Last month Master Meter, Inc. presented at the Smart Water Summit at the PGA Resort & Spa in Palm Beach, FL. Since 2014, the Agora Smart Water Summit has brought together vendor partners and water utilities to create an intimate environment for in-depth discussions about updating technology and improving infrastructure. Technology and infrastructure improvements come with a price tag, one which requires the financial buy-in of the public stakeholders.
Without a clear valuation of water and the services provided by the water industry, the argument for investment becomes a moot point to the uninformed citizen. The value of water and communicating that message is a vital part of the conversation. Ian MacLeod, vice president of marketing at Master Meter, delivered the luncheon keynote at the 2018 Smart Water Summit. He had this to say about the value of water.
WATER VS DIAMONDS: THE PARADOX
Adam Smith, considered to be the father of economics, published his book the Wealth of Nations in 1776 in which he discusses the paradox of water and diamonds. Smith argued two meanings of the word value, one being the value in use and the other being the value in exchange. So while nothing is more useful than water—water is life—you can’t buy anything with water so, therefore, it has little-perceived value. Whereas you can’t really use diamonds for much of anything but you can exchange them for extreme value.
The point is the value of water paradox is not new.
SETTING THE STAGE
Before we can create solutions, we have to understand the current environment. The American Society of Civil Engineers (ASCE) gave US infrastructure a “D” rating. George Hawkins, the widely-recognized industry thought leader per his tenure at DC Water, also teaches environmental law at Princeton. He has said that “a D is an F with less paperwork.” ASCE may simply be doing the US a public relations favor by not declaring the nation’s infrastructure a failure. There is also the 4.8 trillion dollar funding gap that needs to be met in the next 20 years just to keep the current infrastructure in a state of good repair. Those statements aren’t novel. We all read the same industry journals. So what’s next? How do we solve this problem? Do we look to technology, assistance from the federal government, the entrepreneurial spirit, better communication, etc? The industry professionals around the room at the Smart Water Summit filled the screen with a word cloud of options, further demonstrating there is no silver bullet solution to the problem. It is an “all hands on deck” moment.
AND WHAT HAPPENS IF WE DON’T?
What happens if the inability to wrap our minds around the industry-wide shift in mindset, the 4.8 trillion funding gap, and the total disconnect of the public throw us into paralysis by analysis? What will be the biggest area of impact? Public health, economic development, natural resources, etc?
Obviously, all areas are impacted by water, but let’s focus on economic development because this is an area that often gets overlooked. Let’s go global for a minute. The availability of water plays a key role in the development of a nation. The US has one of the highest gross national products in the world. We are one of the world’s richest countries in per capita GNP, and we’re also one of the richest countries in terms of water availability. If you look across the globe, as water availability for a country decreases so does it’s GNP.
What about the workforce? Half of the global workforce is employed by these eight industries: agriculture, forestry, fisheries, energy, resource-intensive manufacturing, recycling, building, and transport. Half of the global workforce. Whether it’s heavily dependent or moderately dependent, 78% of the jobs in the global workforce are water dependent in some way. This equates to about 1.35 billion jobs. The impact can be brought home by studying the impact of water on the agricultural sector in America.
The US continues to face drought conditions each year, typically in some of the aridest regions, which also are the regions experiencing the highest surges in population growth. The largest population surges are occurring in the most water-scarce regions. This only exacerbates the water scarcity issues of those regions, especially in states that have significant agricultural sectors such as California. This impacts every person that enjoys eating vegetables, fruit, nuts, etc. California is critical to the US agricultural economy. For many crops, California is the near-exclusive supplier. Take almonds for example. California supplies 80% of the world’s supply of almonds. It takes just over one gallon to grow one almond. That equates to nearly one trillion gallons of water per year, which is essentially shipped overseas as the majority of that water remains locked inside of the nut itself.
America is an energy-intensive country. Half of the water withdrawals in the US go to power generation. The water industry may be familiar with the water-energy nexus but are your customers? (Check out our editorial on the water-coffee nexus in Water World Magazine.)
Whether it’s agriculture, energy, or economic development—just to name a few—this country can’t afford to continue to undervalue water. The value of water is more than just a tagline. It’s more than something we only talk about once a year on Imagine a Day Without Water through the Value of Water Coalition.
How do we do this? How do we most effectively communicate the value of water?
FIRST STEP: KNOW YOUR AUDIENCE
Without knowing your customers, it is difficult to communicate effectively with them. You need to survey your customers regularly, preferably every two years. Begin by doing some basic market research to find out where they are getting their information. Don’t make communication decisions based on assumptions about your audience. Do the work to truly understand the demographics of your community. Communication is not one size fits all, there are strategic directions for each segment.
Before anyone will care about something they have to understand it’s value. Brian Tracy, CEO, and author states it perfectly, “the more you focus on the value of your product or service, the less important price becomes.”
THE NIKE COMPARISON: SHOES VS WATER
The water industry needs to demonstrate the value of water in ways that the customers perceive value. The private sector spends five percent of total revenue on marketing, ten percent if growth is the objective. Nike spent 3.34 billion on advertising and promotion in 2017. Obviously, we’re not implying that kind of spending from the water industry, but let’s briefly talk return on investment. The basic Nike Air Jordan shoe sells for $120 and consumers don’t bat an eye. In fact, there are certain Nike shoes on the market selling for $100k. In 2017, Nike was valued at 29.6 billion dollars. Conversely, in Texas when water bills begin to inch towards $100 in the summer the phones at customer service start ringing. How many dollars were spent influencing public perception of the value of water in Texas versus the value of a Nike shoe?
Why does this comparison matter? Nike gets to impact the bottom line. The water industry impacts the lives of communities across the country. We need to be taking the best of the private world to create the best for the public health of our communities. We need to invest in the same level of engagement. We need to treat customers like they have a choice in who provides their water service.
Public sector mindsets need to adopt a private sector business approach to communication in the same way they have with innovation, technology, and business administration. The private sector is an untapped source of proven insights into audience segmentation and targeted campaigns that address the pain points of specific populations. Customers already perceive water services the same way they do the other public utilities they interact with regularly, such as electricity, gas, telecommunication, etc. An outstanding product and service is the expectation, the public health of a nation is the mission.
At Master Meter, we believe in your mission. We support your mission and we’re here to be your allies in that mission.