2016 CRW - Keynote Session: Driving Best Practices in Business Development
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The document discusses best practices for business development in the construction industry. It notes that while the industry has seen nine years of growth, many firms do not have formal business development plans or dedicate enough resources to business development. The document provides strategies that top contractors use for developing new business opportunities, focusing on the right customers, differentiating from competitors, and engaging the entire organization in business development efforts.
2016 CRW - Keynote Session: Driving Best Practices in Business Development
- 1. 0© 2016 FMI Corporation Driving Best Practices in Business Development Specialized Carriers & Rigging Association Gaylord National Harbor | September 22, 2016
- 2. 1© 2016 FMI Corporation Business Development - Industry Context 6 2 3 4 9+ 1 1 2 5 6.8x ‘07 32% ‘90 ‘82 ‘75 Ninth year of growth Prosperity amidst uncertainty Uneven recovery Energy, Industrial, Civil Infrastructure Demand 7 64 Magnitude of Downturn Duration of Downturn Years to Rebound # of Downturns since 1964 Prior Three Industry Downturns ‘75 ‘82 ‘90 ‘07 ‘75 ‘82 ‘90 ‘07 US Recessions Residential Non-Residential Total E&C
- 3. 2© 2016 FMI Corporation Construction Put in Place Through Time
- 4. 3© 2016 FMI Corporation Our company ________ has the right amount of the right type of work with the right customers to meet our strategic goals
- 5. 4© 2016 FMI Corporation Intentional or Accidental? How much of our success is merely a reflection of a sustained recovery?
- 6. 5© 2016 FMI Corporation How Industry Firms View Business Development
- 7. 6© 2016 FMI Corporation 305 CEOs, Presidents, Owners, Execs 73% less than $100 million 36% less than $25 million 82% regional 15% national 3% international 69% profitable 31% break-even or loss Construction Industry Research
- 8. 7© 2016 FMI Corporation Who Is Responsible for Business Development? Driver Joe Foreman Phil Bus Dev Ken CFO Bob CEO Richard
- 9. 8© 2016 FMI Corporation ‘The work of understanding what the customer values and systematically delivering that value over the life of the relationship’
- 10. 9© 2016 FMI Corporation Reactive firms do poorly in tightening and declining markets
- 11. 10© 2016 FMI Corporation What Does it Really Take?
- 12. 11© 2016 FMI Corporation Market Truths • You are perfectly designed to get the results being generated • Courageous decisions are based on facts • What facts do you need to go all in?
- 13. 12© 2016 FMI Corporation Market Success Strategy Built on Facts Our Vision for the Future Climate Competition Customers Our Company Execution
- 14. 13© 2016 FMI Corporation Vision of the Future
- 15. 14© 2016 FMI Corporation Competitive Assessment Built on Facts • Where are competitors positioned in the mind of customers? • What do other competitors promise and deliver? • How can you differentiate?
- 16. 15© 2016 FMI Corporation
- 17. 16© 2016 FMI Corporation For ‘best of class’ contractors, business development is central to the company’s overall strategy.
- 18. 17© 2016 FMI Corporation 48% of the companies we surveyed have NO formal business development plan tied to the strategic direction of the company
- 19. 18© 2016 FMI Corporation Creating New Outcomes Time Results What Will It Take?
- 20. 19© 2016 FMI Corporation Your Company’s Go-to-Market Strategy is Driven by Strategy = Revenue x Time New Customers Existing Customers and/or
- 21. 20© 2016 FMI Corporation Share of Wallet or Market Share? Potential Customers ServicesCustomersBuy 0 100%0 100% Market Share Share of Wallet
- 22. 21© 2016 FMI Corporation What Does it Really Take to Win? Go-to-Market strategy Focus/persistence Favorable markets Customer demand Project win strategy Pricing for profit Competitive advantage Skills and processes to execute Talent to deliver An eye for the future
- 23. 22© 2016 FMI Corporation Mid-size firms ($100MM to $500MM) spent less as a % of revenue than small or large firms and paid a price in terms of lower hit rates and thinner margins
- 24. 23© 2016 FMI Corporation What Do Customer Really Want? • ___ Quality Work • ___ On Budget • ___ On Time • ___ No Surprises • ___ Personal Attention • ___ Dependability • ___ Returned Phone Calls • ___ Good Communications
- 25. 24© 2016 FMI Corporation These are Basic Customer Expectations Quality Work On Budget On Time No Surprises Personal Attention Dependability Returned Phone Calls Good Communications Nothing on this list will ensure your market position or continued favor with customers….
