Cold comfort — Cool profitability

Posted: 05/01/15

By Rich Rutigliano, PriMedia Inc. 

Face it: there is no cooler business to be in than air conditioning! And here's why—as Mother Nature heats things up outdoors, your retail propane profits correspondingly drift in the other direction...downward. Even with propane's year-round diversity, from May to October, heat is more an adversary for your customers— and for you—than a cozy ally. Summertime relief comes in the form of cool, reliable air conditioning.

As a home comfort provider, you can choose now to turn this permanent fact of life to your advantage. Why not build upon the positive customer relationships you've worked so hard to achieve? If you can manage to keep customers happy all year long by adjusting the focus of your business seasonally, you can stimulate a more steady and balanced cash flow for your company from January to December. There are some who have decided to take a pass on diversifying their core business to include air conditioning. This traditionalist mindset is normally rooted in thinking that says, "We're a propane company— home heating is our business and our specialty...why should we pretend to be all things to all people?" Of course, there is a built in logic here. And there's always something to admire in good, old-fashioned humility. But before closing the window on new possibilities, weigh these self-limiting claims against the realities of the 21st Century. 

Fact: The value of cool is constantly growing! Though the subject of global warming has become highly politicized over the last decade or so in the U.S., the weight of evidence shows convincingly that greenhouse gases are building up globally to unprecedented levels. In the temperate zone (where most of America is located) this will tend to mean hotter temps in summer, and longer lasting summers. Demand for more air conditioning is as likely to follow as night follows day. In fact, U. S. Department of Energy statistics show that from 1978 to 2001, nationally, the percentage of American households equipped with central air conditioning more than doubled, going from 23% up to 55%.

There's more. According to the Earth Institute at Columbia University, "This year is on track to be the hottest year on record...[beating] the previous record high set in 1998, continuing a general trend of rising temperatures dating back to 1980. In May 2005, scientists concluded the Earth is absorbing more of the sun's energy than is being emitted back into space, disrupting the planet's energy balance and resulting in global warming." These facts paint a pretty clear picture. For the propane retailer, the decision whether to stand pat or to start making plans to address increased demand for air conditioning, deserves close scrutiny. 

Fact: Allergic sensitivities and reactions seem generally to be on the rise in the U.S. For example, according to the Centers for Disease Control and the American Lung Association, over 20 million Americans report having asthma; and between 1980 and 1994, the prevalence of asthma increased 75%. Furthermore, statistics show that American adults miss over 14 million work days annually, due to asthma.

The American Academy of Allergy Asthma and Immunology states: "Each year, millions suffer from seasonal allergy symptoms such as nose and sinus congestion, itchy, runny nose and itchy, watery eyes. Many also suffer from perennial allergies...triggered by indoor allergens, including house dust mite droppings, animal dander . . . and indoor molds. The droppings of mites are the most common trigger of perennial allergy and asthma symptoms...Dust mites especially thrive in high humidity and in areas where human dander are found. To reduce dust mites, it is important to keep humidity below 50% throughout the home by using a dehumidifier or central or window air conditioning."

Yes, for many sufferers, a dependable, well-maintained central air conditioning system—with built-in air filtration—can be the answer for allergen control. And again, the traditionalist propane service provider may well wonder how many of his regular customers would love to know he now wears a second hat with "I Do Central Air 2" stitched across the front. If a family is beset by allergy issues (or simply tiring of hotter summers) and is in the market for a new A/C system, it's very likely your A/C add-on would come as welcome news. 

Fact: Mega-department stores are now more serious competitors to propane retailers than ever before. Sears, Home Depot, and other retailing giants offer the purchase and installation of year-round home energy systems, often with easy financing terms. The Big Box retailers also offer extended warranties on equipment and discounted fuel prices. And all this competition is in addition to the discount marketers and rival trades you've always been pitted against.

So, how can you compete successfully? Of course, you can never afford to overlook the issue of customer loyalty. And keep in mind, it's always a two-way street. If you have built and maintained a positive relationship with a customer, being there year-round shows a more complete loyalty to his or her home comfort requirements. This, in turn, reinforces that customer's loyalty to you. In other words, Sears and Home Depot will have a much harder time getting a foot in the door if you're already meeting the home comfort needs of all of your customers through all seasons.

Assuming you want to get on the fast track now with A/C, you can start by talking to your customers about how they feel about their A/C units or systems. Ask them direct, but friendly, non-confrontational questions. Take surveys and/or send out questionnaires with bills. Objective research approaches like these help you take the pulse of their local market. Once feedback starts to trickle in, or pour in, take the next logical step by promoting your new A/C home evaluation and service offerings through direct mail. An informative newsletter is often the propane professional's communications tool of choice. 

Before you become "really cool"...there are numerous practical considerations. Contact targeted trade associations (local/regional/national) to gather information about how to cross the threshold from propane-only to heating and cooling year-round. One worth exploring is the Air Conditioning Contractors of America, which is profiled at www.acca.org. Investigate seminars, certifications— which your home state or municipality may or may not require—and assess other aspects of getting yourself and your staff educationally up to speed. 

And think about this: hiring an experienced A/C guy. Perhaps there is a qualified professional in your area who may be looking for the right opportunity. If you get lucky and are able to hire the right individual, he may turn out to be your air conditioning M.V.P. and a vital source of inside information for all aspects of central air.

Regardless of size, successful businesses do not rest on their laurels: rather, they take stock of reality and adjust, which sometimes means expanding and diversifying the scope of their businesses. Recognizing that market conditions are rapidly changing is what inspires an enterprise to make changes. Such recognition can spell the difference between sinking or surviving and thriving.

As a new year is upon us, now may be the time to take a closer look at the many advantages of providing central A/C to all your residential propane customers. If you think it might be worth considering, feel free to give us a call or contact us. We can help with some tried-and-true formulas that have worked well for propane companies like yours.

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 www.primediany.com and www.propane-advertising.com.