Archive for the ‘National Accounts’ Category
|Integrated Services: It’s Not Your Parents’ Pitch Meeting
Wednesday, May 26th, 2010
By Vik Bangia
Ah yes, the integrated services opportunity. Otherwise known as that great big gap where excellence in point solutions meets a potential customer with multiple needs. In the real estate services industry, the zeal to close the deal is often what kills the larger opportunity. These days, the structure and format of the integrated services pitch meeting has changed dramatically from similar meetings 10 or 20 years ago. However, if the integrated services sales approach is handled appropriately, the results can be outstanding.
First, it’s important to understand the goal, and the best way to understand the goal is by understanding what it is not. It’s not transactions, it’s not revenue, and it’s not even expertise. Rather it is relationship, trust, and safety.
Relationship
The prospect wants to know and needs to be shown that the service provider intends to be in the relationship for the long haul. That’s difficult to do when the service provider is looking only at short-term or near-term portfolio opportunities, but there are a number of tools and techniques that can help.
One such relationship building tool is called the discovery. The discovery is a method for arriving at a common understanding of the prospect’s problem and situation. In order for the service provider to present an integrated solution that makes sense to the prospect and gets their buy-in, there must be a mutual agreement as to the defined need. Otherwise, the service provider is left guessing, and the prospect is left wanting. When the service provider offers to perform an in-depth discovery, they are showing the prospect that they will gain a deep understanding of the prospect’s business goals, challenges, and constraints before they propose a solution.
The goal of a discovery is not to arrive at a solution, but rather a scope of work whose solution will allow each integrated service proposed to provide a direct benefit. It is undesirable to separate the prospect from the sales process, and the discovery process fully engages the prospect in developing their vision for an ideal solution. Throughout the process, the service provider must express candor, humility, concern—and even regret—for the historical failure of the real estate industry to truly understand its clients’ needs.
Remember, with integrated services sales, the sale is not made as a snapshot in time. Service providers need to know that things change, needs change, and the prospect’s business will change and, as a result, must promise to treat the relationship as an unfolding story.
Trust
As service providers, we must learn not to allow the stages of the decision process to be rushed. What was once called a “baby close”, is now positioned as an “offer to reconvene” well after the prospect has said everything they want to say. Why? Because after an integrated services meeting, there’s an awful lot to digest for the prospect, and there is an overwhelming need to achieve clarity, which requires time. By putting themselves in the prospect’s shoes, and by offering the needed time to make a decision, the service provider shows empathy and sets itself apart as confident and trusting in the prospect’s discernment. Competence is not in doing the work, it is in handling the crises. That’s what the prospect needs to believe about the service provider – that they will be there when it counts.
Safety
What constitutes a safe choice? Size? Financial Stability? Reputation? I would argue safety is fluid and relative considering that Enron Corporation was once considered a safe stock investment. Instead, look at safety as one of the core fundamentals of ethics, integrity, and business philosophy. When these characteristics are embodied by people across the firm and lived out explicitly, then and only then can a prospect define the safe choice in a real estate service provider.
In an integrated services opportunity, the prospect’s objectives can seem incompatible, and service providers usually mishandle the opportunity by either narrowly focusing on one area of expertise or overwhelming the prospect with more than they need. However, the discovery process is one tool of many that, when used appropriately, can make all the difference.
What do you value in an integrated service provider?
Tags: integrated services, prospect, sales pitch
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Give Them What They Want
Wednesday, April 28th, 2010
By Vik Bangia
It seems to me that corporate clients want certain things from their real estate service provider, but they haven’t yet been able to articulate these wants in a Request for Proposal (RFP). Interestingly, outside of the RFP process, they’ve been very clear. I speak to several corporate prospects and one thing I’ve realized is service providers need to learn to answer the questions prospects and clients wish they could ask regardless of whether they actually ask them. Better yet, we need to find a way to let their purchasing or procurement departments know what those questions should be in the first place so they’re actually in the RFPs we answer.
What do corporate clients want?
Here’s what I’ve heard:
- Corporate clients want a formal report, delivered annually, that lists the immediate
opportunities in their portfolio and takes into account market conditions as well as
specific provisions in their lease documents, such as renewal, extension, or termination
options.
