Tuesday, June 25, 2013

Don't Overlook the Consequences of Client Problems

When selling your firm's services, keep this principle in mind: The depth of the problem defines the value of the solution. In other words, the more painful, costly, complex, or debilitating the problem, the more the client is willing to pay for the solution your firm offers.

Years ago, I was introduced to the idea that the value of a service is largely defined by whether the client or the service provider is driving the value proposition. When the client clearly understands the problem and can prescribe the needed solution, your service is less valuable. But when the problem is complex and the right solution is more difficult for the client to determine, the value of your firm's insights increases.

So one of the keys to differentiating your services and increasing your profits is doing an effective job helping clients diagnose their problems. Unfortunately, A/E firms often work in the opposite direction, taking a multifaceted problem (from the client's perspective) and reducing it to little more than a technical problem. What this means is that we become perceived less as problem solvers and more as specialized service providers. Which do you think is more valuable?

One way to increase the value of your solution is to connect it to solving not only the technical problem, but the consequences it produces. Imagine a scenario where the largest employer in a small town changes its wastewater pretreatment system, leading to periodic violations of the town's wastewater treatment plant permit limits. As an engineer, you can quickly diagnose the technical problem. But the real problem is much more complex, isn't it?
  • The business changed its pretreatment system because of excessive costs and operational problems.
  • Given the business's substantial contribution to the local economy, the Town has limited political capital for pushing it fix the problem. Plus there is already tension between the two parties over other issues.
  • The State DEQ is holding up approval of an amendment to the Town's NPDES permit allowing for land disposal of sludge pending resolution of the pretreatment problem.
  • With the delay, the farm owners who had agreed to accept the land disposal are getting antsy because of growing concerns by neighbors about the practice.
  • The mayor, who is up for reelection, has strong ties to the business in question, but also is facing pressure from citizens who use the river for recreation downstream of the treatment plant.
I could go on with the complications associated with this scenario, but you get the idea. There are many consequences arising from the pretreatment system changes, and most of them aren't technical in nature. Which engineering firm will be able to connect the dots and offer a comprehensive, value-added solution?

One did. They devised a solution that involved modifications to both the pretreatment system and the Town's facility, and at a cost that both parties could swallow. They negotiated with DEQ to gain approval for this novel approach. And...they led a couple of meetings with concerned local residents to explain the solution and, as a bonus, allay fears about the plan for land disposal. And...you probably guessed it, the mayor was prominently involved in the dialogue.  

This sequence all started when the engineering firm helped the client better understand the far-reaching consequences of the technical problem, how they were connected, and how a solution could be developed that addressed most if not all of them. For this, the Town was willing to pay them significantly more than any of the competing firms proposed.

In the classic sales book, SPIN Selling, author Neil Rackham describes how the best sellers in his extensive research went beyond simply characterizing the buyer's problem to helping the buyer understand the implications of the problem. This more accurately defines the true value proposition—one shaped by the seller, by the way—and enlarges the need for and the value of the solution. You might illustrate the initial value proposition this way:
This is often how the client perceives the situation, or at least defines it relative to procuring services from a firm like yours. But once you've helped the client develop a deeper understanding of the problem and its various consequences and risks, you are in a better position to redefine a broader, more valuable solution than the client initially envisioned, as depicted below:
Of course, there are other factors, such as budget limitations or long-entrenched buying habits, that may prevent a client from agreeing to your enhanced solution. But over the long run, uncovering and addressing the consequences of client problems will add value to what you do and help you combat the commoditization trend.

In exploring the client's deeper needs, you may find it helpful to use what I call the "Question Progression." Another finding of Rackham's research is that a certain sequence of questioning works best in developing your expanded value proposition. The Question Progression is my modified approach, which you can read about here.

Monday, June 17, 2013

Tips for Client Telephone Interviews

It's not a common practice, but a number of clients are using telephone interviews as a step in their procurement process. It saves money but can cost you plenty if you're not prepared for the special nuances involved in making a good impression over the phone.

There are a number of drawbacks in doing telephone interviews, the most significant being the lack of visual contact. This eliminates nonverbal communication, which comprises over half of the message sent and received in face-to-face conversation. It's important to take steps to compensate for this missing element in your dialogue with the client. Here are a few tips:

Do "blind" rehearsals. Phone interviews are variously constructed depending on the client's preferences. But most offer you the opportunity to prepare in advance, whether it's making a brief presentation or responding to questions that are revealed in advance (or that you anticipate being asked). Much as you would in rehearsing for a typical shortlist interview, you want have team members practice delivering their message or response. Only in this case, the audience should be sitting facing the opposite direction, hearing the speakers without the benefit of visual contact. This enables them to better sense how it will be experienced by the client.

Tip: Better still, do your rehearsal over the same speakerphone you will be using for the interview, with your test audience listening in from a different location. That's a truer test of what the client will hear, and can help you identify the need for steps such as better mic positioning or removing background noise.

