Are you substitutable? Or are you one of those hard-to-come-by professionals who has a relationship with your client that borders on partnership?
If, like most, you are not a prime strategic asset to your client and carry out routine tasks, then you are easily substitutable and your client will tend to shop around. If your client is looking for the best, rather than cheapest option, you are less substitutable, even though you may not be involved in high-level decisions.
Then again, perhaps your clients own a large portfolio of properties at a large overall cost. In this case, you rank high in strategic importance, though because the client can dictate contract terms your individual input is less important and you can be substituted.
But the few who are thought of by the client as business partners are the most valuable because their clients cannot afford to let them go. Their individual input is key to the client’s business strategy, and no one else will do.
Of course, we would all like to be partners with our clients. Unfortunately, in the present climate, with agents jostling for instructions, such a situation is rare.
The good news is that attaining such a position is not an impossibility. In training sessions for professional services firms, Kevin Walker, partner of The PACE Partnership, explains that the right strategy will help to create a client base more conducive to partnership than servitude.
Start by picking the best clients
The first step is to avoid taking on a client for which your talents and efforts will go unappreciated. If you bring an unprofitable “garbage” client in, you’re going to be spending a lot of unprofitable time and effort servicing it – “garbage in, garbage out” of “GIGO”, as Walker puts it.
Being strategic in targeting clients rather than taking on instructions from the first person to place a call will give you control over the type of relationship you enter into, and avoid GIGO clients.
Walker explains that your prospective client will not be a good long-term prospect if it is undergoing:
- rapid growth
- a change in senior management
- a change in relationship manager
- a change in quality of relationship with current property adviser
- investment in plant or property
- a relocation
- a change in technology/processes
- a trial period in new markets
- a change in market conditions driving any of the above
- difficulty dealing with legislations or regulations driving any of the above
After ticking off the items in this list, you should consider the methods used in obtaining and maintaining clients. Walker refers to this process as the “pipeline”. All too often, the employee responsible for bringing in work is also responsible for maintaining clients. This, according to Walker, is a fundamental flaw – focusing attention on existing clients ultimately means less time being available to bring in new ones, which leads to someone else being recruited. Without proper management, this situation can lead to “recruiting for redundancy”.
There is always a time-lag between business development and results. All too often, the “feast and famine” syndrome leads to panic with people ringing up prospective clients in an unstructured manner.
Walker says “I have worked with a company whose financial year finished in mid-February to the end of March. It billed 30% of its revenue and drained its pipeline dry. So by 1 April it was starting from scratch. Staff move on when this occurs, as psychologically it’s easier to build a pipeline somewhere else. Also, the customer gets wise and places an order later to save money.”
So why do firms hit a vicious expansion spiral, becoming too busy to create new business? Walker explains: “People look to tangibles and are unwilling to invest in anything intangible, such as business development. You have to make activity tangible. You need to be able to give numbers on business development. People think it isn’t measurable, but it is. The issue is not quantity of activity, rather the output of that activity.”
As well as investing more resources into business development, you should ask yourself whether your senior people are doing low-level work that is better suited to juniors who are yet to be trained in business strategy. And should partners become more managerial, when management is perhaps not their forte? A balance must be struck between producing results and managing the staff and the process.
Walker does not believe that the answer lies in employing full-time business development people. He says: “This is not usually successful in professional firms. Once roles are handed over, few have enough knowledge to manage processes. The client wants to talk to a professional, not a salesperson. There is also a danger of them promising more than they can deliver.”
So what happens when you have increased your client base, yet those clients you do have turn out to be more trouble than they are worth? Most surveyors would find it unthinkable to sack a client.
However, hanging on to clients who make demands beyond your resources can prove costly and detrimental. Remember, being selective could also enhance your reputation.
Walker proposes several options:
- let business wither – do the minimum to execute work professionally, but put no effort into client management.
- have a “be-honest” meeting to confront the client company in a professional manner with the problems your firm has in dealing with it.
- set minimum acceptable fees.
- delegate the client to less expensive, more junior people to increase profitability.
- service “at a distance”, that is, by electronic means.
- pass the client on to a partner organisation.
The Lancaster strategy
Walker also considers the work of mathematician and engineer Frederick Lancaster to be useful. His writings on military combat contain the following theorem: fighting strength equals weapons efficiency times the square of the number of troops. In other words, where concentration of firepower is possible, a larger force can wipe out a smaller force at a greater rate.
The Japanese adopted this strategy in business, penetrating one market segment after another, one by one, until they dominated the total market.
Photocopier company Canon also used the strategy. It wanted to achieve bigger sales in the UK in the late 1970s and needed to attack the market leader, Rank Xerox. Canon started by concentrating on Scotland. Only when it achieved a 40% market share there did it “attack” precisely defined regions in England, before making a push into London with a much larger sales force than Rank Xerox.
Once market penetration had been achieved, and it was dominant in those selected regions, it broadened its product range to consolidate its position.
Using Lancaster’s strategy to gain clients and expand business involves:
- intelligence information – the greater the quality and quantity of information available about the customer, market and competition, the better;
- concentration of effort – done by either splitting the competition and attacking one part at a time, or by marshalling all resources for planned attack on a major account;
- defence – identify segments of the market that can be defended and that, so far as possible, can be insulated from assaults from any stronger competitors.
To apply the Lancaster theory to win clients, first select the targets and select a task force – which is stronger than just one individual talking to prospective clients. Then agree the type of research that is needed and ready to stop if you are wasting time.
Gathering information about the target client is the next stage – use websites, public records and other sources. Reach a “yes or no” decision as to whether the organisation is still an attractive target. Sometimes saying “no” is a very difficult decision to make.
Talk to people within the target organisation to get greater insight. Decide again, whether it is still an attractive target.
Then make a concentrated attack: conduct marketing campaigns, entertain key players and so on. Establish your “bridgehead” and defend it by seeking to expand areas of work.
And stay focused. Making a choice is often seen as risky and is a difficult decision to make when “to choose means to exclude”.
But bearing the Lancaster theory in mind, spreading your professional services thinly over large numbers does not work.
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- Business development: get up and go Published 11th December 2008
- Making a Breakthrough Published 14th May 2009