Commando Consulting: November 2008 - Are You Planning Your Appointments For Sales Diagnosis Or Sales Presentation?

by Tom "Bald Dog" Varjan, Organisational Provocateur

Summary: The world of selling has drastically changed over the last few years but somehow most consulting firms use the same old and obsolete client acquisition practices they have always used. And as a result, they are forced to give in to fee pressures. According to a recent RainToday research study, 65% of consulting firms discount their services to close deals. And many of these firms have strong opinions against discounting. They are like whores who preach about the virtues of celibacy. In this article we discuss one approach we can use to eliminate fee pressures. Audio Version (MP3): 1:09:29

Once upon a time the famous actor and director, Woody Allen said...

"80% of success is showing up."

And then, upon contacting new prospects, salespeople started pushing for the appointments, saying...

"Once I'm in front of the buyer, I can sell anything to anyone."

Indicating that buyers sitting right in front of them are easy to manipulate, thus easy to take their money.

And sales trainers started teaching the mantra that you push for the appointment, so you can present your stuff to buyers.

But the problem is that most of these appointments haven't taken place with buyers, but with low-level flunkies (opinion-makers) from purchasing (peddler fodder) departments. And most of these meetings ended on a friendly comment from these flunkies...

"I'll take your message to my boss. If we're interested, we call you. You don't call us, right?"

And consultants would go back to their offices, wait, and wait and wait. And after a significant amount of time, they contact buyers, and buyers tell them that they have already hired a firm and the initiative is on its way or the initiative has been cancelled.

Then consultants try to connect with more buyers and repeat the process of running canned dog-an-pony shows for apathetic flunkies from peddler fodder departments.

And consultants have learnt over the years that appointments don't necessarily guarantee assignments.

In my experience, what is a better way of predicting the success of appointments is what happens before appointments. What happens between the very first contact and the request for the appointment? I use the word "request" because it's the prospects who should request appointments, not consultants pushing for appointments.

The "what precedes appointments" bit is the qualification/disqualification process. Are we going to meet real buyers who are serious about making investments in the kind of stuff we're selling or are we going to meet flunkies who are collecting information and pushing their luck for some free consulting, so they can take it to their bosses, the real decision-makers.

And this raises a question: Do we really want to do business with buyers who are not even willing to see us face-to-face but send out one of their minions to collect information for their consideration.

Having bought into the idea that consulting is a relationship business, built on mutual trust and respect, personally I do my best to avoid these false buyers like the plague.

Serious buyers, since they're about to make vital decisions over significant investments, are always well prepared for these sales appointments, and they want to have peer-level discussions.

But since many consultants are not equally prepared, peer-to-peer conversations are out of the question, so meetings degenerate to typical job interviews where buyers ask questions and sellers merely answer them.

This problem is especially typical when consulting firms employ commissioned business development folks.

Buyers realise they've been had (They expected to meet real consultants - experts - not commissioned peddlers), they are likely to be extra cautious in the future. So, buyers degenerate the process even more by dumping purchasing decisions on purchasing departments.

So, where is the problem here?

I think one problem is that many consultants have a hard time to put themselves into the salesperson's position. They regard this position too low for their stature and professional pride. This is why many consulting firms have tried to solve the problem by assembling business development groups whose members are supposed to do the "sub-professional work" of selling.

But that approach hasn't worked either. Buyers want to meet experts not peddlers who sold secondhand coffins yesterday, consulting today and used cars tomorrow. The only scenario where this method works is where these sales agents meet buyers' flunkies. It's a pretty twisted scenario. I can compare it to a wife and a husband wanting to start a family.

"We start our family by your agent's having sex with my agent."

So, I believe we have to start the process by learning how to...

Differentiate Between Real Buyers and Self-important Flunkies

But even before that, let's forget that lunacy of hiring a bunch of peddlers off the streets and sending them out to sell consulting services through cold prospecting drudgery.

Many years ago we learnt from Led Zeppelin that...

"There's a lady who's sure, all that glitters is gold, and she's buying a stairway to heaven." ~ Led Zeppelin IV Stairway to Heaven

Many people have carved Robert Plant's words so deep into their minds that they still believe that just because people look like buyers on paper, they are actually real buyers.

