2016 CRW - Keynote Session: Driving Best Practices in Business Development

0© 2016 FMI Corporation

Driving Best Practices in Business Development Specialized Carriers & Rigging Association

Gaylord National Harbor | September 22, 2016


Business Development - Industry Context

6

23

49+

11

25

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-ResidentialTotal E&C


Construction Put in Place Through Time


Our company ________ has the right amount of

the right type of work with the right customers to

meet our strategic goals


Intentional or Accidental?

How much of our success is merely a reflection of a sustained recovery?


How Industry Firms View Business Development


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


Who Is Responsible for Business Development?

Driver

Joe

Foreman

Phil

Bus Dev

Ken

CFO

Bob

CEO

Richard


‘The work of understanding what the customer

values and systematically delivering that value

over the life of the relationship’


Reactive firms do poorly in tightening and

declining markets


What Does it Really Take?


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?


Market Success

Strategy Built on Facts

Our Vision for the Future

Climate Competition Customers Our Company

Exe

cu

tio

n


Vision of the Future


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?



For ‘best of class’ contractors, business

development is central to the company’s overall

strategy.


48% of the companies we surveyed have NO

formal business development plan tied to the

strategic direction of the company


Creating New Outcomes

Time

Re

su

lts

What Will It Take?


Your Company’s Go-to-Market Strategy is Driven by

Strategy = Revenue x Time

New Customers Existing Customers

and/or


Share of Wallet or Market Share?

Potential Customers

Se

rvic

es C

usto

me

rs B

uy

0

100%0

100%

Market Share

Share of Wallet


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


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


What Do Customer Really Want?

• ___ Quality Work

• ___ On Budget

• ___ On Time

• ___ No Surprises

• ___ Personal Attention

• ___ Dependability

• ___ Returned Phone Calls

• ___ Good Communications


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….


Differentiation Starts Here


Hard for Different Reasons


Customer Research

• Market Size and Forecast

• Company Image Analysis

• Customer Buying Practices?

• Customer Satisfaction and

Loyalty


A Key Difference of Opinion

Believers: 80% of firms believe they provide superior service

vs.

Achievers: 8% of customers agree


Why You?

The number one source of competitive advantage

contractors in our survey: REPUTATION.


Why You?

Marketing

SalesProposals &

Presentations

Negotiations

82%


61%

Why Do Customers Leave?


The real value is how your reputation and

relationships translate into specific value for your

current and potential customers


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?

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://ithinkthusiam.wordpress.com/category/change/&ei=m0G1VMXGN86ayASAj4HoBQ&bvm=bv.83339334,d.aWw&psig=AFQjCNGKx9Fax-8EW_SfAX13tqmYsPF8og&ust=1421251331196270


1 out of 10 of the least profitable firms we

surveyed listed price as their number one

competitive advantage


Competitive “Sweet Spot”

Your Strengths

Your Weaknesses

Competitor Strengths

Competitor Weaknesses

Customer

Needs


Give the customer a reason to pick you….

The best contractors know their value proposition at

a market segment, key customer and project level


At Which Do You Excel?

Operational Excellence

Product Leadership

Customer Intimacy

Source: The Discipline of Market Leaders, Treacy & Wiiersema, 1995, Addison-Wesley


Getting Positioned to Win Today

• Quick-turn

• Price-based

• Highly competitive

Or

• Higher expectations

• Longer sales cycles

• Multiple touch points/decision makers


What Does It Cost?


In the last downturn, the least profitable firms

spent more on business development as a % of

revenue than the more profitable firms

did....thoughts?


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?


Great contractors manage their backlogs in terms

of volume and quality


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?


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


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?


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?


In the next downturn, your ability to connect

existing relationships in to new business is

essential


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….


In the last downturn, firms with no full-time

dedicated business development staff saw their

repeat client work decline


Get on it!


W. Chris Daum

President and Chief Executive Officer

FMI Corporation

5171 Glenwood Avenue, Suite 200

Raleigh, NC 27612

(919) 785.9264

[email protected]

www.fminet.com

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2016 CRW - Keynote Session: Driving Best Practices in Business Development

Education