Knowledge Is Key to Pursuing Vertical Markets
When pursuing business growth in new, unfamiliar markets, independent electrical contractors should understand the needs of that particular market and the various product and service options available to meet those needs. They must know the characteristic challenges each particular market poses to electrical systems operation and use effective tactics and supporting tools to convey that knowledge to prospective customers.
Most independent electrical contractors are engaged in the traditional core markets of residential and commercial buildings, often competing for the same business. However, many electrical contractors are beginning to find excellent opportunities outside of these core markets.
Depending on where the contractor is located, there are specialized market opportunities to consider. For example, oil-producing areas, like Texas and Louisiana, offer excellent opportunities to support oil fields and refineries. There are also manufacturing facilities in the Northeast, Midwest, California, Texas, and North Carolina. And every metropolitan area has at least one water/wastewater treatment facility. These opportunities occur in what are known as vertical markets; markets that have needs specific to their industries. These opportunities may be outside of the typical contractor’s core business, but business growth is possible if the contractor makes the effort to understand the needs that are common in that market and demonstrates the ability to meet them.
When considering expanding into vertical markets, electrical contractors should do three things:
Learn the Market: Find out as much as possible about what that market does, including its unique operational, economic, or regulatory attributes. For example, to avoid or minimize production downtime, many pulp and paper processors use plug-and-play power systems to keep individual equipment and processes running while performing maintenance in another processing area.
Identify the Market’s Challenges: Every vertical market has conditions that affect the quality and reliability of the electrical system. Protecting the customer’s electrical system can mean the difference between consistent operations and long down times caused when, for example, liquid-damaged components are replaced or the system is rebuilt.
Find the Right Product Solutions: Manufacturers, like Thomas & Betts (T&B), have been working with companies in all industries and sectors to identify and solve their unique problems, leading to continual new product additions. Electrical distributors can assist in finding new products that are available to better meet customer needs.
KNOWLEDGE IS POWER
The key to marketing in a specialized industry is understanding its specific challenges. For example, the frequent changeovers, startups, and special batches in chemical processing makes the demand for reliability in the electrical system particularly significant, while the long-term reduction in funding for civil infrastructure has placed exceptional budgetary stress on the construction of roads and bridges.
Deciding which markets to target also should be based on an understanding of current economic conditions. To illustrate, the increasing use of electronic data and communications services has made the electrical density of data centers 15 to 30 times that of other commercial buildings, with operations running continuously 24 hours a day, 365 days a year. These conditions make reliability of the electrical system in a data center critical, as downtime can cost as much as $350,000 an hour, making this a profitable market.
Another example is the rail industry, which is growing in North America, Europe, and Asia due to increasing demands for energy efficiency and environmental sustainability. This provides a potentially lucrative market for contractors who can respond to the industry’s demands for reliability and cost containment.
Business opportunities can be found in the particular stressors that affect certain industries, such as water/wastewater treatment. Electrical systems in these kinds of facilities typically need replacement every 15 to 20 years, creating a demand to extend the service life of these systems. Understanding what components will make an electrical system more resistant to the harsh conditions that exist in a water treatment facility, as well as what will make an electrical system more adaptable in response to changing regulations and technology, will enhance the contractor’s competitiveness in this market.
WHERE DOES IT HURT?
Electrical contractors are in the business of solving problems, not just installing electrical components. When soliciting business in an unfamiliar industry, it is critical to understand where that industry’s “pain points” are in its electrical systems.
Pain points are issues or problems that customers face with their electrical systems, such as sustaining continuous operations; containing costs; ensuring safety; and enhancing the power quality, efficiency, and reliability of electrical systems. These pain points are common to most markets but present problems specific to each industry, while others, such as corrosion and extreme temperature resistance, are characteristic of particular industries, such as oil and gas processing or food processing.
In response to typical problems in various vertical markets, T&B organized its products into groups called “Solution Sets.” Solution Sets combine products into an integrated selection that addresses a particular challenge commonly encountered with an electrical system in a variety of vertical markets. These challenges can include continuous operations and sustainability; corrosion and harsh environments; extreme temperature protection; grounding and bonding; power quality, efficiency, and reliability; safety and contamination; stock-keeping unit (SKU) reduction; total project cost reduction; and a roster of service and training programs. Any of these challenges can occur in numerous vertical markets, and electrical systems in any vertical market may encounter more than one of these challenges at any given time.
For the contractor, access to a breadth of product solutions available to meet the specific needs of a particular industry enhances competitiveness and establishes value to the prospective customer. Finding a product that offers features developed in response to a challenge that is typical in a particular industry is often the first step in solving a customer’s problem.
USING THE BEST TOOLS
Once a market is identified as promising, the contractor should try to engage at the highest level of the organization as possible, such as owners, senior managers, or high-ranking officials. Communicating at this level requires that the contractor establish an understanding of the prospect’s business and challenges, including the value offered in addressing these challenges. When dealing with middle-level contacts in project or operations management, the focus should be on the value proposition and problem-solving, while engineers and specifiers are typically more concerned with details about the products and their applications.
When engaging with a prospect, it helps to have collateral pieces, such as a brochure, to use to structure the conversation so that it leads from establishing credibility as a knowledgeable contractor to providing a selection of products and services that addresses the concerns typical in the prospect’s industry. Pictures, charts, and diagrams are effective tools in enhancing a conversation, much like visual aids in a more formal presentation. The contractor needs to not only be a service provider but a trusted adviser, and leading a dialog with a prospect about the specific concerns for a building’s electrical system helps establish the contractor’s credibility for an adviser’s role.
The success of business growth into new markets requires not only knowledge of that market and its characteristic challenges, but an understanding of the contractor’s role in meeting those challenges. The contractor should be educated about the product and service options available to address the various problems typical to electrical systems found in a particular market. Being thoroughly educated about the prospect’s industry and how to best serve it will also give the contractor the confidence and enthusiasm to make a good impression.
T&B offers a variety of print and online tools, including a series of brochures that explains various vertical markets, and another series that describes the solution sets of products to help solve typical operational problems. A local T&B distributor can provide more information, or you can download vertical market brochures at www.tnb.com/pub/en/node/1436 and solution set brochures at www.tnb.com/pub/en/node/1425.
Craig Edlin is the marketing communications manager at ABB, Electrification Products Division, U.S., in Memphis, Tennessee. He holds a master’s degree in industrial distribution from Texas A&M University and a BSME in mechanical engineering from Valparaiso University. He has served as associate faculty at Indiana University-Purdue University Indianapolis in logistics, supply chain management, and industrial distribution. He has published instructional materials in industrial automation, industrial power distribution, and career management.