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Preliminary reports from fuel marketers show that 2018 was a very good year. For the most part, gallons were up, margins were strong and the new tax laws seem to be putting more after-tax dollars in owner’s pockets. With the new Section 179 accelerated depreciation rules in place, it’s lining up to be a very good year, especially to make capital investments.

Deciding where to spend your capital dollars is always a challenge. Understanding your needs and wants is a great first step. Funds spent on necessary repairs to stay in compliance may not be optional. Items like installing new tank bottoms in a fuel facility or adding bulk propane storage to handle capacity may be required investments. Replacing vehicles is always a capital expense item that needs to be addressed and we love our trucks in the delivered fuel industry.

Investing in technology to reduce operating expenses and provide a better customer experience is a trend of the more successful companies. Customers that invested ten years ago in GPS systems, delivery routing and modern back office systems have seen the benefits. Many of those systems may be antiquated now, however they likely had quick paybacks and they gave the customer a better buying experience, which has continued to pay dividends. New technologies continue to come on the market and companies who do their homework, invest in them, and properly implement the systems often see extremely positive results.

One of the fastest growing technologies in our industry are tank monitor systems. This is my personal favorite technology on the market. It was a great idea when the first systems came out 25-years ago, but there were many issues that prevented them from being successful and they never caught on big until the last few years. The cost of tank monitors has come down significantly in the last couple of years and the reliability has increased. At the last trade show I attended there were close to a dozen companies with booths showing tank monitor technology. These systems lower delivery costs by optimizing drop size and they help turn Will Call customers into We Call. Imagine sending an email (or text) to a customer letting them know that with the current weather forecast they will run out of fuel in six days and then ask if you can fill their tank. I would like to make a bold projection that 80% of fuel and propane delivered 10 years from now will be delivered to customers with tank monitors. Our acquisition business has seen the value variance between an automatic delivery account and a will call account narrow, and with tank monitors, I expect it to narrow further.

Back office software is never an easy item to upgrade or replace. This requires a lot of change and people don’t like change, however customers do like the advantages of a modern, interactive, paperless back office system. Your employees will eventually learn to love it also. Imagine a system where customers receive an email after they get a delivery and the payment is automatically charged to their credit card and the funds are transferred into your account the next day. That makes for a happy customer and a happy company. You don’t have to imagine it, you can shop for it.

It’s trade show season and I would encourage everyone reading this to take the time to attend one of the many industry events. It’s a great place to do your homework on what money saving and customer enhancing technologies are available. Take advantage of the tax breaks on depreciation and invest in your business. Good luck in finding the right capital improvements for your business!


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We were very pleased to have such a knowledgeable and experienced company in our corner with the team at Cetane. It was obvious that they knew the best process and how to get the ball over the goal line. Their advice throughout the process was greatly appreciated and we thoroughly enjoyed working with them.

— Steve Lombardi, Brodeur’s Oil, Moosup, CT
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Over the last few years I find myself purchasing more items online. Amazon knows me well and with two-day free shipping, I hardly go to the store anymore to pick up something other than groceries or a card for my wife’s birthday (which is usually the next day). Before I make my choice online I usually look at the star rating and what the reviews say about the various items I am looking to purchase. I typically go to the bad reviews first to see why people were unsatisfied. On occasion, I regret spending too much time on researching a $10 item, however when it is a major purchase or decision, I feel it is time well spent.

I have to believe that many homeowners like myself use the same method when choosing a home energy supplier or home services company. Before we meet with a new client for a valuation or potential sale of their business, I immediately go to their website. I want to learn about their company and be prepared with questions about their business. As part of my research I look at the various star ratings from some of the more popular sites such as Yelp, Facebook or Google Reviews. If I see a poor rating, I usually discuss it with my client. I am surprised at how many owners are not aware of their various ratings and reviews.

Here are some surprising statistics from a study done by BrightLocal:
– 84% of people trust online reviews as much as a personal recommendation.
– 90% of people will read as many as 10 reviews before making a decision.
– 58% of people say the overall star rating is the most important part of their research

In addition, MOZ (the gold standard of measurement of web presence) says that the more negative reviews a company has, the more it risks losing potential customers.

Having attended several business programs at various industry events, I learned that there are some specific action plans an owner can take to help improve their star rating and address customer dissatisfaction. I am no expert on how to improve your perception on the internet, so I asked an expert.

