Tough Business Conditions Could Create Opportunities

Posted: 09/01/14

By Rich Rutigliano, PriMedia, Inc. 

The recent decline in oil prices is relieving some of the intense pressure on the Oilheat industry, but many observers are still expecting a tumultuous winter. If the dire predictions come true, financial pressures will cause numerous dealers to fail in the next six months, and thousands of customers will be "orphaned." 

The first order of business for most retailers is to survive the season with your business and reputation intact. With credit tight and prices unpredictable, investing in customer acquisition may be a luxury that you cannot afford. A combination of company collapses and severe weather in your area could also create a fuel crisis that demands your attention and consumes all your resources. 

If you are on solid financial ground, however, and companies around you fail, the winter of 2008-09 might present some important growth opportunities. Dealers who are prepared to take on new customers and manage their expectations will be the big winners. 

When a company is failing, the best solution for everyone concerned is a buyout. Unfortunately, company sales hit a wall this offseason, and the major acquisition companies turned away a lot of potential deals. Any strong company can still buy a struggling competitor, but the terms could be tough on the sellers. The value of customer lists has dropped, and if a company is carrying uncovered liabilities in the form of prebuys or budget plans, the value may actually be in negative numbers. We have heard reports of recent company sales in which the seller paid the buyer. 

Where deals haven't been struck, failing companies might simply collapse when they can no longer buy oil. The banks will claim their assets, and their customers will be orphaned. It's a nightmare scenario and a serious crisis for the customers, but the accounts have to go somewhere. 

To win in this potentially chaotic environment, you need to maintain a clear sense of your goals. New business is nice, but the only customers that will benefit you in the long run are the ones who are likely to stay. There is no point in a full-service dealer pursuing customers abandoned by a discounter, because they'll leave soon in search of lower prices. 

If you have decided to recruit this winter, first make sure you have the means to serve extra customers. Size up your delivery capacity and ensure that you will have the trucks and the people you'll need. Approach your bankers and wholesalers to make sure you'll have the ability to ramp up your oil purchases. 

Here are some additional steps you should consider. 

  • Develop and execute a brand recognition strategy. Customers who become orphaned this winter will immediately begin looking for a new dealer, and you want them to call you first. Through advertising, public relations and sponsorship deals, you can raise awareness of your company and create a positive image. You're targeting customers who are under stress and likely will be looking for a company that seems trustworthy. To resonate with them, play up your financial strength, sound business practices and stability. Writing an article in a local newspaper that explains the industry's current struggles can help you be seen as a leader. 

  • Polish your online image. Expect customers to turn to the Internet to find a new supplier. These people have just been burned by one oil company, and they're going to be searching for a smarter, more reliable one that knows how to succeed in hard times. Make sure your website has a professional look and feel, and pay particular attention to the home page and the "About Us" page. A Web site that projects stability, knowledge and integrity will appeal to customers who are looking for a safe haven in the storm. 

  • Invest in pay-per-click advertising. Orphaned customers who turn to the Internet for a new provider are likely to respond to a well-worded advertisement that appears in their search results. A well-managed pay-per-click campaign will put your ad on their screen any time a potential customer enters matching search terms like "heating oil" and the name of their city or town. 

  • Provide helpful information. These customers are likely to have urgent questions about what's happening with Oilheat. Prepare new materials with them in mind, such as a primer on the home heating industry that spells out the current dilemma and explains the importance of working with a strong company. Post it on your website and tell your CSRs to direct callers to it. You should also have printed copies available in the office. An orphaned customer will be strongly inclined to work with a company that "has the answers." 

  • Prep your staff extensively. Work closely with your CSRs to help them understand the mindset of the orphaned customers, particularly the ones who have lost money because they were on budget plans or prebuys. CSRs must be prepared to handle the levels of misery and distress that they may encounter, and they will have to be comfortable explaining the need for a credit check and any restriction you need to put on the new accounts, such as making them COD. First impressions are critical. Spend time making sure everyone knows what to do and say. 

  • Run a referral program. Reward your customers for sending new customers your way, and send out a letter soon reminding them about the incentive. If their friends lose their oil dealers, you'll have recruiters "in the field" to drive customers your way. 

  • Prepare for extreme rapid response. Customers who are on automatic delivery may find out that their provider has gone under only when their oil tank runs dry. If the weather is very cold, they'll be looking for immediate help, and the way you respond could set the stage for a long and fruitful relationship. How will you determine if they're telling the truth? Will you check their credit before you do anything else? Will you risk making a small emergency delivery and hope you get paid? Map out your response options in advance, then make sure everyone who answers the phone knows what to do. 

  • Plan for the long haul. Customers who lose their oil company this winter and land with another competitor of yours might not be satisfied with their new company. Plan to continue your advertising and public relations campaign for a few years so that your brand recognition remains strong and customers will continue to gravitate towards you.

Above all, never take your eyes off the ball. The best customers are the ones you already have. Helping them and communicating with them effectively should be your top priority. If you are taking on new customers, let your current customers know that your expansion will not affect their relationship with you.

If your circumstances prohibit you from taking on significant numbers of new customers in your area, do what you can to help longstanding, loyal customers facing financial hardship and tend to business as usual. If you do the right thing, your good reputation will grow, and the customers will find you.

Richard Rutigliano is President of PriMedia, Inc., a full service marketing and communications firm with offices in New York City, Long Island and Boston. The company is now offering free marketing consultations to Oilheat retailers. Phone: 800-796-3342, or visit their Web sites at and