6 Myths in the AE Industry

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Design Facilitator has collected over 30,000 responses from clients of Architecture, Engineering and other professional service firms. They've analyzed these responses and their research has identified the most damaging misconceptions firms believe about their clients' perceptions.

* Misconception #1: Clients think our fees are too high
* Misconception #2: Clients will tell me if they have a problem
* Misconception #3: I know exactly how to help my clients best
* Misconception #4: Clients are just looking for the cheapest option

In this presentation, we'll show you how these misconceptions negatively affect your Architecture or Engineering firm and your clients. We'll provide strategies to overcome these problems, create stronger client relationships through more successful project outcomes and increase your firm's profitability.

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  • Based on a scale from 1-7.
    The average score is 5.2.
    The percentage of scores above excellent is 21.5%.
  • Julie Olson and Renee Godwin, conducting research for the Society of Marketing Professional Services Foundation, found word-of-mouth communication (including clients talking to other clients) to be one of the most pervasive modes of referral and reputation building for design firms
    See “Growing Your Business Using the Untapped Power of Word-of-Mouth Marketing” August 2008
  • Julie Olson and Renee Godwin, conducting research for the Society of Marketing Professional Services Foundation, found word-of-mouth communication (including clients talking to other clients) to be one of the most pervasive modes of referral and reputation building for design firms
    See “Growing Your Business Using the Untapped Power of Word-of-Mouth Marketing” August 2008
  • Discuss how we tend to underprice for our perceived value. Chart how client value gro
    “Using client feedback to become more valuable to your client is more effective than the effort and cost spent developing new clients.
    ws from initial project on and what builds “expert” status.”
  • Participative leadership:
    -Promotes optimum behavior by defining desired results. -Allows visible measurement of actual results
    to stakeholders (feedback).
    -Stakeholders then design the best way to achieve results.
    -Increases accountability & individual efforts simultaneously.
  • Recessions shrink a firm’s ability to compensate and reward their staff.
    Prosperous firms know that this is a prime time to add talented staff.
    Staff who are likely to never return and may take clients with them.
    Each key staff member lost equates to nearly $200k of unexpected cost and lost revenue.

    To leave your firm vulnerable can be very costly.
  • Recessions shrink a firm’s ability to compensate and reward their staff.
    Prosperous firms know that this is a prime time to add talented staff.
    Staff who are likely to never return and may take clients with them.
    Each key staff member lost equates to nearly $200k of unexpected cost and lost revenue.

    To leave your firm vulnerable can be very costly.
  • Recessions shrink a firm’s ability to compensate and reward their staff.
    Prosperous firms know that this is a prime time to add talented staff.
    Staff who are likely to never return and may take clients with them.
    Each key staff member lost equates to nearly $200k of unexpected cost and lost revenue.

    To leave your firm vulnerable can be very costly.
  • When we look at client feedback on a firm by firm basis, we discover additional interesting trends.
  • Fine to look at info we’ve given you that are averages, but important thing is – most valuable when it’s about your designers at your firm and your clients
    In order to remain valuable – you need a steady flow of it so you can see when changes occur (trends and patterns)

    Firm A:  83% response rate; 6.1 average score; 0% of scores below acceptable.
    Firm B:  24% response rate; 4.5 average score; 18% of scores below acceptable.
  • Fine to look at info we’ve given you that are averages, but important thing is – most valuable when it’s about your designers at your firm and your clients
    In order to remain valuable – you need a steady flow of it so you can see when changes occur (trends and patterns)

    Firm A:  83% response rate; 6.1 average score; 0% of scores below acceptable.
    Firm B:  24% response rate; 4.5 average score; 18% of scores below acceptable.
  • Fine to look at info we’ve given you that are averages, but important thing is – most valuable when it’s about your designers at your firm and your clients
    In order to remain valuable – you need a steady flow of it so you can see when changes occur (trends and patterns)

