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Consulting Sales: How Should You Develop Your Strategy?
HomeStrategyConsulting Sales: How Should You Develop Your Strategy?
Consulting Sales: How Should You Develop Your Strategy?
Welcome to the next episode of our management consulting iTunes channel How to Build and Grow a Consulting Firm, where we discuss the business of running and growing a consulting fir. In today’s episode, I want to talk about a question everyone faces frequently. Every time things do not go well when it comes to growing a consulting firm you are forced to confront the question, “What should your consulting sales strategy be?”
For example, let’s imagine you are leaving a consulting firm to set up your own firm or working in an industry and want to consult back to your former employer and their competitors. You are going to have to ask yourself, what should your consulting sales strategy be. I am going to answer this question and we will discuss it with an anecdote from my past.
When you start a consulting firm, it is easy to get caught into a long process to study the market, think about your skills, understand the business models you have, and then develop your strategy. All of that is a waste of time.
Many years ago, when I was a senior partner in corporate strategy, I used to act as a troubleshooter at the firm. So, when the clients were giving our firm a hard time on difficult assignments and engagements, the other senior partners would send me in not only to smooth over the relationship but to also get the work back into shape. So, I did that quite a lot and it went very well in Asia and Latin America and so on.
Then, my role shifted a bit whereby I was sent in to help reboot offices that were performing poorly. I was sent to those offices to stabilize them and figure out how to grow them or how to manage their client relationships. While major firms do not like to talk about sales or money, if these offices do not perform well, it is obviously draining the firm’s resources. At the end of the day, if the office is not generating profit, it is a drag on the balance sheet of the firm and that needs to be fixed.
So, this happened a few times but here is a good anecdote. I was sent to Latin America. I arrived in the capital city of this country. It was not a new office, but an office that had struggled in recent times due to an exodus of certain key partners who moved into industries.
Consulting sales approach error: getting into a long process of prospecting a client
So, the firm was struggling in that city. It was a relatively new office and not that established. The airplane had lost my clothing, so I arrived wearing the same clothing as I had on the trans-Atlantic flight the previous night. I looked like some kid from a J. Crew catalog and I went into this meeting with some of the other partners.
My colleagues were in name only as I had never met them before. The firm is big, so you do not know every partner. I was a lot younger than these partners and I was obviously not the ethnicity of the dominant group in that country. So, I had the trifecta of negatives going against me.
They brought in some of the engagement managers and we were talking about what is happening with consulting sales, just a general conversation.
When you are sent in to turn around the office, even though you have the mandate to turn it around, you technically do not have a mandate because those local partners need to accept you first. People always forget that at the major firms you generally cannot tell people what to do there. It is a partnership. Even if another senior partner sends you, the local contacts need to accept you.
So, I could not go in there and say, “Okay, we have a meeting, let me tell you what to do to grow consulting sales”. So, I was having a discussion. I ordered breakfast for them and we were all sitting and talking.
The engagement managers and some of the new partners had grown up in that environment and had never worked in some of our international offices. They were going to present this analysis they did of the major companies in that country and the surrounding countries. They had put together a very detailed analysis of the market shares and priorities and issues. But I did not see the whole presentation because it looked way too long, and of course, I was wearing stinky clothing and I was a little bit jetlagged. I had not even started eating my breakfast yet.
So, their strategy to increase consulting sales was that they had analyzed the market and they knew the clients to pursue and they wanted to pursue those clients.
Consulting sales the right way: rebuking the approach from deep-diving into analysis to directly talking to a client
So, I looked at them and I said, “Okay, we have three partners in the room and with me, that is four partners. How many clients do we know between the four of us? In Latin America, I do not know anybody. I do not speak Spanish, Brazilian, or Portuguese, so, obviously, I do not know anyone here.” They say “Well, we know about four clients per partner, maybe five, and we can get meetings. It may be a few more but we are definite for about four per partner”.
So, my view was, “Okay, if you know four clients per partner, our strategy to increase consulting sales is to meet those clients and figure out what their issues are and how can we help them”. Then I remember someone making the comment, “But how are you going to go into those meetings, Michael? You don’t speak Spanish and if we had to go to Brazil, you don’t speak Portuguese.”
And I told them, “Look, guys, I have access to the world’s greatest translator”, and they looked at me and said “Why? Did you bring your assistant?” and I said, “Nope, I have a credit card and it buys alcohol.” Let me tell you something. You go anywhere in the world, if you get people drunk enough, they will be able to connect with you and when clients connect with you it helps a lot to grow consulting sales.
