When Marty Donnelly made his first acquisition in 1979, little did he know how that little plumbing, hydronic heating and water treatment company would change his business.
"After buying that one business, I soon realized the potential of water treatment," he explains. "Customers were calling us because they either had leaking or broken water conditioning equipment with no name on it or, if it did have a tag on it, the company was out of business. No one was responding to their needs. So we started looking for those customers."
Donnelly is "head coach" and chief executive officer of Donnelly's, a plumbing, heating and cooling contracting firm in Lansdale, Pa., about a half-hour from Philadelphia. He started the company 31 years ago with a business partner but became sole proprietor four years later.
That acquisition in 1979 spurred him to buy three more companies over the years, allowing the company to grow without entering the volatile new construction market. And adding water treatment services gave Donnelly's an edge over its competition.
"When one of our service technicians is in a home for a plumbing repair and notices there's water on the floor around the water softener, he'll bring it to the customers' attention," he says. "Maybe they didn't notice it or chose to ignore it. Now he can get out the flat rate book, look up the repair, show it to the homeowners and say, 'It's X amount of dollars to repair this, and I can take care of it for you right now.' It's really an ideal thing for the customers, as well as us."
Water softening equipment is just like any other household appliance; it needs to be repaired, replaced or upgraded, he adds. If you can't repair it, you have to replace it. That led Donnelly's to sales of new equipment. The company now offers point-of-use and whole-house water treatment systems, plus various add-on equipment.
And the water business is a profit center for Donnelly's. The company sells one brand of water conditioning equipment, of which Donnelly's is the exclusive dealer in its area. In the past two years, the water treatment end of the business has grown to 17 percent of Donnelly's overall business.
Competing Against The Culligan ManConsumers are concerned about the quality of their water, how it tastes and smells. U.S. sales of bottled water rose 9.3 percent in 2000 to $5.7 billion, according to Beverage Marketing Corp., a New York-based research and consulting firm. In 1999, bottled water made up 8.1 percent of the U.S. beverage market. Bottled water is a $35 billion worldwide industry and will continue to grow as water quality concerns and fitness and health awareness increases.
But how can you compete with all those water specialty companies out there?
"I believe PHC contractors have a distinct advantage over the water specialist," Donnelly says. "We have the training and know-how to handle general purpose water from the city water main or a private well into your home. All the water guy wants to do is the water end of it. He's not interested in your water heater, your well tank or your pump.
"Consumers today want one-stop shopping. It's all about convenience. One of their most valuable possessions is their time. They don't want to waste it by having to deal with multiple service companies. The last thing that a consumer wants to hear is 'We don't do that.'"
That's where cross marketing comes in. Donnelly's has Yellow Pages ads under the plumbing, heating, cooling and water conditioning categories. If a customer calls about a plumbing or heating problem, the service tech solves the problem and then asks about the home's water quality. He offers to conduct a free in-home water analysis. If a customer is calling about a water conditioning equipment problem, the service tech inquires about any plumbing or heating trouble the homeowner may have.
"Not only do we provide soft water and drinking water systems, but we can fix your heater or toilet, unclog your drain, replace your water heater and change your well pump," says Donnelly's service manager, Joe Howenstein. "We can remedy the problem, not just treat the symptom. We want to provide more services for our customers so that when they're in a jam, they know they can count on us."
"We cross-market; it's important that we as the plumbing contractor make sure that the customer knows what else we do," Donnelly adds. "It's a win-win situation. We get that business, and the customer gets a seamless experience."
Donnelly's has a certified water specialist on staff, Harry Brauer, who received his certification from the Water Quality Association. He primarily answers the service techs' questions about water treatment issues, but many customers also call in for information. "That service is very valuable to our customers," Donnelly's son, Chris, notes.
One of the services offered to potential customers is free water testing. A homeowner may be dissatisfied with his or her water, so a call is made to one of Donnelly's customer service representatives, who books an appointment for a technician to go to the home and test the water. The water is tested for six things: hardness, pH, iron, chlorine, sulfur and total dissolved solids. The homeowner then receives a water report.
Donnelly's also has a state-of-the-art testing facility at its disposal for testing problem water. Homeowners with private wells are encouraged to test their water yearly to make sure nothing has leached into the groundwater.
Closing The SaleIt all comes down to selling the benefits of a particular water treatment or water conditioning system, consistent with the quality of the water and the needs of the customer. "Sometimes customers don't care if there's chlorine in the water," Donnelly says. "Every customer's needs are different. You have to listen to the customer to determine the need in order to satisfy that need."
Usually the first step is to remove the hardness from the water. Hard water may contain calcium and magnesium. If that is the problem, Donnelly's techs can demonstrate to the homeowners the problems associated with hard water: pipes that are coated with calcium deposits ("Like hardening of the arteries," Donnelly says), and water heaters with a foot of sludge and sediment on the bottom of the tank. This sediment can make water appliances so inefficient, they burn out and have to be replaced. The benefit of having soft water is less wear-and-tear on household appliances, and lower utility bills.
