Ostwald Enterprises of Albuquerque, N.M.—
Selling System Longevity
in the Land of Enchantment
By Steven Delgado
WC&P Senior Editor

When potential customers ask Pete Ostwald how long his reverse osmosis (RO) membranes or his softening units will last, he always answers them truthfully: "I don't know."

"I have a Kinetico softener out there right now that's over 23 years old, with most of the original resin still in it; and I have a membrane out there that's 12 years old and still working fine," Ostwald said. "So when people ask me how long membranes last, I tell them I don't know."

Ostwald's dealership, Kinetico Quality Water Systems of Central New Mexico, serves Albuquerque and outlying areas like Farmington, Taos and Grants-where the infamous softener, installed in 1977, is buried within a galvanized steel box according to requirements of the region.

"When I'm at home shows, I tell prospects 'Why don't you ask any of these water companies around here if they have a system that's up and running after 20 years,'" Ostwald said. "Not only that, but most of the original resin is in it and we've rebuilt it with current parts that still fit the unit...it's not electric, so it's buried legally."

Joining forces
It's the system longevity approach that Ostwald uses when selling his systems, especially when going against discount stores, appliance dealers and other retail competition in the area, that includes Sears, Culligan, Universal Water, EcoWater and General Ionics. The EcoWater dealership and the Ionics dealership had recently joined forces to market together, which inspired Ostwald to team up with an appliance dealer to form his own water treatment tag team.

"Appliance dealers in this area are having big trouble with installations of their softeners," he said. "So we work together with installs: we install their gear and they sell our equipment on their floor. And of course we do our own installs." Ostwald conducts sales training for salespeople on the floor. Many customers that walk into the store immediately ask about differences between units in both cost and product.

The appliance dealer Ostwald works with carries Enting softeners and inexpensive ROs as well as Kinetico equipment. Typically, a customer will come into the store with a Sears RO unit in hand, looking for a replacement. The salesperson lets them know the Sears unit is comparable to inexpensive RO units-the ones you have to replace membranes and filters on each year. With Kinetico ROs, the system is designed to shut itself down for servicing at 500 gallons, a feature that's exclusive to Kinetico. The membrane is guaranteed for five years with a life expectancy of 10-and it's at this part of the sale testimony of the 12-year-old membrane comes in handy.

Once presented with options on both ends of the spectrum, the customer makes the decision on what they're looking for in water treatment. The agreement is new for the dealership but Ostwald says everything is going well with the arrangement.

Water challenges
Service and unit guarantees are what sell well in New Mexico. Many rural areas are not only time consuming to get to but have unique water challenges once you get there. Two of the biggest challenges are copper leaching and iron level spiking. One sale Ostwald made in Taos, roughly two hours north of Albuquerque, involved pulling a previously installed unit. The customer wanted insurance that the dealer wouldn't just install the a new one and abandon the account out in the middle of nowhere.

"I typically guarantee a softener unit for 30 days, but in this case I guaranteed it for 90. We had to add more media at one point, but we got his iron down to zero. That was a referred customer who will probably refer us to someone else."

While USEPA has identified Albuquerque as an area where drinking water is likely to exceed new proposed arsenic rules without additional treatment, Ostwald said customers don't yet recognize the fact that the Kinetico unit removes 95 percent of arsenic as a selling point yet.

He says he likes playing water detective and that it's the best part of his work. "We're getting known out here for not backing down from water problems... Word of mouth is wonderful here and is very effective. People trust when other people tell them to go and talk to someone."

From East to West
Ostwald bought this Kinetico dealership in 1996 with no previous water experience. It had been going for seven or eight years prior to that. His business background comes from owning a business back East that sold mailing, filing and stationary supplies. He and his wife finally grew tired of upstate New York weather. "In Syracuse, you've got a lot of bad weather. I was driving 40,000 miles per year through the worst weather God put on this earth," he said. The business was successful, but he and his wife had visited and fell in love with New Mexico 10 years earlier.

Without regret, he put the business on the market, sold it and moved West where he got a job starting a new PageNet paging service in New Mexico in early 1995. But that itch to own your own business again, which never really seems to go away once you've done it, continued to gnaw at Ostwald.

About this same time, he had trouble with the softener at his home. It was installed incorrectly, with too much distance between the softener and the brine tank, which wouldn't allow it to draw enough brine to properly regenerate. "We had hard water and I couldn't figure out what was going on. So I decided to do a little homework; I checked all the consumer magazines and came up with the Kinetico system as being this great piece of equipment," Ostwald said. "I called them and said, 'Talk to me.'"

When a Kinetico serviceman showed up to examine the existing softener and installation that was in place, he informed Ostwald his outside water spigot was hooked up to the softener, along with everything else in the house, and he'd been using water softened with salt on the landscaping around the house-which is detrimental to desert plants. One year and $800 worth of plants later, he called the dealership that had installed the unit and told them he was unhappy because it wasn't softening water like it should have and no one had told him the outside spigots were soft. "They did buy back the unit; I'll give them that much," he said.

A little while later, a broker tipped him off to a hot business prospect in the area-the Albuquerque Kinetico dealership. Ostwald was immediately interested.

The potassium choice
Ostwald takes on water challenges, maintains friendly relations with his competitors and has a modest advertising budget, marketing his services through three small regional newspapers in northern New Mexico. He takes care of his remote customers like his in-town accounts. And because of the desert plant incident with his previous softener, his dealership pushes potassium chloride over salt.

"Now my people and myself are emphatic about telling people that if you have a septic tank or your outside water faucets are going to be on soft water, you've got to use potassium. You've got no choice," he said.

Concerning the common problem of potassium crystallizing into a solid block at the bottom of regeneration tanks: Ostwald says the main culprit has always been temperature variations, because softeners are most often installed in the garage. Putting the brine tanks off the floor using wood and rubber mats underneath will deter the cold coming through the bottom of the unit and provide a more even temperature. A specially designed Kinetico unit that addresses this is "waiting in the wings," he added.

Ostwald sells K-Life brand of potassium. Unfortunately, Sears, Home Base and other area discount stores have the "Nature's Own," line, and one of his customers has already compared packaging to the K-Life he bought from the dealership, noticing the two manufacturing addresses were the same, but not the prices. The discount store does, of course, sell it at a considerably lower price.

Conclusion
Taking on New Mexico's water challenges head on and solving them is still Ostwald's favorite part of the business. "It's the satisfaction of knowing you've hit these problems and have been able to solve them. That people are coming to you and saying, 'Help me,' and you really can help them," he said.

With the multicultural heritage of the state a model of diversity, his dealership provides the same dedicated level of service, regardless of a customer's background. He said oddly a number of Hispanics, while they may have a customary cadence to their manner of speaking, don't speak Spanish.

"We mean what we say and we do it right. We had a record year last year and we've already had a record quarter...we must be doing something right."


Ostwald Enterprises d.b.a.
Kinetico Quality Water Systems of Central New Mexico
6020-C Midway Park Blvd.
Albuquerque, N.M. 87109
(505) 342-1656
(505) 342-1668 (fax)

Owner: Pete Ostwald

Employees: Six; three with combined duties of installer/service/management, two strictly administration and one strictly sales.

Started: 1996

Revenue: First year, dipped because of learning curve and change in advertising strategy from billboards to newspapers; 15% higher in 1999 over 1998; 1Q 2000 is 10% up on same period in 1999

Quotable: "The water business is a very repetitive business; once you can guarantee that you can solve their problems and back that up, you have the sale."
--Pete Ostwald