I spend much of my time coaching and training engineers, architects, biologists, geoscientists and other related professionals on the various aspects of becoming a better business person. The “business” skills they require include leadership, communications and business development to name some of the key topics. I must confess that probably the most frustrating and difficult topic to deal with is business development a.k.a. “sales”. Discussions on this issue normally end up at how they have to reduce fees and project scope in order to secure work. I understand that a lot of day-to-day work is “commodity” in nature. This often equates to small projects with a very specific and often limited range of services being provided. There may literally be dozens or even hundreds of other competitors ranging from national and global firms, right down to sole proprietors working out of their home or a shared office pursuing these types of projects. To be clear, I’m not talking about making these types of projects and the associated low fees as your target work. Although, sometimes commodity or routine services can lead to more and better work if your work quality is consistently good and if the small projects are used as a means to build personal relationships with clients. Over time these types of projects can lead to larger, more complicated and interesting work which is also generally associated with higher fees.
The objective of this blog is to encourage engineers and other professionals to stop letting the client set the agenda and move the discussions to reducing the fee. You’ll get to that point if you continue “to dance to their music”. The first step to move beyond selling on low fees is to spend some time defining your value and worth to a client. Once you have done this you can intelligently and confidently move the discussion to highlight your value proposition and focus on the benefits and solutions you offer to counter the low fee argument. Another option is you can simply end the discussions and leave. This may sound radical but it does work when you are in a no-win, low fee only discussion. It is also a powerful strategy if you don’t want to weaken or undermine your brand and reputation or get drawn into the client’s game that sets you firmly on the race to the bottom.
To help you define your place, select the best position for your services based on these three categories – Competitive, Unique and Distinct.
A prospective client takes their cues from you and assesses if you know what you are worth or if they can control the process. Knowing which category you are in will help you set up the pursuit and job-winning process and put you in a stronger position from which to negotiate and finalize the deal.
This is where you and or your firm are chasing everything that moves within a spectrum or range of work. This type of work can often be performed by junior staff members such as EIT’s or interns that are working to get experience. As long as the work is reviewed or signed by a senior person this can be a source of revenue and cash flow but it generally doesn’t make for building a successful profitable company.
Competitive work is low fee – flat fee or hourly billing. Your effort and input should only meet client requirements by doing good work without adding a lot of extra value that you don’t get compensation for. Your minimum profit margins must be obtained for competitive work.
This type of work is generally more profitable because it may involve providing services that can only be performed by a smaller and select group of individuals. These people often have advanced or specialized training and experience in areas, sectors or disciplines that positions them and their value at a higher level. The outcome or solution they provide may also require innovative thinking or application of unique resources or technology such as BIM or REVIT. Work secured in this category is generally more fulfilling and has more long-term impact and positive the outcomes that benefit the client.
Unique work is moderate to higher fee – higher hourly rates or value-based fixed fee. You contribute considerable effort and time at this level and should realize higher profit margins.
This work relates to providing highly specialized, or unique and unusual solutions. This may focus on providing proprietary on patented solutions or systems, or the ability to successfully work in very challenging or high risk environments. It’s similar to the difference between seeing a GP for medication to treat headaches versus being treated by a brain surgeon for a tumor that is causing excruciating pain and may be life threatening. Both offer solutions however only the surgeon has a distinct, and perhaps even rare skill set and ability to provide highly specialized treatment that is based on education, training, experience or even innovation that has resulted in the development of unique techniques or treatment procedures.
Distinct work generates high fees – primarily lump sum based on value and long-term benefits. The client views you as a valuable resource, thought leader and partner that provides unique perspective and is able to work through significant challenges and even create break-through solutions.
Once you know where you reside, or should be positioned, it is up to you to make the decision to stop playing the “race to the bottom” game. I find it particularly intriguing when engineers tell me they don’t want to engage in business development and sales activities because the behaviours and actions they perceive that are associated with selling are not “logical” and less than respectable. I like to ask them if reducing fees to the point where they are not making money, cutting corners or constantly trying to increase scope is a more logical thing to do.
Knowing your market position and defining the associated value proposition is the first step forward. If you chose to intentionally be the low cost low service engineering, architecture, accounting firm that’s fine. Just don’t promise more than what you can deliver. It is the equivalent of being like Wal-Mart or Costco. Both are successful and well-run firms. Neither presents itself as anything other than what it is though. They provide good products with limited or fast changing selections and options, no frills, low prices and little to no service. When we enter their stores, we know exactly what we’re getting and for the most part we are fine with that. Look at how successful both are. Unless you want to be the Costco of consulting, don’t try to compete on low price while offering high levels of service and providing innovative solutions. You can’t and it’s not “logical”. Instead, select the position you know you can occupy and potentially even own and focus on consistently performing at a high level. From there, clarify your message and communicate it in a positive and confident manner so that prospective and existing clients immediately know who they are dealing with. When you try to be all things to all people you become nothing to no one!
One last thing – if you don’t believe you offer value; if you can’t communicate it passionately and effectively; if you can’t support your claims with results and client testimonials, don’t say you can.
However, if you truly can deliver – go for it! In reality, you are probably better than you think you are and should be confidently stating what you offer and are capable of delivering. Focus on the benefits and solutions you provide because that is where value resides and that is where the money is!