Marketers Optimistic About Growth; Many On-Board With Appliance Sales

The propane industry is an optimistic one, with 25% of marketers expecting their business to grow more than 10% in the next two years, according to the final data that the Propane Education & Research Council (PERC) shared with BPN from a PERC marketers survey. The council plans to release complete results from the survey sometime this month.
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PERC president and CEO Roy Willis provided some preliminary results of the survey at its Atlanta meeting in April, and PERC director of communications Gregg Walker expanded on some of those results in a phone interview with BPN soon after that meeting.

Walker noted that the propane industry has been through a great deal of change since PERC last conducted a marketer survey in 2010, including a sharp rise in propane production and a challenging winter of 2013-2014 that exposed some weaknesses in the nation’s energy transportation infrastructure. This year seemed like the right time to ask marketers about their expectations for business growth, their willingness to support new propane-fueled technology, the overall direction of PERC, and their opinions on other issues.

He noted that the final results of the survey were based on 784 completed marketer surveys. Out of the 784 responses, 53% said they expected their business to grow 1% to 10%. If you add the 53% to the 25% percent number that expect their business to grow more than 10%, that means 78% of the respondents expected their business to grow in the next two years.

When marketers were asked what factors would drive that growth, sales and marketing was the most common answer.

Respondents gave the propane industry a 7 out of 10 score when asked about their satisfaction with the propane industry’s marketing efforts overall. Walker said that seems about right, since PERC was under a U.S. Department of Commerce restriction on its public education activities for about six years. PERC announced this past April that the restriction had finally ended, allowing it to resume its public education.

Responding to the question of which activities PERC should increase, marketing was a common response. Nine out of 10 of those respondents said they felt a PERC public education program would benefit their businesses.

“There’s clearly a sense in our industry that a PERC public awareness program would be beneficial,” Walker said, adding that research company Mastio & Co. conducted the surveys by telephone, and that Mastio will report the survey results to PERC strictly in the aggregate, making the responses completely confidential. PERC learned about Mastio from one of the council’s advisory committee members who has hired the company for research projects in the past.

He thought another interesting aspect of the survey came from the question of whether marketers sell, install, or service appliances. Walker did not recall seeing that question in a survey before. Over half (55%) of the respondents sell at least one appliance; many sold various types of appliances, water heaters and hearth products being the most common. Fifty-four percent install appliances, and 56% said they service appliances.

“That doesn’t necessarily mean they install or service every conceivable type of appliance, but they do have at least some appliance installation and service program,” Walker noted.

Fifty-three percent of survey respondents said they have a business arrangement of some kind with one or more plumbers. About the same percentage (54%) said they also have some type of business partnership with heating, ventilation, and air conditioning (HVAC) professionals.

“We didn’t ask details about the nature of that business relationship, and I can imagine that’s a partnership that can take any number of forms, but I took that as an encouraging sign that propane marketers are working with local construction professionals like plumbers and HVAC pros to take care of their customers,” Walker stated.

Propane marketers are also getting more comfortable with technology. PERC wanted to know about the industry’s appetite for promoting newly arrived products that were just coming on the market, especially in emerging categories such as landscape equipment, work trucks, or new irrigation engines. Twenty percent answered that they want to be the first to get involved. Twenty-six percent answered that they don’t necessarily want to be the first, but they want to get in early. Both of those numbers are up from PERC’s last survey in 2010.

“We do see an increase in the number of companies that describe themselves as early adopters,” Walker said. “They want to get in first or get in early.

“We were pleased to see that based on the sample, the industry is clearly more interested in embracing new products than [it was] five years ago. This is one of the many components that the advisory committee and council will be taking into consideration as they plan the post-restriction PERC.”

On the subject of the consumer-education restriction that officially ended in April, Walker said the PERC advisory committee met in Austin, Texas the week after the National Propane Gas Association Southeastern Convention in April to discuss how to proceed with a “post-restriction” PERC. Any new PERC consumer education programs fall under the purview of the PERC advisory committee’s market outreach and training working group. Walker said the group did not reach any conclusions and would meet again soon.    —Daryl Lubinsky

Online Strategies Help Grow Business

Teams of propane marketers learned in a workshop that a successful online strategy involves Web design and multiple platforms including
search engines and social media.


