A Productive Offseason Can Change Your Course
By Rich Rutigliano, PriMedia, Inc.
The heating season is winding down, and this off-season provides an important opportunity to change your company's direction. With all the challenges and changes that propane dealers are seeing, this spring and summer will be a great time to pause and look at the big picture - and where your company fits in.
Factors beyond our control are making our jobs harder. The economy has been brutal for 18 months, and consumer spending is expected to remain tepid for the immediate future. Ongoing coverage of global climate change continues to cast propane in an unfavorable light, and the electric utilities are capitalizing by plundering our market share.
In the face of this adversity and uncertainty, a business needs a clear sense of direction. It also needs to embrace the customers it has and eliminate weaknesses that could cost it business. I'm recommending three projects for the off-season that address the particular needs of these difficult times.
Check Your Direction
The first project is to update your business plan. The margin for error has vanished, and you can't afford to let your business drift. You need to know where you are trying to go and what it's going to take to get you there. Accurate, up-to-date information is the key. Throw out your old assumptions, and question everything.
Start with a fearless evaluation of the company. Don't think about how things could be or should be, but focus on how they really are. Where are you making money, and where are you coming up short? What are the strengths that you can build on? What are the weaknesses that are holding you back?
Take a long, hard look at the company leadership now and going forward. Who will be in charge, and what will their goals be? Do your leaders have the vision and ambition to take the company in new directions? What do you really want to accomplish? What is the company's financial condition?
You should also update your evaluation of the market where you sell. Size up your competitors one by one. Who is getting stronger, and who is getting weaker? What do your competitors do better than you, and where do you outperform them? Who is likely to fail, and who will be the survivors? Are there areas of opportunity, or likely acquisition targets for you?
Take your time and be thorough during these stages. There is a lot of work to do, and it's good to involve your team throughout the evaluation process. Respect the importance of the information you are compiling, and resist the urge to jump ahead to strategizing.
Once you're satisfied with the information you've accumulated, begin the job of interpreting it and updating your strategy. Be careful to differentiate between problems caused by the bad economy and those caused by operational shortcomings. Develop a realistic range of potential outcomes based on keeping the status quo, and consider how different decisions might affect the outcomes. Don't hesitate to consider radical change. Even if you are not going to alter course drastically, it is revealing to consider all possibilities.
Your analysis should clarify your company's identity and its place in the market. If you are left feeling that you'll have trouble keeping up with the competition, you should probably explore new possibilities, including both diversification and merger strategies. If, on the other hand, you see yourself as a strong company that's built to last and thrive, you should think about raising your profile, pursuing acquisitions while company values are deflated, and expanding your service area.
Your end product should be an action plan that suits you and your business. You'll still face the same challenges you faced when you started, but you'll have a better sense of what you're trying to accomplish and why - and your staff will feel a renewed sense of purpose.
Challenge the Competition
The second off-season project is to bolster your customer relationships. A priority every year, customer outreach is especially vital because good customers are in short supply, and you can't afford to lose too many. The electric utilities and the discounters don't deserve your good customers, but they'll be happy to take them if you stand by quietly and don't fight to keep them.
The electric utilities are pulling out all the stops to encourage fuel conversions - aggressive advertising, inaccurate criticism of propane, and lofty claims about environmental superiority. The utilities enjoy generous help from the media, who tend to parrot electric industry rhetoric and criticize propane.
The discounters, meanwhile, are benefiting from increased price consciousness brought on by the terrible economy. Cash-strapped consumers are more likely to reach for the low price in 2010 without thinking about what corners are being cut to save those pennies.
Your job is to give customers reasons to stay with you - a job that no one else is going to do for you. Remind customers of the tremendous value you deliver, and explain what's wrong with the competitors who are courting them. If the electric utilities are after your customers, tell them the truth about electric - the stuff the utilities leave out. Reference the lack of equipment service and the high costs of heating with electricity.
If discounters are a problem, get your customers thinking about where those cost savings are coming from. Remind them that only a professionally run operation like yours manages risk effectively. Point out that discounters may cut costs by skipping essential safety procedures like tank inspections, criminal background checks and employee training.
Regardless of who the competition is, challenge their claims while portraying your company in a highly positive light. Talk up your roots in the community, your solid range of services, your high-end equipment, and your expertise. Tell them about your storage facility and why it's important for the customer to use a dealer that has one. Enlist satisfied customers to provide testimonials about their experiences with your company. Talk about how you can help customers meet their conservation and environmental goals, because they might think they have to convert fuels to be clean and efficient. Identify everything that makes your business a better value than the competition, and share it with pride.
Newsletters are the best tool for the job. They reach your entire customer base, and they are more likely to gain the customer's attention than an e-mail would be. Customer letters also reach every customer and get noticed.
Messages gain strength with repetition, so it's best to maintain a disciplined communications regimen. A combination of excellent customer service and strong, timely messaging will make most customers reluctant to switch.
My third recommendation is specific: Make ordering, scheduling and payment available through your website this year. Some propane discounters are using the Internet effectively - making it possible for new customers to complete a first-time order online, including the payment, in just a couple of minutes.
The convenience is compelling, and the company that provides it looks contemporary and customer-friendly. The propane industry has long prided itself on customer friendliness, but our definition has leaned more toward the traditional model - friendly people on the phone helping in any way we can. We need to continue that, of course, but we also need to accommodate the customer who would rather avoid the conversation altogether - a growing segment of the population.
Failure to change with the times has doomed many a company. Don't use the sagging economy as an excuse to lose your competitive edge. Use this off-season to realign your priorities, fight for your customers, and make it easier to do business with your company.
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.