By prioritizing customer connections Lakes Gas ensures sustainable growth in a competitive market
Lakes Gas (Lakes) is a major propane retailer in the upper Midwest that sells and distributes propane for residential, commercial, industrial, and agricultural uses. CEO Trent Hampton briefly outlines the company’s history: “The business was founded in Forest Lake, Minnesota, in 1959 by Howard Sargeant, when he purchased the Harguth Oil Company. Through his expertise in acquisitions, he grew the small operation into the 14th largest retail marketer of propane in the United States. His five children and 16 grandchildren, who all still reside in Minnesota, remain the beneficial owners of the company, and today, Lakes is the second or third largest family-owned propane business in the country.”
Trent then goes on to explain the strategy behind the company’s approach: “To put it simply, we zig where others zag. Our value proposition is providing a local
service through our many community-based offices. We have over 57 locations within our geographic footprint, far more than anybody else. Propane demographics in the upper Midwest tend to be somewhat rural and slightly older. We know that our customers enjoy having personal service in their hometowns. Many of our competitors have moved towards national or even international call centers; they’ve closed branches to save money. This produces an impersonal service. We have taken the opposite approach, and we’re growing organically because we’re providing personalized, local service that customers value. This also enables us to have much shorter delivery windows, which clients appreciate; during peak times, this can be up to two weeks less than our competitors.
“Historically, we have focused primarily on supplying propane to the residential sector, and we still do; however, we saw an opportunity to expand into the service sector in metro areas with forklift cylinders and temporary heat for construction projects. We’ve taken advantage of this opportunity by hiring salespeople in three metro areas: Milwaukee, Minneapolis, and Green Bay, Appleton.”
Recent investments
As well as strong organic growth over recent years, Lakes has also sought growth through acquisitions. Trent expands: “We’ve acquired eight businesses in the past three years. We average two or three acquisitions per year, and we like to bring our philosophy to those businesses. Most of the companies that we buy are multi-generational family businesses; they’re very important to their local communities. They are also very important to the families; they want to make sure, before selling, that their business goes to someone who will care for it and continue to be a part of the local community. The last thing they want to see is their father or grandfather’s work dissolved into a large company, followed by the closure of its office. We take a different approach; we come in and treat the family heritage the same as we treat the Sargeant family heritage and continue to be active members of the local community.”
Trent then explains how the company approaches selecting businesses for potential acquisitions: “Through the association and networking, we are familiar with a lot of the owners in this sector. We’re looking for quality businesses with a history of good customer service, as well as growth and stability within the operation. We seek individuals who run their companies similarly to how we run Lakes. Safety, for example, is always a priority for us when we come in. We then look at the geographic match; we will favor locations closer to our footprint over locations in Texas or Florida, for example.”
While Trent notes that the business takes a community led, and ‘traditional’ approach to customer service, that’s not to say that Lakes shies away from modern methods where it sees a benefit. As an example, he highlights a major investment in modernizing its IT structure over the past five years. “We began the process to help overcome some of the challenges presented by Covid; it has helped us operate in a more remote, mobile, and secure way,” he explains. “This investment happened alongside the addition of more strategic storage locations, and we now have the largest storage infrastructure in the upper Midwest. This also provides a layer of security for us, which is especially useful given the harsh winters we experience up here. On top of this, we have also been updating some of our local offices.”
Trent continues, now expanding on how sustainability features in the company’s approach: “First of all, we believe that propane has a place in a clean energy environment. Throughout the United States, in every state, with perhaps one exception, propane, from source to use, is currently cleaner than electricity. At Lakes, we’ve invested in generating growth in that market. It is a difficult market because incentives vary as governments and political environments evolve. Not only at the national level, but also state by state. Nevertheless, we want to be prepared for change because we believe in it.”
Dedicated to propane
Keeping abreast of changing regulations, and also promoting the benefits of propane as a fuel are key focuses for Trent and this is reflected in his involvement in the Propane Education Research Council (PERC) and the National Propane Gas Association (NPGA): “I served as a councilor and officer on the national Propane Education Research Council, and I am now on the board of directors, serving as an officer on the National Propane Gas Association. The Council is exploring ways to provide safe and clean energy through propane, which has been vital to our operations. We strongly believe that we have something to give back to the industry because it has been so beneficial to the Sargeant family and to all of us.”Trent concludes by outlining the company’s ambitions for the coming years: “We expect to continue organic growth through customers who prefer a local approach and the ability to talk to someone in their community. We also expect growth through acquisitions, both within our existing footprint and in adjacent areas around the Great Lakes, including Northern Illinois and especially the Lower Peninsula of Michigan.”