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Posted By Mark Haas CMC FIMC,
Friday, September 11, 2009
Updated: Friday, September 11, 2009
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What do I do about the increasingly frequent, "I'm sorry, we just don't have the budget to fund this project right now" response to a well reasoned and sorely needed offer of assistance to a client?The budget closing objection is similar to several others, including the implicit objection that your price is too high for the work or value proposed. It is about perceived value. This can result from not talking to the person who will benefit directly from your intervention, thus a lower perceived value than you want. Second, you may be facing a competitive pressure from other vendors of services, even attorneys, accountants and engineers, all of whom may be facing market pressures to lower their fees. Third, this may just be a negotiation technique to see how much money the client can save (we are not the only ones who use "closing techniques"). Assuming you are talking to the qualified buyer and the one whose problem you are solving, it is critical to find out how much your services are worth to the client. One way is to not beat around the bush and just ask, "I understand you are cutting back on many investments, so tell me how much budget is available to improve sales efficiency by 20% (or whatever you are proposing)?" If the answer is "none" then your conversation under these terms is pretty much over. Either another service, another outcome or another buyer is called for. If they say "around $40,000," then you can, without cutting your daily fee if you are charging on a time and materials basis, start the discussion about trimming services to available budget. You should always be prepared with alternative formulations of your project (e.g., what could you do for 25%, 75% and 150% of your proposed fee). Tip: Budget objections are always tied to value. If your client was sued, they wouldn't say, "We just don't have the budget to defend ourselves," or if there was an office flood, they wouldn't say, "We can't afford to clean up the damage." Your services just need to be altered to find that value. © 2009 Institute of Management Consultants USA
Tags:
customer understanding
marketing
proposals
prospect
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Posted By Mark Haas CMC FIMC,
Thursday, September 10, 2009
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This has happened twice in the past year: I reach an agreement with a prospect on a project, only to be told that "the management team" or "a project review committee" has decided not to go ahead. How can I keep this from happening? There are two likely sources of this outcome. One is that you were really not talking to the fully qualified buyer. If someone does not have the authority to "issue the order" to start your engagement, then you should find the person who does. However, the model of a single qualified buyer may be flawed. It may be that the person was qualified as an individual but that, in your case, the decision does not rest with a single individual. If "the management team" is making the decision, you need to be addressing the team, or at least the most influential members of the team, with your proposed value and approach. Tip: If a board of directors or management team is making the decision to retain you, see if you can get some time in front of the entire group before the decision is made. This gives you some sense of who members are as individuals, their decision style, how they interact, and (hopefully) their disposition to using consultants and their attitudes about the situation or problem you propose to address. In addition to collecting market intelligence about the organization, issue and decision makers, it may be appropriate for you to presell or discuss your proposed approach or value with the board. Don't leave it to your prospect as an individual to convey your message to the decision making body as a whole. © 2009 Institute of Management Consultants USA
Tags:
market research
marketing
proposals
prospect
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Posted By Mark Haas CMC FIMC,
Tuesday, September 08, 2009
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My old firm never asked for a retainer or partial fees in advance of an engagement but I hear that some independent consultants will ask for a percentage of fees in advance. Now that I have left to start my own firm, how common is this and should I press this with new clients?It is quite common for consultants to ask for a retainer or some fees up front. But before you ask for an advance, think about why you would want to do this. There are several rationales (if you feel compelled to discuss this with your prospect). First, are the simple economics of getting your money as early as possible to manage cash. We pay for many services, such as groceries or movies, before we consume them, so why not consulting services? However logical this may be to consultants, our efforts are intangible services for which clients perceive some risk, so asking for partial fees up front splits the difference in risk between front end and back end payment. Second, the concept of "earnest money" comes into play. There is something psychological about putting money on the table first. As a former client, I can vouch for the attention-focusing impact of paying a significant amount of fees up front and having the consultant work through the retainer. Finally, there may be a measure of risk management in getting a retainer if you believe the client may not be able to pay. This is a real issue when your clients face cash flow constraints or if you are consulting in distressed industries. Tip: Your ability to secure advance payments from a client is mostly about their perceived risk of doing business with you. Certainly your reputation and referrals from past clients play a role. But the core of managing perceived risk in the client's eyes is your ability to create confidence in expressing the scope, sequence and content of your activities and the value created over time. It more likely you will only be paid after the fact if you are just "advising" a client or providing effort. You will only be paid for hours after you deliver hours. If you want fees in advance, your best bet is to convince them real value will be delivered in full, on schedule and guaranteed. You are more likely to get a piece up front if the client thinks you are delivering value rather than hours. © 2009 Institute of Management Consultants USA
