An Open Challenge To Water And Wastewater Equipment Executives

We have talked a lot about the connection between sales and marketing. Comparing the two departments and the eternal internal struggle between them over who is more important and more impactful. Two parts of a company that must work together to be productive but in many cases struggle to do so.

However, perhaps we are asking the wrong question.  When we are all in business to make money, how can a water or wastewater equipment manufacturer be more impactful with its money when investing in growth?

The answer may simply be in R&D and product development, BUT not in the traditional sense.  Simply put, you need to put MORE money into marketing and LESS into product development and R&D.

Products in this market evolve, just like any other market.  But, this industry is very slow to adapt and accept anything “new.” Because of that hurdle, most product upgrades or innovation remains relatively minor for fear of regulators not accepting it or buyers’ innate fear of being the first to try a new technology.

A good case study snapshot to help prove my point would be to take a look at the pharmaceutical market.  It is no secret that pharmaceutical manufacturers are among the most profitable manufacturers in the world.  They are primarily a business-to-business market just like us and historically face similar hurdles in regards to regulations (predominantly the FDA).

So, how do top pharmaceutical manufacturers spend their profits when investing in growth? 

Company                                 R&D                           Marketing

J & J                                        $8.2B                          $17.5B

Novartis                                  $9.9B                          $14.6B

Pfizer                                       $6.6B                          $11.4B

GSK                                        $5.3B                          $9.9B

Merck                                      $7.5B                          $9.5B

Sanofi                                      $6.3B                          $9.1B

Astra Zeneca                           $4.3B                          $7.3B

Would any one question the success of these manufacturers from a revenue standpoint?  The key to their success could be attributed to the moment when they realized what investments would contribute to their profitability in the most impactful way.

In the water and wastewater industry, marketing professionals often times are faced with the following scenarios with their marketing budgets at this time of year…

Best Case: Got the same budget as last year

Worst Case: Adjusted the budget down (or eliminated it completely) due to slower sales than expected

As marketing professionals hear those messages, they (along with everyone else) watch hundreds of thousands of dollars, if not millions, being put into developing some new feature or new product.  While innovation is certainly commendable it has almost zero impact when the target audience continues to see your products in the same light as those companies you compete with every day.  Why wouldn’t they? You’ve cut efforts to speak to them, influence them, educate them, and move them towards understanding the reason behind the innovation in the first place.  This is of course putting aside the simple fact that innovation is met with hesitancy in this market more than any other market that comes to mind. 

Here is my challenge to CEOs, Presidents, and Executive Board Members:  For just one year, follow the roadmap developed by some of the most profitable manufacturers in the world … swap your product development/R&D budget with your marketing budget.  Just swap them.  At the end of the year examine your sales numbers for 2018 and sales forecast for 2019.  If done correctly, I can assure you that your revenue and P&L reports will reflect such a convincing verdict that you won’t go back to “the way we’ve always done it.” 

Are you up for the challenge?