The New Precision Targeting Sales Model for the Water Industry

Lead generation, and indeed the sales model in general, is a huge challenge to water startups. Ask any entrepreneur or investor about their concerns in the water sector, and the slow pace of sales to utilities is bound to come up. WatrHub (IH2O '14) have a novel approach to solving this problem. The CEO Ahmed Badruddin explains more. Enjoy.

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The U.S. water infrastructure deficit is staggering. According to AWWA, over $1 Trillion Dollars is required over the next 20 years in the U.S. to upgrade and maintain the current water infrastructure. Technologies and solutions exist to address water infrastructure needs at lower costs than projected. However, they are constrained by the existing industry structure and sales models.

The water industry is complex. 5,000+ water technology companies navigate a highly fragmented market of 70,000+ water & wastewater utilities that collectively spend over $100B per year maintaining and upgrading the U.S. water infrastructure. For these companies, it is a humanly impossible task to track and analyze opportunities hidden within 70K+ utilities.

Therefore, historically, two primary sales models emerged in the water sector. The first one is the Reactive RFP model that relies on monitoring RFPs (Request For Proposals), going to market through rep firms, and waiting for the phone to ring. The second is the Shotgun Sales model that relies on building direct sales teams that travel the country, county to county, utility to utility, tradeshow to tradeshow, in pursuit of opportunities.

WatrHub has introduced a novel, disruptive approach called the Precision Targeting model, which leverages data analytics to enable water technology companies pinpoint their most promising water utilities at the right time. This targeted approach increases their win rates and shortens sales cycles to ultimately give water technology companies a 38% lift in their sales budgets.

1. The Reactive RFP Model

In this model, water technology companies sign relationships with regional rep firms across the country. Each rep firm may have 3-5 individual reps, so with 20 rep firms, the water technology company gets up to 100 sales people on the ground. The reps travel around their territories, call on utilities and engineering firms, develop relationships with local utilities and engineering firms, and identify potential water infrastructure projects that are being specified.

This model has several key benefits for a water technology company. Without incurring significant sales and marketing overhead, the company can benefit from valuable local market insights and relationships that the rep firm has nurtured over many years. With lower overhead, they can extend their reach into the fragmented water utility market since most companies don't have the sales resources to have eyes and ears wherever opportunities are brewing in the market. Reps are paid on a commission basis that typically ranges from 5-9% (but can be higher), so there is a perceived lower risk for water technology companies. Each sales manager in the water technology company typically manages 10 rep firms and his/her job is to support them.

The downside of this model is that the water technology company is one step removed from their end users. Without a direct relationship with end-users, they are left with waiting for the phone to ring to hear about opportunities or when an RFP is posted. At that point, they can largely only compete on price. Because, if a company is only hearing about an opportunity at the RFP stage, they are already too late. Most of the specifications have been decided. This leads to low win rates and significant market blind spots. 

Besides finding out about opportunities too late, there is also the issue of competing for the rep's time and energy. The reps could be selling anywhere from 12-40 other company's products in their line cards. When the water technology company launches a new product, there are significant training costs and efforts in supporting reps to sell the new technology, as well as lunch & learns with engineering firms to raise awareness to hopefully get specified.

While this model provides the benefit of lower overhead, the water technology company has little control and visibility over the sales process

The Shotgun Sales Model

In the Shotgun Sales Model, the water technology company has its own direct sales team that pursues and engages with potential utility clients. The sales people are paid base salaries in addition to commission and are directly responsible for identifying and closing opportunities. This means higher overhead for the water technology company, as they must pay base salaries regardless of sales performance. Most of the qualified leads come through tradeshows, referrals, advertising, and the sales person's relationships.

The benefit of this model is that the water technology company has more control over its destiny. The direct client relationships are not owned by a 3rd party rep firm. Sales people can focus all their time selling the company's product, instead of being one of dozens of companies on a line sheet. They can develop relationships with target utilities and decision makers early in the municipal buying cycle, increasing the probability of winning the project. With dedicated focus, they can best articulate the water technology company's value proposition to potential prospects. Sales commissions are lower than those paid to rep firms so the overall sales budgets can be up to 11% lower. 

