Passion, People and Principles
post # 538 — April 28, 2008 — a Client Relations post
Raintoday.com has just released a new study Fees and Pricing Benchmark Report: Consulting Industry 2008. 645 respondents in the consulting industry completed the survey. Among the findings:
Firms that are well-known in their target markets receive higher fees, see their revenue grow, and earn higher profits than their lesser-known counterparts. Brand leaders were more likely to price their services at a higher level than their competitors in the market (42% of brand leaders were premium-price vs. 28% of lesser-known firms). And, they were more likely to actually get higher fees by up to 35%.
While most consulting firms (and consultants to consulting firms) criticize the use of discounting, 65% of consulting firms report that they do indeed discount their fees. Even the most profitable firms discount – 49% of firms, with 25% or more firm profit, report that they discount. The average discount level: 11.7%.
When it comes to premium-price firms and what sets them apart, it is not their size, the amount of repeat business they are able to get, or the region of the country in which they are located. As a matter of fact, none of these had an effect on a firm’s ability to charge premium fees. The factors that matter most to premium price firms are how valuable their work will be to the client upon completion, and whether or not the firm can deliver superior results versus the other providers – 36% find this “extremely important”
Verbatim Comments From Respondents:
Pricing Strategies:
“We do not compete on price. Ever. If we can’t compete on value, ability, talent, and, frankly, if we can’t create a better value proposition for the client, we don’t want their business anyway.”
“We are aware of the potential need to reduce cost to gain access but also believe that the selling process should effectively focus on value and reference capability to deliver.”
Introductory Service Pricing:
“We’ve found that the first project creates pricing expectations for future projects, and that the work is valued more when it is priced at full rate.”
“The introductory pricing strategy is not necessarily a lower price, but a smaller or pilot project which makes it easier for the client to accept without prior experience with our work.”
Why Do Use Value-Based Pricing? Respondents Say:
“Our work, approach and value delivered are unique enough that value-based pricing is the ONLY way in which we are compensated fairly. A time-based approach simply makes no sense for us – one intervention/coaching session often causes a change in direction that’s worth millions of dollars to the client–how many hours of our billing would that be worth?”
“Part of our approach is to address the business’s issues and value of any potential solution to the bottom line of the business or business unit. Our pricing is provided in relation to the benefit. We also use this approach to minimize work in low value areas of the business/org.”
“Provides income far beyond hourly billing availability.”
Standard and Realized Fees:
“Our pricing model almost always ensures that the standard hourly rates are realized, hence the zero difference in the numbers above. Sometimes we will cash in a little more on the senior levels, and provide juniors cheaper, but on average we end on the standard rates (which are not public).”
“Difference between published and realized rates is due to discounting to get the business and/or project taking more hours than estimated to complete. Often this is due to client being unable to supply content or time when needed.”
“I do not even keep track of time, nor is time a factor in establishing value to the client. I simply don’t think this way. Managing capacity is about being extremely effective, not about focusing on time.”
Service Guarantees:
“It is a great source of competitive advantage. We offer to solve a specific business problem with a specific technical solution at a specific time and price (price includes expense and travel). No excuses, just deliver. Using this philosophy, we are slowly taking work away from competitors who don’t know we exist. We are also charging 2 to 3x more for projects than competitors are bidding on an hourly basis.”
“We find that our consultants rise to the expectations, so the service guarantee has not cost us much but has led to a higher level of personal dedication to meeting client expectations.”
post # 537 — April 25, 2008 — a General post
GL HOFFMAN, Chairman, JobDig, and Linkup has created a free eboook about the 100 “learnings” he has experienced after 25 years in starting companies.
The ninth episode of my new podcast series, Strategy and the Fat Smoker, is now live and available for download.
It is dedicated to exploring the themes found in my new book by the same name. Each chapter will be accompanied by an executive summary ebook covering the same material. I encourage you to forward these to friends and associates who may be interested in the topics covered. If you are already a subscriber to my podcast feed, this pdf will be available in your itunes.
With Tyrants, Energizers and Cynics, we begin to look into problems in management and managerial cultures. Three leadership styles are examined, and the reasons why each is used are explored.
NOTES FOR THE EPISODE:
00:33 – Introduction
00:44 – The evolution of short sightedness
01:40 – Tyrants
05:22 – Energizers
08:39 – Cynics
13:45 – Short-term thinkers: The enabling factor
You can download Tyrants, Energizers and Cynics or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. My seminars are always available for download at no cost.
post # 536 — April 21, 2008 — a General post
In correspondence with me, Wilson “Bill” Katter offered the following views, and gives permission to us all to circulate (as long as we acknowledge his authorship and copyright.)
BUSINESS DEAL BASICS
To avoid many of the problems which arise in business relationships, here is a set of prerequisite criteria with which all parties should enter the discussions/negotiations.
Much time, money and effort can often be spared with the conscientious practice of these criteria.
Without them, the negative impact of misunderstandings, aggravation and emotional wear and tear can also sometimes cause an almost incalculable loss.