At the April 2015 NPGA Southeastern Convention and International Propane Expo, a topical and well-attended educational session dealt with formulating an Internet marketing plan. The workshop was titled, “Hacked! How to Build a Winning Web Strategy Without Getting Hacked.” Energy industry Web consultant Ben Gutkin of Warm Thoughts Communications (Clifton, N.J.) conducted the three-hour workshop patterned after the hit Food Network show “Chopped.” Selected participants divided into competing teams in three areas: website design and development, search engine marketing, and social media.
Online Strategies

The scenario for the workshop was that the various teams represented a 10-MMgal. propane company in the Atlanta area, delivering propane residentially and commercially (including autogas), with a showroom selling hearth and outdoor living products, as well as appliances such as gas dryers and water heaters. The teams were tasked with using online marketing to grow the business through new customer acquisition, improved retention, and increased sales to existing customers.

  • The website design teams were tasked with creating a new company website that would optimize design, navigation, content, and search engine use to implement the business strategies to the target audience.
  • The search engine marketing (SEM) teams were tasked with using search engine tools such as pay-per-click (PPC), online display advertising, and review sites such as Yelp and Angie’s List to create an online marketing campaign and budget to help the company reach its growth goals.
  • The social media teams were tasked with using Facebook, Twitter, LinkedIn, Pinterest, and Google+ (the top five) to develop a strategy to help the company increase “social shares” (the new link-building), and build “likes” and thus domain ranking by improving quality connections and followers to help reach growth and customer retention objectives.

Website Design Implementation
The website design teams considered several key design components:
  1. A website needs to have a clean, professional look devoid of clutter, junk, and typos that engages people and makes them want to do business with the company.
  2. Since the average viewer spends only 3.5 seconds before deciding to stay or leave a website, the site must quickly address these questions: Do you have the product I’m looking for; are you in my area; and do I want to do business with you?
  3. Does the website optimize content by using “keywords” in pages, tabs, and photos?
  4. Does the website make navigation easy?
  5. Is company contact information clear and easy to locate? (Many websites bury contact information.)
  6. Is your website mobile-friendly?
The last decade has seen a huge increase in mobile devices. Today, mobile accounts for half of all Web searches. On April 21, 2015, Google changed its algorithm to expand mobile-friendliness ranking criteria. Mobile-friendly and mobile-responsive websites will be rewarded with better positioning in Google’s search engine results, meaning more traffic from this rapidly expanding user base. Conversely, websites not mobile-optimized will see less traffic and receive a smaller piece of the mobile pie and will be forced to rely on the shrinking desktop-based audience. Website owners don’t have an option: Go mobile! You don’t want to land in the Google dungeon on page 2 or beyond.

Search Engine Marketing Implementation
The SEM teams considered these key factors:

1. Is Pay-Per-Click (PPC) a Good Strategy For Your Company?
PPC is an Internet advertising model used to direct traffic (potential propane customers) to specific websites (propane companies) where the advertiser (the propane company) pays the PPC operator (Google AdWords, etc.) when the ad is clicked. The PPC model lets the advertiser chart various statistics including:

• Impressions — the number of times the ad appears (no cost)
• Clicks — the number of times the ad is clicked (the advertiser pays)
• Conversions — the number of times a customer contacts the company by phone, email, or submitted form after clicking the ad.

Thus the company can calculate the cost of a new lead. For instance, if a propane company ad is clicked 200 times at a cost of $5 per click, the cost is $1000. Of the 200 clicks, if 20 people contact the company (conversion rate 10%), the cost per lead is $50 ($1000/20 = $50). A propane company trying to grow its business through new customer acquisition could use PPC as part of its online marketing.

2. Review Sites
Another area of search engine marketing that has become important in the last decade is the advent of review sites such as Yelp, Angie’s List, and Google Local Business. Review sites put the power in consumers’ hands; on average about 85% of customers read reviews for local businesses. More than 60% of users read two to six reviews before they reach any conclusions.