Now, this may sound like a very throwaway comment but the point I am trying to make is that so many people I see do these detailed analyses of who are the clients, what the issues are. But you have got to understand unless you canmeet that client and you have their respect it doesn’t matter whether you understand the issues. They are not going to do any work with you.
Growing consulting sales by working with clients you already have access to
So, the starting point to grow consulting sales is to hold the analysis for a bit and focus on the clients you already have access to and can meet. It is okay if you want to analyze them a bit but it cannot be a situation where an engagement manager is sitting in the office reading annual reports and the press to figure out some “aha” moment that is going to impress the client.
I understand if you are reading through the issues to supplement your knowledge. But if you are a partner, running a boutique consulting firm, and you know a client, it is very unlikely that you are not going to know what their issues are. So, your consulting sales strategy should not be about doing guess analysis.
Many boutique consulting firms are scared. They lack confidence, so they do analysis which does not really give the client any confidence. But it gives the firm confidence that they are ready. They put together an approach so that they feel that they are going into consulting sales meeting armed with something. It is almost like a sacrifice that they are making to the client, as part of consulting sales process. “Look, I killed some paper and made some PowerPoint slides. Would you give me work?” Those kinds of sacrifices went out a long time ago.
So, your starting point when it comes to consulting sales must be “I know the client, let me meet the client and figure out what the issues are”. If you do not know the client, then it is fine that your starting point is who are the clients I can meet. But then you do not go ahead and do arbitrary analyses for companies you do not know because you want to serve them. You can only do it if you have a lot of money behind you, and you have the time. Most partners within consulting firms do not have enough resources to use inefficient consulting sales practices.
If you worked at the major firms where they have partner reviews every two years, then you have two years to figure this consulting sales process out. If you took a two-year cycle to meet the executive of some Fortune 100 company, build relationships with them, win the right to serve them or to earn the privilege to serve them over two years, that is fine. But usually, you do not have that cycle.
The consulting sales strategy of any consulting firm must be to survive
Survival means you stay in business over time. Time costs money. So, you at least need break-even revenue. As you survive, you will serve clients. You will learn what works. You will improve. You will slowly develop your consulting sales strategy by engaging clients. Trying to develop a consulting sales strategy before you engage a client is a bad idea.
The starting point or the consulting sales strategy of any consulting firm must be to survive. Survival is your consulting sales strategy, at least initially. Survival means you would need money because time costs money. So, if time costs money and your job is to survive, it means that your goal is to spend money while you survive. You need to at least break even or cover your costs at a respectable amount. For instance, if you have put together a lot of savings and need not cover as much of your costs, by and large, you at least would want to break even.
Learning what works on the ground
As you survive and as you collect money to break even, everyone wants to be like McKinsey and BCG. The point is, when those firms started, they were not like themselves today. In fact, today those firms are not trying to be like themselves ten years ago. As you serve clients, you learn what works.
I have seen boutique consulting firms who refuse work because it is not prestigious. Let me tell you something, nobody knows you. The editors of the New York Times are not sitting together and saying “What is Barry Shaw’s boutique strategy consulting firm in Arizona do. We could do a story about the fact that he is not doing prestigious work for clients”. That would be a big issue.
Boutique consulting firms worry too much about what people think about them. I can assure you nobody cares about what you are doing. If for ten years you did work mostly for people who were thought not to be elite, nobody would know about it. And even if some of your former colleagues will think it is beneath you, your firm will much more likely survive. And if it does, you increased your chances to do more meaningful work.
The reality is that you need to start somewhere, learn about a client, and work your way up. There is a reason why countries like China, Singapore, South Korea started with basic menial assembly work. They went into the game, they earned money, they plowed it back and moved up the economic value chain doing more of higher-value work. You might be one of those fortunate people that do not have to start at the beginning. But it does not matter where you start. You need to be moving up the value chain.
So, start somewhere. Learn what works. You will improve and slowly develop your consulting sales strategy by engaging clients.
Leveraging what you have and the FIRMSconsulting resources that could help you
Do not try to develop a consulting sales strategy for the kind of work you would want to do with a client before engaging the client. That is the equivalent of a McKinsey, Deloitte, or Accenture deciding to develop a strategy for a Fortune 100 client without ever meeting them. Well, it does sound absurd but that is what most of the boutique consulting firms do.
