Written on: August 12, 2012 by ICM
R.F. Ohl, in Lehighton, PA, used to be an oil company. Well, it still is; like many forward thinking companies in this industry, it is best described as an “Energy Company.” When you walk into their headquarters showroom, it’s also obvious this is not just a fuel supplier.
When we visited, that showroom (next page) was full of fireplaces, patio furniture and high-end barbecue grills (Why not? A major portion of the company’s retail business is propane); but in the fall, that’ll change. The grills and patio tables and chairs will give way to furnaces and boilers, solar panels and the like.
The company was started by R.F. Ohl in 1984 as an offshoot of his water well drilling business. Founder Robert Franklin needed oil for his well drilling rig and tired of paying someone to truck it in (the 12 cylinder Detroit diesel engine consumed 150 gallons a day), so he bought an old truck from his previous employer, an oil company that had gone out of business, with the idea it would be an ideal mobile storage tank. Former customers saw him driving the truck about town and asked if he’d deliver fuel to them. Reasoning this would be a good fit, since the water well drilling business stops in winter and heating oil picks up, he agreed and the R.F. Ohl company was now in the heating oil business.
Eventually, his sons, Steve and Brad, would join the business, Steve working in the office and Brad on deliveries. Steve, now President, sat down with ICM and discussed his approach to diversity, learning and growth.
When he returned from college, Steve approached his father, concerned that nothing was being done to promote the business. “So I asked him if we could see what we could do with it. He said, ‘Run with it,’ so that pretty much gave me free rein to do what I wanted, as long as I kept them informed as to what was going on,” explained Steve.
They eventually dropped the dying well-drilling business, turning their attention to heating oil. “By the mid 1990s,” said Steve, “…the customer base grew pretty rapidly.” Steve’s brother, Brad, was a full time driver and three part time employees helped out in the winter. By 1998, they hired their first full time oil delivery driver to help Brad.
“So with two trucks on the road at that point, we were looking to expand, so we added a propane filling station as part of our idea to get people out to our office.” That office was a small area of their house. “We started in the basement, then we moved out to a garage.”
The key business then was the propane bottle filling station—about 50,000 gallons a year. This is when the little idea “light bulb” began to flash. Since people were coming in for propane, why not see what else they’d like to buy. “We set up this little shelf and found we were selling quite a few quarts of motor oil as well as some unique things the department stores couldn’t handle—oddball stuff for farmers and antique car stuff. We built our customer base on that.”
When you’re selling propane for people’s gas grills, why not sell the grills as well? A little research showed no one in the immediate area was selling high end gas grills, so that was the goal. “We got into different stoves and grills and pretty much opened up a nice little retail business where people could come in and shop.” But when Steve’s father passed away in 2002, “We knew we were at a crossroads; it made sense to keep [the business] going.”
More growth, but from where?
Here’s Steve’s approach to business in a nutshell: if you want to grow, try to add products and services that already fit into your present operation—and that are, if possible, not capital intensive. As an example, they added patio furniture, retractable awnings and other products.
Take retractable awnings, for example. To install them, it would require similar tools to what they were already using to install boilers and air conditioners. “You’re cutting holes, drilling, you’ve got a rack on the truck to carry the awning—it’s not that terribly different. We kept adding different things that we thought would kind of complement what we were doing. That’s how we got into the outdoor products. We were already out delivering grills, so what’s the difference if you put a patio furniture set on the truck? Or an outdoor fire pit, since we were already selling propane? It seemed a natural extension… You really don’t have to invest a lot to do certain things.”
One day, he had been leafing through a phone book while in a hospital waiting room and noticed that the listings included a number of categories without entries. “Nothing in them. So I started listing all the things we could do, and as I was going down the phone book, one of the things was ‘Awnings.’ Nobody in the area did awnings, or if there was someone, they were way out of the area.
“Why try to penetrate a market that is already full? So that’s kind of what I did, how we got into patio furniture and fire pits and grills—nobody did these things, so it was a very easy entry point.”
A completely different business
Around 2003, they decided to expand propane sales by adding propane delivery to their menu. It didn’t take long to find out that they were in unfamiliar territory. They knew immediately they needed help—from people who really knew that aspect of the business. “We hired a propane manager who had had 25 years’ experience with a major company, so he brought a lot of his knowledge.
“When you get into propane, you should just forget everything you know about fuel oil because it is a very different product. Don’t try to run it like a fuel company. It’s capital intensive.” And there are pitfalls an experienced person knows how to avoid. “I like to think I have an open mind, but I wasn’t thinking about a lot of the pitfalls and things that we would have fallen into if we hadn’t had somebody who knew what to expect.
“If you don’t think about it, for example, and set up propane tank at somebody’s house and they never buy any propane, there has to be a consequence for that for the customer.” Ohl’s current tank agreement specifies a customer either use at least one tank per year, or as an option, pay a rental on the tank, which is owned by the company, not the homeowner. “We feel if you own the tank, you can keep the customer longer.”
