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Three Problems With Relationship-Based Business Development

If you talk to enough architects, you’ll quickly realize there’s a belief in the A/E/C world that relationships are the name of the game. Not that long ago, one respected marketing and business development consultant told me that 80% of new commissions come through relationships.

I don’t want to discount relationships. They’re important to us on a number of levels and, yes, if you run an architecture, engineering, or construction firm, a good portion of your work probably does come to you through some sort of relationship.

As a business development strategy though, you need to understand that things are changing.

First problem with relationships: They go away
It used to be that if you had a good relationship with the right person, all that client’s work flowed your way. In fact, when I was still working in architecture firms, I had a client who made all the facilities decisions for an extremely active and well-funded local organization. For almost 20 years he funneled all that organization’s work to us. Then he retired.

Your relationships are with human beings. They retire, change jobs, get promoted to different positions, basically experience some sort of change that makes that business development relationship less valuable to you. The relationships effectively go away.

Second problem with relationships: They’re just one person
It used to be that if you had a relationship with the right person, you could count on them to award the client’s or the prospect’s work to you. Today, decision making teams are getting bigger. There’s rarely one decision-maker. In fact, the average selection committee today is at least 6 people.

It’s not enough to have a relationship with one person. Now that your oldest, best client has a selection committee, your relationship with the Vice President isn’t enough. Your track record working with that client isn’t enough. There are 5 other people on the selection committee and that means that everyone you’re competing against may have a relationship with someone on the committee. In a simple vote, your relationship with one person on an ever-expanding selection committee loses.

Third problem with relationships: They make us lazy
Back when you had that relationship with the ultimate decision-maker, you could rely on them to advocate for you. They knew you, they’d worked with you, they trusted you and that was probably enough. Today, they’re not the ultimate decision-maker anymore and you haven’t equipped them with the tools they need to persuade the rest of the committee on your behalf.

Relationships are based on trust. In a one-to-one context that trust is usually built on experience over time. You don’t have that time anymore. Today, your clients and prospects learn about 70% of what they want to know about you before you even know they’re interested. What’s worse, you’re trying to gain the trust of a committee instead of the one person you’ve known for years. You can’t sit back and rely on that relationship to go in and carry the room. In a multiple-decision-maker world, where your prospects think you and all your competition looks the same, sounds the same and acts the same, you have to make yourself the clear choice and gain fast trust.

It’s up to you.
Keep building relationships. That still has to be part of your business development strategy. But go in with your eyes wide open. There are three keys to making the most of your business development relationships:

Have a clear message.
You need to clearly state what your convincing advantages are … the reasons why your prospects should choose you. Those advantages have to be clear enough (and stated enough) that those advocating relationships can repeat them just as easily as you can.

It’s not about you.
As experienced and qualified as you are, the decision-makers and selection committees are only interested in the firm that addresses their pains, threats, and fears. In order to gain fast trust, you have to demonstrate that you understand what’s keeping your prospects up at night and make your messaging all about them.

Have a conversation.
What it takes to get in the room is not the same as what it takes to win the room. That old-school relationship may have gotten you to the short-list interview, but now you’re in a room with 5 other people sitting, arms-crossed wondering why they should pick you.

You don’t know them; they don’t know you. Remember when you first met that person that’s now “your relationship”? It started with a conversation. Don’t talk about yourself like everyone else does. Win the room, and the project, by starting a conversation with them, about them. They’ll feel like you understand them, you’ll build fast-trust, and you’ll differentiate yourself from your competition.

Are you relying on old-school relationships or building fast-trust that differentiates your firm and makes you the clear choice for the right projects and the right fees?

If you don’t know how to answer that question, connect with me here on LinkedIn and let’s start winning the room.

A Year in Review: Great year. Did we set ourselves up for failure?

What a year! Congratulations to everyone in a professional services firm that just finished their best year ever. I count myself as blessed because so many of you, so many leaders of firms (whether accountants, or architects, or attorneys, or contractors, or engineers) shared feedback about your firm’s successes and struggles and what you see trending in the industry. Thank you for that.

As I look back at the year, there were certainly a few common threads that wove through most of the stories I heard.

Obviously, one of the common threads was that most everyone is very busy. Another was that many are also struggling to attract and/or retain the talent they need to get the work done. In a way, those two sentences could summarize the state of professional services industries today.

There’s another thread I’ve focused on quite a bit lately because it worries me… a lot.

Even though most of the firms I talked to are busy, maybe busier than they’ve ever been, there’s an underlying current that, if they’re willing to admit it, worries almost every one of them.

Here are a few notes I jotted down during conversations this year:

  • We’re busier than we’ve ever been, but we’re less profitable than we’ve ever been.
  • We’ve won more projects than ever before, but we submitted for a record number too. Our win percentage is actually down.
  • We’re so busy and we’re hurting on the talent side so much that we’ve put a hold on developing new business. I’m afraid not being able to perform will hurt us more than passing on a few projects.

I don’t want to dwell on the negative… it has been a great year, but these kinds of comments leave me wondering: How will you leverage this year’s success for even more in the coming year? I hope this year wasn’t the setup for a disaster to come.

Here are the two things I’d like you to weigh in on:

  1. If you were very busy, ever busier than ever this year, were you more profitable than you’ve ever been or have you been working harder for less margin?
  2. If you had more work than ever this year, were your win rates actually up?

My fear is that many professional services firms, while having a successful year, have simply been propped up on a very strong economy. I hope you’ll prove me wrong, but if I’m right…

If professional services firms aren’t getting better at winning, what will happen when the economy inevitably slows down and competition gets tighter?

We’re already seeing signs that things are slowing down.

A couple more notes I jotted down:

  • We just had a project post-mortem with a client we’ve worked with for 15 years. Everyone was thrilled. The next week we found out they were looking at different delivery methods and fee-shopping for their next project… The. Very. Next. Week!
  • We’re a $1.2 Billion company and 90 percent of our work comes from repeat clients and referrals. We have a team of 6 responsible for our business development, but they’ll all be gone in the next 8 years.

If you’re responsible for developing business in the professional services world, I’ll guarantee you’ll tell me it’s a relationship-driven industry… and you’ll be right.

Relationships are important. They need to be developed, maintained, and cherished. There’s a good chance you wear “90% of our work comes from repeat clients and referrals” on your best blazer like a gold star. You’ll insert your own number between 75 and 90, but everyone says it.

It’s great when there’s plenty of work going on and those relationships are paying off, but what happens when projects start to dry up? What happens when those relationships start to fee-shop or the people that maintain the relationships aren’t in your firm anymore?

I know you’re busy and I hope that continues for a long time. Congratulations on a successful year, but please, please make sure you work hard in the coming year to get better at winning more of the right work at the right fees. It’s the only way to avoid disaster when the economy slows, commoditization is magnified and irrelevance is the lens your clients and prospects see your services through.