In a recent blog post, Business Development & Its 6 Biggest Pain Points, Helbling & Associates discusses the current business development (BD) challenges that many A/E/C firms are facing. In another post, Solutions For Your Business Development Challenges, it outlines the basic operational principles that support a solid BD strategy. But there is an additional concept that is important when creating a balanced BD program - the Pareto Principle, also known as the "80/20 Rule".
The 80/20 Rule in BD means that 80% of BD efforts are spent on retaining current customers and 20% of efforts are focused on acquiring new customers. By applying this simple concept, a company can save time and money as well as contribute to increased profits. Why?
Consider how much effort goes into retaining a current customer whom you have worked with in the past and have already developed a relationship. Then consider how much effort goes into identifying a new customer and acquiring them, which can take months or years of pursuing the relationship. When comparing these scenarios, the equation of profit minus expenses can be drastically different with retaining a current customer utilizing much less internal resources and money. That is the primary reason why the 80/20 rule is an effective concept in a BD program.
Realistically, acquiring new customers is critical for a company's growth. But it's important to keep in mind the value of ensuring your current customers are getting what they want and need to retain them as clients for additional and future projects and to have them recommend you to other potential customers. There are many ways to do this but you can start by asking yourself the following questions:
Does my company make its transactions easy and smooth for customers?
Does my company have a process to ensure that it fully understands and addresses its customers' wants, needs and objectives?
Is my company responsive to its customers in all aspects?
Does my company follow up after completion of a project and conduct a customer experience or satisfaction survey?
Is my company doing anything adverse that is pushing customers away from securing us on future projects or from referring us to other potential customers?
Though all of the above questions are important to address, #5 is by far the most important question you need to ask and resolve immediately.
In conclusion, developing a balanced and effective BD program is a common challenge that has been identified within the A/E/C industry. By asking yourself the above questions, applying the 80/20 rule and researching customers' needs, wants and levels of satisfaction, you can improve your customer retention and increase the efficiency and productivity of your BD efforts.