What Customers Think Might Surprise You

April 14, 2008
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If building owners or property and facility managers are among your customers, you should like hearing this. Members of our management team attended the National Facilities Management and Technology Event, one of the premier education and trade show events for building owners and facilities managers, and brought back the goods on what is on the minds of your customers, and what you need to do to successfully sell to them.

Far and away the hot topic this year was energy and sustainability. A quick tally of the education program showed that nearly one-half of the sessions (38 of 81) were dedicated to energy and sustainability topics.

If you don’t know what Leadership in Energy and Environmental Design (LEED) is all about, find out (here’s a hint on where to look: www.usgbc.org). The popularity of the United States Green Building Council’s (USGBC) LEED® program is growing exponentially. Brenden Owens, director of technical development at the USGBC describes the rate of growth this way, “When the first billion square feet of space becomes LEED certified, it will have taken approximately 7 years since the inception of the LEED program. The second billion square feet will take 7 months. The third billion will take 7 weeks.” However, LEED is not just for new buildings. LEED for Existing Buildings (LEED-EB) is expected to be one of the fastest growing programs in the LEED family, so even if your business focus is on service and retrofit, there is still a great opportunity for you.

ENERGY EFFICIENCY: A STRATEGIC ADVANTAGE

The AirAdvice booth at the event promoting a BuildingAdvice™ platform had the tagline, “How will you reduce your energy bills?” That message resonated with attendees, though their typical response was, “I don’t know, but I know I need to.” Hit by the effect of aging systems and rising utility rates, energy bills are increasing - and getting the attention of financial decision makers.

This offers a great opportunity for you to provide a valuable service by helping your customers reduce their energy spending. The key to success is to put it into financial terms. Rick Lubinski, president of energy consulting firm Think Energy Management, said, “I used to close about one out of every five proposals for system upgrades. When I moved the financial analysis from the back of the presentation to the front, I started closing four out of five.” People make decisions on dollars and cents, not kilowatt-hours and therms.

Energy savings can tie directly back to your customers’ strategic initiatives, and can offer tremendous financial leverage. If a firm earns an operating profit margin of 10 percent, identifying $100,000 in energy savings is the financial equivalent of increasing revenue by $1 million. Once you’ve already identified the savings, which would be easier? For the owner of a leased office building, the value of the building is directly tied to the cash flow it can generate.

According to one source, “A potential buyer of a multitenant office building might be willing to pay 10 times the positive cash flow of the property. If energy upgrades can reduce energy expenditures by $50,000 a year at the facility, the asset value rises by $500,000.”

OUTSOURCING

Facilities management organizations have long been turning to outsourcing to handle day-to-day maintenance activities within their buildings. That’s nothing new. What is a growing trend is the use of strategic supplier agreements that reduce the number of contractors that may work in a facility while expanding the scope of work for the remaining contractors. The key drivers behind this trend are reducing the overhead cost of managing large numbers of suppliers and providing an increased share of the business to firms that provide innovative and high-quality services.

As Tim Frank, portfolio manager for Toyota Motor Sales, U.S.A. said, “We have contracted with a single firm to provide facilities management services for all of our corporate offices in the United States. We have found that a single point of contact offers a big advantage in quality and consistency across our operations.”

As we talked with building owners and operators specifically about their needs to reduce energy and the role energy assessments play in that process, there was a consistent desire to find a firm with the capability to provide that service. In virtually every case, the owners we talked to represented dozens, if not hundreds, of buildings. These potential customers are looking for firms with expanded capability in assessing the energy performance of their buildings, including energy assessments as part of the service offering. This provides an opportunity to differentiate your capabilities in comparison to your competition.

Publication date: 04/14/2008

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