Published:
5 August 2013
Category: Magazines and newsletters
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ECA - Electrical Industry Conference
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THE OPERATING ENVIRONMENT
THE OPERATING ENVIRONMENT
Steve Bratt ECA Group CEO
Steve Bratt ECA Group CEO
Fit and Run – The …
Fit and Run – The …
Fit and Run – The Lost Opportunity? • The operating environment • What are the opportunities • Some do’s and don’ts
Fit and Run – The Lost Opportunity? • The operating environment • What are the opportunities • Some do’s and don’ts
Fit and Run – The Lost Opportunity? • The operating environment – Workload forecasts and projections
Fit and Run – The Lost Opportunity? • The operating environment – Workload forecasts and projections
General Construction - BSRIA 0 10000 20000 30000 40000 50000 60000 70000 2012 2013 2014 New Work RMI
General Construction - BSRIA 0 10000 20000 30000 40000 50000 60000 70000 2012 2013 2014 New Work RMI
M&E Work Forecasts - BSRIA 0 2000 4000 6000 8000 10000 12000 2012 2013 2014 New work RMI £m
M&E Work Forecasts - BSRIA 0 2000 4000 6000 8000 10000 12000 2012 2013 2014 New work RMI £m
Construction Market Projections 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 £ m RMI New Source: Construction Products Association. Competitive Advantage
Construction Market Projections 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 £ m RMI New Source: Construction Products Association. Competitive Advantage
Construction Market Projections - CPA 0 10000 20000 30000 40000 50000 60000 70000 80000 2011 2012 2013 2014 2015 2016 2017 2018 2019 202 2021 New Work RMI £m
Construction Market Projections - CPA 0 10000 20000 30000 40000 50000 60000 70000 80000 2011 2012 2013 2014 2015 2016 2017 2018 2019 202 2021 New Work RMI £m
Fit and Run – The Lost Opportunity? • The operating environment – Work forecasts – Market assessment
Fit and Run – The Lost Opportunity? • The operating environment – Work forecasts – Market assessment
Market Assessment – new work Threat of new entrants Threat of substitutes Power of buyers Power of suppliers Not enough work / buyers market Undifferentiated – price! Uncertain / high risk Threats increasing • Few barriers to entry • Labour readily available • Competition from overseas • Mechanical companies moving to become multi service • FM companies moving into new technical areas • High degree of choice and control driving prices down • Driving risk down the supply chain • Poor payment practices • Material prices still increasing
Market Assessment – new work Threat of new entrants Threat of substitutes Power of buyers Power of suppliers Not enough work / buyers market Undifferentiated – price! Uncertain / high risk Threats increasing • Few barriers to entry • Labour readily available • Competition from overseas • Mechanical companies moving to become multi service • FM companies moving into new technical areas • High degree of choice and control driving prices down • Driving risk down the supply chain • Poor payment practices • Material prices still increasing
Impact • Uncertainty / short order book • Driven to take risks / cut prices • Drives up cost of acquiring work / getting paid • Inability to plan for long term growth • Creates cash flow instability
Impact • Uncertainty / short order book • Driven to take risks / cut prices • Drives up cost of acquiring work / getting paid • Inability to plan for long term growth • Creates cash flow instability
Market Assessment – RMI Threat of new entrants Threat of substitutes Power of buyers Power of suppliers Not enough work / buyers market Undifferentiated – price! Uncertain / high risk Threats increasing • Few barriers to entry • Labour readily available • Competition from overseas • Mechanical companies moving to become multi service • FM companies moving into new technical areas • High degree of choice and control driving prices down • Driving risk down the supply chain • Poor payment practices • Material prices still increasing
Market Assessment – RMI Threat of new entrants Threat of substitutes Power of buyers Power of suppliers Not enough work / buyers market Undifferentiated – price! Uncertain / high risk Threats increasing • Few barriers to entry • Labour readily available • Competition from overseas • Mechanical companies moving to become multi service • FM companies moving into new technical areas • High degree of choice and control driving prices down • Driving risk down the supply chain • Poor payment practices • Material prices still increasing
Fit and Run – The Lost Opportunity? • The operating environment – Work forecasts – Market assessment – Views of contractors and customers
Fit and Run – The Lost Opportunity? • The operating environment – Work forecasts – Market assessment – Views of contractors and customers
Fit and Run – The Lost Opportunity? • Views of ECA Members • “ Maintenance contracts represent 38% of turnover and are an important cash flow source, providing payment in advance for the service. This helps to ensure our fixed costs are covered”. • “Our service calls are 14% of turnover. We would expect to, and usually do, achieve 40% gross profit, which is a better margin than most other work”. • “If there are any changes to the building, customers contact us first for a quote and provided it is value for money, they rarely get another competing quote”.