So, just because something glitters on paper, that is, people assure us on the phone that they have "purse string" authority, we'd better do some digging just to be on the safe side and weed out the pretenders. There is a world of difference between having the authority to buy $100 worth of pencils and $100,000 of consulting.

And we do some digging using some basic project management documents, but first let's take a closer look at the table below to compare real buyers and pretenders, so next time we end up sitting down with a pretender, we can quickly realise who we're talking to get up and get run away faster than a bunny rabbit on steroids.

And from here we can move to the...

Pre-Appointment Documents To Gauge Prospects' Intentions

In 2001, one face-to-face B2B appointment cost $329^[1]. I also believe that it's only fair to assume that since 2001 this number has gone up and not down.

What that means is that we have to make certain that by the time it comes to personal meetings, prospects are pretty well qualified, so we don't waste our time and resources on tyre-kickers. The funny thing is that most prospects who want to skip the qualification stage and want personal meetings or teleconferences out of the blue are tyre-kickers. They want to move very quickly, so they request personal meetings, but after these "emergency" meetings they just fall off the face of the planet and stop communicating with us.

In order to avoid these disasters with tyre-kickers, we'd better develop some preceding stages of interaction. In a way this is a sort of false interaction, because all we ask prospects is to fill in some documents. And some prospects refuse to do it.

And in case you think it's plain cold to ask prospects, considering their busy schedules, to fill in documents for you, let's think of a medical clinic where you show up as a new patient. You have to fill in mountains of documents, otherwise the doctor doesn't see you, and you may even kick the bucket in the waiting room. As the famous Henry Crun^[2] said in the Goon Show (Episode title: The Affair of the Lone Banana)...

"Now, let's get some details and documents - we must have documents, you know."

So, let's see what documents we're talking about here...

Feasibility Analysis

This is an internal document that helps prospects to determine whether or not their current situations warrant the kind of change initiative they have in mind. This document asks prospects to justify the change initiative and the associated investments to themselves and their key people within their organisations. If they decide to proceed, they return this filled-in document to you, and you can use it as a basis of your subsequent collaboration.

Mission and vision: Ask prospects what their companies are all about. What are they trying to achieve?

What's missing, and how did it get missing: Unless and until prospects clearly understand and are able to articulate how they've ended up where they are right now, they don't know what to change and how to change it.

Can you fix the problem with familiar or internal resources? It's human nature to do whatever it takes to find a way to use the resources we've already got. Before organisations accept external help and support, they have to accept the belief that they need help. Here ask prospects to describe why the problem exists and hasn't it been solved yet internally.

Cultural trigger points: Until values, norms, systemic and cultural issues are aligned, prospects can't expect their people to change their behaviours to support the new initiative. Here you ask prospects to describe what cultural trigger points they must address before they can make a decision about commencing/killing this initiative.

Problem description: In most cases this is the symptom prospects experience, and then together during the diagnosis phase you establish the root cause of the problem. Prospects' descriptions are the equivalent of the answer we give to doctors when they ask, "What hurts?" Then based on our description, good doctors start the diagnosis process. Note that the patient is vital to the diagnosis, but it's the doctor who leads the process.

As a patient you may say, "my stomach hurts,", then the doctor, after some more questions and tests, establishes whether you have an upset stomach, needing some Pepto Bismol, or advanced stomach cancer, needing immediate surgery. The fact is, just like patients in medicine, prospects are not qualified to perform self-diagnosis, and can't expect consultants to base their solutions on self-diagnosis. So, here prospects describe the problem or symptom they're experiencing which they expect to solve through this initiative.

Describing the intended change: This change balance seesaw can help to decide whether or not to change at all.

Describe the comfort of current state: What benefits do prospects perceive in staying the same and abandoning this initiative. On a scale of 1 (weakest) to 10 (strongest), how strongly do your prospects feel about this statement?

Describe the potential rewards of change: How would your prospects' businesses be better off after this change initiative. On a scale of 1 (weakest) to 10 (strongest), how strongly do your prospects feel about this statement?

