Commando Consulting: November 2007 - The Lunacy Of Using A Separate Sales Force For Consulting Firms

by Tom "Bald Dog" Varjan, Organisational Provocateur

Summary: While once upon a time it was an honour for consultants to go out and build relationships with their markets that in time turned into engagements, it recently has become quite fashionable to hire dedicated salespeople who act like chasers at game hunting. The chasers are running around disturbing animals, and when they start moving around, the hunters, comfortably sitting at their hideouts and sipping their flasks of whiskey, nonchalantly start shooting at panic-stricken animals. In this issue of Commando Consulting we take a closer look at what the problem is with this approach... Audio Version (MP3): 53 minutes

Do you know that the tin canister for canning food was invented in 1810 by Peter Durant of London, but the tin opener was invented only in 1858 by the American Ezra Warnet? Before the invention of the tin opener, people would open their tins with a hammer and a chisel. A rather crude approach which often damaged the content of the tin.

The only reason why I mention this bodaciously fascinating fact is because in spite of having fine and delicate tools at their disposals, many consulting firms are still using the proverbial hammer and chisel of dedicated sales forces to open new client accounts. And the more vigorously they are hammering on their chisels to open a new can, the more often they wallop their own fingers, inflicting more and more damage on their firms, while the clients, the proverbial cans, are becoming more and more resilient.

Many moons ago it was common practice for consulting firms that they operated as cohesive units and landed their engagements as a result of a group effort. It was the typical caveman approach. Cave partners in the cave had their work clearly defined, and every task was part of the synergy the whole group produced.

Typically, the men went hunting and the women stayed at home taking care of the household (cavehold?) and looking after the kids. The woman best at cooking would cook for the whole cave. The woman best at cleaning would clean for the whole cave. The woman best at child minding would run the nursery for all the kids.

For the men, the hunter with the sharpest eyesight was the spotter finding the beast the hunters could go after and hunt it down. (Or sometimes hunted down by it). The guy with the best trapping skills would set the traps.

Basically people did what they were naturally talented at, therefore loved doing. This connection is missed in many consulting firms. We naturally love doing what we are talented at. And people who have a dissonance between the two haven't discovered yet what their innate talents are.

So, once upon a time it was customary for consulting firms to go "hunting" for new business together. Someone who was good at making the first approach, made the first approach. Someone who was good at diagnostics conducted diagnostics sessions with prospective clients. And someone who was good at coordinating all the work was the project leader. Landing new contracts was a group effort.

Then something changed, and consulting firms started using business development people, the commonly used euphemism for commissioned salespeople, to bring in new business. So, while the professionals are sitting in their offices waiting for the manna to fall from the heavens, their salespeople would roam the land knock on doors and dial for dollars.

It was unnecessary to waste time, effort and money on marketing initiatives because these sales folks, usually on full commission, would go until they land something. And if some of them fail to perform up to expectation, it was easy to get rid of them and hire some new ones.

This approach caused many problems, but the biggest problem was that there was no eye-level match between buyers and sellers, as you see on the doodling below...

Bottom-of-the-hierarchy people, the salespeople, were supposed to gain appointments with top-of-the-hierarchy people, presidents, CEOs and other senior executives. And while salespeople desperately tried to be perceived as peers with these senior officers, it almost never happened. They were merely sales reps representing various vendors.

And what made the situation even worse was how these sales reps were hired based on character traits like aggressiveness, glibness, ability to persuade, don't take no for an answer, hit the numbers to reach quota, etc.

Basically selling consulting services became exactly the same as Carl von Klausewitz's definition of war...

"War therefore is an act of violence intended to compel our opponent to fulfil our will."

Paraphrasing it...

"Selling consulting services is an act of manipulation intended to compel our prospects to act in such a way that is financially beneficial to the seller."

And this hunger for the quick buck from consulting firms led buyers...

