Long-term client relationships depend on marketing personal service before and after a sale.
MBT Associates' "red file" on Raychem Corp. dates back to 1973, when the San Francisco architectural firm first learned that Raychem, a $585-million developer and manufacturer of high-performance insulation products and systems, was considering building a new research center at its Menlo Park, Calif., headquarters. Ten years later, MBT's file bulged with financial reports on Raychem, newspaper clippings, scrawled notes about company events, and speeches by Raychem executives. On the cover of the company's 1982 annual report was a photograph of a freestanding metal sculpture at Raychem's headquarters. Says Elizabeth Bagwell, MBT's director of marketing, "It was an important symbol," a work of art "commissioned to represent Raychem's values -- technology, flexibility, and responsiveness."
When Raychem requested proposals from architects for the first phase of its research center, MBT was poised to present itself as a candidate for the $30-million project. (In fact, Raychem had already listed MBT among its candidates because of referrals from other corporations.) In its written proposal and subsequent personal interviews, MBT presented not only its technical capabilities, but also tried to convey that its corporate style -- low key and informal, innovative and technologically oriented -- matched Raychem's. MBT landed the project last May. "If we'd said we are an old, established firm that believes in dignity," says Bagwell, "it would have been the wrong thing to say."
For firms like MBT, developing relationships with clients is a methodical process that ideally begins several years before a "sale." "We allow two years for the pursuit of a client," says Rosalyn C. Koo, executive vice-president 32 the 100-person firm, which ranked #296 on 1983's INC. 500 list of America's fastest-growing private companies, with total net sales of more than $5 million in 1982, up from $4.3 million in 1981. During that pursuit, MBT learns as much as it can about a company, trying to evaluate its financial stability and potential, as well as understand its corporate philosophy, operating style, and key personnel. Bagwell reads half a dozen daily newspapers as well as major business periodicals to keep track of what is happening in MBT's targeted industries. "A lot of firms don't have somebody who can afford the time" to do this research, admits Bagwell. "It's difficult if they're spending full time designing."
Building enduring relationships has, however, become an urgent concern The 1974-75 and 1981 -- 82 recessions stalled and canceled building projects. The American Institute of Architects (AIA), a 42,000 member professional association, reported that, based on U.S. Bureau of the Census data, the real value of public-building construction decreased by 32.8% from 1970 to 1981, and the value of private, nonresidential construction increased by only 7.9%.
Other surveys, by Birnberg & Associates, a Chicago consulting firm, show that the relationship of net profits to net fees among several hundred sampled firms declined from 6.8% in 1977 to 6.1% in 1979, and to 3.6% in 1981. Adds Tom Teasdale, chairman of the AIA's seven-person Architects' Economic and Compensation Task Force, architects -- despite signs of an economic recovery -- continue to lose a portion of the building, design, and construction market to engineers, construction managers, contractors, and design builders.
Given this scenario, the architectural profession has been forced to develop strategies not only to identify potential long-term clients but also to retain existing and past clients. "In a successful architectural firm, 90% of the annual work load used to come from repeat clients and direct referrals," says Weld Coxe, chairman of The Coxe Group Inc., a Philadelphia-based marketing and management firm for architects and engineers. But, says Coxe, because the marketplace has become so fiercely competitive, firms that previously reported a level of 70% to 90% in repeat business have watched that percentage decrease to between 40% and 60%. The marketing challenge, he notes, is to get the percentage back up.
In 1976, recalls Koo, MBT's business had "stopped walking in the door." The staff dropped from a high of more than 60 people in 1972 to fewer than 20 by 1978. Like many professional firms, MBT was made up of people trained in their profession -- planning and design -- not in marketing. In an effort to drum up business, MBT began to go after a wide assortment of projects, including government contracts. "There was a great deal of work in the public sector, but it was very competitive," admits Koo. "We had no track record; no one knew us." Repeatedly, she notes, MBT would make the "short list" of five or six finalists, then fail to land the business.
Realizing the futility of its scattershot approach, chief financial officer Koo (the only principal at MBT who is not an architect) had begun in 1976 to do some rigorous analysis, reviewing 20 years of records and charting past projects and clients. The research showed that most clients had selected the firm largely because of the personality and reputation of MBT's founder, Gerald McCue. (McCue, today Dean of Harvard University's Graduate School of Design, left the day-to-day operations at MBT in 1976 to become a professor of architecture and associate dean at the university. He remains an MBT principal and participant.) Koo's research also revealed that MBT's strongest long-term business was with clients that commissioned large-scale, technically complex commercial and university projects, particularly research facilities and laboratories.
Koo and the firm's other active principals, Frank Tomsick and Allen Williams, decided to stop chasing public work and concentrate on what the company had always done best -- private and institutional building. Since then, MBT has targeted specific industries that showed high-growth potential -- genetic engineering, computer technology, and, more recently, energy and telecommunications companies.
The firm continues to specialize in highly technical buildings, adding only a small number of clients each year Among past and present clients are Chevron Research, IBM, Union Carbide, and Hewlett-Packard.
