combating commoditization
TRANSCRIPT
COMBATING COMMODITIZATION
Combating Commoditization
Delivering Business Value to Clients
Mel Lester June 12, 2015
SC ENGINEERING CONFERENCE
COMBATING COMMODITIZATION
What Is a Commodity?
A product or service that is widely available and interchangeable with what competitors offer
COMBATING COMMODITIZATION
How big a concern is the commoditization
of your services?
1 2 3 4 5
Not a concern
Serious problem
COMBATING COMMODITIZATION
What are the primary causes of commoditization in our business?
Our own mistakes? Clients?
Market forces? The economy?
COMBATING COMMODITIZATION
What are the most serious implications for
your business?
Is the pain worth considering a change?
COMBATING COMMODITIZATION
Provide More Efficient Delivery
OPTION 1
ESCAPING THE COMMODITIZATION TRAP
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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!”
1. Meet strategic needs
COMBATING COMMODITIZATION
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.
1. Meet strategic needs
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
How can your firm better meet your clients’ strategic
needs?
1. Meet strategic needs
KEY QUESTION:
COMBATING COMMODITIZATION
2. Focus on a few markets
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
KEY QUESTION:
How can you become an insider in your clients’ industry?
2. Focus on a few markets
COMBATING COMMODITIZATION
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.”
3. Bundle and rebrand services
Source: Ghassemi & Becerik-Gerber, “Transitioning to IPD,” Lean Construction Journal (2011)
COMBATING COMMODITIZATION
Building an Integrated Solution
High-Value Integrated Solution
Strategic Outcomes
Technical Outcomes
Personal Outcomes
Strategic Needs
Technical Needs
Personal Needs
3. Bundle and rebrand services
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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®
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
1 2
Source: Accenture, Experiencing the Brand; Branding the Experience (2005)
What Leading Companies Do 4. Create great client experiences
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
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
COMBATING COMMODITIZATION
For more information: Contact me for links to articles exploring these strategies in more depth:
Don’t worry, I won’t be contacting you further unless you ask me to!