Bill Jenkins had an idea that maybe his oil delivery customers wanted a little more than just oil. So the owner of D. Jenkins Corp. in suburban Pittsburgh decided to add an HVAC service department 2-1/2 years ago.

"We felt our customers needed a better service department and more than just petroleum distribution," he said.

"We got a lot of complaints from customers who said the HVAC companies blamed the oil for some of the equipment problems. When the contractors didn't have the answers, it was always the oil's fault. So I needed a way to clear my name and give our customers better options."

HVAC service is the new venture for the D. Jenkins Corp. The company added a service department 2-1/2 years ago. Pictured here is Don Klauss, service technician.

SERVICE AGREEMENTS THE WAY TO GO

And despite being relatively new to the service industry, Jenkins knows the importance of service agreements. "We are trying to build a customer base," he said. "Everyone on a budget plan is also on a service plan - they run hand-in-hand. That base is growing rapidly, and one is helping the other. Our two core businesses are working hand-in-hand, i.e., oil customers are turned into service customers and service customers are turned into oil customers."

Jenkins knows the potential for growth through service agreements is almost limitless. He noted that 75 percent of oil delivery customers are pay-as-you-go and have no service contracts. That leaves a lot of potential for new business.

"We already have in excess of 200 service agreement customers," he said.

Jenkins' service agreements aren't just cookie-cutter either. He has received a lot of advice on how to develop a service agreement program and has taken bits and pieces from all of the advice to develop his own plan.

The program is called Total Comfort. It runs July 1 until the end of the following June. "I personally go to customers' homes to survey their use from last year and determine if their budget payment needs to go up or down," said Jenkins. "I give them a feel for what I think the market is going to be. It is a straight price program. We give them a monthly fee.

"At the end of June, I gave them a $300 threshold. If it has been a warm year and they have $400 in credit, we will roll $300 into the next year's program and give a check for $100. Or customers can roll all of it into next year's program. If the customer owes us $400, they have the option of paying $100 and financing the other $300 over the next year's program. There are no big surprises. Fill-ups become automatic and people don't have to worry about running out of fuel."

Jenkins believes that a service agreement program should be simple and allow for customers to opt out if they aren't happy with it. That's why he is sure that customers will benefit from the program - and tell others.

"I want it to be relatively easy to have a parting of the ways if someone is unhappy with me," he said. "That's why I developed a simple service agreement program. Disgruntled customers don't want to do business with me, and I don't want to do business with them.

"I want customers to tell their friends and neighbors that Mr. Jenkins treats them fair and they should try our company. That's how I intend to build my business. The business is based on my service and their satisfaction, not by unbreakable contracts."

He said if customers don't like his service they can always sign an oil delivery contract with another supplier. The choice is easier with oil. "The customer is not tied to a certain distributor and the ties can be cleanly cut," Jenkins said. "That's why it is important to have a real customer service-oriented company. We know this."

Oil delivery had been the only function of the D. Jenkins Corp. from its inception in 1967, until HVAC service started in 2004. Pictured here is David Pysz, oil delivery truck driver.

JENKINS TOUTS OIL AS A FUEL SOURCE

Jenkins believes that selling service agreements can be easier if customers are initially happy with oil as a fuel source. He said he does install natural gas equipment, but the bulk of his work comes in service and replacement of oil-fired products.

"Propane is 92,000 Btuh per gallon whereas No. 2 oil is 139,000 Btuh per gallon at roughly the same price, so oil is the better value," he said.

"Although you can't run your cook stove on oil, the large majority of the energy costs are through the heating equipment."

Jenkins added that prices of oil and natural gas have slacked off this year but both prices are "at the mercy of the media." Oil has been in a strong position as far as supplies go.

"Barring a natural disaster or a geopolitical problem, energy should stay consistent all winter," he said. "One generally does not let the other one get too far ahead of it. One industry does not want the other industry to make all of the money, and vice versa."

Jenkins said that his service agreement program has increased the workload and he sees a need to add to his four-person delivery and service crew. "I'd put a fifth person on as soon as I can find a qualified one," he said. "It is difficult to find qualified people in oil heat in my area. They have to be willing to go to school and we use NORA [National Oilheat Research Alliance] training. We would like to take someone out of a trade school and build them from the ground up."

D. Jenkins, a certified Trane dealer, is also one of the few oil delivery companies to offer service agreements in western Pennsylvania. "I don't know if my competition will pick up on it," Jenkins said.

That's a good thing because as Jenkins said, all of the major energy suppliers, i.e., natural gas, electric, propane, oil, are fighting for the customer. D. Jenkins seems to have a pretty good grasp on how to keep that customer.

Publication date: 11/27/2006