Lehighton, PA (population 5,000 plus) is in coal rich, aptly named Carbon County, just three miles south of the eponymous town of Jim Thorpe, PA, and a short hop to the Appalachian Mountains and the Appalachian Trail. Many of the homes R.F. Ohl serves were vacation homes built in the ‘70s and ‘80s in the very green and hilly countryside. Most were electrically heated, since they were seasonal (and it was cheap to install).
But as with many vacation homes, people tend to eventually move into them permanently, and that former electric bill for $100 or $200 a month, with thermostats set during the week at 45° or 50° was skyrocketing as heat was turned up to comfortable levels. Now the bills were coming in at $600-$700 a month.
“So what do they do? They come in and buy a fireplace or space heater and now we’re selling them propane— 800 to 1,000 gallons a year of propane. We were adding 500 accounts a year when we first started. We grew that business from 2003 until now, we have 3,000 accounts.”
Service what you sell
The company does provide full service, but not when they were starting out. Back then, they just took orders, but “My dad did know how to do degree days, so we were delivering to some customers automatically,” explained Steve, but added that when he started doing the office work full time in the late ‘80s, there was only a rudimentary card system. Very rudimentary. “There were no addresses, and just the guy’s first name, maybe no phone number. The directions were, ‘Turn at the old tree,’ or ‘Turn at the house that burned down.’ I realized we had to get computerized, so I kept trying to get a computer and finally got one and set up a system by 1993. I think at that point, we had 600 accounts.”
Taking another look
The recent warm winter prompted them to seek additional revenue, so they looked at air conditioning service. The company had been installing air conditioning since 2007, had been servicing oil heat since 2004, and propane some time before that.
But servicing AC? Said Steve, “We found that only 1% of our customer base used us for air conditioning.”
Thinking outside the box and the company Steve Ohl is convinced one of the smartest moves he made was admitting he could use some outside help. “I can only do so much with natural talent,” he said, adding that he realized he needed someone to help him develop the rest of his talent. “You know, you think Tiger Woods, all these baseball players, football players. They all have personal coaches. Why can’t you have a personal coach for business? I think everybody needs a coach.”
With the warm winter, it became apparent the installation activity was slowing down: “Boilers and furnaces didn’t wear out, so they weren’t getting installed.” So it was imperative that something be done to keep revenue coming in. But he didn’t know what to do.
On advice, he turned to someone completely outside the industry, a gentleman named Rick Munson of Paramount Business Development— an engineer by trade and a former corporate turnaround expert—and now, a business coach.
Steve says it really opens one up to many possibilities, “…because all of us are self defeatist. We say we’re going to do something, but we never do, we put it aside. [Having a business coach] …kind of holds you accountable, because now, as a business owner, nobody holds you accountable. Not even yourself, sometimes. So you have to look outside and say, ‘Whom can I bring in to help me with this? And it seemed like a natural fit. It’s worked out great for us.” The number one best move
“If I could point to the one thing I’ve done in the last couple of years, what number one thing could I say I’ve grown my business with most effectively, it would be the coaching.”
The coach, by the way, is not a heating oil expert, nor an HVAC guy. He is best described as a facilitator. Rather than telling Steve what to do, he’ll ask what he wants to do, and provide suggestions that the company can work with.
Positive results from the coaching that are immediately apparent, he says, are a better understanding of his customers and what they want, improved internal communication and team building, which capitalizes on the strengths of his employees as they work with others.
For example, a recent sales team meeting was to develop the top ten things that create great customer service. So they made a list, over a year, of the common customer complaints that came in, and basically, it boiled down to three key issues: one was price—another was internal communications—and the remaining was external communications (between customer and driver, or the tech, for example).
Out of that, he learned that only nine percent of the people had pricing issues, but fifty-six percent of the problems could be traced to internal communications. Clearly, that was an area that needed to be addressed.
Steve stresses he has a coach, not a consultant. “You can hire a consultant, have him come in. He gives you a ‘what’s wrong’ scenario, but he doesn’t really tell you how to fix it. He gives you the information, but it is not as if you are really working with that person. They give you a nice manual that says this is what you should do, but nobody is there along the way.
“That’s why I like the coaching aspect. I meet with him every week, in person, or by phone and we spend an hour and a half, go over the issues, set goals on what we want to achieve this week. And it’s all on me. It’s not his ideas, they’re my ideas. He helps me to solve them.” Team building Another positive result of seeking outside advice: team building. When a team is assembled correctly, it functions much more smoothly than a random arrangement of individuals. Employees have varied strengths and weaknesses. The first step in garnering that knowledge, he said, was to do a personality profile of each employee. “We did that for everyone, so we could learn how each of us worked.”
The coach was able to facilitate this process, showing them how to do it. “Now we do it on our own. It’s fairly simple. Just a little booklet, 25 questions.” But those 25 questions provide enough information to create a profile, he says. “It is amazing how it pegs you, shows what your strengths and weaknesses are.”
From that, he continued, it is possible to find out who works well together. The next logical step there was to implement what are called learning style tests, which basically determine whether someone is kinesthetically, aurally or visually oriented.
Individuals who are kinesthetic learners learn by doing, hands-on. They prefer to do things first, experience the actual process. The aurally, or auditory-oriented individual can listen and hear instructions and be comfortable with that. The visually oriented person basically learns by seeing, either the procedure or a picture.