Describe the pain of current state: How would your prospects describe the pains and frustrations of the current state. On a scale of 1 (weakest) to 10 (strongest), how strongly do your prospects feel about this statement?

Describe the fear of change: How would your prospects describe their fears and worries about changing the current situation? On a scale of 1 (weakest) to 10 (strongest), how strongly do your prospects feel about this statement?

Change/No Change: Now prospects can add up their scores and see where they are. This is not carved in stone, but it sure gives prospects a better picture of whether they expect improvements or merely hope and pray for improvement but refuse to change. Both answers are all right. It just helps prospects to stop kidding themselves. As the saying goes, in order to make an omelette, we have to break some eggs. And prospects must be clear about what they want more: The omelette or some nice, whole unbroken eggs in their pantries.

Historical Information: Description of the historical data relevant to this problem. Has this happened before? Is this an acute or a chronic problem?

Possible solutions: What solutions have prospects have tried in the past? How has each solution worked? What do prospects think why certain solutions didn't work? Was it the solution itself or poor execution of a good solution?

Evaluation of capability: Is the prospect's company ready for the change at all? How were previous change initiatives handled at the company?

Assumptions: Here prospects can describe any facts they presume to be true, real or certain.

Constraints: Here prospects can describe any barriers that can jeopardise the success of this initiative.

Recommendations: After answering these questions, prospects most probably have a better overview of what's happening in their organisations than you had before. According to Gabriele Veneziano's theory of quantum physics...

"Everything is connected with everything else. We just have to find them."

Where there is a problem, there is a solution? Your role is to help your prospects to find their own solutions and then together you make that solution as good as you can. So here you ask prospects their takes on the solution they think would work.

Cost Benefit Analysis

"When you can measure it and talk about it in numbers, then you know something." ~ Lord Kelvin

This cost benefit analysis helps your prospects to establish whether or not there is a sound business reason for proceeding with the initiative prospects have in mind. Change for the sake of change is retarded. But not changing when there is a good reason to is equally retarded.

This part of the document is, using Rod Tidwell's (Played by Cuba Gooding Jr.) words to Jerry (Tom Cruise) in the movie Jerry Maguire, the "Show Me The Money" section. If we don't know the numbers there is no point even in entertaining the idea of change. What for? Just to be busy? That's nonsense. Without knowing the numbers, the initiative can easily become just another cost as opposed to a valuable investment with hefty expected return. Using the title of Mahan Khalsa's brilliant book, "Let's Get Real Or Let's Not Play."

Components of the Cost Benefit Analysis

ID#:

Description:

Comments:

ROI category:

Increase Revenue (IR): It relates to seizing an opportunity. E.g.: Increasing proposal acceptance rate, increasing your service fees, etc.

Reduce Costs (RC): It relates to reducing or eliminating some undesirable symptoms. E.g.: Reducing the cost of acquiring a qualified sales lead, reducing the cost of rendering a certain service, etc.

Avoid Expense (AE): It relates to establishing whether or not it makes financial sense to invest in something or someone. E.g.: The total annual cost (about 160% of the gross compensation) of a full-time website designer is about $140,000. So, you have to decide whether or not it's justifiable to make the investment and hire one.

Dollar Value: What is the conservative annual value to seize the opportunity, to eliminate this problem or to avoid this expense?

Example

Description of Main Initiative: Increasing sales

ID#: 1

Description of Sub-Initiative: Increasing proposal hit rate

Comments: Including: 1) Revamping proposal template, 2) Revamping proposal submission process, 3) Teaching new skills

ROI Category: IR

Annual Dollar Value: $24,000 per proposal

In my case, until and unless I receive these documents back from prospects, I'm not willing to invest personal time. Not in person and not on the phone. If prospects have questions, they can email me and I respond pretty promptly.

After receiving these documents, you review them and if you decide to go ahead and give this prospect a chance to become a client (Remember, you carefully select!), then you can move to the first meeting. But before the meeting, you set the...

Conditions For The Meeting

These conditions are vital to make sure that both your prospects and you arrive at meetings with the same expectations.

