Sunday, December 27, 2009

Uncovering the Client's Real Needs

Clients hire you because they have needs. To provide great service, you must accurately understand your client's needs. So how would you rate your skill in uncovering needs?

Evidence suggests that professional service providers aren't as good at this as we'd like to think. A recent study by found that the second most common problem that clients reported when buying professional services was that the seller did not understand their needs (30% of respondents). The most common problem (at 38%) is related: "The seller did not listen to me."

My experience with clients corroborates these findings. Not only does our lack of insight into client needs undermine our sales efforts, it compromises our ability to serve the client after the sale. Most service problems I have encountered are primarily caused by not adequately understanding the client's expectations. Many technical failures can also be traced to this same shortcoming.

So how can you do a better job uncovering the client's real needs? I'm going to devote the next few blog posts to answering that question. Let me start by suggesting that you should consider the client's needs at three basic levels:

Technical needs. Meeting technical needs is obviously the focus of your business. That's the strength of your firm, where your experience and expertise lies, and the realm in which your staff is most comfortable. When clients are looking for your help, they tend to define their needs in technical terms. But that tendency, in my opinion, is more a function of how they view A/E firms rather than how they view their real needs.

Clients generally see A/E firms as technical specialists. But more often than not it is the nontechnical aspects of a project that are most important to the client. You are able to deliver greater value when you uncover and address the next two levels of needs.

Strategic needs. These are needs that impact the overall success of the client organization. This includes political, financial, operational, and competitive concerns. Here's an important point to keep in mind: Your projects are almost always driven by strategic needs. They form the crucial "why" behind what your firm does. Failing to uncover strategic needs limits the value of the solutions you deliver.

Have you ever wondered why other professional service firms can command much higher fees than the typical A/E firm? I believe the most important difference is that most other professional firms--such as law, accounting, management consulting, and marketing firms--focus on meeting their clients' strategic needs. We focus on technical needs, often without making the connection to the strategic drivers that make our projects important.

Linking your technical solutions to meeting strategic needs can be a key differentiator. Many A/E firms talk about helping their clients succeed. But most don't seem to understand what that really entails. It requires providing a more comprehensive mix of business and technical insight than most engineers and architects tend to offer. Don't overlook your client's strategic needs.

Personal needs. Clients are people, not agencies, companies, or departments. The people involved in the buying decision--and the people you serve after the sale--bring their own personal wants and expectations to the transaction. Ignore them at your own risk. Yet firms often do.

Personal needs can cover the spectrum of the two levels discussed above, but they go further. Individual buyers hold personal perspectives on the strategic drivers behind a project. They may prioritize certain technical issues, especially if they have a technical background. But ultimately there's an element of self-interest involved. Every individual buyer, either consciously or subconsciously, is asking: What's in it for me?

If you've followed this blog, you know I stress delivering a great customer experience as integral to delivering a great project. Superior service (i.e., a great customer experience) is perceived at the personal level. Thus one of the most important aspects of uncovering client needs is discovering individual expectations with regard to the working relationship. Few of your competitors are looking at this during the sales process. You can step into that gap and create an advantage.

Meeting these three levels of client needs should be a point of emphasis at every stage of your interaction with the client--sales, proposal, interview, negotiation, project planning, project delivery. Of course, you must first uncover needs at each level, which involves asking the right questions in the right way. That will be the focus of the next couple of posts.

Monday, December 21, 2009

Could We Learn Something From McDonald's?

The rock bottom of low achievement or hard times, it seems, is to end up "flipping burgers at McDonald's." Similarly, we sometimes evoke the fast food giant's name as symbolic of low-price, low-value business--that is, the antithesis of what we aspire to in the A/E profession.

But in reality, McDonald's is the epitome of success. Their distinct business model and practices have been well documented and widely praised. Indeed, McDonald's has proven to be virtually recession proof over the years. They are currently outperforming Wall Street estimates and the Dow Jones industrial average.

