Commando Consulting, June 2010

How a Dedicated Sales Force Can Destroy Your Chances Of Selling Your Consultancy Services

By Tom "Bald Dog" Varjan

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Have you ever thought about it that the typical North American home has 2.55 people and 2.73 TV sets, which is having a disastrous impact on all family members.

On the top of all that, half of all North American households own at least three TVs, and the average person watches TV about 4.5 hours per day. But in the average North American household the TV is turned on more than eight hours a day even if no one is watching it.

Having multiple TVs in their homes seems to be just as addictive for people as having dedicated sales forces in so many consulting firms.

Lots of consultants start their practices and then dream of the day when they can become "real professionals" and relegate marketing and selling to some commissioned peddlers. This way consultants can get busy delivering their unrivalled, astonishing and marvellous services.

And even lower level of that stupidity is when firm leaders try to simplify their payroll and taxation, so they hire these peddlers not as employees but as subcontractors on straight commission.

A while ago I was working with an information technology firm that was in the middle of transforming from "fixing boxes" to "information technology consulting".

Both the owners, the managers and the people were great to work with, but we had an issue about the sales force. While in the business of fixing boxes, the firm maintained a dedicated sales force that was pounding pavements, dialling for dollars and barging through "No Solicitors" signs on a daily basis, it was just complete nonsense to sustain the same approach when transforming to consulting.

But the owners wanted to save on marketing, so they just went out and were selling "fixing".

But they wanted to work as consultants, that is, fiduciaries selling care, protection and guidance, but had a hard time to realise that selling through a dedicated sales force would do more harm than help, and would position the firm as fungible vendors as opposed to respectable experts.

In my experience, while selling through a dedicated sales force works nicely in selling commodities to consumers or even selling services to purchasing agents, it's a call for disaster in selling premium consulting services to real buyers.

Why?

Because when buying consulting services, real buyers want to talk to real experts who can solve buyers' problems. Buyers expect peer-to-peer relationships, so when they meet overzealous commission-hungry peddlers, buyers freak out and run for cover.

In general, accountants understand it, so do lawyers and medical professionals. But there seems to be a problem with consulting firms that try to pose as trusted advisors but hand over the relationship-building part of the business to dedicated sales forces with an average annual attrition rate of 43%.

Is it surprising then that many industries that like calling themselves trusted advisors, like information technology, fitness or Internet-related services, end up eking out living as fungible vendors because they sell their services using armies of mercenaries that they've just hired off the streets either on a commission or minimum wage basis.

And why is that?

Simple.

Firm partners and top executives don't want to be accountable for growing the business, so they abdicate it to these sales mercenaries with quotas and demands to perform. So, what is the problem? These sales people are highly volatile and, due to the nature of their roles, they have a very low sense of care to build relationships.

They are paid to close deals, which may be all right peddling bibles or encyclopaedias door-to-door, but is an absolute no-no in building trust-based relationships to sell consulting services.

Considering that a client is someone who is under the care, protection and guidance of a professional, then ask yourself this question...

"Can we achieve this perception by the way we operate?"

There is a huge difference between responding to bids and creating a natural demand, a sort of "buyer's gravity" for your consulting services. Commissioned sales people can do the former, but only people who are part of the firm's structure and culture can do the latter.

There are four main reasons that make selling consulting services drastically different from selling "things". So, let's take them apart one by one...

1. Buying consulting services usually involves longer buying cycles


2. Buying consulting services usually involves higher investments


3. Buying consulting services usually has no tangible deliverables, only a future improvement in clients' condition through the consulting firm's care, protection and guidance


4. Products are bought by customers, but consulting services are bought by clients

1. Longer Buying Cycles

People who are used to selling "things" have learnt that in traditional sales you prospect, set the appointment, present and close. Then take the order and the money and move on to the next customer.

Selling consulting services is a totally different keg of worms, thus it needs a totally different approach.

It may well take several meetings to define the objectives and the scope of the project. It can take months or even years to turn an interested prospect into a paying client.

Nevertheless, regardless of the length of the buying cycle, you must stay in touch with prospects and wait for the moment when they are ready and willing to move forward.

Many consulting firms hire dedicated sales people for this purpose, hoping that the sales force will take care of this nurturing process, so the real consultants can get on with their normal daily project work.

There is one problem here: Providing consulting services requires trust-based relationships. Essentially clients buy care, protection and guidance.

But look at what happens in traditional sales force driven consulting firms?

Trust builds up between the salespeople and their prospects. When, after converting prospects into paying clients, salespeople disappear and the technical - IT, fitness, etc. - experts appear out of the blue and want to start projects. But how can we expect prospects to truest these new people?

