Falling Prices: Five Things You Should Be Doing NOW! - It’s All About Your Customers - Warm Thoughts Communications
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Falling Prices: Five Things You Should Be Doing NOW! – It’s All About Your Customers

Posted on February 10, 2015

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Most fuel companies find themselves in an enviable position this winter:

Good margins. Strong degree days. Plummeting cost of product. Big credit balances building up in budget accounts. Much needed ammunition to fight back against the gas-conversion narrative.

At the same time, and because this is the oilheat industry after all, there are some land mines in play.

Many customers on fixed price plans (if you offer them) feel that you really could have lowered your price if you wanted to. They think you are making more money off them this winter and, while they may have had to honor their contracts, they are itching to shop around once the handcuffs are off.

Your price is dropping, but not as fast as the gasoline prices, or as low as they are seeing others advertised. Again, they may not act on that now’ in the middle of winter, but it poses a risk going forward. For example, we track how much search is happening around fuel prices over the internet, and it is an early-warning signal of customers’ unhappiness. Search is up substantially over last year in many places. So there will clearly be some retention challenges for you and, for that matter, your competitors. Your pain may be their gain, or vice versa. It all depends on how well you play it.

What should you be doing to secure your base, so that the great buzz of this winter does not turn into a hangover come fall? Are there ways to leverage the situation to get new customers, or to upgrade your customers and cross-sell more products and services?

In my Breakthrough Groups, we’ve been bouncing this around for a couple of months. It has been a hot topic with my consulting clients as well. Below are some helpful ideas that, with good execution of customer communications and training, could pay big dividends.

  1. Budget balances — Put them to work.

    Traditionally, companies will take their budget credit balance and roll it into next year’s numbers—hoping customers won’t ask for the money back. That’s ok, but it sets up the following year (2016-17) to be a bear, especially if prices go up. Customers could get a double whammy—no subsidy, and higher prices built into the estimate. That will trigger customers to shop for deals, and more will drop off your budget plans.

    Alternatively, you could:

    • Give them a holiday—Tell them not to pay their last one or two payments. This is very good for building good will. It also leads to less whiplash with the next budget cycle. And perhaps it reduces the number of customers requesting their remaining balances back.
    • Use customers’ credit balance to make it easy for them to get cap protection. If you offer price caps for a fee, use the budget balances to seamlessly renew them. In fact, consider renewing your cap early to take these customers off the table by allowing them to secure their cap before prices have a chance to rise. We’ve done this before with many companies and, if done correctly, it is a big win.
    • Allow your customers to use their credit balance to easily buy your AC service plan, heating plan or some other product or service they would normaly have to lay out money for. They don’t have to write a separate check, and you book the sale right now.
  2. Convert your Prebuys.

    If you have prebuys, this is trickier, but you could consider letting them convert the last vestige of their gallons into a budget cap, lowering their rate on the remaining fuel. You can claim that you negotiated a deal with suppliers, and lock them in for a year+. Since many prebuy customers will harbor ill feelings after this season, this might be a good retention play, and gets them off prebuy, but obviously has some costs associated.

  3. Don’t ignore the rest of them.

    Recently, one of my clients and I were talking about the cost savings that “all” fuel customers are experiencing and how to best capitalize on it. Our discussion hinged on this message: “So, you’ve saved almost $1,000 this year as a result of falling fuel prices. What are you going to do with it?” We wanted to convince them to permanently reduce their fuel bills by improving efficiency with some of their unanticipated savings. Upgrade equipment, buy a smart thermostat, get that long-overdue tune-up done, invest in new heating and cooling technology, etc. Sure, it is easier for customers with credit balances to make upgrades, but the pitch should be made to all. This year’s savings can pay off year after year regardless of what happens to prices going forward.

