SWOT your business

A couple of weeks ago, I wrote about the four parts of a marketing strategy: segmentation, targeting, positioning, and establishing the value proposition. This week, I want to back up just a bit, because the marketing strategy is actually just part two of the four parts of a generic marketing plan.

There are lots of variations on this, but the four parts are 1) analyzing the situation 2) the marketing strategy 3) the marketing mix 4) implementation / feedback.

This week, I wanted to touch on part 1, “analyzing the situation”. The most common tool for this is what’s called a SWOT analysis. That’s a semi-clever acronym for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis can be done on almost any business, team, or individual for that matter.

As the owner of a water systems business, if you did a SWOT analysis of your business, what would it look like?

Strengths – Ask yourself, what are the top 5 things that make my business a strong one? It could be your experience, your reputation, a certain expertise, or perhaps a piece of equipment no one else has. It could even be something like your location.

Weaknesses – What are the weak points of your business? These could be anything from a lack of properly trained employees to a lackluster accounting system.

Opportunities – Looking externally, what are the biggest opportunities for you and your business? Is it geothermal, a new housing development, or upgrading existing systems to constant pressure? This summer, perhaps it’s been the drought.

Threats – If you’re in the water system business, several possibilities come to mind here, such as the encroachment of public water, price competition, no new housing, and the economy in general. But these will be different in different markets.

Note that strengths and weaknesses look internally at you and your company while opportunities and threats look outside your company. Actually, my preference is the inverse of the above, TOWS analysis, which is, you guessed it, Threats, Opportunities, Weaknesses, and Strengths. It’s become more popular in recent years because it forces you to look externally first, not last.

In any case, the reason a good SWOT analysis is crucial to a marketing plan is that it forces you to match your marketing strategy (step 2) to the situation. For example, if new construction is at a standstill in your area (that’s a threat), targeting builders doesn’t make sense. Likewise, if constant pressure systems are doing well in your area (opportunity), and you’re experienced here (strength), your strategy needs to target this area.

This is not complicated stuff, and like I’ve said before, you probably do much of this already without thinking about it in precisely these terms. However, a thorough and rigorous SWOT analysis is generally much harder than it first appears. But whether you’re building your business or coaching a Little League team, it can help you frame and organize the situation. And once you truly understand your current situation, the other components of your marketing plan start to fall into place.

The 4-step program

When it comes to marketing strategy, any marketing course beyond high school will break it down into four parts: segmenting, targeting, positioning, and the value proposition. Does any of this apply to your water systems business, or is it just academic jargon? I think it applies, and here’s why.

Let’s start with segmenting. My version of this is “a customer is not just any customer”. You probably do this all the time. You know intuitively that the water system needs of an expensive lake home are different from those of farming operations which are still different from those of a municipality.

Segmenting leads to targeting, which is simply identifying which of these segments you feel are the most profitable and make the most sense for your business. As a water systems contractor, you may decide to target everybody that needs water, or just certain segments, such as agriculture.

Once you’ve identified your target market, the strategy moves to positioning. This answers the question, “Where do my products and services fit versus the competition?” Are you the low-cost leader? Are you the expert on variable-speed constant pressure products? Or, is your company somewhat of a generalist, providing a variety of water services?

Finally, after you’ve segmented your potential customers, targeted which ones you’re going after, and decided how you’re going to position your business within that target market comes the value proposition, also sometimes called the unique selling proposition. A couple of fancy names, but this is the meat of a marketing strategy and the essence of your business. It’s also the hardest part. Your value proposition encompasses your advertising, your brand, your competitive advantage, how you do business, and even your logo. It says, “Here’s why you should buy from me.” The list of choices can be long: I am the most convenient (24 hour service); I am the most experienced and reputable; and I am the most affordable, are just a few examples.

The reason the value proposition is so important is that the alternative is to try to be all things to all people. That rarely works because it just confuses the customer. What makes finding the right value proposition difficult is that it has to match the capabilities of your business to what will resonate with your target market. For example, if it doesn’t make financial sense for your business to be the low-cost leader (and it rarely does), you shouldn’t go there.

As a water systems contractor and business owner, you’re probably already going through this exercise, maybe even unconsciously. Nevertheless, you’ll never regret taking a step back from time to time to think the steps through. You just might find a better (and more profitable) value proposition.

Slow down and have a conversation

The following post originally appeared in June of last year. Since we’re in the busy season for many water systems contractors, I thought the timing was right to post it again.

Let’s face it. The term “sales” in many circles has a reputation for trying to sell us things we don’t need or even want. But, truly successful sales people will tell you that’s not how they do business. They’ll tell you that what’s made them successful is a relentless focus on helping their customers get the products and solutions they need. They see themselves as educators and consultants, guiding their customers through a decision-making process and providing options.

