To see how PHSI began, we have to travel back to 1996 when co-founder Craig Story spotted a gap in the market and decided to launch a new drinking water business, in conjunction with his business partner John Windju.
“I had previously founded a semiconductor equipment manufacturing company in California,” he says. “The business was acquired, so I decided to move my family to Sandpoint, Idaho, to enjoy some snow, water skiing, beautiful mountains and scenery, fresh air and pure water. Everything was spot-on except the pure drinking water part. In the area where we lived, there was a community well, which at the time had multiple contamination issues.”
Craig ended up spending around $80 a month on bottled water for the family. “This basically provided the inspiration to design, engineer and build a prototype mains-fed water dispenser, and forged the beginnings of a start-up company that ultimately became the PHSI company.”
Craig freely admits that the company’s first prototype was “not a beautiful piece of machinery”, but it did serve its purpose and provided pure water. “My first thought was that every kitchen and office should have a system like this, albeit a much prettier one,” he says. “I decided to work on a business plan, which is when John and I teamed up to start PHSI.”
The company has changed dramatically since the first prototype run in 1997. “If you were to look back, you would see night and day,” Craig reveals. “Even since 2000 through to today, you would see all-new products along with two new product lines, new distribution channels, new finance and marketing programmes, a new factory, new dealers and a staff that has grown 15-fold.”
Most of the PHSI team came from outside the industry, which Craig believes has contributed to its success, “since we didn’t have any preconceived notions”.
As a privately held company, Craig explains that since 2004 sales have grown on average 15-20% year on year. Sales revenue in 2008 was 20% up on 2007, a substantial result considering the global economic difficulties.
The company works with about 200 Fortune 500 companies and has many high-profile clients. At the moment, PHSI is focusing on the commercial sector, from major offices to small to medium size businesses, but does see the residential sector as a great opportunity for the future.
How do you view PHSI within the North American water cooler market today and across Europe/the rest of the world?
Craig Story & John Windju: We believe PHSI is definitely the number one mains-fed water cooler manufacturing company in North America. In Europe, we’re still a small player. I’m pleased to say that Europe is growing year on year for us as we carve our way into multiple markets. We believe Asia will be an up-and-coming market in the future.
Where are the real growth areas for your business?
Story & Windju: We still haven’t really scratched the surface of the opportunity here in the US. Dealer expansion in the US and Europe are our main focus at this time.
Is your National Account Programme proving popular?
Story & Windju: The National Account Programme is gaining popularity based on economic conditions, including customer awareness of the range of mains-fed products. We’re seeing more requests for quotes from large Fortune 1000 companies looking at saving money plus eliminating the issues that go along with bottled water.
Do you deal with end-users directly or via distributors only?
Story & Windju: The only time we deal direct with end-users is if we’re working on a National Corporate Account. All leads other than National Account leads that are generated through our websites and other means are handed over to our dealers.
Which are your most popular water cooler models?
Story & Windju: The PW1R is the most popular water cooler in the US. However, the Interpure product line is the most popular in Europe.
Do you have new products in the pipeline?
Story & Windju: Within the last few months, we announced our Purlogix-e series product line to the market. Within a year or two, you’ll see new products coming to market from PHSI. In the meantime, we’re continuously improving our current products by adding new features and enhancing performance.
What new technologies are you using?
Story & Windju: We use basically all the technologies known in the industry, such as reverse osmosis, carbon filtration, ultra filtration, ozone and ultra violet. As an example of continuous improvement, we recently incorporated Bio-Protection at the dispense nozzle to inhibit bacteria growth.
How important is the design and look of a water cooler?
Story & Windju: We believe it’s extremely important. Future products will mainly consist of cosmetic changes to existing systems without much change in the purification process.
Are customers still willing to pay for quality and top technology?
Story & Windju: Yes, however the customer must be sold on quality and technology otherwise it becomes a price-only sale.
Is the North American office drinking water market still in a healthy state and is there potential for more growth?
Story & Windju: The office drinking water market for mains-fed water coolers is in a healthy state. However, I believe that bottled water will not grow at the substantial rate that it did in the past based on mains-fed water coolers becoming the popular choice for office drinking water.
What do you find most exciting and interesting about the mains-fed market?
Story & Windju: The growth opportunity is the most exciting thing, while the most interesting is that so many people still don’t even know what a mains-fed cooler system is.
What are your main methods of winning new business?
Story & Windju: Sales training is extremely important to winning new business. Mediocre sales people will provide mediocre sales. We have a comprehensive sales training programme for our dealer network. Providing the proper high-quality marketing tools for the sales people is also very important. Last but not least is the importance of feet on the streets.
What do you think are the most effective methods of marketing for your business?
Story & Windju: We recognised early on that selling a premium mains-fed cooler would require a network of dedicated dealers who understood the business to business sales process and project a professional image. Consequently, we focus our marketing efforts on recruiting entrepreneurs from various industries and then equipping them with hands-on training, sales videos, websites and sales support. This provides a great deal of brand continuity and has enabled us to develop what we believe to be the strongest dealer network in the industry.
How important are environmental issues to your business and how are you approaching them for the future?
Story & Windju: Our product is very ‘green’ and impacts the environment in a positive way by eliminating the bottles associated with other coolers.
Do you have any sponsorships or extracurricular activities as a business?
Story & Windju: Each year, we sponsor about five charity events in our local town, such as high school sports teams, food banks and academic clubs. We also recently started an internship programme where we hire graduating high school seniors to work in our call centre.
What are your main ambitions for PHSI in the future?
Story & Windju: We have several ambitions. Firstly, we wish to expand, develop and support our dealer network throughout the US and Europe. We aim to build our National Account sales team and expand into the Asia Pacific market. We’re also looking out for acquisition possibilities of companies that have synergistic add-on products with our own.
Hannah Oakman is editor of Cooler Innovation magazine.
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