    Firm A:  83% response rate; 6.1 average score; 0% of scores below acceptable.
    Firm B:  24% response rate; 4.5 average score; 18% of scores below acceptable.
  • Client Comparison:
    Firm A:  Best client avg score = 7.0; worst client avg score =  4.5
    Firm B:  Best client avg score = 6.4; worst client avg score = 2.4
  • Designer/Engineer Comparison
    Person A:  Avg Score = 6.5; percent below acceptable = 0%; 11 surveys sent; response rate = 64%
    Person B:  Avg Score = 6.0; percent below acceptable = 0%; 59 surveys sent; response rate = 41%
    Person C:  Avg Score = 5.0; percent below acceptable = 8.3%; 13 surveys sent; response rate = 31%
    **Note that Person C is a principal who specifically looks for opportunities when there may be a problem.  Low scores are not BAD - doing nothing to discover problems is bad.  Person C may have some of the most effective behavior - look at the larger picture.
  • Designer/Engineer Comparison
    Person A:  Avg Score = 6.5; percent below acceptable = 0%; 11 surveys sent; response rate = 64%
    Person B:  Avg Score = 6.0; percent below acceptable = 0%; 59 surveys sent; response rate = 41%
    Person C:  Avg Score = 5.0; percent below acceptable = 8.3%; 13 surveys sent; response rate = 31%
    **Note that Person C is a principal who specifically looks for opportunities when there may be a problem.  Low scores are not BAD - doing nothing to discover problems is bad.  Person C may have some of the most effective behavior - look at the larger picture.
  • Designer/Engineer Comparison
    Person A:  Avg Score = 6.5; percent below acceptable = 0%; 11 surveys sent; response rate = 64%
    Person B:  Avg Score = 6.0; percent below acceptable = 0%; 59 surveys sent; response rate = 41%
    Person C:  Avg Score = 5.0; percent below acceptable = 8.3%; 13 surveys sent; response rate = 31%
    **Note that Person C is a principal who specifically looks for opportunities when there may be a problem.  Low scores are not BAD - doing nothing to discover problems is bad.  Person C may have some of the most effective behavior - look at the larger picture.
  • Designer/Engineer Comparison
    Person A:  Avg Score = 6.5; percent below acceptable = 0%; 11 surveys sent; response rate = 64%
    Person B:  Avg Score = 6.0; percent below acceptable = 0%; 59 surveys sent; response rate = 41%
    Person C:  Avg Score = 5.0; percent below acceptable = 8.3%; 13 surveys sent; response rate = 31%
    **Note that Person C is a principal who specifically looks for opportunities when there may be a problem.  Low scores are not BAD - doing nothing to discover problems is bad.  Person C may have some of the most effective behavior - look at the larger picture.
  • Refer to 6 myths – show how feedback can work to eliminate those:

    Collect fb from very beginning of project
    Use FB to keep your
    Use to increase value
    Bill according to your value
  • 6 Myths in the AE Industry

