February 24, 2015

The ROI of Relationships

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by Steve Whitehorn

The financial success of any firm is built upon its personal relationships. However, many firms often fail to realize this basic truth. The endless pursuit of new clients to expand market share is an outmoded, counterproductive strategy. You can spend an overwhelming proportion of your marketing budget trying to win new clients, but in the process you miss out on the bottom-line benefits that come from nurturing existing connections.

According to Donna Fenn, contributing editor for Inc. Magazine, acquiring new clients can be costly, while existing relationships are more reliable and profitable. In fact, repeat clients spend close to 70% more than new ones. By investing in existing clients, firms earn trust and fortify their alliances. For example, if you need to renegotiate a fee during the design phase of a project, a long-term contact is more likely to approve a higher fee than a first-time client.

Furthermore, adding a new client to make up for those that leave you is actually decreasing your profits and increasing your marketing costs. If you gain a new client, but lose an existing one because you were unable to give them the attention they need, you end up with the same number of clients as before. Except now, your profit margins will suffer because it costs more to get new customers than to nurture the ones you already have.

Sometimes, however, you need to shake off the dead weight. Just as you can benefit greatly from nurturing your best connections, you should let go of those that aren’t working in your favor. Parting ways with a client may seem counterintuitive. However, difficult clients waste resources and diminish profits. Assess your client list and separate them into three categories, identifying your favorite clients, those you like or need to get to know better, and then those that you would rather not have to deal with. Hopefully, you don’t have anyone in the third category but, if you do, take stock of why you don’t like dealing with this client. Do they always pay late? Do they consistently expect you to double your workload without adjusting your fee? Are they constantly eroding your time with incessant e-mails and phone calls for things that can be addressed at your regular meetings? If your answer is yes to any of these questions, it may be time to part ways.

As an architect or other design professional, you can’t afford to spend time on negative client relationships, especially since your business is subject to unique pressures that often result in diminished budgets and strained cash flow. Think of it this way: the Pareto Principle, also known as the “80/20 Rule,” cited here by Forbes contributor Dave Lavinsky, can demonstrate that 80% of a firm’s profits are generated by 20% of its clients. By keeping strong client relationships and discarding unprofitable alliances, firms free up time and energy to devote to their top 20% clients, resulting in greater financial stability overall.

By recognizing that client relationships directly influence your profitability and by nurturing these relationships as your best assets, you can create a solid foundation on which your business can grow.

Steve Whitehorn is the author of the upcoming book, Ensuring Your Firm’s Legacy, and Managing Principal of Whitehorn Financial Group, Inc. The firm is the creator of The A/E Empowerment Program®, a three-step process that helps firms create a more significant legacy and empowers them to achieve greater impact on their projects, relationships, and communities.

 

February 17, 2015

Doctor in the Haus: Off the Radar

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Dear Doctor,

I’m an architect with a strong professional network, including over 500+ connections on LinkedIn. I’m also a member of the AIA. But my network is predominately made up of other design professionals and colleagues in the AEC industry. I feel like it’s a new year, and I need to do something different. I’d like to broaden my reach and meet new people. And I was just promoted to associate, so I need to be able to bring new business into the firm. Can you suggest some ways that I can develop a presence beyond my immediate circle of colleagues and get to potential clients? 

Signed,

Off the Radar

 

Well, Off the Radar, you are certainly asking all the right questions. And you’re in luck, because the Doctor has answers. But, I have to admit, your timing may be off by just a teeny weeny bit, because it’s been a brutally cold winter – at least for those of us who live in the Northeast – and who wants to be running around proverbially knocking on doors to meet people in this cold? However, don’t you worry, because the Doctor has some ideas! And you don’t always have to brave subzero temperatures to make important connections.

Let’s start with LinkedIn. It’s great to have so many connections. But have you tried to take advantage of the people you know? I mean that in the best possible sense! For example, you may find that one of your LinkedIn connections knows someone who you want to meet. Maybe he or she can make an online introduction for you. Or, even better, you can all get together for coffee. Just make sure that you dress warm and wear plenty of warm clothes when you go out. (I know, I know, I’m not THAT kind of doctor, but I still care about you).

