Embedding successful key client management in the construction industry

[edit] Introduction

Typically 80% of turnover comes from 20% of clients and crucially 95% of profitability comes from that 20%. Your entire business is built on client relationships, and how you deal with your existing clients will determine your company's future.

The key to success is effective leadership. Someone has to decide that managing the client base more effectively is essential to the future of your company, or that if the current way of managing clients doesn’t change, then the company is at risk.

Then, to implement a key client management programme, you will need to apply energy and commitment to achieve buy-in throughout the company. Most professionals will see the value, but what invariably happens is that when they get back behind the desk, client management issues get put onto tomorrow’s to do list. In fact, achieving the key client management actions may be in conflict with achieving today’s objectives. You need to commit some additional resource and time to key client management, to achieve significant results.

[edit] Current clients vs. new clients

Historically firms place a high value on winning new work from new clients, but conversely you should only pursue new clients when:

• Current relationships are so strong they guarantee new work.
• They always include you in any new work discussions.
• You have identified all the opportunities likely to occur in their future.
• You have examined every area where you can sell capabilities within existing client.

Very few firms can claim to have fulfilled the criteria above. Work won from existing clients is more likely to be more profitable for two reasons:

1. Selling costs are likely to be much lower.
2. Profit is a factor of margin and volume.

The risks of implementation are:

• Being over-ambitious and trying to do too much. (This has a serious impact as previous attempts may have lacked realism and subsequently future attempts lack credibility.)
• Failing to up-skill practitioners and to embed culture change. (Once a programme has been introduced, unless a sustained focus on embedding the new culture is made, old habits will creep back in and the momentum will dissipate.)

So the advice is ‘Keep it Simple’.

[edit] Developing relationships

Having a clear view of the type and characteristics of the relationship that you currently have and wish to have with each of your clients is crucial to success. There may be some relationships that offer long-term potential; others provide steady levels of low-margin income.

The construction industry is a highly project-focused environment, and it is the relationships that occur within the project team that lead to success. And yet, developing and building these relationships for the future is sometimes haphazard, not least because the construction market is also highly competitive.

Contractors and consultants often complain that some clients base their selection decision on price. As a result this negates the value of the expertise and the hard work that has been put into developing these relationships and the insight that enables the team to craft a solution that they believe is better than that of its competition.

However, it could also be that the client does not understand why and how this solution is better in terms of meeting their needs. It is often the case that your team does not position and project the added value, or how they could continue to create that added value on future projects. Construction organisations don’t themselves fully appreciate the added value they deliver.

If construction firms do not understand amd communicate where they can add value to a project and do not differentiate themselves from the competition, then the client can only judge them on the lowest common denominator. And this is often the price.

To move the focus away from price, it is important to understand why existing clients keep coming back. A part of this is through understanding where, who and how we added value to their business during the last project(s).

Why not ask them? Better still get a third party to ask them and get the warts and all. Your clients will be impressed that you care enough to ask where they want your service to improve; but don’t then forget to change what they said isn’t working.

In situations where the service that clients receive doesn’t meet their minimum expectation, this will fuel their price sensitivity. You need to know if this is the case. This can then be married with your own understanding of the relationships that you have with the client. You may find that your views are aligned, or that they are significantly different – each informing your future plans and actions.

What may emerge from this feedback are actions to improve the quality and focus of the service that the client receives. These may relate to technical solutions or management processes, but equally they may concern some of the background issues, not least the management of expectations.

[edit] Setting & meeting expectations

If you want to develop a successful relationship you must meet or exceed your clients’ expectations. It is your responsibility to do what it takes to understand what the client expects. You play a role in influencing clients’ expectations through the commitments that you made during the business development process and typically client-focused organisations under-promise and over-deliver.

Managing client expectations successfully depends on understanding, influencing, setting and agreeing those expectations at every stage of the relationship:

• When discussing new projects.
• When negotiating fees.
• At the start of a new project.
• At regular stages during the delivery programme.
• At the end of the project.

Frustration on both sides is often caused, not by a failure to agree the technical specification, but by the soft issues. For example:

• How the two sides are going to work together.
• How they will communicate.
• Who the client should speak to if they have a concern about progress.
• How to keep critical momentum on a project without seeming to be authoritarian.
• How information should be presented in reports.

Everyone in the client team must know exactly what the formula is for delivering to this client’s satisfaction. Meeting client expectations is as much about the management and motivation of people as it is about producing a report on time.

Little issues like not receiving information on time or not finding it that easy to deal with a member of the team may not provoke a complaint, but will influence the decision about who to appoint on future projects. Therefore it is vital that at regular stages you establish your performance against the client’s criteria. All those influenced by your work need to be questioned, and with sincerity. You need to record their views and check that your understanding of them is accurate and then you need to do something about them.

If the service you are selling in the market place is perceived to be the same as others or a commodity where the only differentiator is price, then you may want to look at two contrasting strategies:

1. Your service can become the ‘low cost producer’ in the market. This can mean developing and combining more efficient ways of working, reducing headcount, paying lower salaries and getting people to work harder than they do now.
2. The alternative is to constantly invest in developing new expertise that adds greater value for the clients. Focus on innovation and on selling better, more leading edge services for better returns. It then becomes possible to differentiate by delivering a totally tailored service that consistently exceeds clients’ expectations. This will enable you to generate the optimum level of work from those clients, achieving attractive rates and building a reputation that allows you to secure new clients who will pay well for the service that you provide.