To Develop Peddler Fodders To Keep Sales Reps Out Of Their Kingdoms

So, buyers had to develop systems to deal with the influx of these undesirable pests, called salespeople. So they created various "peddler fodders", like purchasing and procurement departments, RFP processes, bidding structures, etc. Many consulting firms that used to be trusted advisors to their clients suddenly became fungible vendors with no hope in hell to ever meet high-level decision-makers eye-to-eye.

And the funny thing is that the thicker is the wall of separation between buyers and sellers, which the buyers erected as protective shields, the more ruthless and aggressive salespeople sellers started hiring. They even stipulated it in their recruitment ads that sales folks must be immune to repeated rejection, doors being slammed into their faces (mind your conk, mate!), being thrown out by security and verbal abuse.

And the more skilled these sales reps are at infiltrating buyers' companies, the more skilled buyers have become at protecting themselves by inventing dysfunctional buying processes. One of these "amazing" inventions is the RFP process, and history has taught us...

Why The RFP Process Doesn't Work

The RFP process' intention is to simplify the acquisition of professional services to the level of buying a pack of ribbed condoms.

1. Alerting condom manufacturers about the opportunity


2. Issuing specifications for the type of condoms wanted


3. Requesting samples and pricing


4. Buying the cheapest


5. Keeping and using the free samples as a self-proclaimed entitlement

1. Alerting consulting firms about the opportunity


2. Issuing RFP specifying the solution wanted


3. Requesting detailed proposals


4. Accepting - in most cases - the lowest bidder's proposal


5. Keeping the other proposals and whoring their contents as a self-proclaimed entitlement

So, let's see some of the problems with RFPs.

Creating A Level Playing Field

While this is a great euphemism, it really means that sellers refuse to see sales reps eye to eye, and send them into a fighting frenzy with other vendors. Buyers issue RFPs, and upon responding to that RFP, every vendor had better look the same by complying with specific expectations. If you don't comply to the letter, then you're out of the bloody bidding battle.

The seller's objective with the RFP is to improve the quality of responses they get from vendors, but the sad reality is that they get shitty responses. Why? Because the best consulting firms with the best solutions don't bid. They have better things to do than wasting their time on morons who try to solve their problems through RFPs. Yes, companies that are serious about solving their problems and finding the best solution with the highest return don't issue RFPs.

Then what companies issue RFPs? Well, governments. But that's understandable because they have no accountability. Governments' aim is to find competitively cheap solutions through bidding frenzy. Aren't we surprised that governments all over the world are in deep financial shit?

If a company were run as incompetently as most governments are, the CEO would be beheaded and his head would end up on a pike in front of the company's office building.

RFPs do create a level playing field. Every submitted solution looks and sounds the same, the same tired, old, hopeless, toothless, over-clichéd pompous pontification, and then these solutions get judged by a committee, 90% of which have no earthly idea what it is all about.

Imagine that you're submitting a $1 million plus proposal to revamp the company's IT structure, and the decision whether or not your proposal is good enough is judged by a bunch of purchasing agents whose technical savvy is limited to the usage of the microwave and the coffee percolator.

They can't assess your proposal. What they can do is to match it against rigidly defined specifications. If your solutions is better than the specification, they you're out.

Maybe it comes as no surprise to know that most solutions that companies acquire through RFPs need re-work in a fairly short space of time. Naturally. RFPs hunt for the lowest bidders. And that's what buyers get. I believe hiring external help through RFPs is just as retarded as hiring new talent through resumes.

Both processes are comfortable, convenient and cheap. Companies use these dumb processes to hire competitively(cheap) substandard people and companies that look good on paper, but often don't have significant value to contribute to the company.

So here is the level playing field: Only the mediocre mass needs to apply.

Removing Value From Your Solution

You can have the greatest solution for the buyer's company, but the RFP asks you very specifically what to include.

In the Seven Habits Of Highly Effective People Stephen R. Covey writes...

"If you want to make minor, incremental changes and improvements, work on practices, behavior, or attitude. But if you want to make significant, quantum improvement, work on paradigms."