Fit and Run – The Lost Opportunity? • Views of ECA Members • “ Maintenance contracts represent 38% of turnover and are an important cash flow source, providing payment in advance for the service. This helps to ensure our fixed costs are covered”. • “Our service calls are 14% of turnover. We would expect to, and usually do, achieve 40% gross profit, which is a better margin than most other work”. • “If there are any changes to the building, customers contact us first for a quote and provided it is value for money, they rarely get another competing quote”.
Fit and Run – The Lost Opportunity? • Views of ECA Members • “Customers with maintenance and repair contracts are extremely important and represent the highest customer retention group on our database”. • “We started out in Intruder Systems and we could see that the business in that sector was starting to plateau, so we decided to invest in the Fire Sector, having a database of loyal customers allowed us to promote this new service successfully”. • “ I realised my customers trusted us and that we were capable of managing the projects – so we moved up the food chain”
Fit and Run – The Lost Opportunity? • Views of ECA Members • “Customers with maintenance and repair contracts are extremely important and represent the highest customer retention group on our database”. • “We started out in Intruder Systems and we could see that the business in that sector was starting to plateau, so we decided to invest in the Fire Sector, having a database of loyal customers allowed us to promote this new service successfully”. • “ I realised my customers trusted us and that we were capable of managing the projects – so we moved up the food chain”
Fit and Run – The Lost Opportunity? • Views of customers Maintec – 80% of engineering and maintenance managers expect their maintenance budgets to remain the same or increase. 55% of businesses aim to increase profits by investing in technology to increase plant and building longevity. The top priorities were: • Outsourcing maintenance services • Reducing energy costs
Fit and Run – The Lost Opportunity? • Views of customers Maintec – 80% of engineering and maintenance managers expect their maintenance budgets to remain the same or increase. 55% of businesses aim to increase profits by investing in technology to increase plant and building longevity. The top priorities were: • Outsourcing maintenance services • Reducing energy costs
Fit and Run – The Lost Opportunity • Some facts about repeat business: • Every 5% increase in retention yields a 25-100% increase in profit • Repeat customers spend 67% more than new ones • Chances of winning work from new customers is 1 in 8 • Chances of winning work from existing customers is 1 in 2 • Repeat customers are likely to refer you to other customers • Repeat customers are more likely to pay full price
Fit and Run – The Lost Opportunity • Some facts about repeat business: • Every 5% increase in retention yields a 25-100% increase in profit • Repeat customers spend 67% more than new ones • Chances of winning work from new customers is 1 in 8 • Chances of winning work from existing customers is 1 in 2 • Repeat customers are likely to refer you to other customers • Repeat customers are more likely to pay full price
What are the opportunities?
What are the opportunities?
Fit and Run – The Lost Opportunity? … become a solution provider for your client
Fit and Run – The Lost Opportunity? … become a solution provider for your client
What are the opportunities?
What are the opportunities?
Some Do’s and Don’ts • Make sure you: • Know how to identify and maximise repeat business • Have the right skills, mindset and business model to maximise repeat business opportunities • Know who your most valuable customers are (LTV) • Know why they keep buying from you • Differentiate yourselves with the things they value • Know how to implement a retention strategy • Know how to incentivise customer loyalty • Ask loyal customers for referrals • Make sure you don’t: • Become one of Oscar Wilde’s “cynical men” • Become one of our industry’s “always someone”
Some Do’s and Don’ts • Make sure you: • Know how to identify and maximise repeat business • Have the right skills, mindset and business model to maximise repeat business opportunities • Know who your most valuable customers are (LTV) • Know why they keep buying from you • Differentiate yourselves with the things they value • Know how to implement a retention strategy • Know how to incentivise customer loyalty • Ask loyal customers for referrals • Make sure you don’t: • Become one of Oscar Wilde’s “cynical men” • Become one of our industry’s “always someone”