Here are some basic conditions you can set for your meetings...

• Prospects are required to show up for the meeting with their key business documents


• Prospects are required to bring a $1-5,000 cheque with them filled in and signed


• Prospects are required to make go/no go decisions by the end of meetings

These three points demonstrate the kind of commitments only real decision-makers can make but flunkies cannot.

You go through the diagnosis, and if you and your prospects decide to work together, then you take the cheque. If you decide to not work together, then prospects take their cheques and you can all go home. And if prospects ask you for a proposal without definite commitment, then take the cheque. Well, the proposal represents value, so you may want to get paid for it.

Many of my clients have adopted this radical approach, and mysteriously all tyre-kickers have vanished from their lives.

The Diagnosis

At no point of the meeting you launch into a presentation. Presentations are monologues. Diagnoses are dialogues. Huge difference.

What is the difference?

When you present to prospects, you tell them about problems. But they don't necessarily buy into your presented problems.

So, instead of presenting, you facilitate a diagnosis session during which prospects, through honest collaboration, come to their own decisions regarding their situations.

For instance, when you're quantifying the problem, you ask prospects to do the calculating of the dollar figures. You merely write things on the white board or flip chart. This is the same as the doctor's asking you to raise your arm over your head, and you scream in agony. Now you really know you have a problem.

When prospects calculate the cost of their own issues, you give them a chance to scream in agony. And that's good. Otherwise you're merely telling them a tale about a fictitious problem. They may listen to you, but behind your back they smile at your attempt. But screaming patients don't smile at their doctors sceptically. They want to receive the remedy... yesterday.

And the last part of the diagnosis that together you write the proposal, which is not so much a proposal but rather an action plan. And in this plan together you scope out the solution.

Scope of value: What value prospects expect to derive from initiatives?

Scope of services: What services have to be performed to deliver this value?

Measurement of progress: What do we use to measure progress?

1. Doctors don't assume there is a problem


2. Doctors ask questions about obvious physical symptoms that cannot be refuted


3. Doctors don't not expect or allow the patients to diagnose themselves


4. Doctors don't get beaten up and threatened to be fired by their managers when patients turn out to be healthy and don't need profitable interventions

One more word about diagnoses. When we do this initial diagnosis, it's obviously free, but it's also pretty simple. It's a sort of physician-level diagnosis using good judgement, testing heart rate, blood pressure, knee reflex and some other simple indicators.

But what the engagement must start with is a detailed specialist-level diagnosis, including MRI, blood test, tissue biopsy, 12-lead ECG, EEG, DNA analysis, VO2max, etc. But this advanced diagnosis must be paid for.

If developing a clear and detailed diagnosis of clients' problems that will aid their decision-making process, it must be paid for.

While the initial (free) diagnosis identifies the problem, only the detailed diagnosis can establish the magnitude and the depth of the problem. And this detailed diagnosis will also establish your credibility and differentiation from the competition that is too busy doing dog-and-pony show presentations.

Yes at one point in the engagement you become a solution provider, but right now you have to be a project manager for your clients' decisions-making process.

Post Diagnosis

With first time clients, since they don't know you and have never worked with you, the best bet is that you start small. For me, this small means a detailed, payable, diagnosis which can take a couple of days or weeks, depending on the size of the client's company.

This is a low-risk, low-investment option both for your clients and you to get to know what it's like working together, so after this short gig you can decide whether or not to go ahead and do some more work together.

On Summary

According to a recent survey by the Wellesley Hills Group, a whopping 54.7% of management consulting firms expect their purchasing levels to go down. Competition is becoming fiercer than ever.

For management consulting firms, 74% of clients are willing to switch to competitors at the drop of a hat^[3]. And these are clients who are overall very satisfied with the service they receive.

So, which firms can best keep their clients? The ones that are different from the crowd.

And while doing presentations can nicely blend your firm into the crowd, doing diagnosis can make you stand out like a princess in a whorehouse.

On their websites and in their brochures lots of firms are pontificating about collaboration, but in real life, many of them are presenting ready-made shrink-wrapped solutions, mass-produced in their offices by legions of freshly minted business graduates.