The biggest value of any new solution is that it can bring a new way of thinking to the buyer's company. What happens is that based on a certain paradigm, the client created a problem that has to be solved. So, buyers are looking for solutions but refuse to change their paradigms. The fact is that as human beings we're terrified of change. And so are our companies.

Client companies are willing to make small modifications in their operations, but stay away from major changes, that could bring in major improvements. And here's an interesting observation. I'm not a big TV fan, but I regularly watch Gordon Ramsay's Kitchen Nightmares. Here is this highly accomplished chef and restaurant manager, Gordon, and he goes in to troubled restaurants most of which are just a few weeks from bankruptcy, and helps to turn them around.

In the last episode Gordon put the question to the owner...

"If you're such a genius, how come that you have no guests?"

And the owner said...

"Because all those morons don't understand my restaurant's uniqueness."

He was blaming the market for not coming to his restaurant to eat his microwave-made overpriced stodge.

Similarly. Companies issue RFPs and then think why all the solutions are the same mediocre. Why indeed?

The solutions come mainly from mediocre companies, and the RFP clearly described the dimension of the solution.

What's the logic in going to the dentist if I tell her what exactly to do with my teeth? Who is the expert at teeth? The dentist or me?

No Human Contact Between Buyer And Seller

Although consulting firms try to establish human relationships with sellers, it's becoming increasingly harder because buyers are not looking for human relationships. They are looking for competitive(ly cheap, easy, traditional, comfortable and convenient) patchwork solutions to their problems by alerting the masses to the opportunity to bid. And the mediocre mass will bid.

The relationship between buyers is taken over by a phantom relationship between sales reps and procurement departments. But this causes two major problems. They both represent the very people who should directly communicate with each other but they don't.

Why?

Because for consultants, selling is a far too demeaning job, so they abdicate (No! It's hardly ever proper delegation) it to the sale force.

For decision-makers meeting armies of sales reps is not an important job, so as a wall of defence, a peddler fodder is built. It's called the procurement department. What the sales reps and the procurement departments have in common is that none of them is qualified to represent sellers and buyers.

It's the pervert equivalent of hiring a relationship counsellor to start dating with other relationship counsellors on your behalf, and when there is a match between the two counsellors, they can organise and carry out a phantom wedding without your needing to ever meet your spouse. And when the two counsellors agree to start a family, you give some body fluids in a test tube to your counsellor and he can pass it on to your wife's counsellor.

But the problem is that all the key information, that is, the real value, is lost in this crazy chain of intermediaries.

Just imagine that you're flying and the plane is about to land. That's great. Then you find out that your captain is blind as a bat and the tower controller is deaf as a cannon, so they will communicate with each other using intermediaries. Are you still sitting comfortably? I doubt it.

One communication method that is commonly used is the bidder's conference. But at such group events firms don't ask deep and meaningful questions because the minion in charge can't answer them anyway. Also, the question can be too sensitive in front of the competition. But these are vital questions to ask to get the best solution.

Imagine you're a doctor and just diagnosed a patient with HIV. You know you have to ask her the sensitive question...

"Madam, you are HIV positive. Your husband is not. Who have you had sex with in the last six months?"

While it's important to ask the question, you don't ask it in front of the crowd in the waiting room.

Also, by this point many buyers ask bidders to sign non-disclosure agreements. So, it's just plain scumbaggy to ask consulting firms to reveal their deepest secrets in front of other firms in order to comply with the bidding process.

Buyers Pretend To Be Experts

This is the dreaded self-diagnosis. Buyers have established what exactly they need, and now they go to the local "solution superstore", the local "consulting Wal-Mart" to select the cheapest solution that they think will solve the problem.

But there is a problem. Buyers are undisputed experts at creating problems they are looking for solutions for. If they were experts at the solution, they would have already solved the problem.

Imagine the buyer is struggling with an IT infrastructure problem with a Windows. Then the buyer issues an RFP to upgrade the Windows server.