Another way to build your influence is to start a conversation about a topic on LinkedIn. If you don’t want to dip your toe in such deep water, at least you can start to post updates on LinkedIn on a regular basis. It’s good to show your network that you’re alive and kicking!

As for meeting new people, well it just means that you need to change up your surroundings and the company you keep. Other architects are great, but you can’t just hang around the same people all the time because, ya know, that just gets BOR-ING. And if you want to meet potential clients, then you need to start stalking professional events where you know those folks might be (ok, I’m not advocating the creepy kind of stalking, of course, just saying that you need to put yourself in the company of people who you want to do business with). When you go to events, make sure you get there early and actually talk to people. The great news about networking events is that…just like you, people are there to network! Imagine that! Even better, if you find an organization that you like, get involved in a committee or seek out a board position. You can attend as many breakfast meetings as you like, but there is no substitute for digging in your heels, really getting involved in an organization and forging strong relationships that really matter.

Remember, too, that you can meet potential clients anywhere. Get involved in a charity or do some pro bono work for a local community group. You never know where your next client may turn up. And you’ll feel gratified by helping others – a double win!

You could also consider writing some articles about your expertise. Many trade journals and other publications are always looking for good content. This can be a great way to start building up your visibility in front of potential clients. And, even better, you don’t have to go out in this freezing weather to do it!

However you decide to begin, Off the Radar, stay warm and try not to get “cold feet”…and remember to have fun!

 

 

 

 

 

 

 

February 11, 2015

Little Things Mean A Lot: How to Strengthen Your Professional Relationships

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Whether you follow-up after a meeting with a brief, friendly email, send a client a card for their birthday, or simply pick up the phone to check-in and say hi, every “little thing” that you do to reach out to clients, colleagues, and journalists can help strengthen your professional relationships. These seemingly small actions place you top-of-mind not only with people that you want to do business with, but also with those who can help build your influence. Here are some “little” tips to help build your relationships and get larger returns as a result.

Use a personal touch. In today’s world of e-mails, texts and tweets, don’t underestimate the value of a personal phone call. Take time every so often to pick up the phone to say hi to a prospective client or to catch an editor up on your latest project. You can also stop by a client’s office to say hello or drop off a small token of appreciation you’ve picked up during a recent trip. The idea is that you let people you know know that you’re thinking about them and that they are important to you.

Perfect your timing. Reaching out is important, but don’t forget to factor in when you should be reaching out. Don’t just get in touch with writers and editors when when you want them to write about you or cover your project. Instead, suggest meeting for a coffee to talk about the stories they are covering, your treat. Make a friendly introduction to a third party that shares common interests with your writer friend. Send a thank you note and connect on social media by sending a LinkedIn invitation within 24-48 hours after your meeting. On the other hand, if you know the person is swamped, don’t pester them to meet or call them, they probably don’t have time to talk to you. People appreciate it when you have a sense of their schedule and you work around it.

Socialize on social media. Social media is an essential tool for successful marketing. You can share your work and ideas in real time, while simultaneously making connections with other design pros. Maintain an active Twitter and LinkedIn account and open up communication channels with writers, peers, and potential clients. Connect with, or ask for an introduction to, those folks you want to know. Familiarize yourself with journalist’s Twitter handles and say hi once in awhile. Of course, don’t forget to mention your latest project, too!

Really get to know them. If you take the time to find out what’s important to the people you want to connect with, your chances of establishing professional relationships with them will increase. That means understanding who the journalist is and not just what publications they write for. Make a list of personal as well as professional data about each person, ranging from their alma mater to their extra-curricular accomplishments to what non-work-related subjects in which he or she is interested. If you demonstrate that you know details about the person’s life outside work, it shows you’re interested in building a mutually beneficial relationship.

Strong professional relationships don’t happen overnight. It’s worth investing the time to develop real, lasting relationships with editors, writers, potential clients and peers because it builds a foundation that’s beneficial for your business in the long term.

 

 

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