Prospects say...

"Do you mean that after getting to know me and taking my money you relegate me to someone who I don't know and who doesn't know me and my business? Thanks but no thanks. I want my money back and I'm out of here."

There is another problem here too. Most consulting firms want to compensate their salespeople with commissions, which focuses short-term financial gain.

The problem is that salespeople have only one single reason to stay with their firms, and as soon as somebody offers just a tiny bit higher commissions, these firms start losing their highest producing salespeople.

So, if you consider the long buying cycles, the commission structure goes totally against it. Salespeople will turn around 2-3 times between first contact and signed contract.

I know a financial planning firm that employed commissioned telemarketers to get new business. They thought it was a great investment and a very cheap way of getting business. There was one problem: The telemarketers did everything humanly possible to get the business. The result: The firm was losing clients twice as fast as gaining new ones.

The telemarketers managed to sweet-talk people into signing up for the firm's services, but the financial planners were unable to keep up with the telemarketers' exaggerated promises and sometimes even downright lies. The firm wanted to build long-term relationships for repeat and referral business, but compensated its telemarketers on short-term financial gain and volume.

2. Higher Investments

When buying consulting services, we have to look at investments from two distinctive perspectives, and compare them to "things".

Preventive action is the steps we take when we do something to avoid a problem. Smart people do regular physical exercise because they know the benefits, such as mentally alert, physically and emotionally relaxed, less prone to injuries and illnesses, higher performance, better sex life, and many others. And what is the monthly investment?

Maybe $50 a month on your gym membership, $100 on good vitamin and mineral supplements and maybe a few sessions with a good personal trainer to get you going and keep you on track. If this sounds too much, let's look at how much money people spend on coffee and junk food every month, which only reduce their performance and productivity while speeding up their journeys to their graves.

If, as a result of being more focused, your overall performance goes up by 25%, you gain that money back in the form of extra revenue and qualitative enhancements in your life. At the same time there is a large herd of idiots who justify why they don't have time to exercise because they are too busy.

Yes, too busy working harder with a scattered mind and an on-the-brink-of-final-breakdown body. It is like "speeding" down the highway in second gear, with the handbrake on. You can make small progress, but run your car to the ground in the process.

In business, the preventive action is about making an investment to avoid a future problem. The problem I have seen over the years is that so many consulting firms refuse to invest in their own businesses in the form of professional development for associates.

Firm leaders buy new computers, new furniture, even move to bigger and spiffier offices, but neglect helping their associates to grow.

But realistically, everything stands or falls on continuing professional development. This is how associates can offer more value to clients, so the firm can collect higher fees.

Many firm leaders stay away from investing in their associates' continuing education in case they leave, so all the investment is lost.

Verasage founder, Ron Baker has a good question to these leaders...

"But what if they stay with your firm using their obsolete skills?"

And this is opportunity lost.

And Ron is right. The real damage is not when cream of the crop associates leave but when crap of the cop associates stick around at your firm. They are not bad enough to be fired for incompetence, but bad enough to hinder your firm's progress and success.

Besides, the opportunity to learn and grow are top priorities for top-notch consulting associates. So, if their firms deny the opportunity to learn and grow, they pack up, leave and spread the word about the firm.

And that's a real disaster.

Losers usually follow the smell of money. Winners usually follow the smell of opportunities to get better in their crafts.

Contingent action is when people spend a lifetime being busy and stressed out, and in their late forties and early fifties they hit the operating theatres for heart bypass surgery or something even more sinister. Many of them can never go back to work and spend all of their earlier accumulated money on medication and surgery just to stay alive for a few more miserable years. That is the moment they wish they had taken preventive action.

In business contingency action is about catching up with the investment that should have been made in the past to prevent future problems.

In the summer of 2002 I was sitting in the president's office of a high-tech firm in North Vancouver, Canada. The firm had some serious sales problems. When I asked the president about their marketing, he told me they had neither time nor money to waste on "this marketing garbage".

He also said they were too busy. Then he said...

"Tom, if you can guarantee beyond the shadow of a doubt that you can put at least $50,000 into our bank account within three days, I hire you."

I gave him a big smile, realising he was in desperate need of psychiatric counselling, and left.

The funny thing was that the president - allegedly - had lots of money in his other companies, but was reluctant to invest into his newest endeavour. A few months later the firm went tits-up, which leads me to the - maybe false - conclusion that none of the president's companies was making money.

The other problem is that many firm owners take as much money out of their businesses as possible, and neglect to invest in the future. They have nice homes, cars, boats and other things to make their neighbours green with envy, but have no marketing budget to generate revenue.

