Combating Commoditization

COMBATING COMMODITIZATION
Combating
Commoditization
Delivering Business Value to Clients
Mel Lester
June 12, 2015
SC ENGINEERING CONFERENCE

What Is a Commodity?
A product or service that is widely
available and interchangeable
with what competitors offer

How big a concern is
the commoditization
of your services?
1 2 3 4 5
Not a
concern
Serious
problem

What are the primary
causes of commoditization
in our business?
Our own mistakes? Clients?
Market forces? The economy?

What are the most
serious implications for
your business?
Is the pain worth
considering a
change?

Three Primary Strategies
DifferentiationEfficiency
Stay the
Course

Provide More
Efficient Delivery
OPTION 1
ESCAPING THE COMMODITIZATION TRAP

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

Differentiate
Your Firm
OPTION 2
ESCAPING THE COMMODITIZATION TRAP

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

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

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!”

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.

Weighing the Consequences

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

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

How can your firm
better meet your
clients’ strategic
needs?
KEY QUESTION:

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

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

How can effective
marketing help
you become an
industry insider?

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

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

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

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

KEY QUESTION:
How can you become
an insider in your
clients’ industry?

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.”
Source: Ghassemi & Becerik-Gerber, “Transitioning to IPD,” Lean Construction Journal (2011)

Building an Integrated Solution
High-Value
Integrated
Solution
Strategic
Outcomes
Technical
Outcomes
Personal
Outcomes
Strategic
Needs
Technical
Needs
Personal
Needs

Collaboration as Strategy?
Construction OperationDesignPlanning
• 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

Bundling / Rebranding Success
• 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®

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

1 2
Source: Accenture, Experiencing the Brand; Branding the Experience (2005)
What Leading Companies Do

Benchmark
Expectations
Identify
Gaps
Create Service
Deliverables
Implement
Service Plan
Prepare
Service Plan
Solicit Client
Feedback
Client Experience Delivery Process

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

 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

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

For more information: Contact me
for links to articles exploring these
strategies in more depth:
mel@bizedge.biz
Don’t worry, I won’t be contacting
you further unless you ask me to!

Check this out: www.ae-resource.com
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Combating Commoditization

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