Vary your voice tone. A monotone delivery should always be avoided, but it's particularly annoying when heard over the phone. Without the benefit of facial expressions, it's up to voice tone to give your words context and feeling. Make sure you sound enthusiastic and confident, but avoid speaking so loud that it garbles your voice at the other end.

Tip: Stand up. Use body movement and gestures as if the audience was present in the room. This will naturally give your voice tone a boost. (A good quality wireless headset is recommended.)

Punctuate your points. In coaching presentation teams, I often have to encourage them to add "contours" to their talk. This involves giving your presentation a clear structure, with key points easily distinguishable from supporting information. This is particularly critical in a telephone interview, since without visual feedback the key points can be readily missed. 

Tip: One simple way to accomplish this is to enumerate your key points. For example, say, "There are five primary steps we will take to ensure cost control. First... Second... (etc.)."

Periodically review what you've said. A reasonable amount of repetition is advised to increase your audience's retention of your key messages. You should identify 3-5 key messages in advance of the interview, critical points that you think are most important—and that you want the client to remember after the interview.

Tip: At every transition in your talk or conversation (junctures when you move from one topic or segment to another), quickly review the main points of the last segment (or the previous segments).  

Be concise. This is another universal principle of good communication that is especially important over the phone. People are more likely to tune you out or be distracted when listening over the phone versus in person. Don't give them a reason to by saying more than needs to be said.

Tip: Make this a point of focus in your rehearsals: Getting to the point without unnecessary elaboration. Have your test audience listen for wordiness and point out where the message could be delivered with greater efficiency.

Monday, June 10, 2013

The Benefits of Market Focus

There are certainly advantages to serving multiple markets, especially in a tough economy. Among A/E firms that work with private developers, for example, those that were diversified typically fared better than those firms that specialized in residential or commercial land development during the worst of the recession. 

Even in a robust economy, different markets grow at different rates. Market diversification may elevate your chances of being in the right place at the right time. Many firm principals consider it a less risky strategy than focusing on a few markets. They can point to firms that suffered when their narrow market niche took a turn for the worse.

But market diversification has its own shortcomings. Many firms boast of their breadth but offer little depth in terms of client sector knowledge, specialized expertise, or marketplace reputation. Most clients value firms that understand their business—not just the services these firms provide—and are often willing to pay more for that insight. Such firms are better positioned to meet clients' higher-value strategic needs

Diversified A/E firms often face organizational hurdles as well. It's harder to pool resources, build strategic consensus, collaborate across business units, avoid turf battles, or cross sell services when spread across multiple markets. While in theory market diversification offers greater flexibility to respond to shifting marketplace trends, I've seen this ability frequently hampered by internal competition. Concentrating management attention and resources on a promising market sector typically means diverting it from another sector or more. Many firms find this difficult to do, and their diversity can end up constraining rather than enabling their strategic dexterity.

The most successful A/E and environmental firms I've worked with have typically exhibited market focus. Among mid-sized firms, these usually have derived at least 60-70% of their revenue from 3-5 core markets. (Large firms, of course, can serve many more markets and still have substantial resources devoted to each.) These firms have often offered a broad range of services, but they were targeted to those few select markets.

By contrast, among the poorest performing firms I've worked with, they usually fit one of two profiles: (1) served multiple client sectors but lacked depth in any those sectors or (2) largely served a single client sector that had experienced decline (e.g., private land development). Interestingly, in both cases, the firms had developed little distinction in the marketplace. Whether overly broad or overly narrow in market focus, the generic firm will struggle in today's economy.

So let me offer some advice to those firm leaders who recognize the need for strengthening their firm's market focus:

Pick a few target markets to focus on strategically. Your selections may be guided by a number of criteria—current revenue, sector growth potential, firm experience, staff expertise, etc. This may or may not involve choosing to exit other sectors, but I'm not suggesting ignoring other markets on which you depend or compromising your financial performance. The intent is to give special attention to positioning your firm as a key player within your target markets (which are likely defined both by client type and geographic area).

Assemble market sector teams. You want to assemble individuals who will form your "centers of excellence" for each target market. Each team should have a committed leader to keep the effort moving forward. These teams will be responsible for driving the activities mentioned below. Give them this particular charge: Determine how to increase your firm's market share within your target markets.

Do your research. Client and market research seems to be an area of weakness in most A/E firms. I wrote on this topic in a previous post in which I cited a survey that indicated that firms that do frequent research grow at a much faster rate and are more profitable. In this case, developing your credentials within your target markets requires considerable knowledge about those markets and key clients. Adequate research is essential.

Actively participate in relevant trade associations. This involves more than attending meetings and conferences; you want to contribute to the organization's mission. Committee or task force participation is strongly advised, especially where you can help address legislative or regulatory issues of importance to that industry. This positions your firm as an advocate for clients in that industry, not just another firm seeking to do business with them.