The recent news that they will be offering free Wi-Fi access at 11,000 restaurants across the country in January got me thinking: Have I mischaracterized them? The move is an obvious rejoinder to none other than gourmet coffee icon Starbucks. McDonald's as the next hangout spot? They already have provided heady competition for specialty coffees--at considerably less cost.

So what business lessons could McDonald's possibly teach us in the A/E industry? I thought of a few possibilities for your consideration:

Consistency creates value. Imagine you're passing through an unfamiliar small town at dinner time. There's only two choices of restaurants: McDonald's and Maxine's Grill. Which do you choose? Most of us would probably go with the former, not so much because we like it but at least we know what we're getting. Say what you will about McDonald's, but they are generally consistent in terms of the food and the experience.

Now pick the average A/E firm. If you're a client working with two different project managers, you're likely to get two entirely different experiences in terms of service and work process. Add another office to the mix and the differences are probably magnified. I've heard several clients describe their interactions with different members of their A/E service provider as "like working with different firms" under one name.

As I noted in a previous post, the path to the "branded experience" requires first achieving consistency in how you serve clients. Most A/E firms unfortunately still deliver the "random experience." Consistency may not be the highest value, but it is a necessary step in creating enduring value for your clients.

Not every need requires a customized solution. When McDonald's founder Ray Kroc first visited a hamburger stand operated by the McDonald brothers in 1954, he was impressed by their quick service and eventually imagined a whole new industry--fast food. He simplified the menu, standardized the food preparation process, and a built an organizational culture focused on the customer. That's customer focus without customizing your order, interestingly.

In our industry, we tend to speak of "off-the-shelf solutions" with disdain. That's beneath us. Yet we address the vast majority of our own needs with off-the-shelf solutions. Why? They're generally cheaper and faster--and fully adequate for the need. Do our clients really need custom designs for everything? Are there ways we can deliver our designs and other services faster and cheaper--without necessarily eroding our bottom line?

A few years ago, one of my clients was lamenting the downturn in one of their specialty markets: Fire stations, especially in small rural communities. As budgets were getting tighter, these towns were going with less expensive (and reputedly less experienced) architectural firms.

"Why does every small town need a custom-designed fire station?" I asked, "What if you had a catalog of, say, ten designs to choose from (like those house plan books)? You could customize the facade or flip the layout to give it a different look. Then charge well below the custom design fee, but at a premium for the level of effort involved." Of course, they quickly dismissed my suggestion.

The New Normal for our business, everyone seems to agree, will include increased price sensitivity among clients (as if this wasn't already a problem!). Perhaps it's time to rethink our "product line." Could there be a greater demand for more off-the-shelf solutions delivered cheaper and faster? How might you streamline your work process and work products without sacrificing client focus or profitability?

A true meritocracy elevates performance. One of the fascinating facts about McDonald's is how many of their top executives started at the bottom. Reportedly, 20 of their top 50 executives once served as regular crew members. Two of the past three CEOs worked their way up from flipping burgers to running the company. How? McDonald's places great emphasis on having a meritocracy.

If you're not familiar with the term, it refers to a work environment in which employees are promoted solely on the basis of their achievements and performance. Like your firm--or is it? The fact is many firms fall short of having a true meritocracy. There are commonly artificial, if unintentional, barriers to advancement. For example, relatively few nontechnical professionals attain the status of principal. Most non-degreed individuals, such as administrative staff and CAD technicians, have limited career options.

Of course, you could argue that few of the above exceptions ever merit moving very far in the organization. They may lack the right skills or knowledge specific to our business. But do we sometimes simply assume they can't develop these attributes because of their education or background? In many firms there is something of a class distinction between "professionals" and "nonprofessionals." Not exactly endearing terms to create a sense of uninhibited opportunity, is it?

