Long-term client relationships depend on marketing personal service before and after a sale.
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.
In the end, "there's no substitute for being good at what you do," says Coxe. Clients "find quality," he says, largely by listening to what others say. To develop a list of potential architectural candidates, Raychem's selection committee contacted and visited companies that had used West Coast architectural firms to build research facilities. Those architects that made Raychem's cut of top candidates were asked to make written proposals. The selection committee also contacted 40 to 50 references for each of the four finalists. John Kahl, Raychem's manager of design and construction, called real estate owners; company chemists called buildings' users; mechanical engineers called mechanical engineering firms that had worked with the four firms. "References became the number one influence," says Kahl.
Personal interviews are another key to the selection process. In Raychem's interviews, for example, conducted by a six-person selection committee, MBT was asked how it staffed projects, reached decisions with clients, and monitored costs. The committee also asked about MBT's goals. "We're looking for people who are clear on who they are," explains Kahl. "We want firms to work for us because they know it's the right job for them." Raychem also interviewed each member of MBT's project team individually to find out how each responded without the support of the group. "We're hiring people, not the firm," says Kahl.
Unlike companies that assign a project to different departments as it passes through various stages -- such as design, drafting, and construction -- MBT appoints a client team, led by one of MBT's principals, even before landing a project. At first the team may consist of only a principal and a project manager, but later it can include as many as 30 or 35 people. The team "tries to find out how the client works," says MBT president Tomsick, "and tailors the design to its system, not to some preconceived architectural conception." Some architects, he says, "work on the 'big bang' theory. They come up with a concept and they stuff everything into it." By involving clients in every stage of design, he notes, MBT forces them to make the design choices. "That way, the client, not MBT, becomes the project's chief defender," explains Tomsick.
After the project is completed, the leader of the team remains the chief liaison. Whoever led the team, stresses Weld Coxe, must be in constant touch with the client. Like a person who gets a feeling of security from a family doctor, says Coxe, "clients want to have their family architect and they want to know that architect cares about them. If the firm leaves the impression with the client that the firm has service, but there is no personification of this, it tends to be a more fragile relationship."
Besides maintaining personal contact, MBT perpetuates its client relationships by providing ongoing services. In 1980, the firm became a major investor in, and helped found, Design Logic Inc., an Oakland, Calif., computer services company. The alliance not only allows MBT to save money and time by computerizing drafting, data processing, and storage, but it also provides an additional service for clients. Floor plans showing how clients use space, for instance, can be stored in Design Logic's computers.
Once a project is completed, MBT performs yearly checks, or audits, on client buildings -- a strategy doctors traditionally have used with annual physical examinations, and one that lawyers, accountants, and other professionals have started to adapt to their own professions. The audit allows MBT an opportunity to rekindle relationships, evaluate a client's changing needs, and meet new personnel A building "might have been sophisticated for the people you originally worked for," says Tomsick, "but darned if they didn't retire."
To supplement personal contact, MBT relies on low-key merchandising and promotional programs. For instance, when a person joins MBT, an announcement is mailed to clients with a photograph of the individual and a short biography. When the company recently moved into a converted silverware factory in San Francisco, a poster was sent to the 1,000 people on its mailing list of clients, colleagues, and consultants. In contrast to businesses in which direct mail can effectively be used to solicit new customers, for service businesses it is of "almost no value to send mailings to people you don't know," says Coxe.
Since 1981, the AIA has relaxed its position regarding the appropriateness of architects advertising their services. Like many firms, however, MBT has shied away from such traditional media as newspaper and radio, in part because the architects don't want to commercialize their professional image. Besides, "people don't choose architects by leafing through magazines," says Bagwell. She argues that there is a "softer kind of publicity," designed to keep MBT's name before the public. MBT's principals frequently speak at design conferences and serve on the boards of preservation and regional-planning organizations, and reprints of articles on MBT are sent to clients and colleagues. "What clients want to hear in all the professions and in commercial advertising as well," maintains Coxe, is what other people are saying about you. You can't toot your own horn very well."
"The best way to market is to perform the best you can for your existing clients," acknowledges Koo. Each year, since 1980, approximately 85% of MBT's clients have been repeat customers. However, MBT's principals also learned during harder times that no firm can rest on its laurels. "You can't take it for granted that they know you're good," says Coxe. "You have to find interesting ways to remind them."
CORRECTION-DATE: February, 1985
The following photographers' credit were omitted from the Selling & Marketing column in the January issue: (clockwise from top) Pacific Aerial Survey (aerial) and Peter Xiques (model and rendering), Marvin Wax; John Steinbacher; Rick Alexander.