Why them?

Because the partners are too busy chasing new business, attending bidders meetings and wasting their lives on responding to RFPs.

I know many people argue about the validity of this diagnostic approach. Many of them have never tried it and would never change from the more traditional peddler-type presentations approach.

I've recently had a prospect who actually told me that if she waited for prospects to come to her, she would wait for the rest of her life. Maybe.

But I also know that most of my clients have achieved the rather impressive productivity level of $500,000 per employee using this twisted oddball approach. Yes, we can crank up sales volume by chasing prospects, but we can crank up profit margins by positioning the firm properly.

The traditional sales model is based on...

5% Qualification

15% Needs analysis

35% Presentation

45% Closing - Seller's commitment: Writing a proposal; Buyer's commitment: Nothing

The mantra is ABC: Always be closing. The mantra of the peddler.

Buying decision is made at the very end of the closing process after sellers have invested a lot of time, money and effort to please the buyers. Most proposals are rejected or not even decided over.

In the diagnostic approach, we have...

10% Discovery - Do we have a mutually beneficial basis for working together?

40% Diagnosis - A collaborative process of diagnosing the situation, including the financial impact

35% Design - Highly collaborative and interactive process to design the best solution

15% Delivery - A jointly designed solution is jointly implemented by buyer and seller

The mantra is ABD: Always be disqualifying. Looking for reasons why we can't do business together, leading to trust and respect based peer-level relationships between true collaborators. Remember, we want to avoid fungible vendor type relationships.

Buying decision is made somewhere between Discovery and Diagnosis, roughly at the 30-50% mark of the engagement.

In the traditional model the buying decision is based more on the seller's solution (Want CRM?) than on the buyer's quantifiable problems (Our salespeople can't communicate with each other and that costs us an estimated $5.6 million of lost business every year). Similarly, most proposals are 80% about the solution and the seller's company.

Considering the recent financial crunch some of your buyers may have got into, this may be a good time to change your sales approach.

Footnotes

^[1] Cahners Research's study was based on the responses from 23,341 businesses. Cahners Research also shows that 1) deals exceeding $35,000 take 5.12 sales calls to close; 2) Over 80% of the sales effort focuses on anything except prospective clients; 3) On average, decisions makers take 4.61 phone calls per week from salespeople; On average, decisions-makers take 1.81 personal meetings with salespeople every week. Continue where you've left off...

^[2] Henry Crun of the British comedy series, The Goon Show. He's played by Peter Sellers. Henry is an elderly idiot inventor and partner of the notorious spinster Minnie Bannister. He is rather decrepit and forgetful, and often struggles to keep up with the world around him. His favourite catchphrase is "You can't get the wood, you know". Continue where you've left off...

^[3] From RainToday's 2005 Report, How Clients Buy: The Benchmark Report On Professional Services Marketing And Selling From The Client Perspective. Continue where you've left off...

"Dynamic Duo" Mentor Programme... ...has 1 opening for July and 4 for August 2010. Click here to continue to read the fiendish details.

Recommended Reading

The Experience Economy: Work is Theatre & Every Business a Stage

by B. Joseph Pine II and James H. Gilmore

The other day I was re-reading Pricing on Purpose: Creating And Capturing Value by Verasage founder Ron Baker, and on page 151 he refers to this book. The section that raised my interest was this...

• If you charge for stuff, then you are in the commodity business


• If you charge for tangible things, then you are in the goods business


• If you charge for the activities you execute, then you are in the service business


• If you charge for the time customers spend with you, then you are in the experience business


• If you charge for the demonstrated outcome the customer achieves, then and only then are you in the transformation business

As the authors outline, the whole idea behind a premium professional service business is that, instead of merely rendering a service, it creates a transformation in the client's organisations, and the highest level of this transformation is transformation of consciousness. That is changing the way clients think.

And I can say, this book changes the way readers think, and if you read it, you never think about consulting the same way. It shakes you up quite a bit and when the dust settles, you see the world totally differently.

I must say, this is one of the most exciting business books I've read so far in 2008.

Place your order with Amazon.com for The Experience Economy. You'll be glad you did.