Hi everyone and welcome to another podcast about How to Build and Grow a Consulting Firm or Practice. In today’s episode, I would like to talk about new clients and address how to sell consulting services.
I want to mention that this entire series is based on our experiences while helping numerous boutique consulting firms and offices of large firms as well as on our personal experiences. For FC Insiders, our loyalty members, we are launching an Insider version of this program, which is slightly difficult and a little bit different.
While we will cover the same concepts, in the Insider version if the program we will discuss a case study of a fairly large firm with revenue of about two million dollars and how we help the firm to significantly increase that revenue, change their client mix, and so on. We will show you how to use each of the tools and techniques and how we took the client through each step.
You can also go to our YouTube channel and watch the YouTube version with graphics (also inserted below).
So, let us just talk about clients. We know sales are important. You cannot do much without revenue a.k.a. sales coming in even if you have the best plans and noblest intentions. You may want to change the world, maybe do things that are important to the well-being of your country. But unless you have revenue coming in, all of that is just an aspiration that will never see the light of day.
So, one of the first things I always tell clients who run a firm whereby it is just one of them or a group of people or even an office of a large firm, is that you need to find clients and do it in a way that closes the sale fast. You also need to avoid what I call the layman’s view of the way McKinsey, BCG, and so on, does sales because the way they do sales is very different. But I am not here to talk you through how they close sales because a lot of the things McKinsey or BCG do, are not possible to do as a boutique consulting firm.
I am going to talk you through the things we have done with the client in the Insider program and similar clients that are suitable for smaller organizations or consulting organizations that are different from the larger firms.
If you stick to the basics, finding clients is not difficult, but you must follow the plan of not acting like a large firm.
I will tell you a little bit of an anecdote here. Many years ago, when I was a Partner, I was sent to Latin America to help stabilize one of the offices. I was working with quite a few of my colleagues. As a resource partner, I had skills that the potential clients of this office would want. I remember arriving there after a long flight of about 17 hours. Having lost my clothing, I went to office the next day wearing the same clothing from my flight, not feeling so good. I met everyone and the Partners talked me through an analysis that they had been working on for a fairly long time, led by some engagement managers and associates, on clients they should target and sectors they could target to rebuild the practice.
My feedback to them was, we already have a strategy and it is called Amex card. What I meant by that was that I was not interested in sectors or industries we should target or clients we should target or clients we need to get into. Instead, we need to focus on clients we know and take them out for drinks and dinner.
A common mistake I see most consulting firms making is that people trying to build a consulting firm focus too much on clients that they think they should be serving, while ignoring potential clients they have access to. In that situation there is never a market analysis. I have never seen a market analysis done with Partners. What we do is, we work on the relationships we have and start from there.
So, if you are thinking, “Whom I should target, which sectors, which industries,” then you are asking the wrong question. The correct question is “Who are the clients I know and who are the clients I can get a meeting with?”
Those are the clients you target even if they are in a sector that you do not want to serve. In fact, there is no such thing as a sector you do not want to serve. Every sector matters. Every sector in the world is going to have some segment of clients who will be attractive to you because if you worry about clients, the first part is to go for clients you can access. Go for clients you know and meet them.
There is another story about when I was serving my first major client. If you follow “Rebuilding a Consulting Practice” and “Partnership. A memoir”, I talk about this client a lot. It is the client that made me, and I ran the most important engagement at that client.
They had a very simple office and they believed in a low overhead structure, and a small head office. The head office of the resource’s client was in this luxurious high-end building complex with fancy Italian and French restaurants on the lower level. I would go and have a meeting with, usually the chief financial officer or the chief operating officer, or sometimes the CEO was involved. I was just starting out and was still only an Engagement Manager at this stage.
So, I did not have the access that I had later in my career. But I would meet these clients for a 30-minute to a one-hour meeting and then I would go to the Asian restaurant on the ground floor so that every time people from the client were leaving, they would have to pass the restaurant and they would see us. I would be sitting there with another Engagement Manager who was running studies for me and we would be having a four-hour lunch and drinks.
People from the office would see me but it did not matter because every time an employee of the resource’s client that I wanted to meet would leave, I would invite them along saying, “Hey, you know it is a Friday evening. Why don’t you join us for drinks?” That is basically how I did sales. There was some thinking involved but there was no PowerPoint presentation with an analysis of the issues. That is because as someone who was serving that client, I knew the issues.
It was not as if I was serving a client that I knew nothing about and had to do research to know the issues. I was working with them on an operation strategy for a few months. I was exposed to their financial strategy issues among other things. So, when I saw an employee I wanted to meet, I would just pull them or say, “Would you like to have a drink with us? It’s Friday evening.” Some would say, “Well, I gotta go home, I promised my kids.” I would say “Just one drink.” We would have one drink and, of course, it would turn into 10 drinks. By the end of that I could not walk so I would have to sit there for another three hours, have coffee, and get to the point where I could get myself home safely.
So, how to sell consulting services? The most important thing is to meet clients you can serve.
Another strategy of offering to demonstrate our skills for four days a.k.a. free is something we did as well.
If you follow “Rebuilding a consulting practice”, I moved to a badly performing emerging markets office. I had a chance to go to London. I also had a chance to go to Boston. But I turned them all down and went to a terrible office.