A propane company should strive to do good work to generate positive reviews. But it is also vital to monitor these sites frequently and respond to any negative postings immediately — don’t let a negative review go unanswered!

Social Media Implementation
Today, social media platforms offer huge marketing opportunities for businesses. Statistics show that 76% of women and 72% of men use some form of social media, primarily Facebook. In the 50-64-year-old age category, 65% of people use social media, and half of the population over the age of 65 uses social media. These numbers are growing and cannot be ignored. Currently, Facebook alone receives 900 million unique monthly visitors.

The three social media teams presented outstanding campaign strategies, making it difficult for the judges to select a winner. Groups were tasked with creating a plan to increase social shares (the new link-building for websites) on the top social media platforms (Facebook “likes, shares and comments,” Twitter “followers”) and connections to boost website credibility and elevate ranking placement in search engine results. For instance, a “like” is the minimum commitment you can get from a Facebook fan. The value hierarchy goes: likes, comments, and shares, in that order. Facebook’s news feed algorithm gives 1300% more weight to a share than a like. The following are highlights of some of the teams’ innovative strategies, ideas and best practices presented:

  • Facebook contests. Promoting a Facebook campaign encourages likes, comments, and shares. Teams offered various incentives in their contests. Prizes ranged from winning a Weber grill to an outdoor kitchen. One team invited friends to “comment” rather than “like” on Facebook to increase social engagement and further boost website rankings. Soliciting a “comment” for contest entry added the benefit of positive comments appearing on the company’s Facebook page. And, increasing opportunities for “shares” means additional Web links to improve search engine rankings.

One strategy included posting photos on Facebook of new installations of propane fire pits, outdoor kitchens, gas log sets, or other appealing propane-related photos.

  • Twitter Hashtag contests. Team “Atlanta Propane” launched a Twitter campaign #SummerPropaneParty using the hashtags #WinAGrill, #AtlantaPropane, and #SummerPropaneParty. They invited participants to share stories of their favorite summer party. The team also created a landing page to their existing website (AtlantaPropane.com/Summer) to push prospective customers directly to the site. The page included a “Feedback” column providing an additional chance to win a free 20-lb summer grill cylinder refill by sharing their feedback. This data was captured for use in future campaigns. Statistics can easily be tracked providing useful assessment information.
  • Pinterest contests. One team launched a Pinterest contest for the chance to win a Weber grill by inviting participants to “pin” photos of their favorite grilled dishes on the company’s Pinterest page. Pinterest is a great way to feature propane-related photos, such as appliances, appealing food, grills, outdoor kitchens, and warm, cozy homes. As the saying goes, a picture is worth a thousand words.

Other social media “best practices” include:

— Schedule Facebook posts to automatically update on a Twitter account.
— Receive text notifications when a post is made on your Facebook page.
— Regularly monitor “review sites.” (Certain situations may require an immediate response — have a plan to address these situations.)
— Post appealing photos of propane-related products on Facebook to project a positive image.
— Set up a toll-free telephone number to track leads.

The efforts of the various teams were judged and critiqued by a panel of experts to determine the “winner,” although every participant “won” by learning how to succeed in Internet marketing.

Online marketing has dramatically changed in the past 10 years (and didn’t exist 20 years ago). A successful online strategy takes advantage of website design and multiple platforms including search engines and social media to grow your business. No longer an experiment, online marketing has become a science.

Keep Up With Appliance Trends and Grow Gallons

Staying current with fast-changing trends in the appliance industry is a must when a propane marketer goes into the appliance or hearth business. One current trend is that people are willing to spend more money for quality rather than buying a “big-box store” appliance that they will have to replace in a few years.
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Those higher-quality items might include linear-burning fireplaces, or fireplaces that burn decorative colored glass beads. Brian Brooks, who runs an appliance store for Brooks Gas (Marshfield, Mo.), said rather than going to a big-box store and buying the cheapest appliance available there, people are more often deciding to go to a specialty hearth retailer, such as Brooks Gas’ appliance store named Top of the Ozarks Hearth and Grill, to buy higher-quality products.  

