October 7, 2015
By Mark Scantlebury, President and CEO
We often get asked how we are managing to grow during this downturn in the oil and gas market. Being an equipment manufacturer, we see a lot of pushback on sales and customers asking for price reductions. There are some things that you can do to help stem the downward pressure on the business and not only survive, but thrive. Here are some of the things that we do at ETC to continue to grow the business during tough times:
Many products might be a “nice to have” item. They make life easier, but only get purchased when there is a budget. By focusing on developing products that create more income for producers and that pay for themselves over a short period of time, you can avoid being overlooked because of a lack of budget.
A good example of this is an optimizing controller, such as the ALiEN2 Plunger Lift Controller. The product itself gets more production out of an existing asset. In many cases, even getting and extra 5 – 10% will make a very compelling argument. We have even seen instances where a well’s production increased 100%, giving the producer a payback period of two days.
When commodity prices are up, many people just want to take the easy road. They use whatever they know and don’t focus on value. When prices are low and every purchase is scrutinized, there has to be value. Without value, the customer will simply want a lower price. A value-based product may last longer, improve production, require less operator intervention, be safer, use less power, or do all of the above. All ETC products are rugged, reliable, low-power, hazardous location approved, and work in extreme temperatures. These are all attributes that make purchasing ETC products a sound investment.
One way to avoid price pressure is to have products that no one else does. When business is slow, spend your efforts innovating. Create products that solve problems in a unique way, providing extra value for your customers. If you can convince customers that there is a better way that will save them time and money, or improve the safety of their operation, you will get the inside track on your competitors.
ETC is in the midst of releasing the Sasquatch Plunger Velocity Sensor which is poised to change the way that plunger lift wells are run. Instead of relying on average velocity, producers will finally be able to measure instantaneous velocity of the plunger at surface.
One thing that a lot of companies cut back on first is administrative resources and customer support. These are typically seen as overhead. By keeping resources consistent and finding ways to enhance your customer service, you will retain your existing customers and attract new ones. Building strong relationships with your customers will position you well as the market improves.
We have always invested in technical sales people, documentation, simulators, training materials, and other tools to make sure our customers and resellers get the best support in the business.
This is another thing that a lot of companies get wrong. They cut back on marketing or cut sales people for poor performance in the hopes of cutting expenses again. Instead, use the time to pick up quality people that are out of work and put extra money in the budget for sales and marketing. Making people aware of the value of your products and how you can help them will allow you to gain market share. This will help counteract a shrinking market. Once again, this will not only pay off in the short term, but position the company well in the long term.
ETC is actively adding more sales and marketing staff as we speak. We have also increased money spent on resources, training and advertising to help our customers and resellers.
Investing in new products, customer service, and sales and marketing efforts all takes money. In order to do these things, there must be the appropriate financing in place as well as the risk tolerance to follow through even though things may not look good.
We have managed to find great banking and investment partners along the way to help us grow the business. This combined with our mandate to continually reinvest in our people and technology has positioned us to thrive during this period of low commodity prices. We are continuing to grow and expect the rate of growth to accelerate as the market improves.