6 Common Revenue Leaks for Consultants and Experts
Being an expert takes passion, interest, and honing your craft. But expertise doesn’t mean success as a consultant. Consulting is a business, and that means focusing on revenue generating work.
Here are 6 common revenue leaks to check for in your consulting practice. How to apply this depends on your specific business and clients, but if you’re concerned about revenue, here’s some things to check in on.
Leak #1: Not Productizing Your Service Offerings
Consulting should offer a unique insight into each client’s specific situation. But reinventing a bespoke process for each client is prohibitively expensive. In fact, clients want your relevant expertise.
Bulk SEO Consulting is a price-focused commodity
Your experience with specific industries or problems and your portfolio appeal to your best clients. To appeal to them as their best solution, productize your offerings. Here’s a quick example:
I offer SEO consulting.*
A clear offer, but it’s like buying from the bulk bins. You better already know what you want.
I offer SEO consulting to reach the customers
of small to medium size freight companies.
Much clearer, but not really a product.
A productized One-day SEO Assessment
to reach your customers is much easier to swallow.
I offer a One-day SEO assessment for
small-to-medium freight companies
to better reach their customers.
That implies a time/price (one day), and a process/result (an assessment) based on your clear expertise. This is packaging and helps people buy new/unfamiliar things.
How does this help your revenue? It strengthens and shortens your sales cycle for your best clients.
This doesn’t change your offer for generic SEO consulting, but by productizing you’ll spend more time helping your best clients and less time selling them.
Leak #2: Giving Too Much Free Advice
Thanks to the Internet, there is no need for you to offer free 1-1 advice. Invite people to google it.
Real expertise is not just information - it is discrimination and experience. Expertise is:
- skipping the 5 dead-ends before finding a solution
- not having to plow through 500 copycat-marketing blog posts
- not having to “re-architect” a solution later
For expert discrimination to be effective you have to get to know your client’s unique situation. That takes time - expert billable time.
Yet, most people who ask for free advice are innocently trying to get where they need to go. They may not understand the complexity - is it a $5 solution? A $5m solution? It can’t hurt to ask.
So here’s some tips on how to handle requests for free advice:
- Don’t meet in person unless you’re receiving money or closing a deal. Phone and video conferencing is plenty to build rapport until you’re closing a sale.
- Meet on a 30 minute phone/video call to see if you’re aligned with them. Keep doing 30 min calls as long as you want but don’t go over 30 mins for free.
- Do some market research - “What did you find when you researched it?” Their answer may surprise you with new information. Their answer may demonstrate the value of hiring your expertise. Is there an opportunity for a productized service?
- Move people forward. If someone isn’t a good customer fit, there’s no harm in pointing them in the right direction. You may be surprised at how small interactions can have huge impacts on the people you meet.
Compassion is our natural tendency to help each other - but it doesn’t pay the rent. Not wanting to pay doesn’t make them “bad” - it just means they don’t/can’t value your time. And that’s business, not personal.
In the end, letting someone convert your professional offer into volunteering is a form of enabling.
Leak #3: Proposals
There are two kinds of proposals - paid and free. In my experience, most people asking for a proposal mean the free kind.
The problem with free proposals is that they are time-consuming and risk over-promising without careful consideration.
There is a history behind the free proposal. Back before the Internet you could ask for a proposal and get one, but if you shopped it around town for a better price it would damage your professional credibility. While shopping proposals for a better price has become a common practice, not everyone is aware of how much effort goes into a useful proposal. Price shoppers aren’t the best clients anyways, but your time has already been spent.
So, if someone asks for a free proposal, let’s assume they are innocent, and skip the history lecture. Instead, let’s offer them a productized service.
If the productized service doesn’t cover everything they want in their proposal, offer it as the first part of the larger project at a low-risk scale (days not weeks). It makes a lot more sense to do a free proposal for a paying client.
I had the opportunity to do a “one-day marketing workshop” recently. An excellent marketing consultant distilled their $4500 2-day on-site marketing consultation into a workbook. Then over 2 days and 4 hours of consulting, I worked through the process and he checked in on my progress. It was a great way for me to get a custom plan at a fraction of the price, and for him to spend 4 hours on the phone getting paid for a custom proposal.