A six- to eight-burner grill at a big-box store might cost $400 to $500, for example, but the grill will most likely need new burners and replacement parts about two years later, and those parts might cost more than the entire grill itself.

“I get a lot of people who want to buy a quality barbecue grill that has an excellent warranty and customer service behind it,” said Brooks, who noted that his company has sold appliances since it opened the Brooks Furniture Store in the early 1930s. Gas appliances were also offered in the back of the store. As demand grew, the company determined that it needed a supplier to provide the gas to power the appliances, and that’s how Brooks Gas got started. It entered the hearth business in 2007 with the opening of Top of the Ozarks. Brian Brooks estimates the appliance business brings in an additional 2000 to 4000 gallons of propane sales per year and has increased the company’s gallons sold by 10,000 to 15,000 gallons total since it opened. “They’re wanting something that’s going to last, and they’re not afraid to pay a little more for it. They may spend a little more upfront, but they are in some cases buying the last grill or barbecue they will ever buy.”
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Brooks explained that the average “appliance only” customer will use around 250 to 300 gallons per year; marketers who start an appliance business should not expect to grow their in-house gallons by significant amounts. Existing customers who install an appliance for space heating will reduce their furnace use, so it usually evens out, or offers very little growth for existing business. Increased appliance sales and off-season revenue is the main benefit of owning an appliance business.

That has been the result for Brooks Gas. The appliance business has been picking up as of late, along with the local economy in Marshfield. The hearth division is established enough that it is holding its own as a business, and it is getting a lot of walk-in traffic from people who are not existing Brooks Gas customers, including competitors’ propane customers, natural gas customers, and wood users.

About 85% of its grills operate on propane, and the other 15% are charcoal. In the hearth category, the business sells gas logs and fireplaces that run on natural gas and propane. The company carries vented and vent-free stoves and carries wood stoves as well.

The business carries many of the same brands it has sold since it opened its doors in the 1940s, including fireplaces, room heaters, and hearth products from Empire Comfort Systems (Belleville, Ill.). Brooks Gas services what it sells, and it buys appliances from Gas Equipment Distributors (Nashville, Tenn.) and Bergquist Inc. (Toledo, Ohio). Brooks’ appliance business is dealer-licensed, insured, and state-certified for service and repair of gas stoves, fireplaces, and grills.

Vent-free fireplaces are the hot product as of late. “They’re efficient, they burn very little gas, and they put out a lot of heat,” Brooks said. “They require little maintenance, and aesthetically they’re just like the real thing.” Empire continues to be a hot seller in that area, with its White Mountain Hearth brand. “They make a quality, well-built product,” Brooks added. Gas grills from Weber (Palatine, Ill.) are also best-sellers year-round.

An increase in customer requests for back-up or supplemental heat is another trend, particularly when cold weather approaches in Missouri.

“That’s the No. 1 question I get: What do you have to run after the power is out?” Brooks noted. He answers the question by showing all of the company’s vent-free logs, vent-free fireplaces, vent-free heaters, and even vented room heaters in Brooks Gas’ inventory.

Dedication is necessary to stay on top of all of the product trends and keep an appliance business current with the times. Hearth trends change every couple of years and in some cases every year, and Brian Brooks has seen the popularity of various products go up and down quickly. To keep up with those trends, he and other members of his family business — his father Joe runs the company, and various other family members are involved — attend appliance industry meetings and trade shows, which helps ensure the business is not full of inventory that is no longer popular. In addition to the propane industry’s Southeastern Convention, Brooks attends the Hearth Patio and Barbecue Association Expo, and his company is a member of the Midwest Hearth Patio and Barbeque Association and the Missouri Propane Gas Association.

For the hearth category, customers primarily buy propane, unless they use natural gas service at their homes. In the area of grills, propane is popular, but charcoal is still a good seller as well. The Big Green Egg charcoal grill gets consistently good sales numbers and is growing.

