One of the most challenging and perplexing problems for an architectural, engineering or construction business is putting return-on-investment value for marketing and business development activities.
Sure, you can count the hours required to prepare an RFP response, or answer a tender. But if you’ve been in business even a short period of time, you know these expenses don’t truly reflect the costs or the important behind-the-scenes work that needs to be done.
And there’s a paradox in that an RFP/response for a well-established current client (or closely related referral potential client) will be infinitesimally less expensive than a green-sky new prospect, especially where you haven’t even the shade of existing connections or relationships.
If you push the numbers out, you’ll discover something like the 80/20 story, where 80 per cent of your business arrives relatively easily from repeat and close referral clients, and the remainder is “everything else”. (My ongoing poll puts it at 29 per cent for repeat and 42 per cent for referral business, or 71 per cent overall for these two categories.)
Since these two business-gathering sources result in more than two-thirds of your total new business, and cost virtually nothing to manage, why should you spend anything on other initiatives?
The problem here is nothing is ever that simple. Much of the most effective work we do in the marketing/business development area has little direct immediate benefit, but proves vital in terms of success.
For example, I can tell in my own business that a salesperson will soon fail if he or she spends all day trying to sell, especially over the phone or by email (because it is “efficient” and the rep can reach many clients, quickly). The representatives who do the best spend far more time in the community, volunteering for association committees, helping out at events, and generally seemingly avoiding overt selling activity.
In my own case, I spend countless hours writing this blog, books, articles and helping out with association and community activities, all of which do not have any immediate obvious business development value. Yet, over time, these initiatives support the brand and help us to attract worthy results.
You can sometimes build metrics around these processes. But even when you do, you come up with more anomalies.
For example, a successful US AEC practice tried to determine its highest probability of success in responding to RFP inquiries. It discovered the highest success correlation related to?the amount of time principals/owners spent on the project before the go/no go decision date. It seems that in this situation, delegation sent a negative signal: If the high-billing-hour?principals were passionate about the work, it would happen; if they weren’t it wouldn’t.
These observations lead me to some challenging conclusions:
- Undeniably, anything you do that enhances repeat and referral business will pay off far more than any other marketing initiatives you can follow. You should give these activities the highest priority.
- You need to be careful about efficiency because the best results often occur from indirect community-building activities. One solution may be to mandate a certain percentage of billable/marketing time for non-business activities, something like Google’s 20 per cent free-time initiative.
- Sure, you need to measure your results and initiatives. Just be careful to assess whether what you are measuring really takes you where you need to go. And this can be challenging for a long-cycle business such as winning work on major infrastructure projects.