The Big Question
Questions I get from consultants. And my answers.
This is the final part 3 of answering questions I received after publishing my recent blog about productizing consulting services.
Standardizing your services is an important element of the consulting business approach that I advocate, but it will only work if you change your mindset about:
(1) narrowing down your focus and expertise, you need to understand all the patterns of the prototypical pains of your (narrow) target audience;
(2) designing a client-pain-centered value proposition (see my new workshop), sharply positioning your expertise to prospects;
(3) allocating 25-30% of your time consistently to marketing;
(4) learning to say no to incoming opportunities outside of your narrow area of expertise to protect your time and expertise deepening (and to have a high quality of life, see my post about my 4-day week)
In my recent blog, I already discussed the following topics:
● Why tailor-made service offerings are draining for (upstream) consultants
● Advantages of productizing your consulting services
● Packaging your services doesn’t mean eliminating personalization
● How to switch to a packaged service model
In the past two issues of the newsletter – #33 and #34 – I introduced you to the following concepts and steps:
● Definition of productization in consulting
● Why do clients buy productized consulting services
● The 3 steps in productization of consulting services
● Step 1: It all starts with paid upfront discovery
● Step 2: Roadmapping as a core component of productizing in consulting
● Step 3: The long tail: your advisory retainer, the client’s ‘peace of mind’
Here’s what I will be talking about today
● Pricing of your productized consulting services
● Examples of productized consulting services you can learn from
● Tips to help you make a move to productization in consulting
Pricing of your productized consulting services
It’s impossible to give precise details about the amount of revenue you can generate with productized consulting approaches. I’ve seen projects (with the 3 steps) varying from a few 10.000’s to almost a million. Especially in large-scale technology, the step 1 diagnosis (or sometimes also called ‘feasibility study’) can be pretty big in volume.
Here’s what I learned in the past decade and what my consulting clients are putting into practice:
● The goal should always be to (carefully) sell all the steps at once. From a pricing altitude point of view, that’s your highest possible anchor point. The total cost (of the 3 steps) also helps to create a more positive perception of the (lower-cost) for the diagnosis or feasibility study (step 1) only (if the client would choose for step 1 only).
● There’s a lot of research and study in productized pricing models. I prefer the work of Blair Enns in his book ‘Pricing Creativity’ where he explains ‘progressive pricing’ as mentioned above (with a 3-tier step approach).
● I often debate the cost of step 1 with my clients as step 1 can be used as an easy entry point with a new client (Trojan Horse approach). However, my advice is to maintain solid pricing for step 1, as too low pricing might create a poor perception of your expertise. ‘Giving it away’ at low pricing to get an entry ticket is not always a smart move. It might harm expertise perception, and it might be challenging to ask for higher price points in the following steps (too big delta).
● What I am seeing with my students, their clients feel proud of hiring an expensive expert to help them solve their problem(s). Expensive experts provide clients with feelings of ‘being taken care of’. And, in my experience, they tend to listen better and accept candid feedback more constructively.
● And you? You feel recognized for your expertise. That’s called a win/win. Right?
Examples of productized consulting services you can learn from
1. Salesforce post-M&A integration consultancy (experts in merging Salesforce after enterprise M&A):
● Step 1: diagnosis of integration challenges, opportunities, duration estimation, and cost estimation
● Step 2: roadmap to integrate the two systems (mainly done by client with expert guidance)
● Step 3: CIO gets personal guidance during 12 months (advisory retainer)
2. CRM sales improvements (expert in enterprise B2B sales process improvement):
● Step 1: diagnosis of improvement opportunities (mainly how to improve moving from MQL to SQL - marketing qualifies leads to sales qualified leads)
● Step 2: roadmap to enhance the internal sales process, including the development of playbooks and a training program (delivered by consultants, beyond step 2)
● Step 3: CMO and CSO getting personal guidance during 12 months (with one workshop per month - follow-thru of the roadmap) and execution of training program (to help clients getting self-sufficient)
3. Retail demand forecasting improvements (experts in automating supermarket demand forecasting using AI):
● Step 1: feasibility study to uncover demand forecast improvement opportunities, including initial opportunity-based cost estimations
● Step 2: roadmap to improve demand forecasting, including a training program for the CoE analytics
● Step 3: 6 months personal guidance for the demand forecasting leader
Tips to help you make a move to productization in consulting
● The main target is helping the client become self-sufficient (and you should talk about that many times).
● Therefore the approach should always be: the execution of the roadmap is the client’s responsibility, but you provide expert guidance.
● You must strive for a 5-star experience in the way you execute the diagnostic (e.g., automated questionnaires, top-notch reporting, and advanced data gathering) and deliver the roadmap (e.g., with virtual roadmap tool Miro.com).
● If you are starting to use productized approaches, don’t go all the way from the start. I always advise doing it in small steps, carefully testing and validating your approach before going big.
● Beware of becoming the ‘order taker’ of the project leader, and make sure you stay away from getting in cc in team email streams. As the expert, you are the strategic advisor, and you provide ‘peace of mind’ for your C-level clients.
● Be careful with the number of productized projects. It’s great to sell them to the market, but you have to be careful to keep the volume of follow-thru and executive guidance doable. Scaling is the objective, but balance is necessary.
That’s it...3 newsletters with productized consulting as the topic. I wish you good luck with your thinking and doing. Going back to previous newsletters is possible: edition 34 and edition 33.
Next question I received (answer in the next newsletter #36): I often discuss how experts present themselves. I’ve been asked several times: do I use the I-format or the WE-format, do I talk about my/our expertise/authority, or my/our consultancy. It’s a fascinating topic! See you in 2 weeks!
