In 1959, Lou Petty started the business that has evolved into Aqua Systems after a salesman came to his door and sold him a water softener. Forty-five years later, the company he founded not only survives, but thrives at a $14-million annual sales level in the extremely competitive central Indiana market that’s full of big-box retailers, and has a couple of very strong national brand dealers.
The metropolitan statistical area, which revolves around Indianapolis, has a population of nearly 1.7 million people—up over 15 percent since 1992 (see Figure 1), according to the U.S. Census Bureau. The competition in this market was recently tested when in 2000, American Water Service (AWS), the largest publicly traded U.S. municipal water treatment company, tested its own roll-out of point-of-use/point-of-entry (POU/POE) water treatment equipment for its customer base. AWS soon found out just how tough of a market Indianapolis is, and pulled the plug on this venture. This has ended, for now, industry chatter about municipal water suppliers’ potential to dominate the water treatment market.
“The key to staying competitive in today’s turbulent times is to constantly challenge yourself to offer what customers are seeking,” says Bret Petty, who ran the company his father founded from the early ’80s until late 2003, and led it through its gradual evolution from a traditional in-home sales dealership to its current more customer-friendly retail store model. “Today, most customers know they need our products, and they have more choices as to where to buy them. They demand information and resist the friction of a long-winded, high-pressure sales pitch. So, the goal for us has been to offer them value, and to make it easy for them to do business with us.”
A new dealer model
There has been much talk around the industry that the dealer is a dying breed, and many suppliers have shifted their commitments away from the dealer channel. Couple this with the entrance of cheap overseas product in the market and privacy laws such as the new no-call lists, and some would think you have a very difficult environment. But, with change comes opportunity, and at Aqua Systems business is stronger than it ever has been.
“People are very busy today, and they don’t want their personal time wasted on being sold a water softener. We have found that people actually prefer to come shop at our stores,” says Petty. By adjusting its model, Aqua Systems sells far more equipment out of its four company-owned stores today, than it did when chasing sales house-by-house. In fact, by making the buying process easier for its customers, Aqua Systems completes many transactions over the phone, on the first call.
Embracing wants & needs
Aqua Systems’ retail store model has been developed by trying to understand what consumers dislike about purchasing water treatment equipment, and then providing an environment that does just the opposite. For example, many people today don’t want to set an in-home appointment, but they do like shopping at a store when it’s convenient to them. They also know that there are many options available to them, so instead of having a very narrow product line, Aqua Systems’ offers customers a wide variety of softeners, reverse osmosis (RO) systems, water coolers, bottled water and salt. Because customers don’t want to go out of their way to shop, Aqua Systems’ stores are located in free-standing retail buildings in highly traveled areas. The stores also have a very clean and open, professionally merchandised showroom with knowledgeable people ready to assist. This helps ensure that the customer experience is always very informational and pressure-free. Also, by offering everything from assistance in choosing equipment, to professional installation and service, Aqua Systems really sets itself apart from the big-box market. From the manufacturer down to the contracted service rep, a home-improvement store can have as many as five different companies involved in the product delivery chain. Aqua cuts that chain to one, once again removing friction.
Aqua Systems’ Avon, Ind. location has even had a new Lowe’s home-improvement store move in right next door. It has actually helped business. First of all, customers tend to now shop both places, and Aqua is able to clearly demonstrate more value. Secondly, many times customers need more information than a Lowe’s clerk is able to provide, so some clerks will actually give up and send customers right over to Aqua Systems.
Aqua’s entire approach to “lead-generation” has also changed dramatically. Leads aren’t even talked about. The concept of a lead infers a sale needs to be chased and sold. Now, Aqua Systems tries hard to advertise and promote the value it offers to increase foot traffic and phone calls into its stores. This is done through a combination of radio, print and direct mail. Aqua then measures the number of customers talked to and units written, i.e., sold. The difference in approach is even noticeable when exhibition and trade shows are done. There’s no box that people are encouraged to drop their name in to win a free TV, but the retail showroom, complete with all pricing information, is brought right to the show floor. With this approach, many deals are closed right on the spot.
A premium for service
According to Petty, offering better value isn’t all about being the cheapest. In fact, he feels the issue of customers now comparing prices with the do-it-yourself (DIY) stores is an opportunity to justify a higher price. “Again, because they’re busy, most people will gladly pay more to have you handle everything, and to know that you’ll be around to help them in the future,” Petty said.
This reinforces the recurring theme to Aqua Systems’ model—removing friction, or making it easy to do business with it. Much of this has to do with the sales process itself, which is why Aqua stacks up very well against the traditional higher-priced, big-brand dealers. Part of customers’ demand for information manifests itself in a desire to look at other options. This is a natural part of the way people shop, but it’s counter to everything the commissioned “sales closer” believes. They don’t want to lose the prospective customer. They want the sale now. Consequently, Aqua Systems has non-commissioned sales people on staff who actually encourage consumers to shop around, which makes customers very comfortable. The direct sales commission structure pushes the big brand dealers’ price tag way beyond that of Aqua’s. There’s no way that the commissioned salesperson trying to close a deal, at the highest price, wants his prospect to check out other options, so he or she has to press to confirm the sale on the spot. According to Aqua Systems philosophy, however, if you can feel comfortable with consumers shopping around after talking to you, then you’re probably doing a good job offering value.
Positioned for growth
In 1997, Aqua Systems teamed up with Cardinal Ventures, an Indianapolis-based private equity firm. This association has helped with capital for expansion, and added professional management assistance. Since 1997, sales have more than doubled, and Aqua Systems is prepared for more.
Not only has Aqua Systems’ new approach allowed it tremendous growth in its company-owned stores, it’s also allowed the business to help other dealers convert their own businesses to be more prepared for today’s challenges. Under the leadership of Pat Miller, national sales director, Aqua Systems now serves over 100 independent dealers. And, a growing number of licensed Aqua Systems brand dealers are using its entire turnkey business model, primarily in the states of Indiana and Florida.
When Petty is asked how he sees the future for the dealer, he says: “I’m extremely optimistic. Our products are not plug and play, so there will always be a large group of customers that are willing to pay for expertise and quality service. But, they will know that they have lower-priced options—so, we will have to challenge ourselves to offer the most value possible, and to make it very easy for customers to find and do business with us.”
It also avoids potential negative reactions to hard-charging salespeople that might hurt chances later for selling additional equipment and supplies to your customers as their needs change. In this sense, a more customer-friendly approach offers opportunities for higher returns and better consumer satisfaction in the long run.
The author wishes to thank Bret Petty, past president of Aqua Systems, who is now in charge of business development, and Pat Miller, Aqua Systems’ national sales director.
About the author
Don Line currently serves as president of Aqua Systems, a water treatment dealership and equipment assembler operating three water stores in the Indianapolis area and one in Fort Wayne, Ind. Line can be reached at (317) 272-3000 or email: [email protected]