On the flipside, sales people are a limited resource in the water industry. Significant industry knowledge, sales skills, and relationships are required to be successful at selling to water utilities. The territory assigned to each sales person typically includes several states, and hundreds of potential accounts. It takes time to build relationships with these utility prospects. There is high travel costs to support these road warriors as they spend 50% of their time travelling. As a result, many years and millions of dollars are spent chasing dead-end leads because of the vast number of utilities are out there, and the time and effort required to qualify a lead and build the relationship.

This model provides the the water technology company with more visibility and control over the sales process, however, it is expensive and "hit-or-miss" because of how fragmented the water industry is.

WatrHub Precision Targeting Sales Model

After several years of studying the sales process of hundreds of companies in the water sector, WatrHub has proven a data-driven Precision Targeting approach in identifying high potential water/wastewater utility prospects, which is a leap-forward in shortening sales cycles and increasing close rates.

Essentially, Precision Targeting means focusing sales effort on the most promising water utility prospects, at the right time, with the right sales strategy. Previously, this was unattainable because of obscure sales channels, fragmentation in the water industry, and limited data availability.

However, all of these 70K+ utilities are required to make filings spanning water quality reports, permit documents, budgets, capital plans, council meeting minutes, discharge monitoring reports, and more. Every year, utilities generate millions of public filings in thousands of data sources, that were largely just filed away. WatrHub's software algorithms aggregate and analyze this overwhelming amount of data to unlock new, timely insights in the water industry. We can now preemptively answer questions such as: Which municipalities are now more likely to adopt an AMI solution? Which utilities will be replacing their underground pipes next? Which wastewater treatment facilities have aging equipment that is due for replacement? Which water utilities are at risk of not meeting their water quality standards?

Armed with these market insights, sales teams in the water industry are focusing their sales efforts on their most promising prospects at the right time, ultimately increasing their win rates and shortening sales cycles. Even when working with 3rd party sales rep firms and distributors, these insights are being used to more effectively align and motivate these firms to sell the water technology company's products.

From a water utility standpoint, it means more refreshing and engaging conversations, and a collaborative, data-driven approach to technology decisions.

For our industry, it means faster and more proactive connections between needs and solutions, which will ultimately lead to better outcomes for our water infrastructure.  

Ahmed Badruddin is the CEO of WatrHub Inc., fast-growing Big Data company that has intro-duced a novel, analytics-driven approach for water industry firms to pinpoint high potential water utility prospects. Ahmed is regularly invited to speak at national water industry conferences. Prior to WatrHub, Ahmed worked in various technology leadership roles at Microsoft, where he incubated novel data systems. Ahmed has a Bachelor’s of Applied Science from the University of Toronto in Electrical Engineering.

5 Reasons a Prudent Water Utility Engineer Cares About Apparent Water Loss

Valor Water Analytics won our Water Infrastructure Challenge in 2015, and has since gone from strength to strength becoming the partner of choice for Utilities across the country to get the most our of their networks through the application of data science. Christine Boyle, CEO, shares reflections on a key topic for Utilities - Water Loss. Enjoy.

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I think about apparent water loss every day, but not every water utility professional does.  I want to highlight 5 reasons all water utility engineers should care about apparent water loss, so we can further the discussion on how to get the most out of our water networks.

1) Apparent Loss is Under collection of Revenue to Which Utility is Entitled

According to Water Research Foundation, apparent losses in American water utilities account for annual water loss of 58,774 MG and annual financial loss of $489M (on average).  With over $3.2 trillion in water infrastructure investments needed to modernize our nation’s decaying pipes, tunnels, and reservoirs, money from resolving apparent losses can go a long way.

To boot, water utilities in California took a large revenue hit during the drought. By simply addressing apparent losses, up to 5% of total operating revenues can flow back into the utilities’ operating budget.

2) Apparent Water Loss introduces Degree of Error in Quantifying Customer Consumption

We have seen examples of concerns over error in measuring demand due to meter inaccuracy in places like New York City where a large supply tunnel is scheduled to go off line for repairs, and city officials want to verify that they can meet demand through the other two tunnels.  The question they must ask themselves is this: Is the metered estimation of customer consumption accurate enough for them to plan for decreased supply?  That is, do they trust the reads of the over 800,000 meters that provide customer consumption data?

As New York City officials fall in to the prudent category, they are engaged in multiple projects to make sure their measurements are correct.