There’s no area where that’s more true than with the professional water systems contractor. Most don’t like to think of themselves as sales people. But, a huge part of job is just that. You are our industry’s educators and representatives to the rest of the world.

What makes this especially true in our industry is that water systems are far more reliable and have a greater lifespan than most of the appliances in our lives. As a result, most homeowners will only need a new water system or something repaired every 10 years or so. That means that you will only get the chance to stand in front of your customer once every decade or so. So, we need to make the most of that opportunity.

In many cases, the homeowner is out of water and is literally desperate to get it back. Nothing highlights the critical nature and value of water more than not having it. As a result, the conversation becomes a one-way, two-part question of “how soon and how much?”. Try to slow things down. Have a conversation. A few minutes goes a long way. Show them how their water system works. What does that tank do anyway? Explain why they are out of water. How has their home and lifestyle changed since someone last looked at their water system? Have you always had that garden?

Why do this? Because two things will happen, both of which are good for you. It will be a springboard to upgrading their water systems. Perhaps it will be a constant pressure system, or dry well protection, or water treatment. Maybe it will be simply a larger tank. More importantly, you will have instilled confidence, both in their water system and you. From there, they will tell their neighbors.

What will they be telling them? In so many words, that you listened to them, the two of you had a great conversation, and they ended up with a far better solution and water system than just being “back in water”. What they didn’t get was a sales pitch.

Constant pressure by the numbers

Over the last several posts, I’ve detailed several niche applications for variable speed, constant pressure systems that had nothing to do with constant pressure.

This week, I want to step back and talk about the overall financial opportunity presented by constant pressure systems. I’m going to make a few assumptions here, but I think my point will remain the same.

Of course, there are a lot of factors that determine how long a submersible system will last before some type of service is required. Tanks need replaced, pressure switches fail, and the generally accepted longevity of a submersible pump/motor is 10 – 20 years. Let’s assume that on average, a submersible installation needs some type of service every 15 years. Now let’s figure that into the 15 million homes in the United States that are on private water systems. If there are 15 million systems that need service every 15 years, that means there are about 1 million service calls made each year in our industry.

One million service calls mean 1 million opportunities to offer and sell your customer improvements to his existing system. With Franklin Electric and a couple of other manufacturers offering variable speed, constant pressure systems that can be retrofitted without pulling the existing pump and motor, that means you have more to offer than ever before. For just about every service call, there’s a potential for a constant pressure system. Just need a new tank? Offer a smaller tank that comes with a constant pressure system and put the savings towards constant pressure. Pump or motor need replacement? If you have to pull and replace, then the benefit versus the incremental cost of adding a constant pressure controller may be very compelling to the homeowner. As one contractor told me awhile back, “Even if it’s just the pressure switch that needs replacing, I’m explaining and offering constant pressure.”

Of course, you’re not going to sell a constant pressure system each time you make a service call. But, let’s say it’s 1 in 10. That 1 in 10 could have significant impact on your business. Even if you don’t sell the homeowner a constant pressure system right then and there, you’ve at least planted a seed that may bear fruit down the road.

Quibble with my numbers if you want, but the logic still applies. Think it about for the geographical area where you do business. How many service calls are you doing each year, and how many of those deserve to have a premium water system? There’s something in it for everyone. For the homeowner, it offers the benefits of constant pressure at every tap regardless of usage, faster fill rates for appliances, more utility space by replacing the large tank with a small one, water delivery that matches demand, and built-in system protection. For you, it means the chance to not only increase your incremental revenue per service call, but also to build a following of satisfied customers. But, you can’t sell what you don’t offer; why limit yourself?

Saving on copper

Last week I provided just one example of how variable speed, constant pressure systems aren’t always about constant pressure. Specifically, I showed how a variable speed controller can extend system life. My example was an older system that was getting heavy usage (and cycling) with an irrigation system.

Here’s a slightly different example. I’ve never given a seminar or presentation on constant pressure systems without someone asking, “How much do they cost?” Although I can usually provide a ballpark list price and refer them back to the distributor for their pricing, my answer is “it depends.” The reason is that although there is additional cost associated with a variable speed drive, there can also be some significant savings that offset this cost.

The example cited most often is being able to use a small tank. However, an overlooked, sometimes far more significant savings can be obtained because of the smaller cable required. Here’s why … Regardless if the input is single- or three- phase, most VFDs generate a three-phase output voltage (Franklin Electric’s MonoDrive and SubDrive2W are notable exceptions). So, we use a three-phase motor, and for the same horsepower, the current (amp) carrying requirements are smaller for a three-phase motor than for a single-phase. Therefore, in many installations, we can go with a smaller gauge of drop cable if it’s three-phase.

