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February 2002: Volume 44, Number 2

A Hybrid Approach in the Old Pueblo: Rainmaker Technologies, of Tucson, Ariz., Lets the Sun Shine In
by Ronald Y. Pérez, WC&P Managing Editor

Bill Madison is running a prototype-like dealership in Tucson, Ariz., the desert home of gila monsters, roadrunners and saguaro cactus as well as one of the fastest growing communities in the country. The hybrid operation, he says, will become more prevalent in the water treatment industry. As owner of family-owned Rainmaker Technologies, Madison has diversified his business to include a little of everything.

He says, “There will be more players coming in. We plan on being in the drinking water business, and be everywhere people drink water (homes, offices, apartments, etc.). We really want to push the equipment, reverse osmosis (RO) systems, softeners, point-of-use coolers for businesses. There will be more hybrid businesses like this one.”

The 43-year-old Madison believes diversification will play a major part in surviving market trends such as increased competition from “Big Box” and mass retailers, water utilities and the Internet. Currently, most of Rainmaker’s business (80 percent) revolves around its water treatment equipment while the other 20 percent deals directly with “u-fill” bottled water via vending machines. Madison began the business with filters, countertop and undercounter RO units, whole house filtration and softening. Then he got a brainstorm.

With space to fill
Rainmaker opened in a 1,700-square-foot storefront building on one of Tucson’s busiest streets in 1999.

“When we got this building, we thought we might as well handle the bottled water stuff -- coolers, crocks and bottles -- since there’s so much traffic here. For what we do as far as equipment, you don’t need that much traffic. Plus, we use in-house telemarketing and door-to-door selling so we really didn’t need this location. But since we had it, we decided to expand along with the square footage. The question became, ‘What do we do with all this space?’

“The decision was made to get into bottled water. And I didn’t want to become a water store. In essence, we kind of backed into the bottled water business.”

Rainmaker uses equipment from USFilter, Tucson-based Water Tec International, Water Resources, of Phoenix, and a few others. “We will do business with anybody who will work with us, especially local companies,” he adds. “We like to see American-made equipment.”

Sales first
With RO as the main part of the business, Madison would like to see more RO rentals. Shower-head filters are also gaining more popularity and space at Rainmaker. The business makes service calls but doesn’t promote that part of the business as much. He explains that they’re trying to build a “sales organization,” service customer equipment only, and farm out installations due to a small staff. Three of four employees are in the sales department.

He says, “We don’t like to go into a house and come out without a sale. We don’t offer a lot of free steak knives and stuff. We’re straight up with people and we tell them what we do and what we offer. We would like to sell whole systems but we don’t want people to overspend either. At times, we will sell one part of the system at a time. With ROs, you’re going to be there at least once every year to change the filters with an opportunity to present other parts of the system.”

Most of the business’ advertising derives from the yellow pages and the Internet where two separate websites -- www.rainmakertechnologies.net and www.rainmakerwater.com -- have garnered some out-of-state business in Oregon, Texas and Nevada. According to Madison, some distributors in some smaller cities charge high prices for certain types of equipment. As a result, customers seek a more cost-friendly alternative.

In the water
With a vast majority of his customers on municipal water, Madison gets his share of people concerned with potential chemicals in their water, since the city began delivering a mixed blend of treated Colorado River water transported via canals across Arizona and groundwater. As part of the arid Sonoran Desert, the water also has a higher natural salinity than many areas new residents come from, making taste an issue for those from other areas of the country. Many of them may only come as snowbirds, temporary residents visiting during colder months. As he says, “No one wants to drink from the tap in Tucson. With winter visitors here, we also hear the same thing from them. Since the arsenic standard changed in October of last year, I’ve also received more questions about that.”

Last year, Rainmaker’s sales increased by 20 percent. With the same number of employees, Madison say he expects to hit the $1 million mark in sales within two years. This in a city that has several other water treatment dealers. In all, he foresees “a lot of growth in the next three or four years.”

The recession that has plagued the country for much of 2001 seemed to pass over Rainmaker. After the Sept. 11 attacks, Madison encountered more calls regarding procuring potable water from sources like streams and ponds. He often referred them to sporting goods stores since he doesn’t carry “backpacker”-type equipment. He says, “I tried to explain to them that it’s really the water out of the faucet that needs to be treated. Also, strangely enough, sales have gone up as soon as things started cooling off.”

Turning air to water
Speaking of cooler temperatures, air conditioning was Madison’s first vocational choice when he got out of the U.S. Air Force. A Michigan native, he was stationed at Tucson’s Davis-Monthan AFB. Discovering winters could put quite a dent in the A/C business, he looked for a sideline. As a plant operator in the military, he glided toward water treatment as early as 1993.

“After investigating the various water issues in Tucson, I decided water might have a future of its own besides the air conditioning thing. So I got off the hot roofs,” he reasons. “It was better to be inside the home where you’re talking to nice people and working on the ground in cooler conditions. For the first few years, we were basically doing this on the side. A couple of years ago, we got this building and decided to go full time with this.”

Conclusion
Even with the looming presence of “Big Box” retailers and getting enough distributors, Madison hasn’t regretted making the switch to water treatment. His unique take on Big Box retailers is: “They don’t advertise like bottled water does in many businesses. That’s the problem. Besides, they’re not a threat because the knowledge isn’t there.”

Still, Madison sees room for improvement. “I think the industry could work together better to provide products to the marketplace. For example, distributors could work with smaller companies (mom and pop) instead of being direct competition.

“In the next 10 to 15 years, I believe water treatment devices will be just another appliance in the home. Our society is becoming more mobile so we want to provide equipment that they can take with them when they go out. Distillation will also grow. We don’t carry any distillers but we may start.”

Rainmaker Technologies
6039 East 22nd Street • Tucson, AZ 85711
(520) 745-9117 • (520) 745-9141 (fax)

Owner: Bill Madison

Founded: 1999

Staff: 4 (one inside sales, two outside sales, one administration/inside sales)

Sales: 20% increase in 2001 over 2000

Quotable: “Unlike computers, this industry doesn’t change much. The same technologies used today have been around for a number of years. In this industry, it’s so hard to get something new pushed through. If you say RO, everyone knows what RO is. But if you say magnetics, then there’s a different perception. And if the market isn’t ready for it, you can’t move the product. For example, how many people had iceboxes before they bought refrigerators? You sell what the market is ready for.”

-- Bill Madison