When used consistently, this strategy will allow you to grow faster, raise fees, shed bad clients, and ramp up your pipeline of job candidates.
I spend a certain amount of my time on LinkedIn. I like that it isn’t full of politics and conspiracy theorists, and, for the most part, people there are talking about business. I will say, however, that I see a lot of architects talking about how underpaid and overworked they are, along with a certain number of engineers complaining that they can’t get good fees. All of them are usually also griping about having too many hoops to jump through to get a project, and then when they do, they struggle with getting paid by their clients on time. Oh yeah – and don’t let me forget to mention the difficulty most companies claim to be having filling their job openings.
The answer to all of these problems – and more – could be solved over the long haul by employing a strategy I have only recently decided to start referring to as “over-marketing.” What is over-marketing, you might ask? I can describe it quite simply as consistently spending more and doing more marketing-wise than what would be considered “normal” for a firm of whatever type yours is. How much more? Let’s say one-and-a-half to two times what everyone else is doing. And for how long? Forever. That means you never stop.
I have been a student, teacher, and active participant in the AEC industry and entrepreneurship for most of my life. And I am going to make a bold statement: I have never seen a firm in the AEC business, or any industry that actually used this strategy over the long haul, fail to succeed well beyond its peers – ever!
Let’s take a look at a “typical” architectural firm of about 20 people. Maybe it has a couple of owners. They do about $3 million a year in net service revenue. They have an effective labor multiplier of 3.2. They spend about 7 percent of net service revenue on marketing. The principals make a couple hundred thousand a piece annually – a good living by most standards. They have an 80-day average collection period, close to a million dollar book value, and their firm, if they wanted to sell it, is worth about $2 million.
Now I want to paint a picture of what one could do with this business. Let’s just say for the sake of discussion they kick up their marketing expenditures by 5 or 6 percent of NSR. This will allow them to do original research on specific client types, publish their research and get it out to specialized media as well as present it at industry conferences, mail 30 postcards annually, post original content three times a day on LinkedIn, implement a real CRM and do the training required to get everyone using it, hold an over-the-top open house at their office annually, participate in four major trade shows a year, and more.
Let’s say they over-market like this for 10 years in a row. If they did, I would not be surprised if they had a 250-person company doing $40 million or more in NSR, growing by 20 plus percent annually with higher than average labor multipliers, making a 20 percent profit. It would not shock me if their principals were earning seven figures annually and their business was worth $40 million or more.
My point is this: Consistently over-marketing will allow you to grow faster, raise fees, shed clients that are hard to deal with or won’t pay in a timely manner, move into new geographical markets or client sectors, and ramp up your pipeline of job candidates. This allows the firm to be more profitable and the owners to make more money and build a much more valuable firm because it is growing rapidly.
You think this is an impossible fantasy? Think again. I have seen this “over-marketing” strategy work in every type of AEC or environmental firm, as well as all manner of other businesses that serve proven large, mature markets. It can’t be used sporadically. It has to be employed consistently over many years. And it takes faith and a higher risk tolerance than many professionals have.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.