Target marketing efforts on those core markets. I've written much in this space about content marketing, providing information and insights of value to clients rather than the usual self-promotion. Deep understanding of your clients' business enables you to better serve their needs and interests through your marketing. Don't make the mistake of focusing mostly on your firm's technical services or projects. Address those issues of greatest importance to clients. This helps establish you as a "thought leader" within your core markets.

Set up a system to share market information. You want to build organizational competency within your core markets, which means sharing the information and insights you accumulate through research and experience. Many firms default to simply posting this information on their intranet, but that's far too passive an approach to facilitate knowledge sharing. Instead you want to schedule regular meetings or conference calls for your market sector teams to share this information.

Finally, let me link this effort at market focus to avoiding what I think is a common strategic mistake, which is to seek growth primarily by expanding into new markets or geographies. Many firms I've worked with, frustrated by the stagnation or commoditization within their current markets, have been too quick, in my opinion, to look for greener grass elsewhere.

This defies the counsel of the strategy gurus I most respect—people like Michael Porter and David Maister—who say that it's best to go deep before going broad. In other words, seek to build competitive advantage where you are, with clients and markets and services that you know best, before trying to create it in places where you have little if any standing.

Start with your core markets, defining and executing strategies for growing your market share and strengthening your competitive positioning. Once you have built a competitive advantage here, then seek to export it to new (similar or related) markets or geographic areas. Moving laterally before deepening your market position often dilutes your business development efforts, spreads resources too thin, and diminishes profitability.

Wednesday, June 5, 2013

The Problem with Selling

There is a fundamental flaw in how most architecture and engineering firms market and sell their services: The focus is on the seller rather than the buyer. We know this intuitively but aren't sure what the alternative is. If we are to contemplate a better approach, it's advisable to first characterize the problem with the current method.

When I do sales training, I always start by asking participants what their immediate impressions are when I mention the word salesperson. As you would expect, their responses are overwhelmingly negative. Common descriptions include fast-talking, aggressive, self-centered, deceptive, dishonest. The prominent impression is that salespeople are more concerned about their needs than the buyer's needs.

The assessment is harsh and probably unfair to most sellers. But the perception is real, and you dare not ignore it when selling your firm's services. Why? Because if the prevailing image of salespeople is negative—and various surveys show that selling is the most distrusted profession—is there any reason to think that prospective clients view you differently when you're in the sales role?

It works but needs to work better. Of course, you can argue that you're making sales. So are other salespeople. But wouldn't you like to find a better way? There's an interesting contradiction I've observed over the years. Most technical professionals are a bit uncomfortable in a sales role because of the stigma attached to it. Yet when I've accompanied them on sales calls, I've witnessed the very behaviors that they say they dislike about salespeople—talking too much, not really listening, focusing on themselves rather than the buyer.

How can this be? They don't have another model to follow. Selling in our profession is naturally patterned after the selling we've observed elsewhere and have perpetuated in our firms for decades. Plus it's worked. Until recently, most A/E firms were doing quite well using the traditional approach to business development. But I would argue that the old way isn't good enough anymore in the wake of the Great Recession.

Motives matter. Why are salespeople so distrusted? Trust is built on an understanding that both parties have the interests of the other in mind. Fair or not, most of us seem to think that salespeople are generally more concerned about their own interests. Perhaps it's the long tradition of unwarranted cold calls, pushy sales pitches, lack of complete candor, and pretending to care. What's interesting is the fact that most people love to buy, but we don't trust the motives of those hired to help us buy.

Is this relevant to your firm? Well, when does interest in selling peak in your office? Is it not when you really need the business? If that's what primarily motivates you and your colleagues to get out and sell, don't think that clients don't notice. Here are some common sales behaviors that reinforce the notion that you're not acting in their interest:
  • Cold calls for the simple purpose of introducing your firm
  • Sales conversations that focus on talking about your firm's qualifications
  • Scheduling sales calls primarily for your convenience ("I'm going to be in your area...")
  • Disregard for providing value for the client's time
  • Using nontechnical salespeople who lack the skills to address client needs
  • Asking for information without offering help or advice
  • Marketing predominantly for self-promotion
  • Proposals that focus on your firm rather than the client or project
The Golden Rule is a good starting place. Every buyer is different, so it's necessary that you learn what you can about what he or she wants and expects. But generally you'll do well to apply the Golden Rule—treat buyers the way you like to be treated when you're in the buying role. This involves flipping the focus from yourself to the buyer.

Let me encourage you to evaluate every facet of your business development process in this regard. You'll find many tips for buyer-centered selling by clicking on the links above and using this blog's search bar. Client focus is a popular theme among A/E firms these days, yet it's rarely evident in how we develop new business. It's time to break the mold and shed the stigma about selling. Do a better job serving buyers' interests and see how that ultimately better serves your own.