Value-Based Fees. Alan Weiss
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Название: Value-Based Fees
Автор: Alan Weiss
Издательство: John Wiley & Sons Limited
Жанр: О бизнесе популярно
isbn: 9781119776963
isbn:
CASE STUDY: THE ARCHITECTS
The American Institute of Architects (AIA) was a client for a couple of years. Their members habitually charged by the hour for designing blueprints, finalizing plans, overseeing work, and so forth.
During a decade of increased salaries for almost every professional service in America, the architects suffered a net decline in income. How much is more light, a better family environment, and better use of space worth? Apparent, less than $100 an hour.
According to Salary.com, the average hourly fee of an architect in the U.S. in 2020 is $27. That is not a typo.
Value-based fees is a philosophy that holds that we provide a dramatic return on the client's investment through our projects and advisory services, in return for equitable income. That's why a peer-level, trusting relationship is required with our buyers, which we'll talk extensively about as we progress. That's how partners treat each other.
Capitalism is based on my providing you with products or services of a certain quality in a certain manner at a certain time, in return for which you will provide me with certain fees in a certain manner at a certain time. If you haven't looked around lately at communism or socialism, let me assure you that capitalism has won.
Let's proceed to help you and your clients win together by intelligently assessing value and commensurate fees.
THE IMPORTANCE OF BUYER COMMITMENT, NOT COMPLIANCE
I can prove anything on a double-axis chart,4 but the matrix in Figure 1.2 happens to hold true. As you can see in the figure, the ideal relationship occurs when buyer commitment to the project (and to you) is high and your fee is high. If buyer commitment is high and your fee is low, you are wasting an opportunity. If buyer commitment is low and your fee is low, you will, at best, create an indifferent sale. And when fees are high but commitment is low, you will be shown the door.
My estimate is that most consultants' approaches (whether or not they actually get the business) are in the bottom left quadrant about 25 percent of the time, in the bottom right quadrant about 10 percent of the time, in the upper left quadrant about 60 percent of the time, and in the upper right quadrant only about 5 percent of the time!
That's right: most consultants, including most of you reading this, habitually undercharge for your services and deliver far more than you are receiving in remuneration, considering your contribution to success. You are undercharging and over-delivering, and lest you consider that an exalted position, consider trying to pay your mortgage or 401k contribution with that combination.
Figure 1.2 The Relationships Between Fees and Buyer Commitment
Most buyers comply. That is, they are willing to go along with the “expert,” even if it's sometimes against their better judgment. Or they will delegate you to someone they believe has the technical ability to evaluate your proposition, typically in the human resource department, finance, or legal. (Put these together, and they are an anagram for “no business here.”) Buyers who merely comply may be seen at first blush as easy to work with, but they are actually land mines waiting for some weight to trigger them. That's because they hold the consultant responsible for everything. They believe that you are doing something to them or for them or at them, but certainly not with them.
Compliance is dangerous because the buyer usually takes no inherent responsibility for the project but rather abdicates to the consultant. I've never found a project that a consultant can unilaterally implement successfully, since consultants have responsibility but no real authority. (When that dynamic is reversed, it's the sign of a very poor implementation scheme.)
Consulting projects should be true partnerships between the consultant and the economic buyer. This begins prior to the proposal being signed and is an integral aspect of obtaining high fees. A merely compliant buyer will grudgingly or apathetically go along with the implementation but will do so at the lowest possible fee. The head is involved but not the gut (remember: logic makes people think, but emotion makes them act). Large fees are dependent on emotional buy-in, and that must be achieved in the relationship aspect of the consulting sequence, well prior to the actual closing of business.
This is why patience in formulating the right relationship is more important than attempting to make a “fast sale.” The former is a partnership where fees are academic; the latter is a unilateral benefit where fees are often the main point of contention.
The buyer's commitment to outcomes and to his or her role in the partnership being formed to reach those outcomes is the key determinant of high fees. Buyers who are too willing to go along with your recommendations are as potentially fatal as those who dig in their heels after you've said hello.
CRITICAL STEPS FOR BUYER COMMITMENT
It's worth repeating here briefly the sequence of events in the consulting business acquisition process that engenders the highest-quality commitment; the first three are shown in the graphic in Figure 1.3:
Shared Values: Those common business beliefs that will allow you to work effectively with the prospect—for example, a mutual antipathy for downsizing or a common belief in the importance of ongoing employee feedback
Relationship: That level of a trusting interaction in which you and the buyer are comfortable with each other, can be honest (even in disagreeing), and share insights and assistance with each other on a mutual basis
Conceptual Agreement: Agreement between you and the buyer on the objectives for the project, expressed as business outcomes; metrics, measures of progress toward those objectives; and value, the buyer's stipulation of how he or she and the organization will be better off as a result of those objectives being met
Figure 1.3 Consulting Business Acquisition Sequence
These three critical steps, each dependent on the prior step being successfully in place and addressed as we proceed, will garner buyer commitment. The absence of conceptual agreement will result in either a lost sale or a lousy sale (and the latter is often more damaging than the former).
Fees are dependent on buyer commitment well before a proposal is ever tendered. Note that fees are not even on my chart.
THE BUOYANCY OF BRANDS: HOW BRANDS HELP FEES
The second book in this Ultimate Consultant Series is dedicated to branding for consultants. One of the key reasons for effective branding СКАЧАТЬ