Essentially, these are strategies to decline requests for free proposals in ways that let clients save face and offer value. If a client still demands a free proposal, you’ll have to ask yourself if they are the kind of client you’re looking for.
Leak #4: Chasing Invoices
Invoicing isn’t hard. Sending and paying invoices is just pressing buttons. “Due on receipt” could be paid in about 15 minutes with a coffee break.
Invoicing should not feel like this.
Invoices need to be chased for a several reasons:
Unclear Invoices - Make sure your invoice includes your business, your customer contact, payment info, and the value you added. Invoice fraud is not uncommon. Make it easy to pay your invoices.
Institutional Friction - Successful businesses must focus on revenue - you have to make paying you a priority.
Invoice Financing - Companies are run on cash-flow - and it’s not uncommon for Net-30 invoices (Net-30 means pay in 30 days) to be used for short-term financing. Net-30 invoices are essentially risky short-term loans.
Invoice Piracy - Some unscrupulous businesses hold invoices hostage as leverage for negotiating discounts or free work - or never intend to pay. I’ve seen lawyers do this (“sue me!”) and government contractors are notorious for this (Net-45 to Net-60).
The best way to head off these problems is prevention:
- Make your invoices clear and easy to pay.
- Decide your boundaries. What’s right for you? Net-10? Net-15?
- Write and discuss payment terms with clients up front.
- If a client would like an exception, what should they provide? A deposit? 3 references from other vendors? Don’t humiliate yourself by setting boundaries and then breaking that promise to yourself.
- Get a deposit - especially from first-time clients or young or pre-revenue companies.
- Act immediately on late payments - start making polite and firm calls.
- Don’t freak out about late invoices. Stuff happens. Most people hate paying late almost as much as being paid late. You’re options are the client’s cooperation or debt collection. If someone has broken a promise to you, recognize it with them politely, and ask for a new promise. “Mr Joe, you promised to pay this by the 20th, and that didn’t happen. It’s important to me, when can you promise pay it?”
- “Pause” clients with late invoices and take them off your schedule. Stop unpaid work and start selling - time spent selling is more valuable than time spent collecting debts or freaking out about invoices.
- Ask yourself “Will they pay on time?” and learn from your answers.
If you get significant push-back on deposits and payment terms, ask why. You may find:
- Cash-flow or financing issues
- They don’t see the value of your offer
- Your offer is too big of an initial commitment - start smaller
- Institutional processes (possibly outside this person’s control) that don’t prioritize/respect your work
Having to chase invoices is unprofessional and unnecessary - it is actively wasting your time.
Leak #5: Lead Activation Cliffs
Lead Activation is motivating leads to become customers. Customer Activation is motivating your customers to re-engage.
It’s important to have an effective sales process so you’re quickly making the most of your leads.
Journeys are more fun with maps.
Your leads go through a life cycle to become customers - called a Customer Journey. It’s a list of progressively deeper commitments: email, phone call, deal, deposit, SEO Assessment, invoice, payment, etc.
The easiest way to improve your Lead Activation is to look for commitment cliffs. Places where you ask your customers for too much commitment, too fast.
Online services are great at this. Maybe $100/month is too high of an initial commitment - but 2 free months is an easier commitment to sign up.
Look for commitment cliffs in your Customer Journey, and build some ladders and escalators. Productized Services works great for this because you can create marketing material that works passively instead of calling to explain it in person each time.
Leak #6: Customer Re-engagement Cliffs
Your customer journey should also offer your clients opportunities to re-engage for more value. E.g. SEO Assessment -> SEO Workshop -> Social Media Campaign -> Adwords Campaign -> Etc.
Looking to fill your schedule? Write up one of your productized services and invite previous customers for a special deal.
Service fees are a good long-term revenue source - for example hosting costs. So are retainer contracts e.g. 5 hours a month for $500, but they shouldn’t be open-ended or roll-over indefinitely. Customers will min/max open-ended service agreements, maximizing use then canceling before it becomes profitable.
Don’t underestimate the value and revenue of on-going support as a way for customers to re-engage.
Fixing Revenue Leaks
Revenue and invoices may be the least interesting part of consulting, but they’re the most interesting part of a successful business.
Fixing revenue leaks will be specific to your business and clients. But these 6 leaks are a great place to start.
To your success!
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