The correct strategy depends on what your clients and potential clients see as valuable to them.

Make time to carry out these actions and if time is taken up, decide what not to do. If not you will end up with a wish-list that doesn’t get completed and the client will get the same old service that they can get from a number of your competitors.

[edit] Selling to existing clients

‘The best source of new work is our existing client base’ is a common statement in this industry and it couldn’t be more true. Your people are onsite or in the offices of clients the whole time, yet it is rare for them to find additional opportunities for work. If they see an opening to which they can directly relate the objectives and chosen strategy of the client organisation, two things will happen:

1. They will recognise the opportunity.
2. They should feel confident enough to pursue the opportunity, raising it either with their own people or directly with the client.

A surprising number of delivery team members do not know the business objectives of their clients. It is recommended that you test how much real understanding your people have of their clients and their marketplaces. Selling skills training is the first step in enabling people to spot opportunities. Give them the knowledge, understanding and confidence about their clients business so they can recognise how something they perceive as an opportunity can fit into and support the client’s business direction.

[edit] Cross selling to existing clients

Organisations often work in silos where there may be a significant lack of integration between business units / core services and / or local offices, and this influences the clients’ perceptions of what you can deliver. What you are as a firm is what each individual client perceives you to be. Multidisciplinary, client-orientated teams provide the right environment for cross selling and truly client-facing organisations organise themselves in this way.

Without this client-oriented organisation structure, the risk is that professionals do not recommend other parts of their company; they may even recommend external professionals in whom they have trust and confidence. Today, companies realise that their fee growth ambitions can only be met by selling further services to their client base.

Despite this, directors and partners keep their colleagues from other disciplines at arm’s length from their clients. People must be encouraged to work together. To create the right environment for cross selling you have to have people who are:

• Prepared to share and delegate.
• Recognised or even rewarded on the number of introductions they provide to others within the company.

Real team working is a major facilitator of regular cross selling. Companies must have team objectives. There are often fundamental, structural, cultural, organisational, motivational and behavioural issues that need to be addressed if there is to be any hope of realising the full potential of cross-selling opportunities.

If a company wishes to cross sell effectively it has to ensure its people have sufficient current knowledge of the company’s services to be able to immediately advise the client if they have the capability to assist.

[edit] Success factors in key client planning

An effective client plan can be an extremely powerful tool in the hands of an organisation that is committed to becoming truly client focused.

The key client plan should be designed to match the needs of the client team and should suit the client that it has been written to serve. It may be as simple as a single piece of paper, or far more complicated, spanning financial, organisational, project and contact information. It may be written by one person, or coordinated by a single person from the contributions of people across the company. But to make sure that it is workable, it should start from the premise that the plan should contain the minimum information needed to focus on the client and add value to their business through the benefits offered by your company’s services.

[edit] Project Management and key client management

The construction industry makes good use of project management disciplines in their everyday work. These skills work extremely well as a way of keeping control of client management plans.

[edit] Using tools to develop a list of actions

There are a number of tools that can be uses to help identify the actions that should form a part of your key client plan. They focus on helping you to identify the state of your relationship with the client: how many people you know in the client organisation, how well you know them and how to protect those relationships against your competitors. In other words assessing both the quality and quantity of the relationship.

Although it is highly desirable to keep your key client management plan short and simple, there is some information which should be collected to make sure that you know enough about your client’s business to be able to develop the sort of relationship where it is unthinkable for them to go to anyone else.

Summary:

• Your key client plan should be as brief as possible to make sure that it is workable for you.
• The simplest key client plan includes the strategy or aims and objectives for the client.

[edit] Implementation

Mobilising key client management effectively and getting the benefits is dependent on having identified your key clients, the person responsible for the relationship and having defined the membership of the team that delivers services to the client. In practice, you also need to have identified a person who will provide the dedicated marketing support to allow your client managers and client teams to manage key client management activity alongside project delivery.

Having defined who are your 'crown jewels', key clients and valued clients, you should revisit your client list annually to assess whether you have a valued client that is growing enough to become a key client, or indeed whether one of your key clients is now working with someone else (after a take-over for example).

Whilst events that cause demotions are likely to be high profile, you should watch your valued clients to see if they now meet the criteria you have set.

To effectively manage your key clients, you need regular contact with them that is relationship focused rather than project-focussed. The client manager should be meeting with them to discuss their future strategic needs, assess their current opportunities and threats and to discuss ways that your company can help them to achieve their objectives.

The client team should also review the relationship with the key client on an annual basis, using tools that measure the strength of the relationship to drive out actions to improve it. A review may also be kicked off by a major change within the client, for example, a change in personnel with the influence to affect buying decisions.

You need to make sure that your key clients are happy with the work that you do for them and that you understand what it is about your service that they value most. To do that, you need to carry out regular client satisfaction surveys and most importantly to act on the information that they provide. You will also get valuable information about what your clients’ value about the work that you do for them. Use this information to make your marketing more compelling.

The end of every project should be finished with project closedown that celebrates the success of what went well, identifies what you would do differently and develops useful case studies, signed off by the client. The close-down meeting can also be an opportunity to examine if there are any other services that your client needs for the next stage of their development.

This article was created by --Philip Collard 10:14, 21 November 2013 (UTC)

[edit] Related articles on Designing Buildings Wiki

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