ARTICLE | 6 MIN READ

Key Metrics for Propane & Heating Oil Dealers

How do modern propane & heating oil dealers grow their businesses in an increasingly competitive market?

The energy industry is changing—with tighter margins, higher cost pressures, and increasing turnover, it’s more important than ever to use data to run operations. Key Performance Indicators are a deceptively simple but powerful method of benchmarking success, evaluating performance, and identifying areas of improvement. Here are the top metrics for propane & heating oil companies to monitor through KPIs.

What Is a KPI?

A Key Performance Indicator (KPI) is a milestone number used to measure success. In the fuel delivery industry, KPIs are based on past performance and industry standards. Reaching that number through profits, deliveries, and other strategies can signify success, while falling short of a KPI is a sign that something needs to change.

KPIs might be gallons per stop, gross margin dollars per hour, or gallons per degree day—but there are countless metrics to measure, and some might be better fits for your business than others.

How Do I Set a KPI?

The first step to setting a KPI is to start broad. Visualize the numbers that are important to your business and examine the trends that influence them.

To establish a KPI, you should look back at historical data for your business and similar competitors to set a standard for positive performance. However, it’s crucial to account for variables when establishing KPI goals. Your KPIs may be lower than industry averages, but that’s perfectly fine—focus 75% of your KPI metrics on historical data and 25% on what the industry averages.

Once you’ve put a KPI in place, the long-term strategy requires check-ins to evaluate progress. Over time, metrics like customer count and prices will change. As those numbers change, you’ll see if you’re thriving or need to adapt.

What KPIs Should Fuel Dealers Track?

With all the possible metrics to measure, it can be overwhelming for energy companies to establish KPIs. Add in the fact that every organization is different, and you’ll find that the best KPIs for one energy business won’t be a good fit for another. That said, there are some common metrics that many fuel dealers track, as we’ve discovered in our annual Tech Trends Benchmarking Report. Here are a few of those common KPIs to help you get started.

Fuel Sales

Fuel sales should go up in the winter and down in the summer, so charting annual sales is a great way to measure delivery KPIs. Are the peaks high and the valleys deep? If so, flattening the curve can make year-round fuel and service jobs more balanced while improving your bottom line.

Gallons Per Mile

One of the top metrics we see fuel dealers measure is the volume of gallons delivered per mile driven. Simply divide gallons delivered by miles driven; the higher the number, the greater your success. And while this is a fantastic KPI, it does come with a caveat that makes interpreting calculations a bit complex.

KPIs are neither a management tool nor a performance evaluator. Rural drivers will always average fewer gallons per mile compared to drivers delivering in concentrated urban and suburban areas. You still can—and should—experiment with a gallons-per-mile KPI, but make sure you understand the context behind the numbers before marking successes or areas of improvement.

Average Drop Size

Bigger is better, as the saying goes, and this sentiment rings true for fuel delivery KPIs like average drop size. If deliveries are shrinking over time or have been historically low, inefficient forecasting strategies could be to blame. Keep in mind that smaller drops lead to lower profits. Still, delivery costs include salaries, truck maintenance, gasoline, and other variables—try to account for these when looking at the total value of drops.

Margins, Labor Costs, and Callbacks

Are your service workers called out to remedy situations that could have been handled on a prior visit? A KPI focused on service work could aim to reduce callbacks per month and labor costs while also improving customer satisfaction.

Why Should I Use KPIs as a Fuel Delivery Company?

KPIs aren’t answers to your business questions—KPIs are a way of asking the right question. So, measuring these metrics may not tell you exactly what’s going on, but they can certainly point you in the right direction.

That’s why it’s crucial to start implementing KPIs now. You don’t need to choose the perfect ones for your business immediately; as you measure these metrics, you’ll discover areas that can be improved. You’ll dig into those, establish more refined KPIs, and eventually be on track to transform operations for the better.