If you want to serve a client doing mediocre work, do it. You need to start somewhere. If your game plan is, this is my staging ground to get to something bigger, that is fantastic! No one needs to understand that, and nobody is going to care. You know where you are going and that is what counts.
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The reason I want you to see that is to see what is possible and where you are going. You can even start there now. My point is if a client comes to you and says “Hey, I need you to do some basic data gathering work”, you can add a spin by adding in some value. You can see how to do that through some of the training episodes we make available, which basically shows you the life cycle of what you should be doing.
The time to develop a strategy without generating income is a luxury you do not have and do not need
You need to start generating income to afford the time to develop your consulting sales strategy.
You need to find a client, sell something, anything. Do not be caught into this trap of thinking. “I am only going to do consulting work this week”. Every single day consulting firms are figuring out new ways or new types of work to do. If you think to yourself that I respect these firms and am only going to do the work they do, remember that you are only doing the work they did ten years ago.
Firms are constantly changing the work that you respect today. It will take a few years for it to enter the media and so on and by the time you hear about it, they would have moved on to other things.
Drop your ego. Most likely, you have nothing to lose.
So, you are going to drop your ego here. A lot of us are driven by ego but you, most likely, have nothing to lose so do not try to be elite. You need to survive and be in the game.
The opportunity of meeting clients can just be around the corner
So, the act of trying to generate one sale is going to teach you more than months of planning. Know your consulting sales plan: the process of going through that discussion is going to teach you much more. Just being at the client’s office shows you so many things about the energy and the culture of the client. You meet new people.
I remember very clearly about working on a major restructuring. I was an Associate at the time. We were given room to work in the executive offices of this major corporation, which was our office. It was the head office of all the executive offices with people reporting directly to the CEO. Some of the board members also had officers there.
I would go and sit in the reception area whenever I had coffee. You would be surprised by the people you would meet just by being there. So even when I went to see clients, I would wait in the reception, meet other clients, and start a conversation.
I remember once going to Latin America and on the flight back in business class I sat next to one the head of operations for a potential client that I wanted to meet but had never got the chance to meet. Obviously, I struck up a conversation with him. It never led to any work, but it led to me understanding a lot about that client, which helped me with my existing client.
You meet new people. Your assumptions are verified. You may assume a lot of the things about a client but when you call them and talk to them, you realize, “This is not true. They do not want this. They do not care about this.” You understand what the client wants and what the client does not want. The act of going through with the process of trying to generate sales in that meeting is going to teach you all of that.
An additional benefit of this consulting sales approach is that you will do less work
One of the biggest mistakes that most boutique consulting firms make is, because they are so self-conscious, they may not end up bringing the amount of value they think they will be bringing. They do a lot of analysis and they like to take that to the client to say “Look, we analyzed your business. These are the issues. This is the framework. This is the methodology. Will you work with us?”.
Now, if you are a FIRMSconsulting Insider we have a typical McKinsey BCG engagement which is also available to premium members on strategytv.com. There you will learn the technique we use to generate only that analysis which is required to solve the problem and not to do a whole lot of unnecessary analysis to please the client with a thump factor. So, you do not end up thumping a big report on the table.
If you are an Insider, go to “How to become a McKinsey partner with Kevin Coyne”. It is a surprising course because he talks about consulting sales and of course McKinsey, BCG people do not talk about sales. At the partnership level, even though no partner talks about consulting sales, as we were not allowed to talk about sales, it is all about sales.
That program shows you how to think about consulting sales. But no way does Kevin talk about doing lots and lots of research before you arrive there. What you will realize is that you need to focus on your sub-skills to build camaraderie with peers, get their attention, show them your thinking. You have got to focus on delivery and on getting results.
Once you meet a client, a lot of the things that you think they are going to want, which you may spend all of the time doing, they do not want. So, you end up doing less work.
The minimum viable service and the critical delivery path
The next thing is that each one of us is different. Some people running boutique consulting firms may have a mother who needs their help, so they need to spend time every day visiting her. You have no choice. Others may have kids they have to pick up and drop off at school every day. So, you need to build your operating model around these things. This is what I call the minimum viable service and the critical delivery path.
So, if you are a strategy consultant, there is almost a hundred percent guarantee that you are not doing strategy the methodical disciplined way we teach in “Inside the Program – A typical McKinsey, BCG study” or “The US Market Entry Strategy” study. For FC Insiders, we also have the “Corporate Strategy and Transformation Study”. You most likely are doing what I call “A minimum viable service”. You will create some shortcuts for how you do strategy. You would not know what those shortcuts are. So, when you do your first engagement, you will figure out how you are going to do what you are going to do. You develop your critical delivery path.
