Thursday, November 17, 2011

Strategic Selling in AEC Part 3: Why Have a Sales and Service Focus?

This is the third of a four part series of posts on the sales culture of the Architecture Engineering and Construction industry (referred to below as AEC): how it needs to evolve to meet the demands of a rapidly changing industry, and what you can do in your company to integrate sales and customer service more fully into your entire organization.

If you’re an AEC firm, I advocate retooling your business culture to be more sales and customer focused for a host of reasons: perhaps the first would be that true professional sales people will be able to see all of the endless list of problems and challenges detailed above as opportunities, for that’s indeed what they are. Another crucial reason is that you can probably assume that many of your competitors are likely to be stuck in an anti-sales mindset for the foreseeable future, so you can have an advantage in starting a new approach sooner, although the smart AC companies have been onto this for sometime. Let’s look at it from a purely business standpoint.

A typical sale in AEC, let’s say for an architectural firm, involves many millions of dollars, a highly consultative process with many partners, vendors, solution providers, design consultants, and government agencies. There’s always lots of grinding rounds of qualification and competition even to get to a bid situation. And there’s always considerable negotiation around fees and budgets, before and after winning the project, if you’re lucky or skilled enough (or both) to do that. There’s a very long sales cycle, years in many cases, and the project cycles are quite long, meaning that considerable sales activities and negotiations always happen after the project is won- upselling, change orders, scope changes, revisions to designs, schedules, budgets, and deliverables. And presenting conceptual designs and solutions also involves “selling” of sometimes new and crazy ideas. All of this costs a lot of money relative to the fees that can be billed to clients- I don’t have the data, but I’m always amazed at the average cost of sale for an architectural firm. These days it’s higher than ever, especially since most clients expect a lot of competitive design for free, even if it’s not specifically requested in an RFP. This all adds up to a very complex, long term, high stakes, consultative sales process with many moving parts. Why would you not want a seasoned, highly competent sales professional (or better yet, a team of them) in charge of this process?

The sales process in AEC is generally ideally suited for solution selling, as most projects have a multitude of problems to solve before the project is awarded. So many project pursuits for larger projects involve full schematic design phases that there is significant overlap between sales activities and design activities in terms of teaming with clients to solve problems. These phases are good opportunities to integrate sales and design activities. Designers may not be comfortable with sales but are usually hardwired for solving problems.

Let’s look at a few opportunities. Green/sustainable design has been mainstream for years, and firms that specialized in it five years ago have a big head start. But if you’re late to the game, there are still ample opportunities to retool and develop sustainable practices. Growth in this sector is projected to be 250% by 2015. Many innovative firms are rending toward integrated services beyond their core disciplines of architecture, engineering and construction. many new service sectors: strategic planning, extended programming and planning, building commissioning, high performing envelope and fa├žade design, modeling, user experience assessment, existing building assessments, branded environments, LEED, energy services, operations and maintenance, to name a few. Compliance based work (energy and water efficiency, GSA, military, federal mandates) LEED based design will provide a rich source of business as codes governing energy and water use continue to change. Tax incentive driven projects, based on energy and water rebates will also provide work. Commercial developers, institutions, and government agencies all need innovative solutions for higher performing buildings and more flexible and sustainable environments, with better indoor environmental quality that promote work/life balance and employee health and productivity. Green and sustainable retrofits will provide a big source of business, as capital spending for new construction remains low and building owners rethink the ROI on their existing building stock. As owners as they become more sophisticated about AEC services, they will go direct to consultants more and more, and firms that provide a collaborative, consultative, integrative sales and design process will have a competitive advantage.

Next: Part 4: How to Rethink the Sales Function

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