- They want the ability to report live data to their senior management, in dashboard form,
that shows their competitive position within the industry as well as against internal
benchmarks they set for themselves.
- They want help establishing those internal benchmarks in the first place.
- They want involvement from the service provider’s senior leadership in addition to that
of their local team.
- They want to receive tangible evidence of thought leadership and best practices through
articles, white papers, and industry involvement. Those that are not involved in
professional organizations feel they don’t know what’s going on in the real world. Even
those that are involved feel limited in the level of meaningful information they receive.
- They want us to come in and help them analyze their internal processes, recommend
improvements, and measure the success of our implementation.
- They want us to report on value add – not just our value add, but something they can
take to their management that shows their value add. More than ever, these people are
under pressure to justify themselves to their management.
- They want service providers to come to them with innovative ideas that have impact on
a portfolio-wide basis (sustainability opportunities, energy management, lighting retrofit,
etc.).
If the service provider community would package these wants and offer them as part of their national account services and not as add-on services, more corporate clients would be receptive. If they actually delivered on these bulleted items, more clients would stay contractually engaged with their existing providers for longer periods of time.
To do this, service providers need to think in terms of both products and services. Good, tactical service delivery is important, and so is adopting an account management way of thinking. Obviously, there is a revenue threshold for which this approach makes sense, but in example after example, the investment of a service provider’s time, energy, and effort have a remarkable payoff. With most real estate service providers, it’s not an easy thing to convince them to consider this as an investment and not an expense.
On the corporate side, it is imperative that Corporate Real Estate (CRE) management within corporations help their internal procurement departments understand and articulate what they need to the service provider during the RFP process. Too often an RFP question will simply ask providers to “describe your account management approach.” This is way too open-ended. Perhaps an idea is to sit down with individual service providers and ask, prior to the issuance of an RFP, what their specific service and deliverables for you will be during transition and as part of ongoing account management on a quarterly and annual basis.
Do you get all of the information you need from real estate service providers during the RFP process?
Tags: corporate real estate, request for proposal, RFP
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Real Estate as an “Infraservice”
Wednesday, March 3rd, 2010
By Vik Bangia
In the area of corporate real estate outsourcing, smart service provider firms understand that the purpose behind their engagement is more than just doing what they’ve been told. To understand exactly what comprises a good outsourcing plan depends on the specific needs and challenges of the client’s organization, and that’s often difficult to discern. In most cases, it follows naturally with the size of the company. To get to that level of understanding, real estate has to be considered an infraservice by both the client and the service provider. I define “infraservice” as a service that is key to the entire corporate infrastructure from Human Resources to IT, Operations, and Finance.
As a general rule, smaller organizations from mom-and-pop sized companies to burgeoning start-ups (nano-caps) to micro-cap firms are burdened with resource scarcity, limited cash flow, and survival issues. The outsourcing solutions to smaller firms are best delivered through the use of just-in-time and variable resources, financial portfolio optimization services, and a view towards freeing the company to focus on its core business. These firms can be from less than $50 million to $300 million in market capitalization.
Conversely, medium sized companies, such as those in the Russell 3000, are typically burdened by limited access to capital, recruiting and retention challenges, an overwhelmed infrastructure, unpredictable processes (due in part to their inherent entrepreneurial spirit), and the fact that real estate is not a core competency that has been built in to the organization. These firms benefit from highly consultative partnership models that deliver tactical services along with financial management skills and business controls. Small and Mid Cap companies are defined as firms with market capitalization ranging from $300M to $2 billion and $2billion to $10 billion respectively.
Big companies, such as those in the Fortune 1000, (also defined as those with market caps above $10 billion and extending to the hundreds of billions) have entirely different issues. They are challenged by multiple business lines with varying levels of profitability (if they are profitable at all), underperforming assets, bureaucracies, long-term liabilities, and lack of speed or mobility. In addition to a strong consultative skill set, the service provider has to be willing to step into the fray of organizational politics and competing business unit agendas. The challenge here is that most service providers working for Fortune 1000 companies are relegated to a commodity role because the bigger the organization gets in complexity, the more the purchasing or procurement department exerts its authority on decision making. This lends itself to service models that are based on price and not performance.
