Monday, June 11, 2012

7 Business Criteria for Picking Clients

The A/E/C industry has a great opportunity, right now, to be more profitable than ever. The key is to work only with firms that understand the value of design and how that value factors into the price of projects. Getting value pricing to work in your firm requires a combination of factors synchronized to generate high fees and high profits. It starts with picking the right clients. Most marketing consultants suggest a generic plethora of style-related criteria to pick good clients that leave you in the dark when it comes to value pricing. Follow these business criteria, and you will establish a solid foundation on which you will get higher fees.

1. Analyze an existing client. Start inside your firm by evaluating an existing or past client that paid you on value, and who you really loved working with. Write down everything you can to describe them.

2. What position/title does a high paying client generally hold? Decide for your firm the title/position that most high paying clients hold. If your firm does municipal work, are you targeting the mayor or someone well below that level? In general, the higher up in an organization that your client contact resides, the more you will get paid.

3. Define the individual’s spending authority. Just because a person is CEO does not automatically give him authority for high spending. A CEO might have to get board approval, in which case you may want to target the Board Chair. By forcing yourself to define where spending authority lies, you determine who signs checks, who has the power to choose you, and who has the authority to grant you high fees.

4. Figure out your client’s expected future. A driven 42-year-old who wants future power or publicity is significantly different than a retiring 62-year-old. While age alone does not determine a client’s personal strategies, you can make some assumptions based on it. But don’t stop there. Target clients that will take you along with them to great heights. It’s easier to ride on the back of a driving leader than to beg for low fees from a multitude of “Has Beens.”

5. Define a client’s communication channels. While it may not sound significant, how a client likes to communicate with you often determines the outcome of a relationship. If they like midnight cell phone talks, and you don’t, the relationship will result in lower fees for you. Find out how you’ll communicate with each, and decide if you like the way this client meshes with your own communication preference.

6. Is there repeat/add-on work? Find out. Don’t assume. You must target clients that are in a position to do multiple projects if you are to position yourself to improve your fee status based on added value, intellectual capital, or superior service.

7. Are they liquid? With everything above answered positively, the only remaining business criteria is to determine if a client can pay you. Do the homework. Public agencies have public budgets. Bond issues are reported in the news. Public companies file public reports quarterly. If you hit a stonewall doing this research, confront your potential CEO face to face, and carefully study the body language.

If you’ve passed all seven Business Criteria, next ask yourself if you “like” this client. However, if you haven’t checked these seven items, do not waste your time or you will be certain to get lower fees, or get paid late, if at all. Value Pricing starts with Value Clients.

We’re on a mission to help firms like yours navigate their way back to prosperity. Attend PSMJ’s Successful Financial Management for A/E/C Firms to ensure your firm is among them! Click here for upcoming dates and to register for one of our upcoming seminars!

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