Then there's the other side of a meritocracy--dealing with underperformers. Rare are the firms that don't struggle with this, failing to address lingering performance problems, especially among their most credentialed employees. Research and experience show that this has a deleterious effect on the office. It drags down morale, and ultimately the performance of others. But companies with a true meritocracy demonstrate much higher levels of employee engagement, performance, and retention.

Continuous improvement fuels excellence. The changes may not be evident to most of us, but McDonald's is characterized by a culture of continuous improvement and ongoing modifications to the business model. They've had a few slip-ups along the way, noticeably in the early 2000s when growth slowed and other problems arose. But they eventually find a way to trump the competition and keep the customers coming.

Change is one of the foremost challenges facing A/E firms coming through and out of this recession. Evidence suggests that we are facing a prolonged period of uncertainty and change. Client needs will be evolving and the best firms will evolve with them. Does your firm have a change-ready culture, one committed to continually improving how you serve clients and perform your work?

That, I believe, will increasingly become the standard for success. A sustained culture of continuous improvement isn't something that comes top-down from management, although leaders must lead the change. It's a grassroots effort, with staff at every level thinking about how they can do their jobs more effectively and serve the client better.

In this regard, maybe even we can learn something from a company we often think of as residing at the other end of the scale of "professionalism." Perhaps the point is that success is based not on what you do, but how well you do it.

Monday, December 14, 2009

Rethinking Shortlist Interviews

I spent most of last week helping an engineering firm prepare for an important shortlist interview. While each interview is different, there are some common themes in my approach. Some of my advice seems to diverge from the conventional wisdom in our industry. Yet I've enjoyed good success and my discussions with clients have validated my ideas about the process. So I'm devoting this post to sharing some of what I've found works:

Remember, it's all about comfort. Clients, of course, claim that other, more objective criteria are in play. But it ultimately boils down to how comfortable the client feels about the prospect of working with your firm. Acknowledging this will guide how you approach the interview, as the points below illustrate.

Strive for authenticity over polish. Many presentation coaches focus on performance--a well-crafted message, smooth delivery, professional presence, etc. I don't want to dismiss the value of good execution, but you can make a polished presentation and come off as phony. That won't help you create comfort. One of my foremost objectives is helping the presentation team be themselves--genuine, confident, enthusiastic, trustworthy.

Engage your audience rather than talk at them. The client asked for a 25-minute presentation, but do you really want to waste that valuable time talking at the selection committee instead of with them? In my experience, you can typically add some dialogue to your presentation by asking a few well-placed questions. This makes the interview seem a little less formal and imposing, which should put your team in position to better show their strengths. For more on this strategy, check out this earlier post.

Don't rehash your qualifications. You made the shortlist, so you're qualified. One of the most common mistakes is to spend much of the interview making a sales pitch. Unless the client specifically asked for such information, don't go there. Talk instead about your understanding of the client's needs, your proposed solution, and how you're going to execute the project. In other words, focus on the client instead of your firm.

Talk about the working relationship. Almost no one does and yet this issue is at the forefront of the client's concerns: What's it going to be like working with these guys? Will they be responsive? Do they understand what we expect? Obviously, if there is an incumbent, these questions become even more relevant (they already know what to expect from the incumbent). If you really want to be different, talk about your process for delivering great service to the client (see this post for more).

With time limited, say less and slow down. Most presentation teams I work with start out trying to cover too much ground in their allotted time and add more detail than necessary. Inevitably this forces them to rush through their presentation. A better approach is to do more with less. Narrow your content, avoid unnecessary elaboration (often a sign of nervousness), and talk slower. Adding a couple of seconds of silence at strategic points in your presentation increases audience attention and comprehension.

Don't go overboard with speaking parts. I've seen teams try to fit 4-5 speakers within a 20- to 25-minute presentation. It's awkward and usually puts some people in speaking roles who aren't very good at it. A better approach is to involve some team members informally, by asking them prerehearsed questions. They can then demonstrate what they know with more confidence and credibility than struggling through a formal speaking part.