And I remember that the Associate Principal who groomed me to become a Partner, would call up people he knew in the executive offices of resources clients. Clients that we wanted to serve. They were not yet our clients but the clients of the firm. But this particular branch of that client was not being served by us.
So, we use to call them up and sometimes the head office as well because there were a lot of resources companies in the area. We would say “We know it is Christmas time. Why don’t we send one of our top people to work with you and think through issues? And see what happens.”
It was free but he would never say that. He would call it a secondment or whatever he wanted because we were trying to work with clients and see what could happen. And I would be deployed and later on when I became more senior and become a Partner, I would do the same with my top people.
The point is it is five days of continuous access to clients. You are doing work for free. But what is the alternative? Sit in an office and send them emails or proposals? No. At the end of this, I have never been in a situation where it did not lead to some work. Maybe the work came immediately. Sometimes it came three months later. At times it led to a significant improvement in the relationship. But it always led to us doing work.
In those four or five weeks, we would do one of two things. We would sketch out an issue that required us to do an analysis or we would identify an issue and say “You know what, we think we know what we need to do to fix this. But why don’t we do a short two-week pilot with just two people.” Obviously, it was paid. And then that would lead to billable work, which then would lead to implementation.
So, whenever I look at firms and they talk about how they are going to do the studies and the analysis – that is for the clients they do not know. Now, for clients you do not know, the easiest thing in the world is to do a survey of supply chain issues in their sector. Do a study. Firms invest in intellectual property. Do some kind study for this of the sector.
Do an analysis, a summary or develop a new approach. Do some benchmarks and then use it as an opportunity to meet an executive to talk about what you find in the sector. That is how you meet clients that you do not know.
All of this can be done cheaply and quickly. Here is the interesting thing. In the FC Insider version of the program, we are going to talk about that one client we work with, which is representative of other clients as well. But the interesting thing for them is that this area of work eventually generated over 50 percent of their revenues when we were done with them because we wanted them to diversify away from revenue that was purely generated from billable hours. It was difficult because quite a few of them were ex-McKinsey and so on. They had this view that consulting is pure. It must only be billable hours.
So, focus on clients you know. That is the most important thing.
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What changes should you make to shift your priorities?
As you go through this program, remember, it is all about going after the clients you have access to. Even if you have served them from a long time. What I always tell firms is to ‘serve larger clients’ because even if you finish one engagement with them, there is always a chance that something else will come up. If you serve a smaller client, the odds are they are going to be doing less consulting work and there is less for you to move on to.
So how are you approaching your current clients? How many meetings have you arranged? How will you lower resistance? What are you going to do to get them to speak to you?
And then the other category, which is for further down the line, but you need to start pursuing now, is how do you get to clients you do not have access to but you want to know.
The insights shared above on how to sell consulting services apply to new, young, small consulting offices, but it also applies to large offices. These are techniques I used when I was at the firm and I had to go after big multi-billion-dollar clients. When we had to turnaround offices with 70 people, 120 people. Let’s tie together some of the things we have already seen and learned about how to sell consulting services.
The first thing is that you should not spend your days and weeks developing a strategy for “how you are going to serve a client” and “how you are going to grow the firm” and “how to sell consulting services” because you just do not know enough about the market and you cannot afford to burn so many hours on something that is really an expense.
Go out there. Meet clients. As you talk to them, you will find out what their issues are. Having two associates at an office reading annual reports to find out the company’s issues is really a hit and miss. If you sit with a client for an hour, you are going to find out more than anything anyone could ever do in the office to prepare you for that meeting.
Do not get bogged down with complex sales presentations. This is something that people tend to forget at major firms. We generally do not really have to put together complex presentations. Because of our reputation we usually get to put together very simple presentations and get the work. But because you usually do not have a reputation as a younger, smaller office and smaller consulting firm, you should position yourself as someone who can get bankable results.
Do not talk about implementation. It is such a cliché. Implementation is not the same as bankable results. You can implement something and not get the results you promised. Bankable result says, “You hire us, you will get this.” But if you talk about implementation, it does not mean that you can get bankable results. A lot of implementation fails.
Focus on the clients you know. Even if they do not agree to free work, go to them four days, five days in a row and talk to them. Help them identify issues.
I have been in situations where I remember the CEO of a very important client wanted to work with us. She did not really like the firm so much, but she liked me. She would call me, and I would go every day. I went to see her for something like a week. I obviously did not bill her for anything. I would sit in her office. She had a nice lounge. And I would do work for her, help her think through issues. When meetings came up she would go for the meeting and when she would come back, we would talk about things.
That led to an incredibly important mandate for the firm to work for a very prestigious client that we really wanted to work for. That is the same thing as working for free. But you can be creative in the way you do it.
Meetings for five days in a row where you are thinking through issues and providing updates is free work. But we do not talk about it. We do not call it free work.
If you want to meet new clients and you have a great reputation it is going to be easy. But if you do not have a great reputation, then do some kind of free work, e.g. analyzing the sector and present the results.
Finally, the goal is always to create sustainable revenue streams and not follow traditional consulting models. I may talk about this more but in the insider version, we definitely talk more about breaking the revenue streams. Because it is just tiring and demoralizing to go through these periods where you do not have revenue coming in for billable work.
You need to ask yourself, how are you spending your day because it should be in front of clients.
If you have any questions or comments on how to sell consulting services, post a response on iTunes or YouTube. As always, we look forward to sharing with you the next episode/article.
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