Selling fear.
Service engineering is one of the few professional fields of activity where, as a tool for increasing revenue for service providers, it is possible to use the client's fear, forcing them to renew service contracts and abandon traditional design in favor of individual ones.
Using building automation systems as a basis for escalating customer concerns, service engineers offer a well-thought-out product in all respects along with a “portfolio of services” designed to protect customers throughout the entire life of the building, which is 15-20 years.
By focusing on the “exclusivity” and bypassing the traditional solution of the architectural and construction project, consulting engineers establish direct relationships with the client, which goes against the usual practice that was adopted in order to significantly reduce overhead costs in the engineering and construction sector.
Fear is the most effective sales tool in the construction business.
What causes fear?
Property owners fear the potential failure of building systems (or a decrease in their functionality), which results in significant economic losses. Failure of building systems is unpredictable and can happen at any time. No property owner is able to exercise total control over the building, and this is what makes the work of a service engineer in demand, since it is directly related to the economic loss that cannot be avoided in the event of a failure of building systems.
The budget items of state enterprises allocated for the operation of buildings already include possible non-production costs. As for housing stock buildings, from an economic point of view, the lack of income from consumers or excessively high insurance payments come to the fore.
Poor maintenance of building systems does not go unnoticed. Energy is becoming more expensive these days, and inefficient building systems result in higher energy consumption and higher building operating costs. Isn't it the goal of hiring a service engineer to correlate service levels with economic performance indicators?
Since any failure of building systems can be expressed in monetary terms, the value of service engineers' services provides a real return on investment in the eyes of property owners. If we apply the concept of payback to the work of service departments, this area of engineering activity has evolved from the anarchy of contract prices, when the cheapest service won, to a meaningful discussion of economic significance.
Paradigm Shift
After a construction project is completed, the consulting engineer remains on the job waiting for work to begin on a new project.
Interruptions in the engineer's work usually occur during the construction phase and rarely extend beyond that. For many service engineers, the form of the product is the work itself, and, accordingly, the initial basis for choosing service providers is the price they quote.
A completely different picture emerges when considering unexpected phone calls from property owners concerned about a breakdown in the building's systems.
In order to resolve the problem as quickly as possible, competitive offers are accepted, negotiations are conducted, during which the cost and the service provider are established. However, it is not the price that determines the final choice, but the assessment of the scale of the failure or the economic damage.
For the end user of services, traditional design and engineering work and its direct implementation remain behind the scenes. The value is precisely the elimination of malfunctions, and the result of the work results in direct economic benefit for such a user. For a service engineer, this awareness forms the basis for a fundamentally different approach to their work. Work… on selling fear.
Now the consulting engineer will operate the building systems themselves, bypassing close contact with the architect, which is necessary beforehand to build subsequent stable relationships with the client.
Targeted approach
The AIM model (the abbreviation stands for both “purpose” and “Assessments, Implementation and Maintenance”) provides the most efficient way to create a product and maintain it, offering the client continuity of support for the building during its (the building’s) life cycle.
The essence of the AIM is to provide the tenant with a portfolio of services from a consulting engineer.
This portfolio is the basis for long-term relationships with a specific client for a period of 15 to 20 years.
This period is more than enough for the real life of the housing.
Such an organization ensures increased profitability while reducing the cost of services.
During the assessment, the efficiency of the building systems is determined, as well as potential risk areas, which are then announced to the customer.
Terms such as “system reliability studies” or “energy consumption assessments” often involve an attempt to provide informational support for the “fear business.”
The stage called “implementation” refers to the design process itself and subsequent construction.
Consulting companies earn 70-80% of their income from this stage. Trading on fear, such companies often turn to “valuation amendments” at the initial stage of work. These projects are not tied to a strict structure of estimates by their nature. The service engineer creates a certain value in his field of activity, which is not a commodity.
The maintenance stage involves close contact between service engineers and the client throughout the entire life of the building. The forms of such cooperation are limited only by the imagination of the consulting engineer. This may include offering the most modern systems instead of outdated ones, conducting periodic reliability assessments in terms of possible risks, and installing monitoring and prevention devices.
The target approach model extends the traditional development and construction framework (two years) to a period of more than 15 years.
Long-term relationships with clients have their positive aspects, such as: reduced business development costs (no need to develop new projects for new clients), more cost-effective projects (direct competition is excluded), higher corporate income (average income per client increases with a possible decrease in the number of clients).
New fears
The fear that arises during the design and construction of buildings is by no means limited to the walls of already built structures.
It is also based on the knowledge that the consulting engineer learns “too much” about each project he supervises.
Within the framework of each project, he gets access to unique information about the client, to which no other legal entity has access. And information is an asset and, like any asset, can bring benefits.
“Information rules the world” – this has already become an axiom in the business world. Having special knowledge about the client allows the service provider to provide more effective and accurate solutions to problems that are still just emerging.
An excellent niche for business. The concept of “selling fear” is based on this premise and even develops it. After all, having unique information about several clients, a company can analyze the situation as a whole, identifying trends and predicting the course of future events. This creates a fact-based model for assessing the reliability of building systems, which contributes to the development of the idea of “selling fear”.
The basis for such business tactics is the SIP model (Services Information Product — providing service information).
The SIP model is based on the accumulation of unique information about clients, the source of which is the statistics of the services provided. This information is analyzed and, on its basis, a model of the reliability of building systems is developed.
Client requests are catalogued, which makes it possible to create new types of service that bring in a real product and income. All this is done with the aim of diversifying the portfolio of services of a service engineer.
This is possible thanks to the information received from consultants about the unique experience of clients in operating housing. Such information can really change the face of the housing construction market.
To evaluate means to measure
It just so happens that when people make a purchasing decision, they rarely “take the maximum.”
After all, why would a customer want to upset the status quo and change their familiar environment?
It is usually strategically useless to convince a potential customer that their needs, as well as their capabilities, will only increase in the future.
This “top-down” approach will fail.
But selling fear is a “bottom-up” approach. The very thought of the possibility of a building system failure has a magical effect on the buyer. The fear of this is quite reasonable and measurable materially, since breakdowns are unpredictable, and sometimes it is enough to go down from possibilities to consequences to force the buyer to make the right decision.
If service engineers were selling building system optimization services, then this approach would require emphasizing the predictability of the benefits of the proposed project. Another way to implement this approach is to highlight the financial losses from refusing to optimize building systems.
The client may be more interested in a building optimization project if his goal is to solve a problem rather than “optimize something.”
It pays not to lose
The benefits of trading fear are very direct: with this approach, the very role of the service engineer changes. Previously, such a specialist accepted orders for the development and execution of services, but now this “fighter against fear” concentrates his efforts on protecting property owners from potential troubles.
The assessments of consulting engineers are now of a material nature, as opposed to the previous existing practice of offering a “competitive” price. Such a price leads the company into the area of low profit.
However, the greatest value is the opportunity to extend the relationship with the client for the entire life cycle of the building systems, and this is quite a long period. This lays the foundation for increasing the profitability received from the client, while reducing the need to acquire new clients, and at the same time, deeper development of relationships with existing clients.
Is there a question of the universality of such an approach, built on the trade of fear?
But one thing is clear that of all representatives of the professional service sector, the service engineer is perhaps the only one for whom such an approach is open, and the innovation itself creates unprecedented opportunities for property owners.
The article was prepared based on materials from the magazine Consulting Specifying Engineer