Selling fear.
Service engineering is one of the few professional industries where customer fear can be used as a tool to increase revenue for service provider companies, forcing them to renew service contracts and abandon traditional design in favor of custom design.
Using building automation systems as the basis for escalating customer concerns, service engineers offer a sophisticated product along with a “portfolio of services” designed to protect customers throughout the life of the building, which is 15-20 years.
By emphasizing “exclusiveness” and bypassing the traditional solution of an architectural and construction project, consulting engineers establish a direct relationship with the client, which goes against the usual practice that has been adopted in order to significantly reduce overhead costs in the engineering and construction industry.
Fear is the most effective tool for selling services in the construction business.
What causes fear?
For property owners, fear arises from the potential failure of building systems (or a decrease in their level of functionality), which results in significant economic losses.
Failure of building systems is unpredictable and can occur at any time. No property owner is able to exercise total control of the building, and this is what makes the work of a service engineer in demand, because it is directly related to the economic loss that cannot be avoided in the event of failure of building systems.
The budget items of state enterprises allocated for the operation of buildings already include possible non-production expenses. As for housing stock buildings, from an economic point of view, what comes to the fore is a lack of income from the consumer, or too high insurance payments.
Frankly poor maintenance of building systems also does not go unnoticed. Nowadays, energy is becoming more expensive, and inefficiency in the functioning of building systems results in higher levels of energy consumption and increased costs for operating buildings. Why isn’t the goal of hiring a service engineer to correlate the level of service with economic performance indicators?
Since any failure of building systems can be expressed in monetary terms, the value of service engineers provides a real return on investment in the eyes of property owners. If we apply the concept of payback to service work, this area of engineering has evolved from the anarchy of negotiated prices, where the cheapest service won, to a meaningful discussion of economic significance.
Paradigm Shift
After a construction project is completed, the consulting engineer remains on duty waiting to begin work on a new project. Interruptions in an engineer’s work usually occur during the construction phase and rarely extend beyond that.
For many service engineers, the marketable product is the work itself, and therefore the price they charge is the basis for selecting service providers.
A very different picture emerges when you consider unexpected phone calls from property owners concerned about problems with building systems. To resolve the problem as quickly as possible, competitive proposals are accepted and negotiations are held, during which the cost and service provider are established. But it is not the price that determines the final choice, but the assessment of the scale of the accident or the economic damage.
For the end user of services, traditional design work and its direct execution remain behind the scenes. The value is precisely the troubleshooting, and the result of the work results in direct economic benefit for such a consumer. For a service engineer, awareness of this forms the basis for a fundamentally different approach to his work. Work… selling fear.
Now the consulting engineer will operate on the building systems themselves, bypassing the close contact with the architect, which is first necessary to build subsequent stable relationships with the client.
Targeted approach
The Targeted Approach Model (AIM stands for both “Aim” and “Assessments, Implementation and Maintenance”) provides the most efficient path to product creation and maintenance, offering the client continuity of building support throughout its life cycle.
The essence of the targeted approach is to provide the resident with a portfolio of services from a consulting engineer.
This portfolio is the basis of a long-term relationship 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 an increase in profitability while reducing the cost of services.
During the assessment, the effectiveness of the functioning of building systems is determined, as well as potential risk areas, which are then announced to the customer.
Behind such terms as “system reliability studies” or “energy consumption assessment” there is often an attempt to provide informational support for “business on fear”.
The stage called “execution” involves the process of design and subsequent construction. Consulting companies earn 70-80% of their income from this stage.
Trading in fear, such companies often resort to “estimation adjustments” even at the initial stage of work.
These projects, by their nature, are not tied to a strict grading structure. A service engineer creates a certain value in his field of activity, which is not a product.
The service stage involves close contact between service engineers and the client throughout the entire life of the building.
The forms of such collaboration 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 from the point of view 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 costs for business development (no need to develop new projects for new clients), more economically profitable projects (direct competition is excluded), higher level of corporate income (average income per client increases with a possible decrease in the number of clients).
New fears
The fear that arose during the design and construction of buildings is by no means limited to the walls of already constructed structures. It is also based on the knowledge that the consulting engineer learns “too much” about each project he oversees.
Within 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 it can bring benefits.
“Information owns the world” — this has already become an axiom of the business world. Having specific knowledge about the client allows the service provider to provide more effective and accurate solutions to problems that are still brewing.
An excellent niche for business.
The very concept of “selling fear” is based on this premise and even develops it. After all, having unique information about several clients, the company can analyze the situation as a whole, identifying trends and predicting the course of future events. This creates an evidence-based model for assessing the reliability of building systems, which promotes the idea of “selling fear”.
The basis for such business tactics is laid by the SIP (Services Information Product) model.
The SIP model is based on the accumulation of unique information about clients, the source of which is statistics of services provided. This information is analyzed and based on it, a reliability model of building systems is developed.
Customer requests are catalogued, which makes it possible to create new types of services that bring real product and income.
All this happens with the aim of diversifying the service engineer’s portfolio of services. This is possible thanks to the information received from consultants about clients’ unique experience in using housing. Such information can really change the face of the housing construction market.
To evaluate is to measure
It just so happens that people, when making a purchasing decision, rarely “get the maximum.” After all, why would a client break his status quo and change his environment? It is usually not strategically helpful to suggest to a potential client that his needs, as well as his opportunities, 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 failure of building systems has a magical effect on the buyer. The fear of this is quite reasonable and can be measured financially, 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 specifically services to optimize building systems, then such an approach would require an emphasis on the predictability of benefits from the proposed project. Another possibility for implementing this approach is to highlight the financial costs of not optimizing building systems. A client may be more interested in a building optimization project if its goal is to solve a problem rather than “optimize something.”
It pays to make no mistake
Benefits from trading in fear is 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, and now this “fear fighter” concentrates his efforts on protecting property owners from potential troubles.
Consulting engineers’ estimates are now material in nature, as opposed to the previous practice of offering a “competitive” price. This price takes the company into the low-profit area.
However, the greatest value is the opportunity to extend the relationship with the client for the entire life cycle of the building systems, which 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, while at the same time developing deeper relationships with existing clients.
Is there a question of the universality of this approach, built on trading fear?
But One thing is clear: of all the representatives of the professional service sector, the service engineer is perhaps the only one for whom this approach is open, and the innovation itself creates unprecedented opportunities for property owners.
The article was prepared based on materials from Consulting magazine Specifying Engineer