3) Apparent Water Loss Can Impact Credit Rating

As the credit rating agencies get more sophisticated in how they assess water utility credit, they are now using revenue protection measures, data from water loss audits, and revenue risk factors into consideration when they make a credit determination. Ceres has a great series of articles on this topic. Water loss rates are mentioned throughout. 

4) Regulatory Compliance: GA & CA (Water Stewardship Act and SB 555)

According to the water audit gurus, Will Jernigan and Steve Cavanaugh, mandatory water loss reporting is steadily making its way through the nation.  As of 2014, 10 states had water loss regulatory or policy framework per AWWA M36 method. In 2017, this number approaches 15 states. Lucky you if you reside in one of these states as you can rest assured that your utility operators are working hard to deliver you clean and affordable water with state regulators overseeing this effort.

States with water loss regulatory/policy framework per AWWA M36 method (in red)

States with water loss regulatory/policy framework per AWWA M36 method (in red)

5) Customer water leaks can be better detected with accurate meters.

Customer side water leaks can lead to property damage, wasted water, and unnecessary high bills. A recent study conducted by East Bay Municipal Utility District in Northern California found a relationship between meter inaccuracy and failure to detect small customer water leaks.  With more accurate meters and meters that read at a smaller gpm resolution a utility can detect smaller customer leaks. With a communication plan, customers can receive a notice and take corrective action. 

Conclusion

Apparent water loss is smaller in gallons but is important as it impacts customers and utilities’ bottom line.  Valor Water is leading the industry to make apparent loss detection more cost effective.  Stay tuned or contact us to find out more.

Read my last blog post on A Brave New World for Apparent Loss Detection here.

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Like what you read? Drop Christine a line and let her know if you agree at ceboyle@valorwater.com. Next week, Ahmed Badruddin, CEO of WatrHub (IH2O '15) shares his perspective on precision targeting for sales in the water industry, a real pain point for entrepreneurs and technology salespeople everywhere.

 

 

World Water Day: Celebrating What's Possible

Arable Labs (IH2O '17 Water Data Challenge Runner-Up): Helping farmers and businesses reduce food waste with smart crop and weather sensors.

Arable Labs (IH2O '17 Water Data Challenge Runner-Up): Helping farmers and businesses reduce food waste with smart crop and weather sensors.

On this World Water Day, we at Imagine H2O have reason to be optimistic. Every day we witness the ingenuity, perseverance, and technical prowess of entrepreneurs as they unlock promising, new solutions to a water-scarce future. With a front-row seat to water innovation, Imagine H2O is taking today to highlight progress, success and global impact.

World Water Day is also certainly an opportunity to raise awareness and reflect on the formidable challenges ahead. We should use today to mobilize civic engagement about water conservation and the plight of those without access to clean drinking water. We should encourage collaborative partnerships between government and business that help strengthen the resilience of our communities in the face of climate change. However, the urgency for action is constant—not just on World Water Day. It is an existential struggle as much today as it is every other day of the year.

Since 2009, Imagine H2O’s portfolio companies have overcome obstacles to build their businesses and drive adoption by customers in agricultural, industrial, and municipal markets. These companies have deployed solutions to urgent problems that radically improve the quality of water accounting and management globally.

Just this year, Ignitia provided weather analytics to 100,000 smallholder farmers in West Africa. Apana helped 80+ large retailers across North America reduce water usage by 20 percent. Ayyeka installed remote infrastructure monitoring tools in over a dozen countries, laying the groundwork for water-smart cities. ANDalyze tested lead and other contaminants in school districts across the United States.

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These endeavors are part of Imagine H2O’s multiyear water data initiative, which harnesses better decision making to monitor and manage our water resources more effectively. It’s built on the premise that water data innovation helps farmers do more with less, informs infrastructure upgrades to reduce waste and improve access to underserved communities, and provides real-time monitoring of water quality.  

Imagine H2O remains committed to dismantling the barriers to water innovation. And today, rather than highlight the challenges ahead—of which there are many—we want to celebrate the efforts of the entrepreneurs who are developing, launching, and scaling groundbreaking water technologies in markets the world over. We want to recognize the more than 700 people who have applied to Imagine H2O’s program as well as the 80 companies that have been supported through our accelerator.

Most of all, we want to highlight the 12 promising water data startups selected to participate in our 2017 accelerator as they give us hope that the future for water resource management is brighter than ever before.

Learn about Imagine H2O's 2017 portfolio companies here.