“I never thought I’d sell charcoal at a gas company, but we sell more charcoal than I ever thought,” Brooks noted.

His business sells spices and rubs to go along with the cooking products, as well as fireplace accessories. Selling all the products a customer needs for a nice cooking or fireplace experience and going the extra mile for customers is an important part of running a successful propane appliance business, he contends.

“If there’s something that’s gas-burning and the customer wants it, I’m not afraid to try and find it. In this day and age, it’s all about customer service, and if I don’t have it, I’ll at least attempt to try and find it.” A recent customer was building a new house and wanted a gas cooktop, which Brooks Gas no longer carries, but Brian Brooks found a supplier to get one for her.

He believes appliances will continue to become more efficient, noting efforts by the U.S. Department of Energy and the Environment Protection Agency to mandate increased efficiency in gas- and wood-burning appliances. “They tried earlier to severely limit decorative gas-burning appliances and systems that had pilots, and then they backed off on that, but they’re going to try again,” he contends. “Increased efficiency I think is where everything is headed.”

The Brooks family plans to continue establishing and growing the barbecue and hearth side of the business as well as maintaining a consistent product line-up of quality appliances. “I want someone to come in and know that if you buy something from me today, I’m going to have that brand in 10 years.” He admits that is a challenge with the fast-changing product trends that take place in the hearth and appliance business. “But we’re trying to maintain a quality and consistent brand offering for hearth and barbecue so people know that whatever they buy, they can still have service, and there will always be someone here to help them if they need it.”    —Daryl Lubinsky

Congressional Propane Caucus Officially Formed

On May 21, 2015, Congressmen Robert E. Latta (R-Ohio) and Tim Walz (D-Minn.) announced the founding of the Congressional Propane Caucus.The caucus has been formed to provide a bipartisan forum to engage members of Congress, their staffs, and the public on issues of importance to propane consumers and the propane industry.
Congressional Propane Caucus Logo

“I am pleased to join my colleague Congressman Walz in leading this effort in the House. Thanks to an increase in domestic production and the development of shale formations across the country — including the Utica/Point Pleasant formation in my home state of Ohio — Americans are blessed with an abundance of this essential resource,” said Propane Caucus co-chairman Latta. “Propane is vital to our everyday lives; it heats our homes, aids in the production of our farms, and is increasingly being used as an alternative, clean-burning fuel for transportation. I am pleased to start this caucus in order to educate fellow members of Congress on the many uses of propane, its importance to the constituents we serve, and the issues both the industry and its consumers face.”

“I’m proud to lead this caucus with Rep. Latta. Propane is essential for hundreds of thousands of Minnesota families, not only to heat their homes during the long, cold winter, but also for cooking, laundry, and farming,” stated Congressional Propane Caucus co-chair Walz. “It is imperative that we do everything in our power to protect families and local businesses from facing the price shocks we witnessed in the winter of 2014, when a lack of supply put people’s lives and livelihoods at risk.”

The National Propane Gas Association (NPGA) noted in its NPGA Reports email on May 21 that recent developments in the energy sector have generated a strong domestic propane supply that is projected to remain plentiful for the foreseeable future. However, many challenges exist to ensure that Americans have an adequate supply of propane when they need it.

“The Congressional Propane Caucus was designed to focus on these challenges, so that Congress can ensure that propane continues to serve American consumers in a consistent, reliable, and affordable manner,” NPGA added.

Founding members of the caucus include five members of each party:

• Co-chair, Rep. Robert E. Latta (R-Ohio)
• Co-chair, Rep. Tim Walz (D-Minn.)
• Rep. Chris Collins (R-N.Y.)
• Rep. Sean Duffy (R-Wis.)
• Rep. Mike Kelly (R-Pa.)
• Rep. Ron Kind (D-Wis.)
• Rep. Dave Loebsck (D-Iowa)
• Rep. Rick Nolan (D-Minn.)
• Rep. Tom Reed (R-N.Y.)
• Rep. Peter Welch (D-Vt.)

