Going after any and all jobs lowers probability, thus hampering success, and can damage relationships with established clients.
As with most things in life, there is a point of diminishing returns when it comes to going after new work in the A/E/C industry. This is especially true when times are good, as they are now for many firms. Lots of opportunity does not mean that firms need to be going after everything that comes their way. It means they can now be choosier and more strategic about the work they pursue. Many firms are doing more proposals and interviews than ever, yet they have not increased the size of their marketing and business development support staff proportionately. This is leading to decreased win rates as evidenced by the industry average dropping from 33% to 22% over the past year.
Going after everything limits the creativity and customization on proposals, interviews, and other business development support activities that set you apart from the competition. I see many firms doing two to three times the proposals they did just three years ago, but without any increase in marketing staff. Thus, higher probability and higher profit potential are being cannibalized by lower probability and lower contribution. Furthermore, the obsession with new work can erode your relationships and focus on older, established clients and the untapped opportunities with them. Here are a few simple business management techniques firms can employ to fight the tendency to go after lots of new work at the expense of better contracts and established clients.
- Be more strategic in every pursuit. Firms need to be strategic about what clients they pursue and who in the firm is tasked with leading those pursuits. This speaks to the need for annual marketing plans that outline what markets the team will pursue, what specific clients, and who in the client organizations the firm will target for development. When firms come to the realization that they are going after too much work and not getting the returns they want, oftentimes the knee-jerk reaction is to implement a go/no-go process or further complicating the one they may already have. Go/no-go processes can be helpful but they need to be very simple and most are not.
- Relying on a long form of if/then statements can limit the one activity that you rely on for growth – the acquisition of new work. Go/no-go processes should focus on adherence to the marketing plan. If proper attention and strategic planning were put into the marketing plan, then decision making for what to pursue becomes easier. At the end of the day, all firms need to be thinking in terms of return on investment: What returns can we reasonably expect compared to the investment needed for each individual client and pursuit?
- It’s about matchmaking. When considering what clients to target, pursue those clients that have similar values to your firm. Are you a firm with ambitious growth plans that is trying to create the best place to work for your employees? Then an ideal target client could be all the municipalities that are the more ambitious and dynamic when it comes to attracting residents and investing in the infrastructure that attracts families and businesses. Those shared values can really improve your ability to develop a meaningful relationship and thus your chances of winning work. Also, match your people to the clients in these organizations. Make sure the people tasked with developing relationships have similar values, backgrounds, and other features that drive relationships. This is still all about relationships for many firms!
Don’t forget your core clients. The euphoria of winning a new client can sometimes eclipse our focus on existing clients. Winning new clients and entering new markets is critical for every firm in the industry. However, we must always consider the opportunity for growth with existing clients as well. Most firms do not fully exploit the opportunities with their existing clients. That established relationship is gold and that could easily offer additional work or may offer another part of your company an opportunity to do work. This is called cross-selling; the action or practice of selling an additional service to an existing client. To be effective at cross-selling, your people must be fully educated on all of your services and have the incentive to sell those services even though it may not directly benefit them or their team. It takes an intentional and intense focus to provide the level of client service needed to both existing clients and new clients.
The bottom line is firms need to be more strategic in their pursuits. This is an age old problem. Firms go after everything and do better when times are good, and then decline when the market sours. Being more strategic and resisting the tendency to go after everything is the first step in diversifying the firm and setting it up to be more resilient in any market. Furthermore, being more strategic allows the firm to be more profitable as they focus more resources on the pursuits that have a higher potential for being profitable and have a higer probability of winning. Integrating an ROI (Return on Investment) mindset in your culture can revolutionize your pursuit of work and have a dramatic impact on the future of the firm. Stop being the everything firm and start being more strategic in your pursuits today.
Chad Clinehens is Zweig Group’s executive vice president. Contact him at email@example.com.