How Fuel Dealers Can Create Hope For The Future

January 26, 2018 | By: Energy Engine
Categories: Blog Posts

Are we part of the unlucky generation? Or is there a way forward?

It’s inspiring when a single moment can capture a long-standing, complex situation and make it instantly clear. In the span of a few minutes, everything comes into focus. All the important elements are distilled down to the most relevant.

It is from these moments that we can extract the greatest tools for guidance.

A Generational Burden

I was moderating a dealer roundtable when one of these amazing moments occurred. It was a group of about a dozen non-competing dealers who were brought together to share best practices and brainstorm innovative technology ideas.  At the outset of the discussion, each participant was asked to introduce themselves, give a quick profile of their business, and the reason they chose to attend.

On this particular morning, I had made it halfway around the room when I found myself staring into the eyes of a very serious looking and well-dressed attendee. He was the president of an independent Northeast oil company and is widely respected for his knowledge and experience.  After going through the pleasantries, he approached the hard question of why he was there.  As if rehearsed, he said “I am now in control of a third generation company…I am doing everything my grandfather and father taught me and somehow I can’t make money anymore.”  At this point it became abundantly clear he was getting emotional, and with voice breaking, he continued, “I cannot bear the thought of having this business crumble on my watch…how would I explain that to my family?”

It’s true what they say about being able to hear a pin drop. I am not sure I had ever been in a room driven to such absolute silence.  Here is a polished professional fighting back tears as he tells of the weight he has on his shoulders, the weight of family legacy. Truth be told, others fought back tears as well. I was one of them.  It was intensely moving.

The current generation leading our industry drew the short straw. After decades of immovable profits, strong customer loyalty, and an unshakable reputation we are now facing shrinking demand and eroding profits. The lessons of the past and, seemingly, the new ideas from the brightest minds somehow appear powerless in the face of myriad challenges.

What Fuel Dealers Are Facing

The challenges have become woven into the fabric of our industry’s culture and most fuel dealers could recite them with little effort: volatile commodity forces, a new consumer who is not sold on our historical full-service value proposition, and, of course, natural gas.

So where does a dealer find hope?  It can be encapsulated into two maxims:

  1. become a student of your business to a level of detail unheard of until now
  2. be prepared to become a change management organization

If you do these two things and do them well, you will be a survivor.

New consumers (and we all fit this category) are brutal.  They want high quality service at low prices, they want to be catered to, and they want instant gratification.  Loyalty doesn’t enter into the equation.

How To Prosper

To survive in this future, fuel dealers must implement a Customer Experience strategy to help you understand these new behaviors.

It is a science, not a gut feel. You need to understand how to effectively use the internet and ecommerce to reach and service consumers, and obsess about retention.

In an industry quickly being defined by transient consumers, delivering the best Customer Experience will lead to strong competitive advantage.  Learn this and prosper.

Embrace an “omni-channel” business model.  Gone are the days when there were two customer types; full-service automatic and, well, everyone else.  But in today’s complex consumer world, many levels of hybrids are popping up in the grey area between full-service and will call.

With 50% of the market ordering on-demand in many areas, ignoring these perceived low value consumers is immensely risky.  And research shows on-demand is the only growing segment in our industry.  More importantly, data shows that they are just as loyal as full-service customers.

You have to be online and it cannot be a billboard. Consumers want a superior and interactive internet shopping experience, especially the on-demand sector.

Countless retailers sell to all different categories of customers under a single brand story.  Home energy is no exception. Check out ecommerce platforms that allow you to market, acquire, and service price-conscious internet shoppers who want to exercise their right to self determination.

The cost of online fulfillment can be as much as $.12 per gallon lower than phone-based, so profits on “discount” fuel can be very close to your regular automatic price. Measure everything you can and put together a list of KPIs (key performance indicators) that drive your daily objectives.

Manage to the goals with militancy and hold your team accountable. Learn that cutting headcount is easy, but driving process efficiency can be more effective financially, albeit harder. Many dealers have maintained their staff size while using efficiency to cut costs.

Translation: do more with less, but do not hurt quality of service.

Tips like these aren’t just going to put your business ahead of the competition. They aren’t just best practices, they’re mandatory practices.

Conclusion

Back to my friend at the roundtable.

He, and his business, are doing much better these days. He employed some new cost-cutting tactics, and is now intently focused on ecommerce. He has solicited the help of some of the many fine vendor consultants in our industry.

I bumped into him recently and he seemed very optimistic and much less afraid of being the generation that drove the business off the road.

We asked him what he’d learned since the last time we spoke. His response?

“You have to embrace real change, not window dressing change. Bottom line.”