Improvement in drilling technologies and the discovery of larger shale reserves in recent years has increased shale gas production in the U.S., which has meant greater opportunity for distributors serving the industry.
“Oil and gas customers are a prime target for us,” says Tina Hinojosa, marketing manager for sealing products master distributor APG in Houston, TX. “We can see a lot of opportunity in that market.”
APG isn’t alone in its focus. Paul Ziac, hose product manager for Pennsylvania-based R/W Connection, says the oil and gas market has performed well for the company since it began serving it about five years ago. “There’s a lot of activity now that wasn’t here five to ten 10 years ago,” he says. “We try to target that as much as we can.”
Hydraquip Distribution in Houston, TX is also targeting the industry. Tim Nichols, Hydraquip's vice president of sales and marketing, says the company prioritizes its marketing resources accordingly. “We target these customers through many means, including market-specific sales people trained in the industry, ongoing advertising efforts and participation in oil and gas trade shows.”
Generating more business with existing customers is another key strategy for distributors in this area. APG, for example, created a brochure specific to the industry, which has helped them to sell more to existing customers. Hinojosa says the brochure showcases the diversity of APG’s offering and shows customers the variety of applications where their products can be used. Kevin Elvis, also with APG, says when customers see the brochure for the first time, their response is often, “Wow, I didn’t know you did that.”
Elvis says the company’s positioning as a problem-solver also leads to cross-selling opportunities. And solving a problem for one customer (which for APG can mean the development of a new product) strengthens the company’s ability to prevent and solve similar problems for other customers.
APG’s product development capabilities help them to meet the unique needs of oil and gas customers, especially those involved in hydraulic fracturing. “With fracking comes a lot of product development,” Elvis says. Evolving drilling technologies mean customer needs evolve as well, making ingenuity an important part of serving these customers.
Fast service is also important. Elvis says oil and gas customers tend to demand quicker turnarounds than customers in other markets. So, the company offers a 24-hour call-out service (available to all customers) to help them obtain products whenever they need them, a service Elvis says customers are willing to pay for.
Another strategy distributors are using to expand their customer base in the oil and gas markets is by getting closer to the customers in these markets, and their specific needs. R/W Connection opened a 20,000-square-foot branch in Northern Pennsylvania to take advantage of growing business in the Marcellus shale play, Ziac says. They also put more ‘feet on the street’ in that geographic area. R/W also offers 24-hour service, keeping many unique and customer-specific products stocked so they can respond quickly to customer requests.
Membership in NAHAD’s Hose Safety Institute has also helped distributors to better meet customer needs. Institute members are NAHAD member companies who have also met specific employee training and quality control standards and who comply with, and utilize, the Institute’s Hose Assembly Guidelines and best practices for all of the hose assemblies that they fabricate. RW’s Ziac says that being a member of the Hose Safety Institute has been “really important” to their business. Customers who learn about their Institute affiliation and the Hose Assembly Guidelines respond well to it, and some customers require it, including adherence to Institute Guidelines in their hose assembly specifications.
This article is part of NAHAD’s 2013 series on the oil and gas industry.