In 1991 I started out in the consulting business charging per day, a daily rate
Together with Norman Rentrop’s publishing team, I worked hard seven days a week to establish the first independent research service for investors, a printed informational product with over 430 international publically traded companies. Norman is still owner of the publishing house, which is now grossing over € 110 million in revenue annually across the world. Nevertheless, I was running out of cash. I was in the middle of hundreds of pages of research manuscripts, building a gigantic database of company data, and employing a dozen people.
The only thing that I instinctively realized at the time, “If it doesn’t work, I just have to increase my input, cash, and time.” Being an entrepreneur requires a dream and stamina, at least that’s what everyone says. Sure, but Samuel taught me to focus on something else. When you’re under stress, breathe deeply through your nose four times and reflect on these questions for ten minutes: “Am I doing the right thing? Am I doing it in the right way? Am I actually doing it?”
This led not just to an increase in revenue to a six-figure amount within the year, it also prepared my company for a merger, which turned me into a temporary millionaire.
I believe that every self-employed management consultant has the right to discover the reliable system that comes with the recognition, the safety, and the money that he or she deserves. Regardless of which sector you are specialized in, whether as a start-up or an established company, whether alone or in a team surpassing 1 million in revenue, wherever you are located.
Over the course of your career, you have collected great amounts of know-how, expertise, and experience. However, when you approach your potential customers, you are competing against dozens of consultants with regard to your positioning. To better differentiate yourself, an approach may be that “my services / solutions have to differentiate especially through ‘technical competence’ and ‘ability’. I will present these strengths at every introductory meeting, bolstered with PowerPoint slides and more.” This was my approach for a while. And it was a big mistake. It limited my income to six-figures.
And then there are the price / remuneration negotiations. “My potential clients calculate their target price for my services like this: How many hours / days will he / she need, multiplied by a certain hourly rate that one has heard from friends in c-level positions, equals expected execution costs, plus profit margin, equals price. Everyone does it like this, so I am doing it correctly.” My analysis: This limit to your profit is as high and thick as a dam wall in the Swiss Alps. Insurmountable.
Let me briefly comment on the topic of marketing & sales. Regardless of whether you are the sole proprietor or if you are building a company with a revenue of more than 1 million annually with the goal of later selling it (this was my aim). As a start-up, I had to grow to reach a crucial size. As an established entrepreneur, I had to at least replace the completed projects. At the time, I hated sales. I only “did” sales & marketing when the last projects were settled since it was high time for a fresh supply of projects. Since everyone else was doing the same, I was convinced that I was doing it right. A big mistake that limited my company to triviality.
Another topic that sparks controversial discussions in forums: When I began being self-employed, I decided to work alone, without the burden of managing people and paying monthly salaries and other fix costs. However, I still needed additional know-how or simply resources to optimally fulfill the customers’ requirements. My “leadership principles” at the time were as follows: 1) “People who work with me, be it as freelancers or as employees, should know themselves what they should be doing when. It cannot be my daily routine to follow-up. 2) If it’s of high priority, I will rather take the task myself and deal with the client directly.” Does this sound familiar? This approach cost me countless unnecessary hours.
Even as a graduate financial analyst, CIIA, and with a degree in business administration, I had – in retrospective – a funny approach regarding finances as an entrepreneur. “Planning, measuring, optimizing using calculations with regard to marketing, sales, and liquidity planning are tools for big companies. I don’t have time for this bureaucracy, so I will do it later when the company has grown.” Now, the relationship between the marketing plan, sales channel, and liquidity plan helps me stay relaxed during stressful times. Even with monthly, five-figure fixed costs.
The two Excel sheets that support me are updated every Monday morning before the team meeting. In this meeting, I discuss the client projects with my managers and staff. In case there are some delays, these are immediately considered in the liquidity plan. The updated marketing and sales plan is incorporated in the columns for expected revenue. This way, we have an overview of probable incoming payments from existing clients and the values from newly acquired customers that are exposed to risk. Possible changes with regard to costs are also considered.
I would like to once again ask “what is the right thing, what is the right way to do it, and what is actually important” with regard to positioning and sales. You have probably heard that people’s purchasing decision is based “90% on emotional reasons” rather than objective reasons.
As a consultant with in-depth expert knowledge, you will quickly fall into a sales trap when you tell your potential client the following at the first meeting: “We are reliable, experienced, have a long history, and work for these clients.” Then you look out for “purchasing signals in his or her gestures and few words.” However, presenting such a “sales pitch” is not at all interesting at this point in time! My sales coach from Chicago, Gene Rosendale, founder of nonselling.com, brutally demonstrated this. Every statement of this kind leads your counterpart responding with a natural defense mechanism. “I have to think about it” is the mildest form of your sales effort that just fizzles out. No response, and decisions are delayed.
