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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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#229: Picking the Right Metric to Show Your Value

Posted By Mark Haas CMC FIMC, Thursday, January 28, 2010
Updated: Thursday, January 28, 2010
Every consultant says they can deliver great results for their clients, and most of us claim personalized service. How can a consultant compete if everyone is using the same measures of value?

Two ideas come to mind. First, there may be some value to using the same measures as other consultants, making it easier for your clients to compare the value of your services "apples to apples." If you say you are going to return X% on investment (i.e., your fee), or you can reduce personnel costs by Y%, at least you have something quantitative and in terms by which a client would evaluate other investments. The down side of this is you may be rigorous or conservative in your calculations but your competitors are not bound by your standards. You have no way of knowing whether your plausible 35% ROI will compare to your competitor's 1000% ROI, based on entirely different criteria.

Second, you are always better off casting your value in as few terms as possible and in terms that target your client’s or prospect's point of pain. If sales effectiveness is the problem, you might frame your value as an increased sales close rate. However, look closely at the presumed point of pain to find the right benefit metric. If the presented pain is cycle time, it might be that the real issue that matters to the client is unit cost of produced goods, and cycle time is only one part of the cost calculation. Frame your solution metric in the same terms as the problem, not just the symptom.

Tip: In addition to your chosen metric, I suggest another one that is not always used: Speed to Value. This is defined as how long before your results start to appear. All managers are impatient about results. Some may have waited too long before calling you. Show them that, in addition to delivering on their point of pain, your services will return results within weeks, days or hours.

© 2010 Institute of Management Consultants USA

Tags:  client relations  client service  customer understanding  proposals  prospect 

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#214: Pricing Consulting Services

Posted By Mark Haas CMC FIMC, Thursday, January 7, 2010
Updated: Thursday, January 7, 2010
I am at a loss to know how to price consulting services these days. Some of our markets support healthy rates and in others we are experiencing heavy resistance. We have clients who are, for the first time, using rather sophisticated pricing models and challenging us on almost every value point. And we are using value billing, not daily rates, so this is a new one for us. What's going on?

Other than a generational disruption of the economy, an influx of new "consultants" from the ranks of business, the commoditization of professional services and a greater client emphasis on squeezing value from every expenditure, nothing comes to mind. It is a cliché to say that good consultants will command higher fees and lesser mortals may not be able to charge high enough rates to remain in business. However,, in either good markets or bad, whether your industry or specialty is ascendant or in decline, there are several fundamentals of pricing consulting services to which we should attend.

The very first piece of advice is to recognize that you are trading something valuable (skills, experience, connections) for something else valuable (cash or equity). Where you can make the case that your contribution can generate more than the value from which you are paid, the client is eager to make the transaction. A good client expects to pay fairly, if not well, for superior service. If you are in discussions with a client who wants something for nothing, it's time to consider another client. Second, if you tie your fees to the volume of effort you contribute, you have commoditized your skills into a relatively undifferentiated element of time, for which you will compete with the lowest bidder. If you cannot define the timeless value you are bringing to a client, then maybe all you are bringing is hours, which means you are not ready to have the fee discussion. Third, the manner and timing of fee discussions impacts tremendously your ability to be compensated for the value you bring. The general rule in fee negotiations is that the person who mentions money first, loses.

Tip: The process of estimating and negotiating price requires some serious skills and attention to detail. The better books on the subject emphasize understanding the client mindset and present a clear pricing model, while deemphasizing issues like calculating how many hours you need to cover costs. One of the best is Pricing Consulting Services: How to Set Fees For the Value You Deliver by Michael Shays. Shays is a veteran of consulting in a broad range of industries, countries, consulting firm types and economic environments. Learning the nuances of his pricing triangle of Client Perceived Value, Market Perceived Value and Consultant Perceived Value will provide the insight and courage you need to master the pricing of your work.

© 2010 Institute of Management Consultants USA

Tags:  customer understanding  fees  market research  marketing  proposals  sales  your consulting practice 

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#194: The Close is a Challenge for Both Consultant and Prospect

Posted By Mark Haas CMC FIMC, Thursday, December 10, 2009
When the close for a consulting engagement takes a long time or never happens, I always wonder what I could have done differently. How can I get over this feeling that I didn't do enough?

In good times, clients call us out of the blue and referrals reach out to inquire about our services. The new normal is that businesses are more prudent about investing in outside advisors instead of fully using existing staff. Your need to make the case of your services as a wise investment hasn't changed, but the bar has been raised. The world changes even if you don't and your attitude going in to a pitch determines to a large extent how you feel after.

