Good chemistry Featured

10:07am EDT July 22, 2002

Dan Wilson was getting ready to walk out the door for lunch when a customer from Georgia called in a panic. The man was trying to gather samples for analysis from the soil around some underground storage tanks.

The problem: The customer didn’t know what to do.

How many samples should he take? Where should he dig? How should he ship them?

All he knew was the phone number for the company that was supposed to do the testing—CasChem Laboratories Inc., in Canton. He dialed it on his cellular phone.

Which is how CasChem’s co-founder, Dan Wilson came to spend his lunch break that day coaching a small, new customer through the process.

It also helps to explain why the customer, Georgia’s Department of Environmental Control for Underground Storage Tanks may rank among CasChem’s largest accounts this year. Wilson says the agency expects to spend at least $75,000 with CasChem this year, and that the figure could actually surpass $200,000.

“It was well worth the 45 minutes,” Wilson smiles. It also validates one of CasChem’s guiding principles: Make it easy for your customers to do business with you.

Founded in 1991 by brothers Don and Dan Wilson, CasChem has grown to 22 employees and more than $1.5 million in annual sales. Nationwide, the environmental industrial testing business is worth $4 billion a year and characterized by highly competitive (read: commodity) pricing.

While CasChem boasts of clients in 37 states, most of its work comes from the Midwest. Even so, it counts 12 certified labs as direct competitors.

Seven years ago, when they were getting started, the brothers quickly learned that quality was difficult to sell because customers didn’t appreciate the esoteric chemistry of their work. Besides, environmental testing is one of those things people generally do only because they have to.

They have found that, in order of importance, price ranked first, second and third.

But in the last decade, according to the American Council of Independent Laboratories, one of three environmental labs in the United States has gone out of business.

The reason, the Wilsons believe, is that lab owners tend to view their work as more science than business.

“They were more technology-oriented, rather than marketing-oriented,” says Dan, CasChem’s vice president.

The Wilsons built their business around the idea of making the unfamiliar field of chemistry less intimidating and less of a headache to the average customer.

For a client whose background is in management or manufacturing, mounting environmental mandates are difficult to keep up with and quality protocols can be confusing. “We make it very easy for them to do business with us,” Dan says.

It’s a process that’s served CasChem well so far; sales have grown an average of 11 percent a year, the last five years.

At the same time, a policy of going the extra mile for customers has its own dangers. It’s possible to go too far.

“It’s difficult,” acknowledges Don, the company president, “to decide where to draw that line.”

Part of that decision lies with evaluating the profitability of individual customers—and figuring out, based on a number of factors, who the best customers really are.

That’s a work in progress for the Wilsons, and we’re going to make you wait until the end of this story to see how they’re managing.

First, here are the elements of CasChem’s program for selling service rather than quality and price.

Be everything your customer needs

The Wilsons started in business drilling oil and gas wells, but sold that fledgling venture because of market conditions.

They turned to the more promising field of environmental testing, predicting mounting government mandates would create a gold mine.

CasChem started with the testing associated with underground storage tanks, and has since expanded its testing capabilities in response to customers.

“People were coming in and saying, ‘Would you be interested in starting to do this test?’ “ Don says.

At one level, these requests are handled by the book: an evaluation of equipment and other costs, followed by calculation of profit potentials.

In most cases, however, the brothers have added services—even low-margin tests—to help establish their reputation as a one-stop shop. “You’re always looking at the costs,” Don says. “But you’re trying to provide the service to the customer.”

Quite simply, they’ve found it’s easier to build a business if your customers believe they can always come to you first. Today, CasChem’s standard repertoire includes 75 types of tests. “It grew a lot faster than we anticipated, that’s for sure,” Don says.

Such was the origin of transformer testing, which CasChem started in 1993, based on client demand.

Today, it accounts for 26 percent of revenue.

In addition, services like these have helped increase business in other areas. One of Whirlpool’s Ohio plants, for example, started using CasChem only for transformer testing, but now sends its waste-stream profiling business to CasChem too.

The Wilsons know that not all of their services can be comfortably profitable. That’s a calculated strategy.

For example, CasChem offers inorganic testing, which is labor-intensive and therefore very low-profit, to try and lure organic testing, which is higher profit. “We’ve added these to make it a one-stop shop,” Dan says.