Make sure your visual aids are really aids. PowerPoint has gained a bad reputation for a reason: Most people don't know how to use it effectively. When you throw 5-6 lengthy bullet points on the screen at once (which is common), your slide is competing with rather than assisting you. Keep this point in mind: People can't read and listen at the same time. Don't use your slides as notes. Bring up one brief bullet point at a time. Better still, use graphic images to illustrate your points.

Prepare for the most difficult questions the client could ask. Firms often focus all their attention on the presentation and ignore preparing for the Q&A. That's a mistake. The presentation is usually pretty open-ended; the client's not really sure what to expect. But the Q&A portion of the interview is planned by the client, often to test the competing firms. Sometimes their questions are related to specific concerns they have about your firm, and if you stumble in your answer it serves to reinforce those concerns. So try to identify those tough questions in advance and have your answer ready.

Take measures to counteract your vulnerabilities. The shortlist interview is as much a process of elimination as it is one of selection. The client is looking for both positives and negatives in an effort to distinguish your firm from the others. So you are wise to consider where your firm might be perceived as deficient and determine how you can combat those concerns.

I prefer a frontal attack. Suppose, for example, that you are preparing for an interview with a new client and the incumbent is also shortlisted. Do you simply ignore mentioning the obvious hoping the client won't notice? I don't think so. I'd suggest saying something like, "The incumbent obviously has an advantage we don't--they've had the privilege of working with you. Let me tell you what steps we propose to close the gap between them and us in terms of the working relationship." Such honesty, in my mind, helps build trust.

Monday, December 7, 2009

Favorite Free White Papers

I admit it; I'm cheap. I drive a car with almost 200,000 miles on it. I frequently eat at Subway when I'm traveling. I actually buy clothes on occasion at Walmart!

My favorite price is free. As a musician, I have an extensive collection of free software synthesizers, effects plugins, and loops and samples--very few of which I use. I also regularly download various free business white papers, most of which I don't ever get around to reading.

That's not to say I'm not discerning. Like you, I only have so much time to read. I feel cheated when I spend time reading something that doesn't have anything new or interesting to say (which describes most of the content you find on the internet). So I thought it might be worthwhile to save you the trouble. Here are a few free white papers that I heartily recommend:

Profits Under Siege: Growing Your Practice in Tough Times (Harry Mills). This paper contains some excellent insights on strategy and marketing for professional service firms. I've shared this with several of my clients, some of whom have found Mills' ideas an intriguing way to assess their clients and business model. I also recommend the author's book The Rainmaker's Toolkit, from which this white paper is excerpted. Download

Leadership That Gets Results (Daniel Goleman). From the world's foremost authority on emotional intelligence comes a helpful guide on understanding your natural leadership style. Goleman describes six styles and how they affect others, drawing from research on how leaders impact business results. Download

Getting Marketing and Business Development on the Same Page (The Bloom Group). A/E firm leaders don't think much about thought leadership or intellectual capital. They should. This white paper outlines how combining an effective content-driven marketing strategy can greatly enhance the firm's sales efforts. Download

The Customer Experience Journey (Bruce Temkin). Your brand is rooted in the direct and indirect experiences clients and prospective clients have with your firm. Those experiences should thus be the centerpiece of your differentiation strategy. This white paper draws on research in other industries, but the lessons learned are no doubt applicable to your business. Download

Avoiding the Traps in Selling Professional Services (Neil Rackham). Selling consumer products and professional services are distinctly different activities, but technical professionals don't always understand those distinctions. This white paper spells it out, noting that building trust is foremost in selling our services. Download

Putting the Professional Back in Professional Services (Greg Moore). This is another sales-oriented white paper from Huthwaite organization (check out other white papers on their website). The author explains how professionals create value for clients during the business development process. Download

Potential for What? (The Hay Group). Most A/E firms face the daunting challenge of developing the next generation of leaders (and owners). Do you know what you're looking for? This white paper provides guidance on how to identify leadership potential and readiness among your staff. Download (requires registration)

Kill Your Sales: The 6 Most Costly Mistakes You Are Making in 2009 ( RainToday is producing some of the most helpful research and insights relative to selling professional services. If you haven't signed up for their free newsletter, you should. This report outlines the most common reasons that professionals fail at selling and what to do about it. Download

Have any other white papers you would recommend? Leave any suggestions in the comment box below.