"Soft water does lengthen life of equipment -- dishwashers, faucets and showerheads, water heaters and domestic coils on boilers," says Howenstein. "Instead of spending hundreds of dollars washing acid through the coil, and then making sure you rinse it all out, you can tell the customer, 'I can put a water softener in for you today, not even touch your coil with acid, and in about three weeks the soft water will clean the coil.'"
If bad-tasting water is the problem, a reverse-osmosis (RO) system is needed. With RO, a high percentage of total dissolved solids and organics in the water can be removed. "You see people buying bottled water," Donnelly notes. "Do they cook with it? Not likely. Some coffee connoisseurs may use bottled water in their coffee maker, but they don't use it when they make a pot of pasta. And what about ice cubes? It's pretty hard to go into a home today that doesn't have an icemaker in the freezer and a water dispenser on the refrigerator door. We can have RO water going into the refrigerator for crystal-clear ice cubes and bottle-quality drinking water."
And don't forget the savings that homeowners will realize when it is no longer necessary to buy bottled water. Also, they will use less soap, detergent and shampoo with soft water, so these products last longer, saving them money.
"When you change the quality of water, you change the quality of life," Howenstein says.
Dechlorination is a separate thing. Most municipalities add chlorine to the public water system to kill bacteria, but some people don't like the taste and odor of it. Some water treatment equipment manufacturers now offer split systems that soften the water and remove the chlorine in one process.
Other add-on equipment that may be offered includes ultraviolet disinfection, acid neutralizers and chemical metering pumps. Donnelly's also offers residential chlorinating systems for bad well water. "We have systems where the water is chlorinated at the well by an automatic system, then dechlorinated and softened once it enters the house," Chris Donnelly explains.
Invest In TrainingTo help the techs with sales techniques, Howenstein conducts weekly meetings with all of the techs. He also meets with an individual tech every single day, for about 10-15 minutes.
"I coach them on selling, their conversion rate, their efficiency, their tasks per call and service agreements," he says. "Service agreements are a wonderful thing for the customer; we're adding value to the job by going through a checklist of items we have to inspect. Does it help them sell in the home? Yes, but it also helps the homeowner."
Last year Donnelly's spent $2,571.50 on average per employee on training. It wasn't all spent on water treatment training, but a significant investment was made to ensure that Donnelly's techs are properly trained to install water treatment equipment.
All the techs are encouraged to obtain the WQA certified installer classification, Marty Donnelly says. To be able to sell and install this type of equipment, a tech needs to know:
- How to do an in-home water analysis;
- Basic chemistry of water;
- The water distribution system of pipes, valves and fittings;
- The local plumbing code;
- How products fit into certain scenarios;
- How to make a proper connection to the house drainage system; and
- The importance of following procedures for installing and maintaining equipment.
And techs must attend factory training, Donnelly says, because water treatment equipment is no different than home heating and cooling equipment. After-hours training is important also. Every so often Donnelly's will have Thursday pizza night; Donnelly buys the pizza and soft drinks, and the techs spend an hour or so with an instructor learning about a new product or new water quality issue.
"It isn't mandatory, but if the tech wants to be a professional, he shows up," he adds.
Donnelly's advice for plumbing contractors wanting to enter the water treatment business is this: Do your homework. Look for a product that is a complete package, and a company that offers equipment training and technical support.
Join the Water Quality Association. You want to make sure you and your techs are fully trained on the installation and maintenance of the system before you try to sell it. The WQA has thorough and comprehensive training, and requires additional classes every three years to keep a certification level.
And finally, know your true cost of bringing the product to market, and reflect that in your selling price. "Remember that you and your employees are valuable professionals, and you're worth the price you charge," Donnelly says.
Corporate Profile: Donnelly'sHeadquarters:Lansdale, Pa. Service only. 100 percent flat rate.
Top Management: Marty Donnelly, head coach and CEO; Joe Howenstein, team captain and service manager; Maryann Valentino, head statistician and money manager; Harry Brauer, inventory control coach; and Denise Ziegler, third base coach and dispatcher.
Employees: 20 full-time. Of those, 12 are field personnel.
Fleet: Less than five years old. Includes 12 service trucks (supertrucks); three are 12 ft., nine are 14 ft. Also two pickup trucks and one cargo van.
Service Area: Bucks and Montgomery Counties, Pa.
Memberships: Contractors 2000, ISL, PHCC, WQA
Company Image: Donnelly's son, Chris, recently joined the company after serving in the U.S. Navy, but he has been the image of the company for about five years. At 18, his photograph appeared in all of Donnelly's Yellow Pages ads (in the two-county area, Donnelly's has ads in six Yellow Pages). As the company grew and expanded its marketing, Chris would make TV commercials when he was home on leave. About a year ago his photo was placed on the back of the service trucks -- a life-size photo of him standing in the back of a supertruck, as if the doors are open, and waving.