They remain conscious, however, of the risk of spreading themselves too thin. “As the saying goes, you can’t be a jack-of-all-trades,” Dan says, “and a master of none.”

Eliminate the biggest customer headache

From their first day in business, the Wilsons believed one way they could differentiate their company was by offering free shipping or courier service. It’s a small gesture, maybe $10 cost for overnight shipping, but it goes a long way toward making things easy on customers.

CasChem provides the containers and coolers for the sample, assembling the type and number needed, shipping them to the customer’s doorstep and arranging the return overnight shipment.

All of that might cost $30 on a $360 bill. And because of the price orientation of customers, “It’s a cost we basically had to eat,” Don says.

CasChem also provides daily courier pickups within a 60-mile radius—encompassing about 30 percent of the company’s business. “We’ll go and do whatever we have to do,” Dan says.

Bonnie Butner, a CasChem project manager/sales, says CasChem could never get away with passing these costs along. Customers have realized they’re king in a saturated industry. “It’s ferocious competition,” she says. “We have clients who are solicited daily and offered a better price for something we’re doing. This never happened three or four years ago ... Then our customers will call us and ask, ‘Can you match this price?’”

Don says CasChem won’t get caught up in bidding games. If a competitor drops the price that drastically, he says, it will show in quality or turnaround, and the client will be back.

Be the first place anybody’s going to call

For all of its efforts, CasChem is still too small to be a one-stop shop.

But the Wilsons still want their customers to assume CasChem will have an answer to whatever need arises, even if that means finding another company to perform a specialized test.

Dan points to a recent occasion when he spent two hours calling pharmaceutical labs all over the country, trying to develop a short list for a customer who needed a test CasChem doesn’t provide.

It wasn’t just a matter of tracking down names and phone numbers. “I had to call them all and ask them the right questions to make sure they could do it properly, to make sure they could meet our standards,” Dan says.

CasChem’s vice president faxed a list of a half-dozen labs to the executive, who had been a CasChem customer for five years. “I wouldn’t do that for just anyone,” Dan says.

Because many CasChem customers believe the Canton lab can either fulfill their need or find someone who can, the strategy works. CasChem doesn’t charge for its fact-finding expeditions, but more than recoups that money in the long run.

Not long ago, a local woman contacted CasChem, seeking analysis of her drinking water. She thought her husband was trying to kill her. “I gladly referred her to another lab,” Butner says.

Know what extras your customer wants

CasChem four years ago added actually gathering samples—not just analyzing—to its list of services for customers in the 60-mile local radius. “We sort of grew into it,” Dan says.

“The customer sometimes wants to be removed from the whole process.”

Add employees your client can’t afford

The Wilsons attribute some of their growth to their willingness to be an all-around resource. CasChem, for example, employs a quality assurance consultant who works separately from management and the lab to serve as a client’s confidante, advocate and even guardian angel.

“Most labs say, ‘Send in your sample and we’ll analyze it’. They won’t baby-sit you and say, ‘You should be doing this and testing for that,’” Don says.

“Why do businesses in Indiana and Georgia come to us? We stay abreast of the regulations in each state. We know more than most of their local labs.”

CasChem routinely handles these calls even from non-customers. There is a price on that time spent on the phone, Don acknowledges.

“I look at attorneys that charge for phone consultation ... and wonder whether we should. But you just take the extra step. And a lot of times you feel it goes unrecognized. But it comes around.”

Simplify pricing

The construction of new homes and buildings is notorious for cost overruns. Lab analyses aren’t far behind, Don says.

Dating back to its built-in, free delivery, CasChem adopted a flat pricing structure so customers aren’t quoted one price and charged for a larger amount.

“There are labs out there that will nickel-and-dime you,” he says. “People want to know what to expect. They don’t like surprises.”

Don’t profiteer from others’ crises

The need for an environmental test doesn’t always fit neatly into an 8-to-5 weekday. Customers often ask CasChem to take rush a job, and the Wilsons will agree on a case-by-case basis. They charge a little extra to cover costs, but emergencies aren’t a profit center.

Butner estimates that 40 percent of her underground storage-tank customers are rush jobs. Ten percent of the company’s jobs are rush. “In this field, people have to have their results right away.”

“You’re not making a huge premium,” Don says. “It’s a service.”