Sometimes as a last hope, they go to Craigslist and post an ad...

"Marketing director wanted. Pay: $15.00 per hour."

Yes, the business world has become more and more short-term focused. Consulting firms are looking for instant gratification, and are only willing to invest in areas that offer instant return on their investments. That is why so many firms operate like whorehouses, jumping on anything that can make instant money. The emphasis is on "instant".

But when it comes to selling and marketing their consulting services, firms either invest once upfront or keep paying again and again for the rest of their lives.

I think this how the phrase was born...

"Never enough money to do it right, but plenty of money to do it all over again and again... forever."

3. Consulting Services Have No Tangible Deliverables

Unlike in any other business, in consulting services there are no tangible deliverables that represent significant value. Sadly most consulting firms are still working towards performing certain number of hours of manual labour and creating a certain tonnage of deliverables, such as reports, manuals, memos and other similar worthless rubbish because they believe that is where their firms' added value lies.

Also unlike in other businesses, in consulting firms it is quality that counts not quantity. A small appreciative clientele is far more valuable, than a large clientele that keeps complaining about your fees and demanding more manual labour from you.

The value of the service lies in the quality of the relationship and the projected improvement in the client's condition.

While you can buy products like cars or washing soap based on performance, you can't do that with consulting services.

Products like cars or washing soap has performance built into them. It's only so fast a car can go, or it is only so much stuff one cup of washing soap can wash well.

But since providing consulting services is a collaborative process, it takes two to make it happen. Clients can't tell their consultants, "Here it is, get on with it, and don't disturb me too much", or "Here is my prospect list, get on the phone and increase my sales while I'm on vacation.

And very often improvement is not even tangible. They can be increased personal time for executives, improved morale, better corporate image, better client and talent retention. These improvements don't make money that can be directly tracked in the books, but anyone with more brain cells know that the improvement in any of these factors mean new money in the bank. You just have to make sure your buyers have more than two brain cells, which in many cases is not the case.

Also, make sure that your buyers understand that you are there to help, but it is their responsibility to create the desired improvement.

4. Products Are Bought By Customers, But Consulting Services Are Experienced By Clients

There is a world of difference between customers and clients. Customers buy commodities in transactional relationships. The whole idea is the "here is the money and give me three buckets of stuff".

But when we buy consulting services, we actually engage the care, protection and guidance of a fiduciary who works WITH us, not FOR us, and helps us to solve our own problems. In Harvard marketing guru, Theodore Levitt's words...

"Service professionals sell an experience."

Re-read here: They don't solve problems FOR clients. They enable and empower their clients to solve their own problems. One typical example is the financial advisor on TV, Suze Orman. Every word she speaks encourages viewers to solve their own financial problems and take charge of their financial futures without giving it all away to financial planners on a "take care of my money FOR me" basis.

Robert Kiyosaki teaches the same thing. Be your own financial planner. Ask for situational help from several people, but don't abdicate your future to someone else.

By contrast, just think of what so many consultants, especially the large firms, do. They create dependency for their clients. Just think about it.

Do you have full access to your website? Are you able to update it and modify it? Do you know all the usernames and passwords to your site's admin panel?

I have heard many horror stories when clients lost their websites and their databases because their webmasters had controlled everything, but then their webmasters suddenly vanished.

And always make certain that you are not dispensing your expertise as though it were a commodity. Have you ever heard lawyers, doctors or accountants dispense advice over dinner or at networking events? No. So, it is only fair to say that no consultant should do that either. No one.

Now let's take a quick look at the type of clients we can have, because they can make a huge difference either way.

The Three Categories of Buyers: Customers or Clients

1. Joe Buyer says...

"Don't bother me with your salespeople. Send me your stuff quickly and cheaply, but be careful for I have tonnes of your competitors to choose from. So you'd better dance to the beat of my drum, mate".

This is a kind of Wal-Mart approach of selling cheap, low-profile (usually low quality, a.k.a cheap crap) commodity items through transactional selling. In commodity items value is inherent in the "thing" itself, so no extra value is needed in the form of relationships. This is a typical customer.

2. Jeff Buyer says...

"We are looking for some strategic alliances, upon whom we can leverage our operation."

Basically, Jeff is looking for some suckers who are willing to sell Jeff's merchandise to their own customers for a meagre commission.

In the information technology industry lots of companies hang on to major suppliers' coat tails and start selling their "boxes" for a pittance of 5-10% commission, while foregoing the huge margins they could make on "real" consulting. This is retarded, and also proves how short-sighted most IT firms are.