Prospective customers hate salesmen, because they always assume that their offer is so good that it must fit the customer. They talk too much. They ask investigative questions. They do not seem interested in the person’s environment and situation, their views, perspectives, emotions, and priorities. If you could stop selling like this, your sales efficiency would increase by 100 to 300% with the same effort. That means more recognition, less frustration, and more money for the same effort.
Here is a trick that could help you not to sell. You could start every initial meeting with an assumption. To find out more about your counterpart, his or her surroundings and work. It’s about him or her. No small talk. No elevator pitch.
People love responding to assumptions and correcting their point of view. For example, “…nice to meet you. I saw on your LinkedIn profile that… the company is respected by the market as a reliable supplier… you have done a lot to establish yourself…” PAUSE. It is almost guaranteed that your counterpart will pick up the conversation and start a dialogue.
In the following minutes, I actively steer the dialogue. My remarks and questions always refer to what my counterpart previously said. It’s all about him or her, not me. For example, “Interesting. What do you mean by that?” or “Could you explain that to me again?” or “You haven’t mentioned XYZ, what does that mean?” This way, I can gather relevant information (about time, money, problems, market) as long as I like without giving my counterpart the impression of being interviewed.
Then you move on. You can summarize what was said at any time and then insert a 15 second advertisement. For example, “With all these issues, you have a really exciting position. You have achieved this and that… maybe I can contribute towards achieving this and that…” PAUSE and wait for an answer.
The prospective customer will then ask you, “What is the price or what are the next steps?” Guaranteed. He or she is in the lead. In dialogue, not through sales talk. By the way, I never bring a PowerPoint presentation to the first meeting since I cannot know the customer’s detailed needs in advance. Oftentimes, my counterpart then asks me to send specifics in power point slides.
This dialogue model allows you to strongly distinguish yourself from the competition. The effects on my business are manifold. Trust is built up more quickly. I have control over the conversation at any time without being controlling. I don’t feel like a salesman. I receive information that I previously didn’t have. Prospective customers regularly tell me that we had an interesting conversation. Voila!
Now on to pricing. I argue that my costs and profit margins are actually of no interest to anybody. The prospective customer only wants to see a price in relation to his or her benefit in order to satisfy his or her reasoning. Emotionally, he or she has already decided on you since you didn’t present yourself as a salesman.
What is the meaning of benefit-based pricing? If you can change your client’s strategy in a way that increases his or her profit by 253.187 annually in just one hour – based on your experience and knowledge – would you charge just one hour? Would you really do that?
There are two alternatives to this scenario. You could charge a flat rate for the completion of the assignment with the expected results. Your risk: the effort can’t explode beyond the planned scope. In your proposal, the calculated expected financial effect (result) is shown first, the remuneration last. Another option is to share the future result (“success fee”) and to charge a fee in case the project is cancelled (“cancellation fee”). It you are brave, you can offer a guarantee: “no remuneration without success.”
All sales consultants will tell you that more customers, higher prices, and higher purchasing frequency are the only ways to increase revenue. However, you should also consider the closing rate in your sales process. How many meetings can you schedule out of 10 important contacts? 1 out of 10 = 10% or 2 out of 10 = 20%? This constitutes a difference of 100% while exerting the same effort. How many meetings lead to how many deals? 1 out of 10 = 10% or 2 out of 10 = 20% means 100% more revenue with the same effort. Improving these performance indicators has a huge impact since more revenue can be generated from the same input in terms of marketing and sales (time and money). Sales without selling improves this performance indicator sustainably within 12 months.
I simply measure these performance indicators on a piece of paper in my notebook. The figures can then be consolidated in a simple Excel sheet. No software necessary!
Finally, let me return to the topic of leadership. “People who work with me have to know what they should be doing.” Don’t leave the future up to chance! This could cost you a fortune in terms of health (negative stress), recognition (customer satisfaction), and money (hours). Every freelancer and employee needs a clear job description, clear-cut and unambiguous assignments at the beginning of the week and controlling at the end of the week. This is a simple planning and leadership process that I also apply to my own work. Every Friday, I recapitulate for 15 minutes to note down what went well, what has to improve, and I communicate these notes at the beginning of the following week! If people regularly deviate from this procedure? Make a change. The weekly review is a scheduled meeting in Outlook.
Before you start a new week, you should think about the following seven points:
- 20% talking, 80% listening
- Sales without selling increases results by 200-300%
- Base your price on benefit with test profit sharing and fixed price models as alternatives
- Dialogue = love, recognition, respect, peace of mind, more money
- Liquidity planning together with marketing and sales planning ensures serenity even in hectic situations
- Leadership = communicating clear, measurable, and achievable goals, evaluating achievements in review, optimizing and drawing consequences in case of repeated differences
- Increase your closing rate rather than scheduling more meetings
All the success, Andreas Buenter