Not too long ago, a Midwestern city considered changing engineering consultants after using the same firm for 25 years.
During a City Council discussion on the subject, one of the councilwomen said, “(The incumbent consultant) hasn’t done anything wrong, but after 25 years, we need to give someone else an opportunity as well. If we don’t give other companies a chance, I think that’s wrong.”
The City Council was then told that, according to the agreement the city had signed with the engineering firm years earlier, the city would have to pay the firm $100,000 for its intellectual property rights if they terminated the agreement. Upon learning of this provision, the City Council voted to table the discussion of terminating the engineering firm.
For years, we have been preaching that A/E firms must look harder at the value of their intellectual property. Here is a case of an engineering firm that did just that— and avoided losing a client they’d had for 25 years!
Many principals believe that just keeping clients happy will keep them loyal. But this is a case where the client was happy but still desired to change consultants. What are you doing to create an “exit barrier” that will prevent you from losing a long-time client?
About the Author: David Burstein is a PSMJ consultant and seminar leader at PSMJ. Every year he does a forecast of the various architecture, engineering, and construction (A/E/C) markets.
Looking for more information on how to keep your clients loyal, check out PSMJ's A/E Business Development Study: How Today’s Most Successful A/E Firms Keep Their Clients Happy and Win New Work, which is available as a complimentary download.
