Is it time to diversify your propane business? - Warm Thoughts Communications
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Is it time to diversify your propane business?

Posted on October 17, 2016

Think about lifetime customer value, not transactional value


What opportunities do you see in other markets?

Your current propane business model may need an overhaul to keep pace with today’s marketplace. Offering complementary products and services can help you stay in touch with your customers and increase your revenue and profitability. It may be time to sideline that no-frills propane approach. You should be thinking in terms of what your next growth engine should be and how you can get that engine started.

Diversification in the propane business can mean a lot of different things. The most popular avenues by which you can diversify are residential propane equipment sales and propane for on-road and off-road engine use. There are many other diversification choices out there, including other heating fuels (wood, pellet fuel, heating oil, etc.), other engine fuels (diesel, electricity, hydrogen, etc.), and water treatment equipment, and the list goes on. Look for and consider products and services that your customers may be buying from somewhere else and for products or services your customers could buy but don’t.

No matter how you decide to diversify your propane business, there are certain basics to which you need to pay attention. The scope of your ambitions determines a great deal about the planning and resources you will need. You need to own the success of this new part of your business. Are you going to be all in, or are you just sticking your big toe in it? Your employees will sense that and settle in at your level of commitment. It all starts with the development of a business plan that ties back to your objectives, serves as a foundation, and gets you started in the right direction. In some cases I’ve seen this set up as a separate division and in other cases it is blended in with the current operation. Both of these scenarios can work, but they can also backfire. You can end up with silos, lack of synergy and conflict on one hand, or no one really driving the success on the other, just feeling stretched beyond your comfort zone. Should you try to hire someone with experience to run the effort or adapt a home grown staff member to avoid getting someone else’s problem child? All of this needs to be thought through carefully.

How you market this new part of your business is a key to success. Is the projected scope and size of the business important enough to consider a name change or addition of a new byline or alternate logo look for different advertising efforts? Name changes and logo design changes are a lot of work but they can be worth it. Common sense should prevail. If branding and logo changes are warranted, the changes need to be complete, from your website URL and creative, your email address, signage, and truck identification.

Marketing tools such as e-mail, newsletters, direct mail, bill inserts, outbound phone calls, stickers, handouts from service techs, and customer surveys can be cost effective ways to get the news out about the expanded scope of your propane business. You don’t have unlimited resources for this new part of your business, so think through carefully how to leverage your efforts for maximum effect. For example, e-mail marketing is tempting because it is cheaper than printing and postage, but it is much less effective in driving response. I have been involved in test cases where printed marketing pieces receive 70 percent more phone calls and 5 times as many survey responses as the identical piece that is emailed to a similar customer base.

Diversifying your propane business can be a game changing, company-saving, money-making, business-preserving decision, or it can be a frustrating, expensive, resource draining endeavor. Even when done right, you can expect to hear for years to come, “Oh I didn’t know you sold that”. That’s just a buying signal to move in and close the sale.


Tom Jaenicke is Vice-President of Propane Marketing Services for Warm Thoughts Communications, a company providing Breakthrough Marketing Solutions for the energy services industry. He can be reached at tjaenicke@warmthoughts.com or call him at 810 252-7855.

Tom Jaenicke
You can reach Tom Jaenicke online or call our office at 201-330-9276

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