Consider your discussion with prospects as an proposed exchange of "value for value." You have something of value (expertise) and they have something of value (compensation). Assuming you have correctly characterized the opportunity or challenge they face, you may or may not reach agreement on fair compensation or the path forward. That evaluation by the client is only partly under your control and they may not see your value or be able to compensate you adequately for it. Remember, the close is as much a challenge for the prospect as it is for you. If you are even having the conversation, they see intrinsic value in your expertise. A "no" only means that your perceptions of the value differ, and is usually as much a disappointment to the prospect as much as it is to you.

Tip: As many books on closing will tell you, a "no" does not mean your services have no intrinsic value. It just means that they don't for this client at this time. Lest you think this lets you off the hook, a "no" is also an opportunity and a challenge to refine both your selection of prospects and sales pitch so that you can find the best chance to get to "yes" next time. Although it may be a disappointment at the time, consider a "no" as advice on how to increase the value of your services.

© 2009 Institute of Management Consultants USA

Tags:  brand  communication  customer understanding  market research  marketing  proposals  prospect  sales 

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#192: When Your Win/Loss Ratio Seems Low

Posted By Mark Haas CMC FIMC, Tuesday, December 8, 2009
I have been losing a lot of prospective engagements lately. Even when the clients specifically call me to see what I can do for them, the ratio of wins to losses is way down.

There is certainly a lot of competition in the market today and, as the economy starts to recover, the consulting market has not yet hit bottom. Although various consulting markets are on their own schedules relative to the economy, generally consulting lags the business cycle by one or two quarters. When the economy started down, the consulting market was still relatively good. Now that the economy is picking up, clients are still cautious about engaging consultants. This is especially true in markets where management salaries are being cut and staff laid off. It is hard to justify to staff why a company is paying consultants when staff is being cut back (even if this is a logical investment from a business standpoint).

At a minimum, don't get upset by your win/loss ratio. Remember that George Washington only won three of the nine major US Revolutionary War battles he commanded. He knew that some losses were acceptable against unfavorable conditions. He was positioning himself for battles he knew he could win, even though he knew he needed to at least partially engage in battles he would probably lose.

Tip: Focus on the types of engagements that play to your strength but more so to the emerging needs of clients. Instead of thinking about what consulting services you prefer to provide, consider what services your clients need most to emerge from the recession in a stronger position. Pay attention to their reasons for why they can't use your traditional services right now. Turn a rejection of your services into a learning opportunity.

© 2009 Institute of Management Consultants USA

Tags:  client development  customer understanding  learning  marketing  proposals  prospect  sales 

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#191: Making a Powerful Impression with Stand Alone Presentations

Posted By Mark Haas CMC FIMC, Monday, December 7, 2009
Updated: Monday, December 7, 2009
I would like to find some way to differentiate my consulting company. We have nice collateral, both design and content, but it seems many others do as well. How do I separate myself from the consulting marketing noise?

In any competition for mind share, the key word is memorable. To stand out from the clutter, your few seconds in front of a client must be high quality, relevant to the prospect's needs, and have an element of intrigue. There are legendary stories of product sales pitches for which a demonstration was vivid and relevant and became the new standard for that industry (usually until the creator of that novel pitch came up with something even more memorable).

It is important is to weave your service value into a story. An archetypal story with a setting (in this case, the business environment), protagonists (your prospects and their competitors), conflict (the "unsolvable" problem or opportunity they face) and resolution (that would be your services) is a powerful weapon to get them to consider your firm. This is more than a case study, which appeals to the intellect. Create a narrative that appeals to their emotion - it is likely to be the only one they hear.

Tip: Also consider format. Most consultants know the "Shift Happens" or "Did You Know" videos. Consider the impact (as evidenced by the number of viewings on YouTube) these messages have. Rather than putting your "corporate capabilities" into a folder of slick sheets, what if you created a 3-4 minute presentation that got right to the point about the pain your solutions could reduce? Because it is about the client and not the consultant it is more emotionally engaging. The unique and fast pace of the format makes it more intriguing and easy to absorb. The fact that the structure leads directly from their problem to your solution makes it effective. Finally, if you host it on your site, if allows people to look around for other services they might need. If it is really good like the Did You Know videos, it might just go viral!

© 2009 Institute of Management Consultants USA

Tags:  marketing  presentations  proposals  sales 

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