Ben Gutkin, V.P., Marketing Services for Warm Thoughts Communications had these helpful steps for marketers:

1. Avoid getting bad reviews in the first place
2. Generate positive reviews
3. Respond to negative reviews

Avoiding bad reviews is really about Customer Service in the Age of Social Media. It used to be that if a customer had an unpleasant experience they might tell a few friends or family members. And while it was not something a company would aspire to, it was fairly contained. Today, with just a few keystrokes, a disgruntled customer (justifiably or not) can blast their horrible experience out to the world. Training your team to diffuse anger and make unhappy customers feel better about your company is now more important than ever.

Generating positive reviews is an objective that is achievable with the right strategy and participation from everyone in your company who comes in contact with a customer or prospect. There is no reason a fuel business should not be able to amass a couple hundred four and five star reviews. While only one in four people typically writes an online review, seven in ten will do so if asked!

Every business will get the occasional bad review. People expect to see them and your reviews would look fake if you never had any. But responding to them the right way is key. 60% of people say they will change their minds about a company based on how they respond to online complaints.

Think of your response as an opportunity to show the world how much you care about your customers. The key to a positive response is to “hear” your customer, show them you truly care, and offer to make it right. Even when the customer is clearly in the wrong, you want to publicly treat them like they are right. Never “win” and argument on social media where the world is watching.


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We were very pleased to have such a knowledgeable and experienced company in our corner with the team at Cetane. It was obvious that they knew the best process and how to get the ball over the goal line. Their advice throughout the process was greatly appreciated and we thoroughly enjoyed working with them.

— Steve Lombardi, Brodeur’s Oil, Moosup, CT
Articles

Energy company owners are typically very good at preparing their operations to service their customers. Vehicle fleets are always a focus as they deliver the products and services being offered to customers. Customer service training, robust technology systems, purchasing/hedging and a good marketing campaign are other areas successful markets focus on.

The one item most marketers tend to put off is their financial reporting. Many marketers wait until the end of the year for their accountants to tell them how they did financially. It’s a little like being in school, taking tests without getting them graded and then getting your report card for the year, ninety days after the class is over. I know I would have had some surprise grades in school if that were the case, and none of them would have been good surprises.

Rarely does an accountant give you better news than you were expecting. When we speak with owners and ask them basic questions like gallons delivered and margins per gallon, you would be amazed at the difference between their initial response and what we find after completing a financial analysis. For marketers who deliver propane for space heating or for companies delivering heating oil, not one has ever given us their gallons on a weather adjusted basis. They know volumes were up or down based on weather but most don’t know the relation well enough to spot trends in their business. Just as important, most don’t realize how weather effects operating expenses, except maybe delivery expenses. The same is true for how fuel costs effect operating expenses.

Please don’t get me wrong, many of the owners we work with are exceptional business people who run great profitable companies. They are focusing on the big items that have made them successful. I just want to point out that some extra focus on financial reporting can make your business even better. Once you set up the reporting, it is easier than you think to manage it. I was once told by one of my mentors that if you can’t measure it, you can’t manage it. Granted, you need to have some strategic improvisation in all business decisions, but setting up systems to manage financial reporting can open eyes to good and bad trends.

Our first recommendation is to put together a simple budget. What I mean by simple is gallons delivered by product, five or six gross profit categories, and operating expenses. Don’t get too detailed on expenses as a beginner. As an example, vehicle fuel or repairs does not need to be broken out by service, delivery, office, marketing, etc., on your first budget. You can get more detailed after you get the hang of it. Take your last year results, weather adjust the gallons and project what you will deliver for the upcoming year. Do the same for service or other revenue streams. I would recommend breaking out the budget by month and a few days after the end of each month, record the results vs. your budgeted numbers to see how you did. For any large variances take a closer look to see why you were off.

Once financial reporting becomes a regular business function for your company, you can continue to improve on it as time and needs dictate. Now instead of waiting until the end of the year to see how you did, you can get your test results back sooner and be able to pull up your grades (net income) before the school year is over.


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We were very pleased to have such a knowledgeable and experienced company in our corner with the team at Cetane. It was obvious that they knew the best process and how to get the ball over the goal line. Their advice throughout the process was greatly appreciated and we thoroughly enjoyed working with them.

— Steve Lombardi, Brodeur’s Oil, Moosup, CT
Articles

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.


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We were very pleased to have such a knowledgeable and experienced company in our corner with the team at Cetane. It was obvious that they knew the best process and how to get the ball over the goal line. Their advice throughout the process was greatly appreciated and we thoroughly enjoyed working with them.

— Steve Lombardi, Brodeur’s Oil, Moosup, CT