Even more challenging for big corporations working in this mode is that there are fewer and fewer alternatives available to engage only one service provider. And service providers working in this mode cannot see real estate as an infraservice while they are engaged as a commodity. A dilemma indeed, but one that bodes well for those firms that are nimble and can provide resources beyond those that think only transactionally.
No matter the size of the company, the real estate service provider’s role is to think like an infraservice provider and input the corporate requirements for HR, Operations, Finance, and IT into the strategic decision for the company.
Question yourself. As a corporate real estate manager, does your real estate service provider team approach their role as an infraservice? Have they understood your unique needs based upon the size of your organization? Are they trying to go beyond the tactical day-to-day service delivery and get into all aspects of your business? Do you consider them the “go to” team for questions ranging from leasing to organizational design to M&A due diligence? Do they approach their role as a business consultant as well as a real estate expert? If the answer to any of these questions is no, consider the fact that your real estate service provider may have already put themselves in a commodity role. If so, you’re not getting good value for your money (but you probably already knew that). Take this as an opportunity to bring in experts who can show you how rethinking the service provider relationship can enhance your relevance to your company’s senior management.
Tags: infraservice, infrastructure, real estate outsourcing
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Towards Optimal Efficiency
Wednesday, January 6th, 2010
B
y Vik Bangia
For the past twenty years, the mantra in the real estate service provider world has been “cost savings.” Most service provider firms in this industry say they’re experts on delivering real estate solutions that result in bottom line savings. Whether the savings is related to occupancy expenses, energy, or operating expenses, their stated goal is to reduce real estate spending. However, with any line of thinking, what starts small often goes to extremes, and what has transpired in this industry has damaged both client corporate real estate (CRE) organizations and service providers alike.
In the zeal to cut costs, CRE organizations made several missteps over the years. In the 90s they over-outsourced their real estate departments and dramatically reduced headcount; often losing institutional knowledge along with the layoffs. Service providers, in a similarly zealous effort, made recommendations that reduced short-term spending but neglected long-term implications especially in the changing economic times and challenges such as the 1990s recession, turn of the century dot-com era, and our recent (and continuing) economic crisis. The result was a glut of office space, scope creep on outsourcing engagements, and a push by corporations to compress service provider fees. This has commoditized the real estate services industry and made it more difficult for corporations to get what they needed all along, sound advice.
Instead of looking back at what could have been done differently, I’d like the industry to look forward about how to think differently about what cost savings really means. And as usual, I don’t turn to the readily available commercial real estate publications. Instead, I go back to the basics and open up my college physics book.
In physics, the optimal performance of any system is a range in which the system performs best. In corporate real estate, for simplicity, if you define this range as a line, the optimal efficiency of a corporate real estate department is achieved by bringing the organization closer to the line (see graphic below). Working against optimal efficiency are certain internal and external factors. External factors, among others, may include: the economy, competition, politics, regulatory issues, and public perception. Internal factors, among others, may include: vacancy, demand for space, attrition, asset value, and the company’s own business strategy.
In traditional real estate brokerage, an assumption tends to be that every optimal transaction creates an optimal portfolio. But a true real estate advisory approach considers the real estate portfolio as a “system” in which the optimal efficiency of the whole is paramount, and individual decisions are made with the system efficiency goal in mind.
This system framework is created by recommending and implementing the right combination of outsourced support services, CRE organizational design, internal processes and workflow, best practices, communication, internal customer relationship management, and both internal and external benchmarking.
The system then looks to define the optimal framework for decisions by developing space standards, communication and reporting protocols, financial and business controls, and performance measures.
In 2010, consider your real estate portfolio as a system which should be managed with a system view to efficiency. If you’re thinking about a new real estate service provider relationship, be sure to ask questions of your service provider candidates that go beyond the traditional day-to-day or deal-by-deal approach. If you’re looking for questions to ask, write me at vbangia@cresapartners.com.
Tags: cost savings, optimal efficiency, real estate portfolio
Posted in National Accounts | 1 Comment »
