Should customers drive consultants to delivering work for free?

A recent discussion over coffee with a highly respected finance and investment group prompted this blog, a subject which has been carried on for as many years has now started to emerge again with customers seeking free advice and work from consultants, the question is why?

The $101 billion consulting market is jammed with boutique shops looking to peddle their wisdom. The big question is: What is all that advice worth? Or more important from an entrepreneur’s perspective, what are customers willing to pay?

New entrepreneur consultants tend to undercharge for their services. The mistake is understandable. First, it’s difficult to know the going rate because most consultants vigilantly guard their prices. Second, despite the seemingly small barriers to entry, first-time consultants usually don’t have the strong client relationships that giants like McKinsey & Co., Accenture and Marsh & McLennan have built; so, not surprisingly, small fries try to attract attention by competing on price. Finally (and perhaps ironically), many consultants simply underestimate how much a business will cost to run, says Bill Mooney of William Mooney Associates, a consultancy to consultants.

When consultants commiserate about their projects with their managers, colleagues, project managers or account managers, the most difficult issues are given the same  responses, the six words every consultant hates to hear: “You should have managed their expectations.”

• Client will not cooperate? “You should have managed their expectations.”
• Client won’t let you do your thing? “You should have managed their expectations.”
• Client is not happy? “You should have …” And so on.

What’s one to do? Besides watching scope, budgets, deadlines, juggling conflicting requirements, and now managing expectations? Where does one find these customers? And if you find them, how do you manage them?

Expectations are deeper and broader than “requirements:”

Expectations are your client’s vision of a future state or action, usually unstated but which is critical to your success: A client who “wants the project to be quick and delivered,” or who “wants to be involved in all the details” or “not involved at all,” or who expects that your project will result in “reducing his work force by 80%.”

Expectation management techniques are very valuable in client service work. It’s partly for our client’s benefit – to keep their eyes on the ball, to work towards the same goals, etc. We also do it for our own benefit because our project targets are sometimes less precise than we wish they were, our performance criteria are demanding and many activities, such as presentations or deliverables are frequent opportunities for clients to pass judgment on us.

Expectations are a three-way association:

1. They are a primary measure of your success as a consultant. In your client’s mind, satisfaction is how close you have come to their expectations. Not how close you were to the wording of the contract or the scope of work or even the performance criteria, but to their expectations. It may not even be the real results of the project but the process with which you arrive there.

2. Expectations drive all of your client’s actions and decisions. It’s not their everyday duties or their “assigned role” or your very rational explanations that drive them, but their expectations.

3. The consultants expectation needs to be met based on the delivery of 1 and 2, and a payment whether this being an upfront commitment fee, retained monthly fee or tasking fee needs to be paid and agreed in advance of any work being committed to or delivered, payment is more than a fee, payment is a psychological bond between the consultant and the customer and no respect will ever be sanctioned as a direct result of ‘free work’ or contingent work on success only.

To be sure, consultants’ fees vary depending on location and target industry. But there is a common methodological framework for arriving at an attractive pricing structure–both for the consultant and  customers.

You can find success in consulting by developing certain qualities. They make you more effective. After years of consulting experience, I have distilled these qualities into a top ten list.

1. Professionalism

Consultants should always keep in mind that client relationship should remain at a professional level. It is sometimes easy for consultants to take on an “employee attitude,” which in many environments can backfire on the consultant and actually create a negative situation for the project.

2. Time Management

Consultants should look for ways to adjust their work style to accommodate the schedule, budget and overall requirements of the project. This is particularly true when faced with pressure to maintain high quality within finite time and budget constraints.

3. Judgment

Consultants are required to have good judgment when confronted with a problem. We should not jump to conclusions. Consultants should take time to consider the facts and to get feedback from their peers and management before reaching a decision.

4.Team Player

Consultants must demonstrate that they are team players and are willing to learn from team members, genuinely valuing the input and expertise of others. It is important to establish a collaborative relationship with peers.

5. Good Communication Skills

The consultant should have excellent oral and written communication skills. Since we are often viewed as the subject matter expert (SME), we should be able to communicate our opinions effectively. In addition to English, it is beneficial to know the language widely used by the employees of the company. In some countries, the documentation may be in a local language. Ideally, the consultant can easily read this language without employing any translators.

6. Expert Knowledge

Clients typically approach an external consultant for two reasons: 1) the client expects the consultant to have more expertise than the organization’s internal resources or 2) because clients do not have sufficient time to solve their own problems or implement their own projects. As consultants, our level of knowledge should be broad enough to know when to ask questions and/or where to research to find solutions. At all times, the consultant should remain current by reading journals, magazines, informative websites and through networking with fellow consultants. We should know how to apply theory into practice and also be skillful in using appropriate tools (software, professional journals, etc.) to function efficiently in the job.

7. Good Listening Skills

During the consulting process, consultants will meet different people with unique characteristics. Some will be verbose, others reticent. Having excellent listening skills will encourage all to talk freely. This leads to more information sharing which, in the end, can make the consulting process more streamlined.

8. Roles and Responsibilities

It is important for consultants to understand the responsibilities of their role, as well as the practices and parameters of the job. You may notice that each client has a different take on what the role of a consultant entails. Clarifying your client’s expectations and deliverables beforehand may possibly be the single most important task one undertakes. Remember that in a consulting role the client also has duties and responsibilities: they are bringing you in to recommend what they should implement. If they fail to implement within the agreed terms then you can’t help them further and it’s time to walk away.

Remember that each client has his or her own preconceived view of the consultant’s abilities and capabilities—views that will almost certainly differ from reality by varying degrees. Some clients expect the consultant to be a god and recommend solutions that will fix everything that is wrong with their organization; others expect one to be nothing much more than a glorified mechanic called in to fix the photocopiers. Clarifying what you can and cannot do, and what you are willing to do, are paramount concerns before commencing work.

9. Involve Other Consultants

Saying “I don’t know” is often a very good answer to a question. An even better answer is “I don’t know, but I know people who do know.” Consultants do not know everything, and should not be expected to know everything. Saying, “I do not know” will not damage your prestige. As an example, if your client has a problem related to legal issues, try to consult with a legal consultant to help your client find a solution to the problem.

10. Reputation

Protect your public reputation above everything else—you will not get an easy chance to repair it if it is damaged. If necessary, walk away from situations or contracts that could potentially damage your reputation. Consulting is not simply contracting by another name; it involves duties of care and levels of accountability, responsibility and integrity that may well be greater than those of the client. If that proves to be the case and you find a client’s operations and methods are not ethical, then it is time to walk away. Be selective about the clients for whom you work.

The figure above, the red line represents your client’s expectations, the black line a measure of the value you’re providing and the green line your client’s perception of that value. Notice the step down in the expectations line? That indicates expectations that have been successfully reduced. Perceived value is commonly below the actual delivered value, as the results are not always visible, not well explained or publicised. Your objective is to keep the gap between their expectation and the perceived value to a minimum.

In summary, consultancy’s who deliver to clients value, expectations and a scope of work should not be afraid of asking for fees that require execution and delivery on one’s time, if a man or woman works a day of time, they should be paid.