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.