BY GREG BAIRD
The U.S. water market has been called fragmented, slow moving, highly competitive and ever evolving with new mergers, products, services and technologies.
Business development managers for existing water firms are feeling the increased level of competition, and new entrants to the water industry are experiencing the high costs of a “pay to play” environment with many data obstacles in trying to address specific utility needs.
The water industry’s critical challenges of aging water infrastructure with corroded water mains, lead pipe contamination, climate change with drought and flooding, affordability, workforce and knowledge depletion has been well documented and the “call to action” has been sounded. Many firms and investors are answering this call for immediate action but become very frustrated with the ability to gain adequate access to U.S. water utilities and now are turning to “business intelligence” (BI) as a valuable tool for business development.
Figure 1: Breakdown of the number of U.S. water utilities by population.
Business intelligence is a technology-driven process for analyzing data and presenting actionable information to make informed business decisions. Firmographics are descriptive attributes of firms, or in this case, utilities, that can be used to aggregate individual utilities into meaningful market segments. When BI is combined with firmographics and applied to the water industry, limited business development and marketing resources can be specifically targeted to a client market segment.
There are nearly 50,000 permanent (non-transient) public drinking water systems in the United States. These systems are permitted by the U.S. Environmental Protection Agency (EPA) and this data provides the first level of analysis. Drinking water consists primarily of public, private and investor-owned drinking water systems. One could also separately consider the “one water” approach – interconnected water, wastewater, stormwater and water reuse markets.
Firmographics are to every organization what demographics are to describing people. The most common questions of water industry firmographics center around the number of connections or number of miles of water pipes to determine and prioritize the potential revenue. Other data parameters include if the water utility has a need and available funding for a particular service or product. Firmographics provide the ability to describe and classify a water utility within various researched parameters with new insights into a new market segmentation.
Business development managers can use this market segmentation analysis to provide the content and evidence to answer the toughest questions:
- Who are you targeting as potential clients at conferences and in publications?
- What is your realistic Client Profile?
- What is your Actual Market Penetration?
- Are your Sales Territories Balanced with realistic Geographic Opportunities?
- Have you provided your Sales Staff with Prioritized Data and Contacts?
- Have you considered the Investment in Better Information versus more sales staff?
- Do you have a valid fact-based Strategic Plan?
- Is there a Go-To-Market Pathway based in Real Data?
- Have you Updated your Product Development Roadmap?
- Is your Product Roadmap matched to the needs of your Potential Clients?
- Are your Product Development Activities and Timing matched to your Marketing Efforts?
- Is your Revenue Plan realistic and aligned to your Planning Efforts?
David Cox, founder and CEO of California-based FirmoGraphs, explains that “those companies positioning themselves in the most-strategic fashion are applying business intelligence to their marketing and sales initiatives in order to gain a competitive advantage in North America.” He continues, “Have you ever wondered how a firm helped develop the RFP or knew about it before it was released? Have you ever been questioned about what type of marketing activities are justified and if your messaging is reaching your targeted clients?”
Figure 2: Firmographics provide the ability to describe and classify a water utility within various researched parameters with new insights into a new market segmentation.
Cox’s message to the water industry is that most firms have limited marketing, sales and business development resources, and how to deploy them is an ever-changing optimization question. The top recommendations include:
Size. Other than the population served, how would you measure size? Staff? Customer mix, between residential, multi-family, commercial, and agricultural? For your chosen parameter, which utilities are your best prospects?
Operations. The way you measure operational fit for your offerings will depend on what makes a well-qualified prospect. Do they purchase and distribute water, or run their own treatment plants? Is it a combined water and wastewater utility? What is the source of their water? How many treatment plants do they operate?
Geography. Are you strongest in a certain geography, due to resource locations, competition, or other factors?
Financial Strength. What sort of debt ratios does the utility have? What is the history of rate increases to make additional operating funds available?
Budgets. What are the utility O&M spending plans and Capital Improvement Plans (CIP) and how does this match with respect to demand for your own goods and services?
The goals we want to achieve in the water industry incudes sustainable high-quality drinking water at an affordable rate. To be able to do this, better data, market access and streamlined efforts are needed to deliver critical services and technologies to the utilities that need it. Business Intelligence combined with Firmographic data can provide an affordable solution.
Greg Baird is the president of the Water Finance Research Foundation. He specializes in long-term utility planning, infrastructure asset management and capital funding strategies for municipal utilities in the United States. He has served as a municipal finance officer in California with rate design and implementation experience and as the CFO of Colorado’s third-largest utility. He is widely published and presents on utility infrastructure asset management and integrated water finance issues. He is also a frequent contributor to Water Finance & Management.
