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Between 2005 and 2011, IMC published Daily Tips every weekday on consulting ethics, marketing, service delivery and practice management. You may search more than 800 tips on this website using keywords in "Search all posts" or clicking on a tag in the Top Tags list to return all tips with that specific tag. Comment on individual tips (members and registered guests) or use the Contact Us form above to contact Mark Haas CMC, FIMC, Daily Tips author/editor. Daily Tips are being compiled into several volumes and will be available through IMC USA and Mark Haas.

 

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#130: Overcoming Fee Objections

Posted By Mark Haas CMC FIMC, Friday, September 11, 2009
Updated: Friday, September 11, 2009
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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#129: Remember That "The Decision Maker" May be More than Just One Person

Posted By Mark Haas CMC FIMC, Thursday, September 10, 2009
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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#128: Getting Your Fees Up Front

Posted By Mark Haas CMC FIMC, Tuesday, September 8, 2009
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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#124: A Better Way to Ask For Referrals

Posted By Mark Haas CMC FIMC, Thursday, September 3, 2009
Updated: Thursday, September 3, 2009
I have been relatively unassertive about getting referrals from past clients and I have not been very successful in doing so lately. Are there better and worse ways of asking for referrals and testimonials?

One thing to consider about referrals and testimonials is that they are not really about you as a person or a professional. People who ask for referrals by soliciting in terms of how great they are or how much they did for the organization are less likely to get much of a response from the referral source. It is great for one's ego to have a client say wonderful things about you. Who doesn't like a little praise once in a while? But consider how the recipient of a referral will react when the topic is all about you instead of what you can do for them and their organization.

An effective referral or testimonial (the latter being one tangible form of the former) should be thought of principally in terms of how it will be received by a prospective client rather than what is feels like for you to get it. That is, what will the person getting the referral consider as the benefit to them from your services. That you are competent and ethical is nice but more important is an example of how you brought (and can bring to them) value, performance, cost savings or increased profitability. Don't let your ego get in the way. As a consultant, you were probably one of dozens, if not hundreds of staff and other consultants who contributed to the success of an organization. Spend more time talking about how you were able to work with the staff and executives to help them do their jobs better. Nothing induces a lukewarm testimonial more than a consultant who takes credit for more than his or her share.

Tip: Cultivating a referral or testimonial starts long before you actually ask. At the beginning of an engagement, make a list of the kinds of value you plan to provide and that would induce a prospective client to favor your services. During the engagement, update the list with specific examples of contributions you have made to the client organization. Every so often, check with your client and confirm whether he or she sees this kind of value you are providing. If the client says it is unclear whether you are providing this kind or this much value, go back and make a better case or take this off your list. When it comes time to ask for the referral, the client will be familiar with (and have confirmed) the set of valuable services you have delivered and provide you with an appropriate recommendation.

© 2009 Institute of Management Consultants USA

Tags:  client relations  client service  consultant role  goodwill  proposals  recommendations  sales 

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#121: Will a Virtual Team Really Work Well Together?

Posted By Mark Haas CMC FIMC, Monday, August 31, 2009
Updated: Tuesday, September 1, 2009
I have just completed a bid on a project for which we assembled a half dozen specialists. Only a few of us have ever worked together before and I have some concerns about our ability to work well together when the project starts.

As clients look more for the right expertise, whether or not it is in a single firm, virtual teams are becoming more common. It is often best to work with people whose ethics you trust and technical skills you respect and people with whom you have already worked. However, this is not always possible and, on some highly specialized tasks, you must assemble the best people even if you don't know them. This is usually the responsibility of the engagement manager, who plumbs his or her networks to create a team. There are two ways to get a sense of how well a virtual team is actually going to work.

First, to what extent do you trust the ethics and business skills of the engagement manager? Is this someone with whom you have worked before? Was anything said or done during the development of the project approach or costing that gave you pause about this person? Would you trust this person to take over one of your engagements and expect good client services from them with your best clients? If so, then you passed the first test.

Second, how was it to work with the other team members? Was it a professional experience, with clear and easy communication? Did each person deliver on their responsibilities and effort, or were some reluctant to do their share? Were they respectful and generous in their approach to offering criticism and suggestions? Even if you have never met them, can you create a mental picture of them with some comfort? If so, then this bodes well for a professional and productive engagement.

Tip: When you find yourself invited to participate in an engagement pursuit, make a mental (or written) list of the criteria you would use in selecting a business partner. As you begin to work with the virtual team in developing technical and costing approaches, check off which individuals meet your criteria and which ones fall short. If you are not getting any information about a particular person or about one of your important criteria, dig a little deeper. Soon, you will have a good idea whether your new teammates are ones you can trust and respect. If they come up short in several areas, reconsider (quickly) if being part of this team is in your best interest.

© 2009 Institute of Management Consultants USA

Tags:  client development  collaboration  consulting colleagues  ethics  marketing  proposals  teaming  virtual teams 

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