The recent global recession has dramatically changed the world and people’s perception of value and service. In fact, I’d say we have ushered in a new epoch, one that is indeed value conscious. It would be overly simplistic to suggest that the recession alone has caused this way of thinking. Access to information on the Internet has also contributed to this mindset largely because people equate access to doing and implementation, when the twain do not necessarily meet.
The result of this is that consumers feel compelled to negotiate and bargain down products and services, often times to their detriment. In short, just because a vendor is willing to work with a low offer doesn’t mean that it is in the customer’s long-term best interest.
We know for a fact that there was a great erosion of wealth when the capital markets tanked. In the U.S., the subprime residential lending market appears to have led the way, causing rapid loss in equity that led to unprecedented foreclosures and more market uncertainty, etc. People lost financial wealth and confidence in one fell swoop.
Nonetheless, they still need to do certain things, like remodel their homes or move into new office spaces or forge ahead with life by opening new businesses or moving to different states. These changes require the professional services of interior designers, architects and landscape architects, and the many contractors and subcontractors who actually implement the designs.
Here’s the rub: In almost all instances, the costs of running the professional offices have not gone down, nor have the cost of goods or labor for the contractors. What has decreased is income, and what has increased is client expectation.
It’s kind of a perfect storm for things to go wrong, unhappy clients and their design partners, wrought with clients demanding more and vendors trying to appease the requests in order to get the work. Professionals and artists need to practice their craft and stay in business and the clients need the services and products provided; it’s supposed to be a win/win.
The result of this “perfect storm” is the probability that firms are forced against a wall to cut their margins so significantly, that they are just in business to “keep the lights on.”
In the short-term, this can be all right since it forces a firm to look internally for cost savings. However, in the long term, after the cuts have been passed through, senior staff laid off and everyone working longer hours, it leads to loss of job satisfaction and design creativity, mistakes made from excessive hours and less oversight and the need to find other ways to make up the profitability.
In the end, the client pays for these mistakes in cost overruns and change orders or perhaps in design that is not what it could be because the firm simply does not have the extra time needed to find the perfect solution. There is a difference between good design and great design, the latter of which needs to be nurtured and supported.
As a quick reality check, I think it is fair to say that there are some amazing firms that are exceedingly busy right now and still manage to command the fees they need to produce top design and quality implementation.
I would suggest that those clients choose to pay what is required and recognize that a high level of customization and creativity needs to be supported in a proactive and enthusiastic way. However, the majority of firms are suffering and many have gone out of business. Yes, we can all sharpen our pencils. But, at the end of the day, creative talent needs to feel appreciated and one of the ways this is done is by paying what the talent asks for and becoming a preferred client, not just a “keeping the lights on” client.
Lloyd Princeton is a business consultant and motivational speaker devoted to interior design and architecture. Princeton frequently speaks in North America and has lectured internationally. For more, visit www.dmcnyc.com and www.imatchdesigners.com.