For instance, Microsoft is not too keen on hiring more sales people (Hey, who needs more headache?), so through its "partnership" programme MS recruits thousands of companies, and those companies end up peddling MS bits and bobs to their own customers. (No, they are not clients).

Many companies also have the idea of hiring consulting firms and paying them in the future, based on achieved results. A strategic alliance is not a consulting relationship. This is a business partnership, and should not be mistaken with a consulting assignment. Let me repeat it: If you are an advisor to the firm, you are not a partner.

While the traditional sales force can handle the first two scenarios, it utterly fails to deal with the third case. Our emphasis is on Jill's scenario, for that is the real consultative approach.

3. Jill Buyer says...

"We have a problem we haven't been able to solve for a long time, and now we need some help. But instead of solving it FOR us, help us and guide us through the process, so we can solve it together, and we can keep the problem solved after you are gone."

This is the ideal consulting relationship, but most consultants don't operate this way. They create dependency for their clients, "Don't even try it without us." In my view that is both short-sighted and unethical. Jill is a typical collaborative client, ideal for consulting. Realistically, the only type of buyer, suitable for a consulting engagements.

Think for a moment...

Look at law firms. Do they have dedicated cold-calling, pavement-pounding salespeople? No.

Look at accounting firms. Do they? No.

Look at medical establishments. Do they? No.

Then how come that so many consulting firms want to rise to the same level of trust and respect as doctors, lawyers and accountants by sending out armies of salespeople pounding pavements, dialling for dollars and wrestling with gatekeepers?

Have you also noticed that salespeople-less firms don't have price objections.

Have you heard of a brain surgeon who struggles with price objections from her clients. No.

Now about lawyers? I don't think so.

Summary

I know the preconceived notion is that every business earns its keep through a process called sales, so there must be a dedicated sales force.

But over the years the sales dynamic has changed.

Now in some 80% of the cases it's the buyers who find sellers not the other way around.

Firms don't prospect in the traditional way.

Subject matter experts, not salespeople, create valuable content in the form of written-, audio-, video- and interactive materials, and buyers start digesting those materials at their own pace. And when buyers are ready to buy, they buy.

And an automated lead nurturing programme can bring self-qualified buyers all the way to the "climax point", when buyers are ready and willing to discover the possibilities of working together with a firm under mutually advantageous circumstances.

There is no need for convincing, overcoming objections and other similar lunacy.

Also, buyers want to meet experts, not salespeople who represent experts.

So, we have to choose...

Do we want to assemble armies of peddlers roaming the land and harassing the market?

Or do we want to create advantageous circumstances that magnetically attract top-notch buyers?

Well, the second option is easier and a lot more cost effective ($134 vs. $332 per lead according to HubSpot's "The State of Inbound Marketing 2010" report.)

So take a look at how your firm acquires clients. How much does your firm's success depend on content-less salespeople? By "content-less" I mean professional salespeople who sell anything sellable but don't really understand what they sell. For a few years they sell medical devices. Then sell cars for a few months. And then sell information technology, but they don't really understand anything they sell.

And even if your firm still depends on salespeople, start working on generating good content, so great buyers can come to you, so over time you can phase out your sales force.

And if you want to keep your salespeople, then they have to go through a major mindset shift and adapt buyers' new decision-making process.

Come and let's discuss this newsletter issue on my blog...

Recommended Reading

First Among Equals: How to Manage a Group of Professionals

By Patrick J. McKenna and David H. Maister

Although this masterpiece was first published all the way back in 2002, it's never really received the recognition it deserves.

This is one of the handful of books, or maybe the only one that focuses on coaching associates in professional service firms.

There are lots of books dealing with motivating industrial workers, but lighting the fire under the arses of knowledge workers is a different keg of worms.

Now we know that highly talented knowledge workers don't "operate" the same way as industrial workers.

For most industrial workers the operating mantra is, as marketing ace Dan Kennedy succinctly put it at a seminar a few years ago...

"Off to work I go to pay the bills I owe."

But highly talented knowledge workers operate at different levels. Their main motivation is to do something amazing, something, as Tom Peters puts it, that makes the world wobble on its axis.

So, for these folks the traditional carrot-and stick approach doesn't work.

And this is what Patrick and David dissect in this book.

Firm leaders are on constant hunt for better people and fail to realise that they have the great people and with a bit of coaching they could bring out the best in them.

But what's missing is this "bit of coaching".

This book is all about applying this "bit of coaching" to bring out the best in your people.

Place your order with Amazon.com for First Among Equals. You'll be glad you did.

"Dynamic Duo" Mentor Programme... ...has 0 opening for January and 4 for February 2012. Click here to continue to read the fiendish details.