Tags:
client relations
client service
customer understanding
fees
proposals
reputation
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Posted By Mark Haas CMC FIMC,
Tuesday, September 08, 2009
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I am a Gen Y consultant and I don't really have a brand other than myself, which I am OK with. Why do I need a company brand when the client is buying my services mostly for me and not my company?Perceptions brand value vary, and nowhere more than when considering how generations look at brands. Ther are three major types of brand for a consultant. Each may resonate differently depending on your type of practice and relationships with your clients. First is professional, often designated by a degree, license or certification. An MBA or PhD, for example, may be prized or denigrated, depending on a client's perceptions of the value of academic degrees. Professional certifications and government licenses are generally recognized as validating experience, knowledge and practical accomplishment (e.g., MD, PE, CMC, ATR for pilots). Second are institutional brands. For most of the later 20th century, who you worked often for carried more weight than who you were as an individual or your academic or professional pedigree. You've heard the expression, "No one ever got fired for hiring XXX"? Many consulting firms used to be, and some still are, strong brands. However, following a series of ethical and management lapses in large firms, including more than a few consulting firms, a company name alone no longer automatically carries the weight it once did. The third brand is the personal brand. Although the rise of social networking and the "always on and public" style of Gen Yers is described as overly narcissistic by Boomers and some Gen Xers, there is something to be said for making a name for yourself beyond just your profession and institution. Because we are more mobile, staying at one company, and often one career, only a short time. Your most enduring brand may just be your personal one. Although a personal brand changes as your circumstances and interests change, it is more under your control than when the professional/institutional brands affected by company scandal or professional ethical lapses. Tip: It is never to soon to begin forging a personal brand. Certainly, it takes more time and effort than did an institutional and professional brands. Once you took a job or achieved your certification, you were all set for those brands. Creating and maintaining a personal brand takes more forethought and effort. Make it a priority to have other people know you first as you, rather than classifying you as the ___ (insert certification or degree here) who works for ___ (insert organization here). © 2009 Institute of Management Consultants USA
Tags:
brand
brand management
marketing
publicity
reputation
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Posted By Mark Haas CMC FIMC,
Monday, September 07, 2009
Updated: Monday, September 07, 2009
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We offer several services to clients around teambuilding, organizational assessments, and leadership and culture transformations. We occasionally introduce new services and products but are unclear which ones will be winners because each seems to have some clients who like them. How can we tell which ones to invest in and which to drop if they all sell reasonably well?There are emotional and logical aspects to this problem. First, you developed a new service because you saw a need in the marketplace and/or you had a capability and a passion to provide a service. Your company committed resources to its development and market testing then, with high hopes, you launched it to at least modest success. This is the emotional part, having invested both desire and hope into a new way to provide services. The second, logical, part is the financial aspect of running your business. You are a consultant because you want to help clients improve their leadership and culture, but you do so as a business. In any "helping profession" like management consulting, many of us would provide the services we do for free if we were independently wealthy. Hence the quandary when we deliver a service in which we are emotionally invested but one that does not produce much in the way of profits. The trick is to set up the conditions for deciding to invest or terminate before you launch, and stick to them. Tip: Part of your planning for a new service must be the profitability of that service. If you are selling a service at a bare minimum, you are starving other services for which you could be making a much larger profit - and whose value to clients is much larger. Two points. First, you need to really understand how much a service is costing you to provide. This means tracking full costs of marketing, administration, and delivery and weighing this against revenues and risk. Second, set some standards for how you will evaluate your service's profitability and when. Usually, if you don't have a demonstrably successful product launch (when enthusiasm is highest and you target your best prospects) the likelihood for increased profitability is lower. Be realistic about your natural inclination to think "costs will decrease with experience" and “more clients will come once they hear about this service." This may be true, but if your service doesn't make the grade with your best shot, drop it and improve your most client-valued services. © 2009 Institute of Management Consultants USA
Tags:
innovation
market research
marketing
planning
product development
your consulting practice
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