“So if you put an auditory guy and a kinesthetic guy together,” explained Steve, “…one can bark directions all day long, but the kinesthetic guy is not going to get it. But you can show him how to do it, and it sticks.”
Wood is fairly common in the area, and the company recently sold its first pellet boiler. But unlike some other fuels, wood requires maintenance. Ohl also installed a Peerless propane gas fired wall hung unit because wood requires someone to be home. “If you go away for a few days, there’s nobody to load the pellets, so an alternative heat source is a good idea.” His idea is if a customer wants a specific solution, it’s best to offer it, because you can keep them as a customer and they will use you for other services.
That’s why Ohl is also installing solar. While he can offer solar thermal, the bulk of interest in the area is photovoltaic. He began selling solar in 2011 and has installed four systems. “We can do hot water, but the customer is not interested in hot water, even though for the bang for the buck, solar hot water is a very good idea. But people don’t find it sexy. They want to see the [electric] meter spin backwards; they want to see their electric bill come down and be able to tell their neighbors about what they did. Solar hot water doesn’t allow them to do that.
Because he likes the simple approach, when he leaned of the turnkey solution offered by EarthSponse while attending the Atlantic Region Energy Expo in Atlantic City last year, he realized he may be able to provide the service at minimal investment. Prior to that, he said, he had a great deal of difficulty getting information on solar, even from the equipment manufacturers. EarthSponse, on the other hand, provides a turnkey solution. They provide the sales and equipment, he provides the installation.
Another idea that seemed to be a “no-brainer,” service plans. “We do a service plan on everything. We call it the Ohl Advantage plan. Basically, we’ll write a service plan on a gas grill—on anything.
“The more you can tie into a home, the more they are going to rely on you to do it.” That means being able to offer anything the customer asks for. “We’ve been pushing total energy. We sell oil, propane, electricity, pellets. Natural gas is not available yet, but when it becomes available, I’m sure I’ll be in line.
“It is always nice, when talking to a customer, that if electricity is an option with them—maybe they’d like to install a heat pump, maybe they’d like to change fuels. We can always say to them, look, we sell all that stuff. We know all about it. We are your energy expert. We can come in and let us take a look. Hopefully, we are the first ones in the door, because if they know you are selling electric, pellets, propane—besides oil, I think they feel more comfortable knowing you are going to give them a good opinion—because you do all these things. It is not like, “I’m just selling oil, so a customer calls and you won’t work on their natural gas system because you don’t really like natural gas. We service natural gas—we service anything if we can figure out how to do it. Because, then again, you want that customer calling you. I’d rather they call me than somebody else.
So does he advertise? Big ads? Go the traditional route? “Our lead tracking showed it cost us $365 to get a lead through traditional marketing, and that was just too much. If it costs you $365 and they are only going to purchase $100 worth of stuff, it doesn’t help you. So we looked internally, and we started this direct mail campaign to our existing customers.
“Right now, we use direct mail. It seems to be working, because people are getting less direct mail than they used to, so they tend to read it. We’ve had a direct mail campaign going on since February. We did a handwritten letter [to existing customers] to promote our air conditioning service. I just basically said, ‘I’m sitting on my porch, it’s February and 40° and how hot do you think the summer’s going to be?’
“So I said, ‘We do air conditioning and we’re running a $99 special, so if you book your air conditioner cleaning right now, I offer free estimates if anybody wants a central system.’ I told them we also have service plans. I just kept it light and I wrote a nice handwritten letter, crossed out a word or two, and put a smiley face at the end, apologizing for the handwriting. On the outside of the envelope, I also wrote, “From Steve.”
“You would not believe the response we got. I was kind of concerned they would be asking for me, but they usually called and said, ‘Hey, I got that letter from Steve and I want to make an AC appointment.’ We booked 70 cleanings off that by the first or second week of March. We also had $100,000 in estimates we also did for new systems off it.” He tried it once more, he adds, with similar results, this time focusing on installations. Both letters were followed up with a postcard campaign.
And recently, he decided to give the U.S. Post Office’s new Every Door Direct Mail Service a try. “It doesn’t require you to know names or addresses. You identify neighborhoods you want to target, and the printed pieces are delivered with the day’s mail to every address. Cost is about 14.5 cents for each post card to whatever zip code or mail route you want.”
“In addition to attending trade shows and meeting with his business coach, Steve participates in a series of brainstorming sessions with other oil dealers (not competitors) who have been invited to Breakthrough Groups conducted by the marketing consultant firm Warm Thoughts [See the separate article on these groups by Ed Cardell elsewhere in this issue].
“That is a tremendous thing. You can learn so much. There is so much sharing of ideas. You are not competing with anybody, and it helps. I think the only way to grow in business—if you really want to grow— is to seek help from other people…. There are so many resources out there. I really enjoy this.”
Like so many companies these days, staying on the cutting edge—no matter the company size—may mean addressing indoor comfort as an energy issue, not a fuel-specific one. But one thing is certain, at least in Steve’s eyes: when a customer calls, you had better be there.