The Case for Product Diversification – It’s Importance Can’t Be Understated
It’s been stated that in order to be a thriving business, over 25% or more of revenue for each fiscal year needs to be derived from new products or services. In fact, it’s accepted as a best practice to ensure meeting future revenue goals. Many companies fall short of the 25% number because it’s hard, yet it’s so vitally important to a company’s ecosystem. Product and service diversification continues to be an important element in Victory Energy’s success. It hasn’t always been easy; however, the hard work has paid off in the form of new revenue streams that are serving to accelerate our collective futures. Here is some wisdom that can be applied to any business.
Look For Industry Adjacencies and Synergies
When Victory Energy started out, we quickly developed a strong niche position, bringing innovative steam solutions to the ethanol industry. It provided a steady revenue, but ultimately would have been limiting from a growth perspective. The key was branching out into other vertical industries with similar application needs. The challenge was taking our ethanol industry experience and rendering how it was analogous to the likes of processing, oil and gas and pulp and paper. The goal was to develop sufficient project case histories to claim expertise while transitioning this expertise to new industries. Today, Victory Energy is well known across almost every conceivable industry with products operating in a multitude of applications. The Victory Energy name is now synonymous with “steam.”
Truly Listening to the Voice of the Customer
I can unequivocally point to actively listening to our customers as the chief reason why Victory Energy is such a diversified boiler, burner and heat recovery solutions provider. Customers require solutions that don’t easily fit into a neat package. They want unique solutions that aren’t cookie-cutter, off-the-shelf products. This is where Victory Energy excels. Many of our standard products, such as our GENESIS High Temp Hot Water Generators, were borne out of customer requests. That’s the framework of our End Market Group – working directly with customers on custom products that are uniquely tailored to an application. It’s not about what we can make; it’s about meeting customer needs. That’s putting Voice of the Customer into action.
Having the Courage to be Bold
The boiler industry is steeped with companies that have long histories. There are many barriers to entry. We’ve faced that many times in our history and have always trusted our gut. It requires following what customers are asking of you. Five years ago, there were direct customer requests for Victory Energy to enter the firetube market with full-line availability. At the time, we were well known for manufacturing large complex firetube boilers – from 800HP to 2500 HP. There was equity for this important niche competency, but we weren’t viewed as a full- line provider. The decision was made to go all in. Today, firetubes amount for an increasingly larger percentage of our overall sales. Our Pulse Line is full of firetubes moving through the plant floor every week. It would have been easy to stick to our limited firetube niche. Our business wouldn’t be where it is today with having a comprehensive product line. We’re doubling down now by offering vertical boilers, closely followed by the launch of hot water units.
Drive for Greater Vertical Integration – Our Burner Business
Many product innovations are natural extensions for the business. We’ve always prided ourselves in being vertically integrated. Extending this position required aggressively entering into the burner segment. Being more and more vertically integrated helps companies control their own destiny. Our line of VISION burners is operating worldwide with great NOx performance metrics. We’re winning burner retrofit projects and more and more of our industrial boilers are installed with VISION burners. By investing in people and products, our line of VISION burners continues to grow.
Growing The Aftermarket Service Business – For the Life of the Boiler
Customer care is critically important today, and in many cases, far more important than in the past. Our aftermarket strategy is to be with customers for the life of the boiler. As tenured boiler room professionals retire and companies cut back on resources dedicated to the boiler room, they are turning to us for support. This requires us to have experienced service professionals to fill the void. Service programs need to be tailored to fit unique customer requirements. Spare parts programs need to be robust. The Victory Energy concept-to-completion promise plays well on the service end of the business as there is truly never a project end. We’re in it for the long run of the boiler.
When it comes to product and service diversification, it’s Full Steam Ahead at Victory Energy.