    1. 1. The Six Major Myths About A/E Industry Presented by: Mike Phillips, AIA
    2. 2. About The Presenter Mike Phillips AIA President Phillips Architecture PA DesignFacilitator LLC Mike Phillips AIA, IIDA, ASID, is the President and Founder of Phillips Architecture PA, a 20-year old multi-disciplinary design firm in Raleigh, NC, name to the PSMJ Circle of Excellence and winner of ZweigWhite's Best Firm to Work for award in 2007 and 2009. A registered architect and certified interior designer, Phillips has incorporated his more than 25 years of commercial interiors and architectural experience into the development of a method of collecting and incorporating feedback to benefit design firms and their clients.
    3. 3. Six Major Myths About the A/E Industry by DesignFacilitator THE INDUSTRY EXPERTS ON COLLECTING AND INCORPORATING CLIENT FEEDBACK • HAVE ANALYZED OVER 30,000 SURVEY RESPONSES TO REVEAL ACCURATE PERCEPTIONS OF A/E/I INDUSTRY CLIENTS • CONSTANTLY TRACKING AND UPDATING OUR UNDERSTANDING OF HOW A/E/I CLIENTS SEE DESIGN FIRMS • FEEDBACK TOOL DESIGNED BY ARCHITECTURAL FIRM AND CUSTOMIZED FOR USE BY A/E/I INDUSTRY
    4. 4. Part 1 Why Firms Collecting Feedback are More Profitable and How to Join their Ranks Showed attendees most effective methods of gathering feedback from their clients Part 2 The Six Major Myths About A/E Clients Contact us if you would like to schedule a presentation of Parts 1 or 2 Six Major Myths About the A/E Industry
    5. 5. WHAT IS A MYTH? myth ’mith noun [Greek mythos] first known use: 1830 1: a thing having only an imaginary or unverifiable existence 2: an ill-founded belief 3: an unfounded or false notion 4: an unproved or false collective belief used to justify disruptive behavior Six Major Myths About the A/E Industry
    6. 6. WHAT PAINS DO THESE MYTHS CAUSE OUR INDUSTRY? 1. Leads firms to misconceptions 2. Produces harmful behaviors & trends 3. Undermines credibility of design firms 4. Disrupts industry prosperity ANTIDOTE: Feedback from your clients dispels negative perceptions. Six Major Myths About the A/E Industry
    7. 7. REALITY: A. Professional design fees typically represent less than 5% of project costs. Total Project Costs Design Costs 1 “CLIENTS THINK WE OVERCHARGE FOR OUR WORK.” MYTH 1MYTH Six Major Myths About the A/E Industry
    8. 8. REALITY: B. We tend to overpromise 1MYTH “CLIENTS THINK WE OVERCHARGE FOR OUR WORK.” (Especially when we are competing for projects.) and underprice Six Major Myths About the A/E Industry
    9. 9. greatly in excess of our entire fee. 1MYTH “CLIENTS THINK WE OVERCHARGE FOR OUR WORK.” REALITY: C. We are creating a sophisticated solution to complex problems. Our solutions can add value and reduce project cost Six Major Myths About the A/E Industry
    10. 10. REALITY: D. Feedback collected from clients measures perceptions relative to expectations. Clients indicate that designers are exceeding their expectations. National Average Score: 5.2 21% of scores above Excellent 1MYTH “CLIENTS THINK WE OVERCHARGE FOR OUR WORK.” Six Major Myths About the A/E Industry
    11. 11. Symptoms: A. Designers make assumptions that “no news is good news.” B. Minor irritations, if not discovered, “CLIENTS WILL TELL US IF THEY THINK SOMETHING IS WRONG.”2MYTH will fester! Six Major Myths About the A/E Industry
    12. 12. Strategies to Bridge the Gap: A. Determine who is responsible for asking for feedback. (Hint: It’s not the client) B. Ask client for feedback to help relieve client’s frustration. C. Incorporate feedback / refine process to address issue / improve value 2MYTH “CLIENTS WILL TELL US IF THEY THINK SOMETHING IS WRONG.” (Hint: Smaller problems, fewer lawsuits) Six Major Myths About the A/E Industry
    13. 13. 2MYTH “CLIENTS WILL TELL US IF THEY THINK SOMETHING IS WRONG.” 0% 10% 20% 30% 40% 50% Feedback Average Industry Average Client Average Response Rates to Surveys REALITY: Clients only tend to tell if asked. When asked, clients respond at 10 times the average rate. Six Major Myths About the A/E Industry
    14. 14. “CLIENTS DON’T TALK TO OTHER CLIENTS ABOUT OUR FIRM.” 3MYTH Research Refutes: Julie Olson and Renee Godwin, conducting research for the SMPS Foundation, found word-of-mouth communication (including clients talking to other clients) to be one of the most pervasive modes of referral and reputation building for design firms. “Growing Your Business Using the Untapped Power of Word-of-Mouth Marketing” August 2008 Six Major Myths About the A/E Industry