Propane Caucus, Tax Credits Among Top Issues for Propane Days

Attracting members of Congress to the Congressional Propane Caucus, extending motor fuel tax credits, achieving parity with natural gas in Corporate Average Fuel Economy (CAFE) standards, and calculating the excise tax for propane on an energy content basis will be four primary areas of focus for the propane industry at Propane Days this month in Washington, D.C.

On May 21, Congressmen Robert E. Latta (R-Ohio) and Tim Walz (D-Minn.) announced the founding of the Congressional Propane Caucus. Latta and Walz have agreed to chair the caucus, and asking members of Congress to join will be a primary goal in the propane industry’s meetings with legislators. The caucus will be made up of legislators who have shown interest in propane issues in the past, and with whom the propane industry could work in the future.
PropaneDays

Extending the motor fuel tax credits that expired at the end of last year and passing an excise tax equalization bill are two other actions that propane industry attendees at Propane Days will ask Congress members to take. Phil Squair, National Propane Gas Association (NPGA) senior vice president of governmental affairs, told BPN on May 4 that the issues list could change if additional concerns come up as Propane Days approaches.

Reps. Latta and Walz sponsored the Propane Education and Research Enhancement Act of 2014, which resulted in the lifting of the consumer education restriction on the Propane Education & Research Council. “We’re very happy to continue working with them,” Squair stressed.

The caucus is being set up as a means to communicate, Squair added, and the need for that was amplified during the supply and infrastructure challenges of the winter of 2013-2014.

“We have many things to tell the Hill, and the Hill is very concerned about deliverability issues and infrastructure changes. Members of Congress who have a particular interest in learning and staying abreast of propane issues can join the propane caucus and keep in touch with what we’re doing. It will be a two-way street: They will be able to hear from us, and we will be able to send things directly to the caucus, those who have expressed interest in our issues.”

The “ask” of the Congress members at Propane Days will be for them to join the caucus. In addition to Latta and Walz as co-chairs, eight additional congress members agreed to join the caucus as of May 21.

Extending the 50-cent-per-gallon tax credit for propane autogas and the refueling infrastructure tax credit have been on past Propane Days “ask” lists, and will be on the list of issues for the propane industry to discuss with legislators and their staff members again this year. Squair has said that Congress members are currently awaiting action on broad tax reform issues before taking a public position in favor of tax credits and extenders, but the propane-related ones are important to the industry.

Propane industry members will also work to persuade legislators to extend Section 179 expensing and bonus depreciation. Section 179 allows small business owners to immediately deduct the cost of investments in property, equipment, and computer software rather than depreciating such costs over time. According to Squair, that gives owners flexibility to reinvest in their business and simplifies their accounting practices, adding that the provisions “would also help companies on the near term make investments and do the things they do and give a little bit of certainty to these companies that don’t have it right now.”

Convincing legislators to support excise tax equalization bills currently in the House and Senate is another area that the propane industry plans to emphasize at Propane Days. The bills call for calculating the propane excise tax on an energy content basis rather than on a per-gallon basis. Because a gallon of propane has less energy content than a gallon of gasoline, a calculation based on energy content will reduce the excise tax on propane as a motor fuel, currently at 18.3 cents, to 13.4 cents. A decrease in the excise tax, along with reinstating the tax credits, will help propane compete better with gasoline as an engine fuel.

The schedule for Propane Days was still preliminary when Squair spoke to BPN. NPGA will hold its board of directors meeting on June 8. To start the Propane Days schedule on June 9, NPGA will present a legislative briefing in the morning to provide more detail on topics in the issue briefs. At press time, NPGA had invited Latta to be a guest speaker to expand on the benefits of the Propane Caucus and other issues. Charles Krauthammer, a Washington Post political columnist and television commentator, will return to give a presentation at Propane Days this year.

“I know people really enjoyed him last year,” Squair commented. “With all the talk already happening about the presidential election and the various personalities that are involved, and the challenges we have in foreign policy, he’s going to have a pretty compelling presentation.”     —Daryl Lubinsky