Advanced Drainage Systems: Growth Outlook

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On that topic, if you have a sales team of civil engineers who are going in to try to influence the acceptance rate of the design engineers, how do you get into those firms, get those meetings? Was it easy or hard? If someone has built their entire career on reinforced concrete pipe, how do you convince them to try thermoplastic for the first time?

We knew that in some places, unless a guy retired, they’re not going to accept us. I hire PEs, professional engineers. When you’ve got Professional Engineer on your business card, you get into that design build firm, that civil engineering firm. They don’t respect the sales guy even though he might be the best sales guy in the world, he’s not a PE, so won’t get in the door.

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I’m sure it’s one of the harder things to do, to get people to move on from what they’ve been trained on and doing for their whole career. How did you incentivize that for the sales PEs and how did you keep them motivated, track their progress? If you think about the acceptance rates from when you started that program and fired the 100 sales guys, hired the 100 PEs, to say three or five years later, what did that look like?

What did we sell last year and what did we sell this year and what did we sell the next year after that? It was a growth incentive. They had a higher salary than the sales guys did, because the sales guys were purely commissioned with a small salary, but instead of $35,000 to $40,000 a year as a salary, I gave those PEs $60,000. In terms of growth year over year – notwithstanding recessions – they got paid on that growth because at the end of the day, if they were doing their job, we grew.

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Where do you think the acceptance rates are now? RCP still has about 70% market share.

No, it’s not that much anymore. It’s all predicated on where you are; it gets really involved. Talk to me about private versus public work; private work contractor, developer, owner etc. they can do whatever they want but public work, for example, building a highway or publicly related funds, that’s when you have to have DOT approval. Therefore if I went around the country I could give you a thousand different answers, but Florida is a great example where we have the DOT approval and ADS crushes it in Florida on public work.

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