  4. Get real about retention.

    Train customer service staff and actually monitor the calls. Your people need to do a better job at fielding the tough questions, such as: Why isn’t your price going down faster? Why are there companies advertising for 50 cents lower? Why can’t you lower your prebuy price? You don’t do enough to train them to handle this. More important, even if you teach your staff some talking points—you aren’t monitoring the calls to hear what they are actually saying. I do a fair amount of call scoring as part of my sales and customer service consulting regimen and I can tell you it is worse than you think—much worse. It creates a hole in your bucket, and you don’t even realize how much damage is being done.

    Besides teaching the right things to say, you should create letters from the owner or GM that go out automatically when a customer calls in with a price complaint or questions, such as “I heard you called in with a question about our prebuy contract. I hope our rep did a good job explaining things. But since this is a complicated issue, I wanted to make sure you had all the information directly from me…”

    I’ve written this type of follow-up letter for several clients, and they have been a big success. They show customers you care and that their complaint matters; and your business relationship isn’t put in the hands of a customer service rep who struggles to understand this stuff, or the spouse who tries to communicate the message they were given to make a joint financial decision.

  5. Reinvent your sales program.

    Companies pay us good money to do smart marketing that makes their brand stand out and makes the phone ring. These companies are super-focused on ensuring that ROI is strong, and that the promotion is effective. But then they miss the key element. Their salesmanship sucks. Actually, fuel salesmanship sucks at most companies.

    This is a HUGE problem for our industry. Even at companies with dedicated sales teams, 90% of what we hear is quoting the price/selling the deal, and virtually nothing that sells the advantages of doing business with your company. And where there aren’t dedicated salespeople, it’s even worse.

    I want to emphasize this point because I don’t think companies realize just how much customer interaction with unskilled or uninterested salespeople hurts business. It is covered up in some companies by fantastic offers that do the selling in place of skill, but result in unprofitable customers who leave within 1-3 years anyway.

    With so many customers up for grabs this spring and fall, you can’t afford to let this continue.

    Some suggestions:

    • Put tracking numbers on your promotion, your website, etc. This will allow you to count how many people are responding to your ads. This is good, but even more important is that tracking lets you hear how the calls are being handled. This is an eye-opening, cringe-worthy, experience that you can’t avoid any longer.
    • Develop a real sales pitch that your people will use. If you don’t have a script—because it sounds, well, scripted—at least have talking points. But the reality is that you must have a structure that gets your people to actually sell: create trust, find their wants and pain points, ask for the sale, get information to allow follow up if you can’t close, etc.
    • Hint: One of the biggest problems is that your people get “ruined” by tons of calls from people who will never be your customer. They start gearing their pitch to the “What’s your price…thanks, goodbye” customers, and miss the chance to sell to the 30% of calls who are legitimately good matches. They don’t ask questions, they don’t sell the company and they don’t follow up. If you are selling full-service oil in a competitive market, you can’t expect to succeed with order takers.

Stay focused on today… and tomorrow.

Don’t get me wrong. We are all thrilled with the competitive advantage that falling fuel prices gives us in the energy market. It is good for our industry and good for us. But this is not the time to sit on our laurels and assume that everything is right with the world. Good margins and strong gallons may give you a healthy snapshot of your business today. But your customer count points to what is in store for tomorrow. There is work to be done on several fronts to make sure that we are using this shift to hold on to existing share as well as to gain new. It starts with the fundamentals of good marketing, great customer service and outstanding sales. As always, you can be sure there will be churn. The question remains: Are you positioned to be on the winning side?

Ed Cardell

Ed Cardell brings a wealth of industry management, leadership and expertise to the company, and allows Warm Thoughts to expand its service offerings. Prior to joining Warm Thoughts, Cardell was the general manager of the heating fuels division of Moyer Indoor Outdoor, one of the country’s most progressive and diversified fuel companies. He also served as the Director of Marketing for the entire Moyer Indoor Outdoor operation.

Ed works with fuel companies who want to grow their business, improve their operational performance and create a structure for success in the ever-changing energy landscape. He also facilitates Warm Thoughts’ Breakthrough Groups–members only groups of fuel company leaders who strategize and benchmark for success–and he’ll be conducting Warm Thoughts’ trademarked customer service and employee training programs.

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