Here’s an example: Let’s say you’ve got a 3 horsepower system with a total cable run of 500 feet. From the single-phase cable charts on page 11 of the AIM Manual, #8 is only good for 470 feet. So, to ensure adequate voltage to a single-phase 3 horsepower motor, you’re going to need #6, which is good for 750 feet.

However, it we use a SubDrive 150 and a 3-phase motor, we use the three-phase charts on page 16 of the AIM Manual. In this case, #10 is good for 620’. So, by adding a VFD into the system, we’ve gone from 500 feet of #6 cable to 500 feet of #10 cable.

Now, with the price of copper, and therefore drop cable, these days, your savings on 500 feet of #10 versus #6 cable will be very significant, probably in the hundreds of dollars. In some cases, you may even save money with a VFD.

This is just one example. But, the point is that whenever you bidding a job, it’s a good idea to run the scenario above. You may be surprised at how little the difference is between the system cost of a conventional system and a variable speed system. And, once again, you’ll have all the benefits of constant pressure.

Geothermal and current loops… it all comes around

These days, quite a few of you are installing closed loop geothermal systems. These systems use long loops of flexible pipe installed underground or underwater to heat or cool a building or residence. Of course, a pump keeps the fluid moving around the loop.

Now jump to variable speed, constant pressure water systems. If you are involved with these systems, especially larger ones, you’ve probably seen or heard the term “4 to 20 milliamp pressure transducer” or “4 to 20 milliamp current loop”. These are loops as well, but loops of electrical current instead of water. And once again, it’s terminology that gets thrown out there without much explanation. So, let’s explain.

Many variable frequency drives (VFDs), especially larger units such as Franklin Electric’s HPX, utilize these 4-20 milliamp loops in conjunction with a pressure transducer. “Transducer” is just a general term for a device that converts a mechanical measurement into an electrical signal. In our case, that parameter is going to be pressure, And, keep in mind that you’ll hear the terms transducer and sensor used interchangeably in our industry.

A small power supply in the drive sends out a low DC voltage to the transducer. In the case of the HPX, its 24 volts DC. These are the “4-20 mA” terminals on the HPX. In our geothermal system, this would be the pump. Two wires connect the power supply to the transducer. This makes “the loop” or the flexible pipe. The transducer then limits the amount of current passing through it based on the amount of water pressure it is experiencing. For example, the 4-20 mA transducer used with the HPX will allow 4 milliamps to flow if the pressure is 0 psi. The upper limit of pressure can be programmed into the HPX, and at this pressure, say 80 psi, the pressure transducer will allow 20 milliamps to flow. Hence the name 4 to 20 milliamp current loop. The VFD controller then knows exactly how much pressure is out there by the amount of current “in the loop”. Continue reading

PID: 3 letters made simpler

Hang around any one of our industry trade shows for long, and you’re going to hear the term VFD. Of course, a lot of you are installing VFDs to deliver constant pressure and already know that a VFD is a Variable Frequency Drive.

Hang around or read about VFDs a little longer, especially on the commercial side, and you’re going to see or hear, “our VFD uses a PID controller.” But, as a rule, no tells you what a PID controller actually is, or even what it stands for. That’s probably because PID stands for Proportional, Integral, and Derivative. That right there probably explains why no one goes any further.

But, like many things, it’s not as intimidating as it sounds. A PID controller isn’t a physical device, but a piece of software inside the VFD. PID controllers are used in tons of applications beyond VFDs, and your brain has a pretty good one built right in. You use it for just about everything that requires physical action.

For example, you’re coming up on a stoplight that just went from green to yellow. Without you consciously thinking about it, your brain determines 3 things: How far am I from the light? How long has it been yellow? And, how fast am I approaching it? These get integrated into a decision that results in the correct (hopefully) physical action.

Thinking in terms of a pump now, the job of the PID controller is simple: “How fast should I tell the VFD hardware to run the pump at any given moment?” And, like your brain, it takes the answers to 3 questions (P, I, and D) to come up with the right answer under all the different circumstances and installations.

The proportional part of PID answers the question of, “How far are we off?” That is, “what’s the difference between the target pressure and the actual pressure coming from the sensor?” On one hand, it seems like that’s all we need to know. However, as it turns out, if we only tell the pump how fast to turn based on this question, there’s a tendency to chase and constantly overshoot our target. We no longer have constant pressure. Continue reading