But a renegade consulting firm, the Bodacious Byte Buccaneers Inc., would like to suggest to scrap the Windows server and set up an Apache server based on open source stuff. It's more realisable and more cost effective. In a relationship-driven situation, the Buccaneers would be welcomed with open arms from buyers. In an RFP situation they are dead in water. Their proposal would end up in the rubbish bin after 10 seconds of reading.

Why? Because the evaluators of the proposals are technical laypeople. They don't know technology. They know how to match the criteria of the RFP against the criteria in the proposal. No, match, no further talk or reading.

No Match In Commitment

Buyers expect sellers to commit to investing significant of time, effort and money in pursuit of the opportunity. In return what are buyers committed to? Nothing. Not a sausage. Most of them don't even have the moral backbone to notify the bidders with a simple message that they didn't get the gig. One firm wins and the others are left on the limbo waiting forever for a decision.

It's exactly like the recruitment process. Companies expect candidates to invest some serious time and effort to do extensive research on the companies and craft customised resumes and cover letters. Then one successful candidate is notified and the others can wait forever. Most companies just don't have decency to drop an email to candidates, saying...

"Sorry, Larry. Not this time, mate!"

Of course, they say they don't have the capacity to notify people, which is horseshit really, considering that with a little technology, this could be done pretty easily. But it's a lot easier to treat people like crap, with the utmost disrespect.

With a bit of technology and consideration it would be easy to notify all bidders, but considering how buyers regard these bidders, it's not surprising they treat them without an ounce of respect.

Prognosis Without Diagnosis Is Malpractice

In an interview at Management Consulting News, the author of 7 Cs of Consulting, Mick Cope emphasises the importance of client relationships and the need to invest time to properly diagnose the prospect's situation...

"In the UK at the moment there is a serious shortage of tradesmen, plumbers and good builders, for example. You get two types here, the cowboys and the real tradesmen, the experts. Now, let's say I have a plumbing problem, and I tell the plumber, I want you to do this to fix it. The cowboy says, okay fine, he does it and takes my money and runs. The tradesman, because he is proud of his craft, will say, I value what you as a client believe, but I have to look into this plumbing system and understand it, otherwise whatever I fix is going to fail later."

While there are many charlatans, with Dr. before and MD after their names, who prescribe anything for the kickback offered by drug companies, there are certain doctors who want to do thorough diagnoses before prescribing a course of action for healing.

The same happens with consulting firms. The charlatans, many of which staffed with people with Dr. before and MBA after their names, bid for anything and offer solutions for anything in the hope of grabbing the quick buck.

But in a way consulting firms are organisational physicians. They are hired to improve the client's organisational health. So, diagnosis is vital. Or so I believe.

What is also interesting is that sellers that have the ethical backbone to conduct thorough diagnoses before committing to a certain course of action, simply don't play buyers' retarded RFP games. They have very specific processes to initiate engagements, and if the prospects are unwilling to follow the process, they can go elsewhere for solutions. The problem is that only handful of consulting firms have the guts to communicate this message to their prospects in fear of losing an opportunity.

But now let's see what happens when...

Buyers Are Willing To Meet Sales Reps - The Rainmaker's Age

And now we're halfway to the age of the rainmaker. But the rainmakers are still the sales reps. Sort of internal sales reps with content knowledge. I use the word rainmaker because by meeting them in person, buyers treat these folks differently. But now there are other problems between buyers and sellers.

What Do Buyers Expect?

Buyers Expect To Meet A Knowledgeable Peer Not A Peddler

Imagine you go to your doctor, and instead of the doctor, the nurse asks you to tell her about your issues and she relays it to the doctor. Then the doctor tells her what to do and then she relays it back to you? How would you feel? I think that would be your very last visit.

Buyers know that most sales reps are hired fresh off the streets and then chucked out back on the streets to knock on doors and dial for dollars. They know neither the company they represent nor the services their employers offer. Yesterday they were selling cars, today they're selling consulting services. No problem. Tomorrow they'll be selling encyclopaedias or vacuum cleaners. The annual attrition rate is 43%, so buyers know that they have very little chance to meet the same sales rep twice.

