Written on: May 9, 2022 by Paul J. Nazzaro
Full of degree days and turbulence, what a winter this has been here in our world—the Oilheat Nation. Every day, across the supply chain, fuel dealers arrive at work to create and capture customer satisfaction.
They are quickly realizing, however, that today they must sell more than just the physical commodity to achieve that goal. Failing to do so jettisons a company into the “what’s-the-price” abyss, where price pressure and margin compression become the norm as their competitors find ways to match the low deal of the day. A more sustainable and differentiated approach starts with knowing customers, understanding the clientele’s ultimate objectives and determining how to generate additional profit for a business by creating solutions and adding new value that align with customer expectations.
Instead of leading with price, progressive fuel dealers invest time in creating solutions that deliver quantifiable, economic impacts for their customers’ bottom lines—as well their own. These companies avoid the commodity trap by creating better methods to deliver enhanced customer value. In our world, this means bundling an improved distillate fuel with a series of extras that, in the end, help differentiate forward-thinking fuel dealers from ordinary commodity-driven operations.
It would be challenging to find an industry more mature than heating oil. This field has been around for nearly a century as heavier, distilled fractions of liquid crude oil replaced coal, and soon Bioheat® fuel will replace oil. As in many other industries, however, market leaders have distanced themselves from the competition by recognizing and capitalizing on the fact that they offer far more than just heating oil and diesel fuel.
This growing group of high-value wholesalers and fuel dealers choose to sell extensive solutions that deliver additional value to their customers—value beyond a low strike price. These solutions come in many forms and are often a combination of services, technology, enhanced fuels, analytics and support—altogether which encompass a quality product that delivers value for customers and ratable sales for fuel marketers.
For wholesalers and dealers, these practical and complementary services can contribute real, quantifiable value to their core product offering. It also allows them to provide flexibility by mixing and matching various service offerings to meet the needs of each individual customer, market by market.
Creating value alone, however, is not enough if the customer will not pay for it. To succeed in differentiating a company and its superior products, time must be invested in order to both understand the value of these enhanced programs and become accustomed to sharing this story with customers.
Branding is a part of this process, but it doesn’t work for everyone. Simply selling a “commodity” requires nothing more than being the lowest price available at any given time. One can win as quickly as one can lose by that choice when leading with price, and price alone, with no additional value provided. Service contracts, budget plans, early-pay discounts and a few free gallons of oil were common offerings that dealers felt would set them apart. Then, as predictable as death and taxes, the company next door offered the same. Time out. Now what? Does the price need to be lowered still?
Much has been written about fuel quality, renewable fuels, real-time pricing, supply, demand and the life expectancy of our beloved industry. However, very little has been penned on how to wrap additional services around an upgraded diesel fuel and heating oil to enable more market share to be captured while improving company bottom lines and customer satisfaction with enhanced products and services and differentiating from the competition.
A great place to begin that transition to increased market share is product branding. Some might argue that branding doesn’t work anymore. Tell that to Nike, Apple, Microsoft, Charmin, Kleenex, BMW, and countless other nationally and internationally acclaimed brands. No sound debate can be made against a company’s smart business decision to distinguish itself and its products from a congested market.
The role brands can and should play in accomplishing these goals is changing quickly as technology, media, political winds and other influences affect how customers perceive their needs and how best to satisfy them. This change will become more pronounced as time goes on.
When you began reading this article, perhaps you were looking to turn your carbon into proverbial diamonds for a profit or maybe you were hoping to determine whether you were a fuel dealer who simply buys and sells, or one that adds value.
Everyone wants to know where they fit. The purpose of short editorials like this is to rethink “normal.” We welcome the opportunity to share with you our story, which is one that started with an objective to deliver maximum value to our customers. ICM