combating commoditization

COMBATING COMMODITIZATION

Combating Commoditization

Delivering Business Value to Clients

Mel Lester June 12, 2015

SC ENGINEERING CONFERENCE


What Is a Commodity?

A product or service that is widely available and interchangeable with what competitors offer


How big a concern is the commoditization

of your services?

1 2 3 4 5

Not a concern

Serious problem


What are the primary causes of commoditization in our business?

Our own mistakes? Clients?

Market forces? The economy?


What are the most serious implications for

your business?

Is the pain worth considering a change?


Three Primary Strategies

Differentiation Efficiency

Stay the Course


Provide More Efficient Delivery

OPTION 1

ESCAPING THE COMMODITIZATION TRAP


Cost Cutting Strategies

Streamline project delivery practices

Control growth of your overhead

Outsource select services and functions

Hire more paraprofessionals

Use hoteling to reduce office space needs

Offer more standardized design products

Design your business for low-cost service delivery


Differentiate Your Firm

OPTION 2

ESCAPING THE COMMODITIZATION TRAP


5 Strategies for Differentiation

1. Meet strategic needs

2. Focus on a few markets

3. Bundle and rebrand services

4. Deliver exceptional client experiences

5. Master relationship building


Strategic Needs

Technical Needs

Personal Needs

Delivering business results relative to:

• Financial issues • Competitive issues • Operational issues • Political issues • Regulatory issues • Management initiatives

Levels of Client Needs 1. Meet strategic needs


Missing the Strategic Driver

PROJECT: Combine two small existing WWTPs

into one

CRITICAL QUESTION: “Why are they doing this?”

CRITICAL MISTAKE: “We can do this project!”



Communicating Value?

Lowdown Infrastructure Improvements. Earnest

Engineering has recently completed phase III of the

infrastructure improvement program commissioned by the

Town of Lowdown. During the past 5 years, three separate

CDBG grants totaling over $1.5 million were utilized to design

and construct water, sanitary sewer, and storm sewer lines to

improve utility services for existing and new customers in the

Town. Included in the projects are over 16,000 LF of 1”, 4”, 6”,

and 8” diameter water mains, over 2,000 LF of gravity sewer,

and over 6,000 LF of storm sewer including, all service

connections and miscellaneous appurtenances.

Design services utilized during these projects included a

WaterCad model of the distribution system that was used to

determine the most effective replacement schedule of

existing water lines to reduce water loss and improve

distribution pressures. Since completion of these water line

connections, the Town has observed a reduction in water loss

in the distribution system from approximately 100% to 19%.

Our project descriptions typically describe what we did… …not what we accomplished.



Weighing the Consequences 1. Meet strategic needs


Commitment

Questions

Adapted from: Rackham, SPIN Selling (1988)

Course of

Action

Questions

Consequence

Questions

Concern

Questions

Context

Questions

Needs Assessment

Problem Definition

Solution Development

The Question Progression 1. Meet strategic needs


Course of Action

Consequences

Concerns

Context Commitment

Initial Value Gap

True Value Gap

SOLUTION THAT CLOSES THE GAP

QUESTION PROGRESSION

Adapted from RAIN Selling, RainToday.com (2009)

Question Progression in Action 1. Meet strategic needs


How can your firm better meet your clients’ strategic

needs?


KEY QUESTION:



Are You an Outsider or Insider?

Client

Your Firm

Client’s Industry

Client

Your Firm

Client’s Industry

Market knowledge adds greater value to your expertise


Becoming an Industry Insider

Research your clients’ business

Talk to them about strategic needs

Get involved in trade associations

Share your expertise in writing/speaking

Develop helpful industry resources

Build relationships with other providers

Don’t confuse BD with industry focus

Hire people out of target industries


How can effective marketing help you become an

industry insider?


Marketing

Indirect Encounter

Examples: Publishing, speaking, press releases, direct mail, website

Goal: Gain the client’s interest

Sales

Direct Encounter

Examples: Networking, sales calls, presentations, proposals, negotiations

Goal: Gain the client’s commitment

Business Development

Marketing vs. Sales


Seminars and other in-person

events

Conference presentations Webinars

Articles in 3rd party

publications

Search engine optimization

PR pitches to journalists

Sources: RainToday.com, The Bloom Group, MarketingProfs, Junta42, BlissPR, AMCF

Best Marketing Tactics

Email newsletter

Articles posted on your website


Why Content Is King

A portable and readily sharable expression

of your expertise

Keeps you in front of prospective clients until the need arises

Extends your reach by providing advice accessible

at client’s convenience

Builds your reputation as a content expert

Reinforces your sales efforts

Strengthens your relationships with

existing clients


How to Build Your Content Library

Identify your target audiences

Stay abreast of what matters most to your clients

Create your storage and filing system

Develop a plan for sharing content

Track content-sharing touchpoints on your calendar

Always think about who might find content item helpful


KEY QUESTION:

How can you become an insider in your clients’ industry?



TRUE OR FALSE? “The AEC industry

is fragmented, inefficient, and

adversarial because each team is

responsible for its own silo of

work and attempts to maximize

their individual profit in the areas

of their own expertise.”


Source: Ghassemi & Becerik-Gerber, “Transitioning to IPD,” Lean Construction Journal (2011)


Building an Integrated Solution

High-Value Integrated Solution

Strategic Outcomes

Technical Outcomes

Personal Outcomes

Strategic Needs

Technical Needs

Personal Needs



Collaboration as Strategy? 3. Bundle and rebrand services

Construction Operation Design Planning

• Change orders = 4-8% of construction costs

• Coordination errors = 50% of change orders

• Average of 5 coordination errors per contract drawing Source: Bill Nigro, Redicheck


Bundling / Rebranding Success 3. Bundle and rebrand services

• Bundled technical, legal, real estate, insurance expertise

• Deliver guaranteed fixed-price remediation, liability transfer

• $571 million environmental liabilities $2.5 billion current asset value

• $4.5 billion planned development value

• 100+ sites Exit Strategy®


Closing the Value Gap

Sources: Kennedy & Greenberg, Clientship (1998); The BTI Consulting Group

What Clients Say They Value

What Consultants Say Their Clients Value

4. Create great client experiences


1 2

Source: Accenture, Experiencing the Brand; Branding the Experience (2005)

What Leading Companies Do 4. Create great client experiences


Benchmark Expectations

Identify Gaps

Create Service Deliverables

Implement Service Plan

Prepare Service Plan

Solicit Client Feedback

Client Experience Delivery Process

4. Create great client experiences


Creating a Relationship Building Process

Identify common traits among your best clients

Determine steps taken to build relationship

Develop a process for relationship building

Pilot the process with top sales opportunities

Goal: Move beyond individual competency to a reproducible winning methodology

4. Master relationship building


Availability: No entrenched incumbent?

Interest: Interested in relationships?

Accessibility: Access to decision makers?

Potential: Promising business benefits?

Values: Consistent with your firm’s values?

Chemistry: Good people to work with?

YES

Engage Relationship

NO

Pursue Transaction

NO No Go

Screening for Relationships 5. Master relationship building


Meet strategic needs

Focus on a few markets

Bundle and rebrand services

Delivering exceptional client experiences

Master relationship building

Differentiating Your Firm From the Rest


For more information: Contact me for links to articles exploring these strategies in more depth:

[email protected]

Don’t worry, I won’t be contacting you further unless you ask me to!


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