    15. 15. “CLIENTS DON’T TALK TO OTHER CLIENTS ABOUT OUR FIRM.” 3MYTH Realities: Clients talk to SIX clients (or potential clients) about your firm, especially after having a problem. Word-of-mouth referrals and recommendations provide powerful avenues for new work. Improving client perceptions of your firm’s value helps build sustainable financial prosperity for your firm. Six Major Myths About the A/E Industry
    16. 16. Effective Strategy: In design projects where client feedback is collected, problems that are found . . . 3MYTH “CLIENTS DON’T TALK TO OTHER CLIENTS ABOUT OUR FIRM.” are immediately followed by improved responses 83% of the time. Six Major Myths About the A/E Industry
    17. 17. Effective Strategy: Use client feedback as an “EARLY WARNING SYSTEM” to spot and attend to problems and create for your firm higher client satisfaction and better referrals. 3MYTH “CLIENTS DON’T TALK TO OTHER CLIENTS ABOUT OUR FIRM.” Six Major Myths About the A/E Industry
    18. 18. “FIRM LEADERS HAVE ALL THE DATA THEY NEED TO MAKE THE BEST STRATEGIC DECISIONS.” 95% OF DESIGN FIRMS DON’T COLLECT CLIENT FEEDBACK. What we don’t know can hurt us. We don’t know what we don’t know. Some of what we know are “MYTHS.” Myths promote detrimental strategies. 4MYTH Six Major Myths About the A/E Industry
    19. 19. “FIRM LEADERS HAVE ALL THE DATA THEY NEED TO MAKE THE BEST STRATEGIC DECISIONS.” 95% OF DESIGN FIRMS DON’T COLLECT CLIENT FEEDBACK. 4MYTH “You can’t manage what you don’t measure.” -Peter F. Drucker Measuring client satisfaction with feedback provides actionable data for management. Six Major Myths About the A/E Industry
    20. 20. High Profit Loss Average Profit Unacceptable - 1 Met Expectations- 4 Exceptional - 7 ExpertPotential Poor Fit Burn Out 4MYTH “FIRM LEADERS HAVE ALL THE DATA THEY NEED TO MAKE THE BEST STRATEGIC DECISIONS.” Measuring client satisfaction improves team awareness and team performance. Improves expert status with client. “Whatever is measured, improves.” Elton Mayo Behavioral Sociologist Six Major Myths About the A/E Industry
    21. 21. “MOTIVATING A DESIGN TEAM IS BEST DONE WITH EITHER THE CARROT OR THE STICK.”5MYTH car  rot–and–stick adj. [Sociology] first known use: 1876 1: characterized by the use of both reward and punishment to induce group cooperation Origin: From the traditional alternatives of driving a donkey on by either holding out a carrot or whipping with a stick. Six Major Myths About the A/E Industry
    22. 22. But, the traditional thinking of either using: • the “carrot” (rewards) • the “stick” (penalties) to produce optimum behaviors is problematic for professional service firms. Seen as manipulation, it produces resistance and resentment, and creates a “battleground” environment “MOTIVATING A DESIGN TEAM IS BEST DONE WITH EITHER THE CARROT OR THE STICK.”5MYTH which turns staff and leaders into enemies. Six Major Myths About the A/E Industry
    23. 23. 5MYTH “MOTIVATING A DESIGN TEAM IS BEST DONE WITH EITHER THE CARROT OR THE STICK.” More effective for professional firms, is to provide valid measurements to track and promote performance. “Whatever is measured, improves.” To cultivate optimum outcomes: • Define desired results (by consensus) • Measure current results (financial and feedback) • Promote process refinement to improve results (staff = stakeholders) Six Major Myths About the A/E Industry
    24. 24. “GOOD STAFF LEAVE DESIGN FIRMS BECAUSE OF MONEY.” MAJOR ISSUE: LOSING KEY STAFF . . . (IS ALWAYS A PROBLEM). • Recession reduces available financial rewards • More prosperous firms can more easily steal your staff • Departing staff may take your hard-earned clients with them • Each staff loss = >$100K in cost & lost revenue (PSMJ Resources, Inc.) 6MYTH Six Major Myths About the A/E Industry
    25. 25. PSMJ: Top 3 Reasons Why Key Staff Leave: 1. Talents Not Seen 2. Contributions Not Appreciated 3. Growth Not Supported 6MYTH “GOOD STAFF LEAVE DESIGN FIRMS BECAUSE OF MONEY.” Six Major Myths About the A/E Industry
    26. 26. PROBLEM SOLUTION 6MYTH “GOOD STAFF LEAVE DESIGN FIRMS BECAUSE OF MONEY.” Measure performance Applaud successes ASAP Identify effective training 1. Talents Not Seen 2. Contributions Not Appreciated 3. Growth Not Supported Six Major Myths About the A/E Industry
    27. 27. MAJOR MYTHS, DEBUNKED BY USING CLIENT FEEDBACK!6 “CLIENTS WILL TELL US IF THEY THINK SOMETHING IS WRONG.” “CLIENTS DON’T TALK TO OTHER CLIENTS ABOUT OUR FIRM.” “FIRM LEADERS HAVE ALL THE DATA THEY NEED TO MAKE THE BEST STRATEGIC DECISIONS.” “MOTIVATING A DESIGN TEAM IS BEST DONE WITH EITHER THE CARROT OR THE STICK.” Six Major Myths About the A/E Industry “GOOD STAFF LEAVE DESIGN FIRMS BECAUSE OF MONEY” “CLIENTS THINK WE OVERCHARGE FOR OUR WORK.”