The minimum viable service is, if you are doing strategy, what is the minimum you can do to develop a strategy for the client. If, for instance, you are doing an operations engagement, what is the minimum you can do to develop a viable operations plan for the client?
The critical delivery path is, how are you going to do that? For example, are you going to create all the slides yourself? Are you going to do all the analysis yourself? That is the critical delivery path.
As you do it, you are going to realize that many things you use, which you think should be done, are unnecessary. You learn to drop some things, but the bottom line is that you are creating a sort of a critical path.
The FIRMSconsulting Insider Program
If you are wondering why critical path thinking is so important, and if you are an Insider, listen to The MasterPlan program, where show you why critical path thinking is so important.
The steps are simple. Step 1 is to meet clients. Step 2 is to talk to clients. Step 3 is riveting the attention of clients. I do not mean taking a gun from a construction site and nailing them onto a plywood board. I mean holding their attention. Step 4 is four free days. I will talk about this in more detail later, but this is a program that we used even when I worked at the major firms.
I will talk about important ways for a boutique consuting firm to differentiate itself or even if you are at an office in some far-flung location of a major consulting firm. You will need to deliver two quick wins, secure an engagement, and then generate recurring revenue. If any of this is unclear or maybe there are parts you just need more elaboration on because you do not necessarily get support anywhere else, we are happy to provide that via our advanced programs (StrategyTraining.com/apps. Contact [email protected] to learn more).
So, some questions for you to wrap up here.
Self-Assessment: compare your own performance/planning to where you should be
Let us assume that you are going to a meet with a client tomorrow, what is the problem you want to solve for them? The problem I am solving is…
It is okay if you are wrong about this. That is fine. When you are going to meetings, you realize, that is not the problem they want to solve. So, when you are going to that meeting, keep an open mind, knowing that you want to test them out. You want to talk about things.
If you came prepared to discuss a problem they do not want to solve and you have no idea how to discuss a problem they may have, let us say utilization rates, then watch the episodes in The Consulting Offer (TCO) on how we do brainstorming.
I know most of you are running boutique consulting firms, and do not want to join McKinsey Bain, BCG, and Deloitte. So, you are wondering why Michael would refer us to that. We are referring you to that because the foundational skills on how to break out issues on things you do not know anything about is taught in that program.
For example, if you do not know anything about utilization rates or utilization factors, how we brainstorm will teach you how to have a discussion with the client. Then you can come back and say, okay this is the problem, how do I deal with it?
Ask yourself, who your potential clients are, who are the people you want to meet? Make a list. Five of them. Get meetings. Do not fall into the trap of, “Okay, I have got five clients. I need to prepare some PowerPoint decks”. Do not do that. Tell me when you are going to meet them and set the dates. Email or call. Do not stalk people on Facebook. It is not a nice experience.
I want to really drum this into you – “How will I avoid the urge to build long presentations by…” What are the things you are going to do, because, it is going to be a trap you are going to fall for. I want you not to get into that trap.
So, what changes should you make to shift your priorities away from over-preparation, which does not help if you do not know the client in that meeting, towards being ready to meet client and learn through the process?
I hope you found this article useful. Remember that I know how hard this is to do. If you speak to a consultant, they all put out this image of being in-charge and controlling everything that is going wrong and not going well. So, if things are difficult, it is okay. I do not want you to think there is something wrong with you. I do not want you to feel you have failed in some way. I do not want you to think that you should give up.
You may have to rethink your finances and cut costs in certain places, but everyone goes through this. Growing a consulting firm is not easy. If it were easy, partners in the major firms would be doing this and succeeding. But I can tell you they usually do not succeed because it is hard to do.
But that does not mean it cannot be done. Many boutique consulting firms are set up. You need to realize that if you leave a big firm, you are leaving behind certain assets that they have, and you need to compensate for that.
If you have never worked at a large consulting firm and you are a consultant, remember that you are not going to bring a custom of those best practices at large firms that do not work at small firms. That is a big mistake people make. They think that things that work at large firms should work at small firms, but they do not.
If you never worked at a consulting firm and you are launching your own boutique consulting firm, you are not going to make that mistake.
As always, I look forward to seeing you in the next episode.
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