Continued from p. 4 Likelihood to convert, by State Bad News The total number of oil customers looking to convert to another fuel 7% of total respondents say they are extremely likely to convert, and 29% say they are somewhat likely to convert. The speed at which they wish to convert Of the consumers who identify themselves as “extremely likely to convert,” three-quarters plan to do so this year or next. Consumers’ fuel price expectations— perception hasn’t caught up to reality. 41% of all oil customers think their fuel costs will be higher than other options five years from now. Only 6% think heating oil will be less expensive than other fuels. Reasons for not converting aren’t based on strong positives about our product Of the people who say they want to stay with oil, only 18% say it’s because they are happy using it. The biggest deterrent is actually, “up-front conversion cost is too expensive,” followed by, “my equipment has a lot of life left.” Close behind is, “the process is too difficult.” Younger consumers and new homeowners are particularly vulnerable We are in terrific shape with customers who are 55 and older. Only 2% identify themselves as extremely likely to convert. Unfortunately, that number jumps to 7% in the 35–54 range, and a whopping 19% for those 18–34. Likewise, almost 20% of new homeowners say they are extremely likely to convert. That number drops by a third for those who have been in their homes for one to five years. Unless we figure out a way to make our product more appealing to younger groups, and more attractive to the folks moving into oil heated homes, the future is challenging indeed. The “extremely likely” group has company While I have been quoting the number of people who say they are extremely likely to convert, the fact is, two to three times more say they are somewhat likely to convert. Good News Their bark is worse than their bite While 17% of customers have seriously considered converting, only 7% said they were extremely likely to switch. What’s more, 20% of those who plan to convert say they will convert to solar. Forty percent believe it will cost less than $5,000 to convert. So while the interest in converting is greatly troubling, the data suggests that the more customers dig into converting, the more obstacles they’ll find. Pricing trends were not fully appreciated This study was conducted after the price decreases of last winter, which significantly closed the gap with natural gas, and also reduced some of the urgency to convert. However, it seems like consumers will need another year or two of lower oil prices to really rethink their calculations. If that happens, the playing field will certainly shift. But you already knew that, right? Unrealistic expectations about break-even time Nineteen percent of total customers think that their conversion will pay for itself in less than two years. Forty-six percent think two to five years, and they say they have little tolerance for waiting longer than that. The savings will come almost equally from lower fuel prices and improved efficiency. Those who say they are Likelihood to convert, by Age Continued on p. 8 > 69% > 39% > 20% 6 ICM/Sept/Oct 2015
ICM September-October 2015
To see the actual publication please follow the link above