“Concierge Service”, A Step Beyond Full Service
A basic full service energy marketer is defined as a Company that not only delivers fuel but provides the associated 24 hour HVAC services necessary to repair heating units in the event of a break down. There are many levels of service being provided by full service fuel marketers. Most full service providers also repair air conditioning units, provide or lease propane tanks, offer service contracts, tank protection and budget billing. The sale of heating and cooling appliances, water heaters and fuel tanks are some other services commonly offered by full service companies.
On occasion we encounter a rare group of companies who take full service to the next level. I call these companies “Concierge Service”. Some additional services provided by these Concierge Service Companies includes low temperature alarms, generator sales, generator service contracts, tank monitors, regular hours on Saturday and Sunday as well as response times typically under an hour, even for air conditioning in the summer. The phone is answered by a human 24/7/365 and many of the customers have given their keys and alarm codes to their Energy Company.
How can a Company like this possibly be profitable you might say? The answer is easy, they charge a lot more than your typical full service Company. This type service is not for everyone in every market but there is a lot to say about charging more if you are worth it.
We recently completed the sale of a Concierge Company. The Company was able to attain margins substantially higher than competitors. This was true across all product lines including propane, heating oil and service. The Company had an impressive growth rate despite being the highest priced guy on the block. The owners told me the growth rate could have been better but instead of adding staffing, they decided to increase prices, weed out price sensitive customers and keep the level of service as high as they could. They wanted to provide the best service possible because it was their nature to do so (a matter of pride) and they wanted to be paid fairly for the level of service they provided.
I relate a Concierge Company to wine making where the truly great vineyards trim off perfectly good grapes to make the ones left on the vine even better. A $100 bottle of wine is not for everyone but there is a market and it is a profitable one. You have to sell a lot of three buck Chuck to make the same money as one bottle of top quality Napa Cabernet.
When we listed the Concierge Company for sale, we had over twenty interested buyers and we fielded nine great offers. Five out of nine of the offers were 100% cash at closing with no retained gallon provisions and two were over 75% cash at closing. The Company sold for the highest multiple of EBITDA we had ever seen for a Company of that size and product mix. On a per gallon basis, it shattered any previous records we had, but remember, value is not about how much per gallon, it’s about return on investment.
While companies like this one is a rarity, there are still some lessons to be learned about providing exceptional service. First and foremost, your customers will appreciate the service and pay for it. You will walk taller around town knowing you are the best at what you do, and when it comes time to sell, you will command a premium price and be paid cash at closing.