So, what can a sales rep achieve when meeting buyers? Nothing! Precisely dick! All they can do is to perform a canned needs analysis and based on that to run a canned presentation. And the problem is that since they can't engage in a meaningful dialogue, the sales rep becomes a typical sales rep (like a used car salesman) with the explicit or implicit message to the buy...

"Give me an offer an I'll cut you a deal."

Of course, the sales rep is on commission, so the incentive focuses on the quick buck. Also, sales rep's performance is assessed on their ability to close deals in one single seating. But who buys $100,000 plus solution in one seating. There are multiple decision-makers and meetings.

And what is the end of the meeting? Buyers say...

"Don't call us! We'll call you if interested."

So, the poor sales rep leaves behind a bunch of information, which very quickly finds its way to the rubbish bin.

Ten minutes later the buyer doesn't even remember that he's ever met that sale rep.

Buyers Expect Their Questions To Be Answered

So, when buyers agree to meet sales reps, they agree because they think they could gain something of value out of the meting. Buyers have questions they need answers to before making decisions. That's why I believe selling professional services is a decision-making facilitation process and not a persuasion process.

But how can a sales rep facilitate anything? He's just been hired off the streets. He has no knowledge of the seller's company, the seller's service, the buyer's company and the buyer's industry. Blind as a bat in terms of knowledge, the sales reps go to meetings representing services and companies they don't know to buyers whose businesses and industries they don't understand.

After a few responses like...

"I have to check that with my colleagues."

...buyers realise that for even for the smallest pieces of information, reps have to run back to the office and talk to the real professionals.

Then it dawns on the buyer...

"Why the hell should I talk to this rep anyway if he doesn't know anything?"

Buyers Expect To Receive A Fee Range

If you charge hourly rates (And losing a pile of dough in the process - accept my deepest sympathy), your sales reps can quote your rates. But doing consulting on an hourly basis is plain negligent and unethical too. However, regardless of how you charge, citing fees in the wrong context can create serious problems. If you cite fees without discovering the buyers' objectives and the value of your help, your fee is almost automatically too high.

But if you run value-pricing, then there is no way sales reps have the ability to cite even ballparks. Why? Because they can't even diagnose buyers' situation and their costs of living with certain problems. This is another situation when sales reps have to "discuss it with their colleagues".

Now when you uncover the magnitude of the buyer's problem, as a professional, you can offer a ballpark, so you can agree with the buyer on the budget, so you don't hit the buyer with a sticker shock in your written proposal.

What that means is that the buyer and you can jointly craft a proposal, which you put in writing after the meeting. But the proposal has no surprises to the buyer. Everything you write is the documentation of your verbal agreement. Also, you agree to write the proposal if and only if the buyer makes a commitment to go ahead. At this point I collect a small fee of $1-5,000 against the total fee of the project. If a prospect vacillates at this point, I know not to write the proposal.

Sales reps who are not really part of the firm care about one thing: Closing the sales even by selling it at very low price. They have no stake in the firm's prosperity only in their own. So, they get paid even if the overall engagement is not profitable to the firm.

Prospects Expect Someone Who Can Evaluate Fit

This is interesting. Since sales reps are paid for the volume they sell, they will do their best to sell as much stuff to as many people as possible. They don't care about client-consultant chemistry, profit margins or other important factors. They are in the quick transaction business.

For the sales rep every meeting is a fit because it results in money in their piggy banks and they don't have to struggle with bad relationships. Buyers may also feel good about sales reps, but what happens when tomorrow the sales rep hands over the relationship to a new set of people. Will the buyer have a fit with them? Maybe. Maybe not.

Unfortunately fit can't be evaluated based on a checklist administered by sales reps. That requires a deeper level of emotional and intuitive connection between clients and consultants.

Since sales reps are rewarded with money for every sale, they won't be able to walk away from inappropriate buyers. And when the deal closes, that often lands the consulting team in deep shit right from the beginning of the engagement.