- 26. 25© 2016 FMI Corporation Differentiation Starts Here
- 27. 26© 2016 FMI Corporation Hard for Different Reasons
- 28. 27© 2016 FMI Corporation Customer Research • Market Size and Forecast • Company Image Analysis • Customer Buying Practices? • Customer Satisfaction and Loyalty
- 29. 28© 2016 FMI Corporation A Key Difference of Opinion Believers: 80% of firms believe they provide superior service vs. Achievers: 8% of customers agree
- 30. 29© 2016 FMI Corporation Why You? The number one source of competitive advantage contractors in our survey: REPUTATION.
- 31. 30© 2016 FMI Corporation Why You? Marketing Sales Proposals & Presentations Negotiations 82%
- 32. 31© 2016 FMI Corporation 61% Why Do Customers Leave?
- 33. 32© 2016 FMI Corporation The real value is how your reputation and relationships translate into specific value for your current and potential customers
- 34. 33© 2016 FMI Corporation Three Key Questions 1. Which are the best customers and projects for your company? 2. How do you get pre-positioned to win the right kind of opportunities? 3. Why should the customer pick you over the other good contractors?
- 35. 34© 2016 FMI Corporation 1 out of 10 of the least profitable firms we surveyed listed price as their number one competitive advantage
- 36. 35© 2016 FMI Corporation Competitive “Sweet Spot” Your Strengths Your Weaknesses Competitor Strengths Competitor Weaknesses Customer Needs
- 37. 36© 2016 FMI Corporation Give the customer a reason to pick you…. The best contractors know their value proposition at a market segment, key customer and project level
- 38. 37© 2016 FMI Corporation At Which Do You Excel? Operational Excellence Product Leadership Customer Intimacy Source: The Discipline of Market Leaders, Treacy & Wiiersema, 1995, Addison-Wesley
- 39. 38© 2016 FMI Corporation Getting Positioned to Win Today • Quick-turn • Price-based • Highly competitive Or • Higher expectations • Longer sales cycles • Multiple touch points/decision makers
- 40. 39© 2016 FMI Corporation What Does It Cost?
- 41. 40© 2016 FMI Corporation In the last downturn, the least profitable firms spent more on business development as a % of revenue than the more profitable firms did....thoughts?
- 42. 41© 2016 FMI Corporation Who are the Right Customers? • Which customers are you most successful with? – Who will pay (a little bit) more for what you do? – Which customers do you make money in the field with? – What size and type of projects are your “best”? • Location • Delivery methods – Who values your contribution and your team? – Who provides you with repeat work? – Have the highest probability of winning?
- 43. 42© 2016 FMI Corporation Great contractors manage their backlogs in terms of volume and quality
- 44. 43© 2016 FMI Corporation Meeting the Customer Where They Live • Who knows best what the customer wants? • Why are we so reluctant to ask? • What would it take to create the organizational capacity? • How are you really different than your competitors?
- 45. 44© 2016 FMI Corporation Getting Feet on the Street • Reasons to meet • Set realistic expectations of networking – Give them a mission + 5 questions • Teach them to ask “good” questions • Share the 80% rule • Provide tips to start and stop • What to do with conflict? • Timing is everything • Don’t save the skills
- 46. 45© 2016 FMI Corporation Questions are the Answers 1. What are your sacred cows? 2. How has your business changed in the last two to three years? – How have your customers’ expectations been changing? – What do you need to do now to better meet customer expectations? – What kind of competitive pressures does your company now face? 3. What are the key drivers of your capital improvement plans/budgets?
- 47. 46© 2016 FMI Corporation Questions are the Answer 4. Tell me about the best contractors you work with – What are they good at? – Where can they be a little bit better? 5. Tell me about your perception of our company – What do you like? – Where can we improve? – What impact would that (improvements) have on you and your team? – What else do I need to know to better meet your objectives? – How can we be of better service to you?
- 48. 47© 2016 FMI Corporation In the next downturn, your ability to connect existing relationships in to new business is essential
- 49. 48© 2016 FMI Corporation A Total Company Effort Driver Joe Foreman Phil Bus Dev Ken CFO Bob CEO Richard An effective repeat customer strategy means engaging everyone in your organization in the effort….
- 50. 49© 2016 FMI Corporation In the last downturn, firms with no full-time dedicated business development staff saw their repeat client work decline
- 51. 50© 2016 FMI Corporation Get on it!
- 52. 51© 2016 FMI Corporation W. Chris Daum President and Chief Executive Officer FMI Corporation 5171 Glenwood Avenue, Suite 200 Raleigh, NC 27612 (919) 785.9264 cdaum@fminet.com www.fminet.com