This is the next article in a continuing monthly series chronicling the growth path of NanoScale Corporation, a growing nanotechnology company based in Manhattan, KS that is commercializing various advanced materials and compounds for improving indoor air quality, removing pollutants, and containing and neutralizing hazardous chemicals.
When we introduced NanoScale Corporation a month ago, we talked about how the company is faced with the challenge of expanding into a conservative market wary of new products or technologies which represent a significant departure from the tried and true.
That market is the civilian disaster restoration market, where contractors work to repair, remediate and decontaminate commercial and residential properties damaged by fire, storms, water, sewer backups and mould. In North America alone, this market is worth hundreds of billions of dollars. It is a steady market sheltered from general economic volatility given that disasters and accidents happen all the time and the cost of restoration is typically covered by an insurer.
Over the past year, NanoScale has focused on laying the groundwork for a strong market push in 2012. In this post, we will explore, with marketing director Kyle Knappenberger, how the company plans to move forward over the next 12 months and overcome what can often be a new market entrant’s greatest competitive threat – the status quo.
Getting the customer to take notice
While NanoScale is expanding into products which help the average property owner improve indoor air quality, its line for the disaster restoration market isn’t sold by your local hardware or home improvement retailer. These are commercial-grade products for use by contractors who buy their supplies from specialized distributors.
This puts the company in a rather unique, and challenging position – it is marketing products derived from innovative, and proprietary, nanotechnology research, to end users who are unlikely to be impressed by a sales pitch that focuses on the wow factor of such cutting edge innovation.
“We really need to balance that and not complicate the sale by overhyping the ‘nanotech’ aspect,” Knappenberger said. “Instead, we have to focus on the benefits of the product and how it can help an end-user who is likely to be an old-school building contractor.”
That means a proactive and ongoing effort to educate people at every level of its distribution channel on the benefits of its products. The need to have its marketing messages clearly defined and embedded within the minds of its distributors and affiliated retailers has become even more acute as NanoScale prepares to expand its sales territories.
NanoScale sells its products to the disaster restoration market through a national distributor which acts somewhat like a wholesaler. This partner has approximately 20 corporate and 50 affiliate retail locations which sell to contractors.
“We support all of these retailers in the field with training and education events,” Knappenberger said. “It’s a pretty traditional sales and marketing model that relies on building relationships and educating these retailers to become champions who will push the product to their customers.”
Mustering more manpower
NanoScale has the U.S. broken into five broad regions and is already active, through this distribution channel, in three – the west, southeast, and midwest -areas. It has focused on these areas first because of higher population densities which allowed it to cover more territory with fewer people. These regions have been divided between Knappenberger and two colleagues and managed from NanoScale’s head office in Kansas. This has meant a lot of time on the road, a particular challenge for Knappenberger, who has other operational responsibilities at the company. For 2012, NanoScale’s plan is to expand through its distribution partner into the two remaining regions, the northeast and the Texas area.
To date, its expansion strategy has been governed by several key factors:
- Where its distribution partner has a physical presence.
- Where population density ensures a sufficient volume of sales.
- Where insurance practices don’t prove to be a hindrance – in some geographic markets, even where there may be sufficient population density and a clear need for disaster restoration services, demand is low because the cost of a restoration isn’t covered by an insurer.
Manpower is the greatest challenge as NanoScale prepares to expand into its two remaining regions. From having worked with retail distributors in its three initial regions, Knappenberger and his colleagues have developed a clear understanding of the sales resources they need on staff.
“So far the three of us have focused on about 30 retail distributors at a time – we know one account manager can only adequately serve about 10 to 12.”
Not only does NanoScale need more people on staff at its head office, it needs to recruit, train and support more representatives in the field in cooperation with its distribution partner.
“We’re in the process of looking for candidates,” Knappenberger said. “We don’t have a specific requirement that they have experience in this industry, but we do want experienced sales people who we can train and instil in them our perspective on serving this market.”
That old-school crowd is learning some new tricks
Meanwhile, the marketing team continues to explore new ways to reach out to, and educate, the end users of its products. In our first post, we noted that NanoScale hasn’t yet engaged in any focused public relations activity. So far it has only advertised in the few significant trade publications intended for disaster restoration contractors. From Knappenberger’s perspective, there are too few niche publications serving this market to yield significant PR traction.
LinkedIn, however, has proven to be an effective channel for engaging with contractors and has yielded more sales leads than NanoScale’s magazine advertising.
“We’ve been surprised by how many contractors are on various industry forums through LinkedIn, but Twitter and Facebook, not so much,” said Knappenberger. “My sense is that more contractors are engaging with their peers for resources and information than looking at those few industry publications. So we have been focusing on this social media platform in cooperation with those distributors who have a lot of connections on LinkedIn.”
Facebook is a popular platform among many contractors, he said, but it’s primarily used to engage with customers and advertise in community, rather than engage with peers.
Knappenberger acknowledged the opportunity, and the need, for the company to plan ahead and consider how it can raise its profile among property owners. It has developed a marketing kit for contractors to use with property owners, and intends to target the consumer market later this year.
“There’s a lot of discussion in the media about the products people are using in their homes, which is raising awareness of health concerns and a desire for safer, less toxic alternatives,” he said. “There is also an opportunity for us to respond to the growing issue of chemical sensitivity.”
When looking at products and supplies, disaster restoration contractors are accustomed to seeing before and after pictures that tell a story. But with NanoScale’s products, it is difficult to illustrate an odour. In our next instalment, we will discuss the challenges of marketing and selling a product that can’t be presented to potential customers in the manner in which they are accustomed.