Some Basic Questions To Ask

1. Do your people operate as one cohesive team or as a group of individual hunters?


2. Are your prospect meetings between sales reps and purchasing agents or between consultants and economic buyers?


3. Who can best represent your firm and the value it can deliver to clients?


4. Who is most qualified to price engagements? (Do you have a pricer^[1] in your firm? If not, why not?)


5. Is the meeting a collaborative discovery of possibilities or a one-sided presentation


6. Is the meeting a mutual discovery and exploration of possibilities or "send a proposal and we'll think about it"

There is no doubt that the separate sales force is the worst-case scenario of selling professional services. It's really an uphill struggle. It's doable but the casualties are high and the process is pretty pricey.

The rainmaker approach is better. There are dedicated professionals in the firm who roam the land selling solutions.

But my favourite, and I believe most lucrative, approach is, when a firm has a consistent marketing and lead generation programme in place which creates a steady stream of opportunities.

In Management: Tasks, Responsibilities, Practices, Peter Drucker wrote many years ago...

"There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product and service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy."

If this is the case, meaning that firms could create automated systems to generate sales leads and nurture them to the point of buying decisions, there is really no need for chasing prospects. Your people can meet the ones that are ready to make a decision, and the people who meet them don't need traditional sales skills. What they need is skills to listen to prospect's issues and skills to diagnose the situation, including quantifying the cost of living with a problem or the value of an opportunity prospects want to capture.

^[1] An objective consultant who prices engagements based on facts, without emotional ties with clients. I suggest to my clients that they keep total anonymity between pricers and the identity of people whose projects they are pricing. This anonymity assures objectivity. This pricer is also called the Chief Value Officer. The CVO makes certain that every piece of client value is captured, delivered and charged for. Continue where you've left off...

"Dynamic Duo" Mentor Programme... ...has 3 openings for August and 4 for September 2008. Click here to continue to the fiendish details.

Recommended Reading

Strategy And The Fat Smoker

by David Maister

Although a business book, the Strategy And The Fat Smoker is a drastically different book from what you'd expect from an established business authority like David. This book revolves around the lessons he learnt while going through a major change in his personal life and went from a sedentary fat smoker to an active healthy non-smoker. But not with the help of sheer willpower but through internal changes, or as Stephen Covey calls them paradigm shifts, that changed his life and health for the better.

And now he demonstrates how professional service firms can use uses the "fat smoker strategy" to change their futures for the - significantly - better.

My big aha moment from the book is that if we manage our people at work with the same dedication, compassion and care, just as good parents "manage" their children at home, we can't go wrong.

The other is that if we go first and set the expectation what we want to see in others, then most people step up to the plate. And the few just say, "Sorry but I can't do this. Good bye". Either way, they don't remain at the firm as low performers leaching off on others' performance. The approach itself is cleansing to the firm. Only the best remains, and the best are attracted.

The relationship between managers and their people is similar to the relationship between parents. They respect each other and enjoy each other company. And their focus is to raise amazing children by maintaining a culture in which the kids are inspired to do amazing things. Similarly, managers' focus ought to be to "raise" amazing professionals who both love what they do and enjoy fulfilling personal lives.

Maybe because of my military past, I'm big on teamwork. Hence I enjoyed the comparison between the mountain lion, wolf pack, the beaver and the ants (humans).

I believe, David really went first in this book, just as he teaches. I've got all of David's books, and this is the best for me, mainly due to its fairly informal "human" tone. When I'm reading the book (now the fourth time), I feel I'm conversing with a fellow human, as opposed to a celebrated expert, who, just like me, has made his fair share of blunders in life, but his passion and love for the profession have always pushed him back on track, and has an amazing life.

Place your pre-order with Amazon.com for Strategy And The Fat Smoker. You'll be glad you did.

Value Pricing Assault Course... ...has 2 openings for August and 5 for September 2008. Click here to continue to the fiendish details.