    28. 28. National Feedback Client feedback from firms across North America helped debunk the 6 major myths harming the A/E industry. Individual Firm Feedback When we look at client feedback on a firm-by-firm basis, we discover additional interesting client behavior patterns. ADDITIONAL DISCOVERIES FROM CLIENT FEEDBACK Six Major Myths About the A/E Industry
    29. 29. SAME CLIENT  DIFFERENT FIRMS Different firms can receive dramatically different feedback from the same client. 0% 20% 40% 60% 80% 100% Firm A Firm B Survey Response Rate Differences include: • 300% increase in responses Six Major Myths About the A/E Industry
    30. 30. Firm A Firm B Average Feedback Score Different firms can receive dramatically different feedback from the same client. Differences include: • 300% increase in responses • Significantly higher satisfaction SAME CLIENT  DIFFERENT FIRMS Six Major Myths About the A/E Industry
    31. 31. 0% 5% 10% 15% 20% Firm A Firm B Scores Below AcceptableDifferent firms can receive dramatically different feedback from the same client. Differences include: • 300% increase in responses • Significantly higher satisfaction • Significantly lower dissatisfaction Tracking each client’s satisfaction with feedback provides the data that increases a team’s value. SAME CLIENT  DIFFERENT FIRMS Six Major Myths About the A/E Industry
    32. 32. The same firm can receive dramatically different feedback from different clients. Differences indicate: • Broader range of expectations • Larger number dissatisfied responses • Feedback is about the client Tracking each client’s satisfaction with feedback identifies how to best adjust to each client’s different expectations. ClientA Range of Feedback Scores SAME FIRM  DIFFERENT CLIENTS Six Major Myths About the A/E Industry ClientB
    33. 33. The same client can “see” dramatically different results from different teams within the same firm. Differences include: • Major variations in perceived value Team A Team B Team C Average Feedback Scores SAME CLIENT  DIFFERENT TEAMS Six Major Myths About the A/E Industry
    34. 34. SAME CLIENT  DIFFERENT TEAMS The same client can “see” dramatically different results from different teams within the same firm. Differences include: • Major variations in perceived value • 10 times the number of problems 0% 2% 4% 6% 8% 10% 12% Team A Team B Team C Scores Below “Acceptable” Six Major Myths About the A/E Industry
    35. 35. The same client can “see” dramatically different results from different teams within the same firm. Differences include: • Major variations in perceived value • 10 times the number of problems • More surveys produce better scores 0 10 20 30 40 50 60 70 Team A Team B Team C Surveys sent in 6 months SAME CLIENT  DIFFERENT TEAMS Six Major Myths About the A/E Industry
    36. 36. The same client can “see” dramatically different results from different teams within the same firm. Differences include: • Major variations in perceived value • 10 times the number of problems • More surveys produce better scores • Twice the client response rate Tracking each team’s results with feedback identifies the best assignments of teams to clients. 0% 10% 20% 30% 40% 50% 60% 70% Team A Team B Team C Rate of Survey Responses SAME CLIENT  DIFFERENT TEAMS Six Major Myths About the A/E Industry
    37. 37. LESSONS LEARNED: FEEDBACK FROM A/E CLIENTS • Busted the 6 Major A/E industry Myths • Confirmed Client-Firm Dynamic: - Different clients have different expectations - Clients perceive differences between firms - Clients perceive differences between teams within a single firm • Tracks Client Expectations to Allow: -Teams to understand client expectations -Teams to adjust to client expectations -Teams to build “expert status” with clients • Building “expert status” with your firm’s clients is most effective strategy for creating healthy, sustainable prosperity. Six Major Myths About the A/E Industry
    38. 38. Questions? Mike Phillips AIA President Phillips Architecture PA DesignFacilitator LLC Mike Phillips AIA, IIDA, ASID, is the President and Founderof Phillips ArchitecturePA, a 20-yearold multi- disciplinary design firm in Raleigh, NC,nameto the PSMJCircle of Excellence andwinnerof ZweigWhite's Best Firm to Workfor award in2007and 2009. www.designfacilitator.com Axium Axiumhelps architectureand engineeringfirms streamline difficult processes and increaseprofitability with easy to use accounting, project management and business development software. www.axium.com

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