Tuesday, December 1, 2009

Is Differentiation Really Worth Pursuing?

Mired in a recession, A/E firm leaders have renewed their interest in the topic of differentiation. Two years ago, the industry was on a roll. Most firms were doing quite well without being distinct from their competitors in any meaningful way. Now facing the prospect of a long, slow recovery, the need to be different seems more compelling.

But is differentiation a reasonable goal? There are certainly skeptics. For example, in his article "The Myth of Differentiation," consultant Mike Schultz writes, "Much as firms might hear otherwise, being different isn't much of a factor in winning or keeping clients. Often, the 'we're different' message affects them negatively." He mentions performing a quick Google search on the phrase "unique consulting firm." It yielded almost 4,000 web pages. For this reason, claims of distinction are understandably dismissed by most clients.

Bruce Marcus is another skeptic. He writes, "Professional service marketers talk of differentiation, which, frankly, is baying at the moon...differentiation is overrated, and is perhaps, like branding, a myth." He questions the ability of professional service firms to claim distinctives given the nature of their business. "You can't say, 'Our firm gets better mileage' [an objective differentiator]. But neither can you say, 'We do better audits.' Or, 'We write better briefs' [meaningless subjective claims]." Few professional firms can offer evidence to support their differentiating messages.

On at least one point, I must agree with the skeptics: Saying you're different doesn't accomplish anything. And this is the extent to which most A/E firms have pursued differentiation. They make unsubstantiated claims of being different. Almost everyone does. So why should we think that clients take such marketing messages seriously?

According to a study by Suzanne Lowe, 81% of professional service firms reported that they sought differentiation as part of their marketing strategy. But she found that "a majority thought of differentiation as simply an exercise in image enhancement." The differentiation tactics most commonly used also tended to be among the least effective. (I refer to a few of these in an earlier post entitled "The Deceptive Distinctives.") Generally, the most common "differentiators" are also the easiest to implement.

By contrast, Lowe found, "The reality is that when it comes to differentiation, the more complex and organizationally deep the differentiation strategy is, the more competitively potent it is." That reminds me of an interview with Dell Computers CEO Michael Dell that I read years ago. He was talking openly about the manufacturing and distribution strategies that had given his company the edge on its competitors. The interviewer asked if he was concerned that the competition might steal their business model. "They can't do it," he replied, noting that the real difference was rooted deep in Dell's organizational culture.

"The strongest competitive advantage," writes Dena Waggoner in the Encyclopedia of Management, "is a strategy that cannot be imitated by other companies." That's real differentiation! So what does this mean for your firm? Is differentiation worth pursuing? Is it even achievable?

Probably not for the average A/E firm. Few firms have the management fortitude to create a truly distinctive company. It's hard work. It has to be. If differentiation was easy, then everyone would be doing it--successfully. Which means, of course, they wouldn't ultimately be successful at it because all their competitors were doing it too.

Does this mean that differentiation is beyond your firm's reach? Not necessarily. Differentiation in our business is largely relational rather than positional. Developing a reputation in the marketplace as a notable firm can be very useful. But success in our business is really forged at the relationship level. If you want to be distinctive, excel at building lasting, profitable relationships. Out-serve the competition, client by client by client. Then leverage those strong relationships to create new ones.

Real differentiation isn't about what you say, it's what you do and who you are. It's how you deliver distinct value to your clients. It's not easy to achieve. But it's even harder for others to replicate.