'Be strategic about business acquisition'

Janet Sanders, PhD, FSMPS, is a consultant whose clients include over 250 AEC firms, plus Fortune 500 corporations. From 1993 to 2000, she was VP of business planning and marketing for Sverdrup Civil Inc. (now Jacobs Engineering). She holds BA and MA degrees from the University of Maryland and a PhD from the University of Kansas, and is a Fellow of the Society for Marketing Professional Services.

BD+C: What percentage of AEC firms are doing a good job of business acquisition?

Janet Sanders: Relatively few do as well as they should. If you look at the entire process—from determining vision and strategic plan, setting your annual business plan fed by your sales plan, targeting potential clients with money who need the kind of work you do, identifying business acquisition roles and responsibilities, and tracking their true costs and outcomes—when you look at business acquisition in that way, you can start to see what your firm needs to do to be more effective.

BD+C: Where do AEC firms go wrong in business acquisition?

JS: Most firms don't understand the full business acquisition process.

At some point in the development of almost every AEC firm, key professionals have to delegate key functions to specialists. But “marketing” is the last thing they let go of, even after legal and accounting and HR are turned over. So they hire coordinators to assemble proposals and the “marketing” becomes “materials”—proposals, brochures, and so on. The marketing brochures become ego documents for the principals; they obsess over them. But what do clients think of them? There's nothing in them about the outcome of projects. That's not being strategic.

BD+C: What other mistakes do firms make in this area?

JS: Most firms today recognize that a single rainmaker can't feed their entire firm. So they go looking for the professional “rock-turner,” But many clients don't like to feel like something “found under a rock,” then turned over to someone else if they're a hot prospect. And the rock-turners may be finding leads that may not be the best for the firm, or ones that the firm may have the best chance of winning.

BD+C: Who should be getting the credit?

JS: Business acquisition is a team sport. Doing good work is an important part of getting good work. But the people who interface most with clients, project managers, are not rewarded sufficiently. They get little training or reinforcement; they do it all on their own clock. Firms put the emphasis on “making the sale,” but only one or two people get the bonuses. That's a flaw of the process.

What is the true metric of success in acquiring new clients? Finding the lead? Not if you're chasing and bringing in business that you may not want. The sale? If you don't know who brought it in, how can you reward the right people? And what if the sale was not profitable?

Some say this is too tough. They reject doing any metrics at all. But when you collect data on specific activities, costs, and outcomes, even over a couple of years, you begin to see connections that let you know what you should continue to do.

BD+C: What about the importance of repeat business?

JS: Firms have no definition of repeat business. Every firm claims at least 70% repeat business. What does that mean? In most firms it's a bogus number. Most AEC firms are not measuring their “share of wallet.” The client hired you again, but they hired a dozen other firms as well. Is your share of that client's wallet 80%? Or are they hiring other firms and you're getting the leavings?

BD+C: What's a good “hit rate” for an AEC firm?

JS: What people mean by hit rate varies. For some, it's when you get on the short list; for others, it's when you get on the short list, make a presentation, and walk away the winner. Sometimes the firm gets on the list and withdraws. So depending on how you define hit rate, everyone is counting something different.

That's why I recommend setting internal definitions and measuring them against your own firm's activity consistently for things like repeat clients and hit rate, and stick to it and be rigorous over time.

BD+C: What do you mean by “measure to plan”?

JS: Most firms' sales plans are very conceptual; basically, they're only revenue projections with “mystery work” the major source of income. I press for specificity: “We will increase the amount of business from that client by 25%.” That's specific.

BD+C: Who should lead business acquisition?

JS: This has to be driven from the top down. CEOs of smaller firms have to take the long-term view and set the right strategy in motion. Mid-size and large firms need a CMO, a marketing professional who can design and implement effective business acquisition strategies.