|
As the petroleum industry continues to change with volatility and added competition, traditional marketers need to ponder if another revenue center called “Mobile Refueling” might just be the answer. Steve Johnson, president of VOCI and chair of the SIGMA Mobile Refueling Task Force, discovered Mobile Refueling at a SIGMA seminar five years ago. Since then, he became a major believer, as this fueling activity became a major revenue center for VOCI. “It was exciting to think about putting our existing delivery trucks to work from 6 p.m. to 6 a.m. and provide a new service to our commercial customers,” Johnson stated.
Mobile refueling generated a new market opportunity and allowed VOCI to provide additional services to its large fleet customers. It also enabled the company to compete in a market with good margins, 24/7 truck utilization, a consistent year-round revenue activity and most importantly, an opportunity to build strong value added relationships with the commercial customer base. At our Chicago Mobile Refueling Task Force meeting, Steve asked one of the SIGMA members to share their recent entrée into Mobile Refueling and here is his story...
Brian Kottcamp, president of Shipley Energy, shared the Shipley Group’s mobile refueling venture story with about 40 Annual Meeting attendees during the Mobile Refueling Meeting early Saturday morning.
“We decided to test a mobile refueling business model to try to smooth out the seasonality of our heating oil business,” said Kottcamp. “Plus, our current client base of bulk, card lock and gas station customers were asking for it.” Shipley Energy, based in York, Penn., is a products that include oil, propane, and natural gas. “Our model is that we’re busy in the winter,” Kottcamp said. “We look for potential profit centers that will grow our off season businesses, which first was mobile refueling and then air conditioning.”
Shipley Energy first surveyed the marketplace, finding a lack of competition, making mobile refueling an even more
enticing profit center. It also balanced the utilization rate of Shipley’s assets and cost centers. Now, the trucks, employees, facilities and insurance functions are distributed throughout the year more effectively.
“We thought it was a natural fit to help increase our bottom line,” said Kottcamp. Shipley Energy started small, by making some modifications to their current truck configurations and hiring a sales person with commercial fuels experience. They also educated their drivers on the new fueling process, which is quite different from their regular routine.
“The retail home heating oil business is where the drivers drop 200 gallons at a customers house and drive maybe 2 miles down the street and do the same, "Kottcamp said. “Whereas with mobile refueling, you’re fueling seven or eight trucks and then driving another 30 feet to get out of the truck and do the same thing all over again.”
This is a new concept for the drivers. The educational sessions’ main focus involved explaining to the drivers that mobile refueling is a whole different business than what the home-heat retail drivers got accustomed to—the scenarios change and the type of driver required most often changes, too.
“As the business has grown, the challenge becomes finding those drivers willing to work the graveyard shift,” noted Kottcamp. “Finding those types of people who don’t mind working at 2 o’clock in the morning by themselves in a dark parking lot is really hard.”
Shipley used its brand recognition and service reputation to grow in the mobile and tank-wagon work, eventually expanding the coverage area to meet the demands of customers. And in 2007, Shipley Energy will address another customer request—updating the current antiquated method of fuel delivery documentation.
EXPANDING YOUR HORIZONS
“Our goal in early 2007 is to automate our trucks with hand-held computers,” Kottcamp added. “This will improve fueling efficiencies, as we currently just use a pen and paper to track gallons distributed to our customer base.”
Under the Shipley’s current model, drivers write down approximately how much fuel they filled the customers’ trucks with and the accuracy depends on the driver and even the weather—especially if it’s raining or snowing! Using an automated system, however, allows new technology to track information as it happens. Tools include hand-held computers for drivers to scan barcodes on the bumpers of the vehicles getting filled that track the number of gallons delivered and the time of delivery.
“We’re looking at three different systems now and we’ll be purchasing that equipment within the month of December,” Kottcamp said. “We’ll then be implementing it within the first quarter of 2007, with the goal of having it finished at the end of the second quarter.”
In the end, Shipley Energy benefited from diversifying into mobile refueling and Kottcamp forecasts continual significant growth in the segment. It allowed Shipley to level out its seasonality by adding a strong component for usually slower summer-time activity. “We made mistakes along the way,” Kottcamp joked, “but we also made adjustments.”
Some Shipley Energy lessons learned from the mobile refueling business venture:
- It takes a proactive sales force to beeffective in the market place.
- There is transition to develop drivers who are willing and able to work the swing and graveyard shifts.
- Truck technology is a key investment that you will need to improve efficiencies.
- There is a significant investment in renovating trucks previously used in heating oil deliveries.
So next time you find yourself in a strategic thinking mode, challenge yourself and give serious consideration to your firm’s ability to add Mobile Refueling as a revenue center; you may be very glad you did!
|
|
