for existing customers? To successfully and economically target these 800 customers, it is critical to know all the appliances in the house and the fuel source for each. It is much more cost effective to mail 800 postcards advertising the water heater rebate program you offer rather than 2000. To target customers with the best potential for increasing their number of burner tips, do a survey. Ask if they plan to replace their water heater, or remodel their kitchen in the near future. This provides you the opportunity to promote the benefits of propane, the cost savings over an electric water heater, and the environmental benefits of propane versus other fuel sources.
A concern for many retailers is having information that is in a readily usable format or system. If the information isn’t in a form that’s easily managed to grow your business, consider creating a system. Consider hiring stay-at-home moms to work a few hours a day or perhaps a high school or college student. Develop the system, then be creative when solving the manpower issue.
Some retail propane marketers with no service department feel installations would be cost-prohibitive due to the expense of hiring service technicians. This creates a unique opportunity for building relationships with local HVAC or plumbing companies. Developing working relationships with other collaborative companies can pay dividends down the road. Not only will you be able to recommend their services when a customer’s furnace goes down, you’ll have an HVAC technician or plumber knowledgeable about propane and who can install appliances on your behalf.
Research and utilize any monies available to keep your costs down. In 2015, according to the Propane Education & Research Council (PERC) website, 24 different states offered various rebates for residential propane uses. The promotions varied from state to state. As of this writing, PERC rebates for the states have not been released for 2016. Contact your state association to learn about rebates. The rebates assist your customers in buying new, or making the switch to, propane appliances (adding more propane burner tips), saving your customers some money, and increasing your share of the customer’s utility bills.
Another consideration is when the bills are paid. Most utility bills are invoiced and paid monthly. Propane is one of the few utility bills your customer does not pay monthly (unless the customer has a meter or utilizes a budget-billing payment plan). Make sure you understand what your customers want and provide options. Providing payment plans can lock the customer into your services versus a competitor down the road.
Challenge yourself and your staff to think differently. Look at each customer as multiple burner tips, not just one customer. Could the customer have four burner tips rather than one? What are you and your staff doing to gain those additional burner tip gallons? Consumers are going to have utility bills. Your challenge is to maximize your share.
Tamera Kovacs is a financial and business consultant for Propane Resources, which provides financial and operational consulting, merger and acquisition services, supply, transportation, and marketing communications services for the propane industry. Contact her at (913) 262-0196 or This email address is being protected from spambots. You need JavaScript enabled to view it..