- The goal of a win/win result, defined as such by all parties
- The skill of understanding the position of all the parties
- A keen appreciation for the relative value which each party brings to the equation
- The use of reliable, authoritative resources
- An “I may not know it all” attitude
- The willingness to have “facts” challenged
- Finely tuned listening skills
- Consideration of all points of view
- Impeccable integrity
- Transparency and honesty
- Keen analytical faculties and good judgment
- A mature sense of fairness
- Compliance with high legal, ethical and moral standards
- Clarity of both oral and written communication
- Timely replies/responses in the exchange of information
- The ability to “disagree agreeably”
- Humble acceptance of the required modification of one’s position
- Patience to do it right the first time so it doesn’t have to be done over
- Equitable compromise without the sacrifice of principles
- A long-term perspective which looks beyond the near-term benefits
- Respect, respect, respect
REMEMBER, IMPROPER MOTIVES WILL MOST LIKELY KILL THE DEAL
ALTHOUGH CHALLENGING AND SOMETIMES TOUGH, DOING BUSINESS THIS WAY CAN HAVE THE GREATEST REWARDS
post # 527 — April 18, 2008 — a Client Relations post
A question from a reader:
Though plenty of examples of “Enterprise 2.0” show tangible ways that social media can improve business, I have not been able to find many examples of law firms taking advantage of Web 2.0 technologies. In the UK at least, it seems that although some niche blawgs are very popular and have done quite well in establishing the author(s) as authorities in their respective fields, law firms as organizations have yet to take advantage of new platforms in substantive ways (as have eg investment banks with internal use of wikis/social networking).
Am I right in thinking that this is pioneer territory for law firms? If not, could you please point me to some good examples of firms that use social media – internally or externally – to improve productivity/efficiency/client services (ie beyond business development/HR/recruitment functions)?
A question from Joseph A. Heyison of the Legal Department at Daiwa Securities America Inc.
“David, a thought sparked by April 11’s WSJ front page, describing Moody’s alleged move to client-friendliness and possible debasing of its ratings process.
“This is a repetitive theme in professional services: the most rigorous firm builds its reputation but is considered client-unfriendly. Then a new management enters, vowing to be more responsive to customers, and the partners learn that yes, their incomes rise and they get better client relationships by bending a little. Then a lot. Examples: Arthur Andersen, KPMG (tax shelters), various law firms, lobbyists (Cassidy & Co.), etc.
“Question One: How do we differentiate client responsiveness from compromising the quality of our work, and what other than moral suasion works? (Tyrannical regulators? In theory, an internal incentive process would be best, but I’ve never seen it done workably. Despite your advice, I think that firm culture in most cases is simply too weak to rely on.)
“Question Two: How does this affect the economic “gatekeeper” theory? (Firms maintain standards to establish a brand which effectively vouches for the client and thus have sufficient economic incentives to police fee-earners against dropping standards for short-term gain). Is that realistic in an environment where fee-earners are mobile and short-term oriented? Or is the only way to maintain gatekeeper standards the threat of regulatory and criminal action, or ruinous civil lawsuits?”
***
What think you all?
post # 529 — April 15, 2008 — a Client Relations post
For more than a decade, I have preached (and practiced) the policy of giving all clients an unconditional satisfaction guarantee. Most of my clients have thought the idea impractical and idealistic.
So, I was delighted to be made aware of the Valorem Law Group
who make this statement on their website:
“If you’re interested in seeing whether we are right for you and your team, try us on a matter. What separates us from our competitors is that you have our value promise on every invoice. If you don’t think we’re worth the amount you agreed to pay, you make whatever adjustment you think is necessary. If your other firms don’t walk that walk, it’s time to try Valorem.”
(Thanks to Gerry Riskin for drawing my attention to this firm)
post # 526 — April 14, 2008 — a General post
The Law Practice Management Section of the American Bar Association has just published a book entitled “The Lawyers guide to Collaboration Tools and Technologies: Smart Ways to Work Together” It was written by Dennis Kennedy and Tom Mighell
Here’s a list of the Chapter headings:
- Getting Started
- Collaboration at the Crossroads
- Collaboration Inside the Office
- Collaboration Outside the Office
- First Steps
- Benefits of Improving Document Collaboration
- Basic Collaboration on Documents
- Creating a Document Online
- Working Simultaneously on a Document
- Hidden Dangers, Security and Metadata
- Benefits of Collaboration in Lawsuits and Transactions
- Instant Collaboration – from Conference Calls to Instant Messaging
- How to Hold a Meeting on the Internet
- Simple Project Management: Basecamp
- Setting up a Simple Extranet or Deal Room
- Email as a Platform
- Sharepoint
- Extranets and Intranets
- Adobe Acrobat
- Wikis: Web Collaboration
- Other Web 2.0 Tools
- Specialized, High-End and Alternative Collaboration Platforms
- Must-Have Features for Your Collaboration Tools
- Collaboration Tools: Free vs. Pay
- Involving Clients in Your Decisions and Choices
- Determining Which Factors will drive your Strategic planning
- Getting the Word Out to Your Collaborators
- Ethics, Metadata and Other Practical Issues
- Ownership, Control and Other Legal Issues
- Potential Pitfalls: Where to be Wary
- Implementing Collaboration Tools
- Recommended Choices from Solos to Large Firms
- Creating a Culture of Collaboration
- The Future of Collaboration in the Practice of Law
All this in 250 pages plus some appendices!
post # 524 — April 9, 2008 — a General post
I just had to share this with you all.
The announcements for the 2008 Webby Awards, hailed as “the Oscars of the internet” by the NY Times, happened yesterday, and my wife’s venture (www.startcooking.com ) was named a 2008 Official Honoree placing it among the highest honored content on the internet.
The Webby Awards
is the leading international award honoring excellence on the Internet, including Websites, Interactive Advertising, Online Film & Video, and Mobile Websites. The awards are judged by the International Academy of Digital Arts & Sciences, a global organization that includes David Bowie, Harvey Weinstein, Arianna Huffington, AKQA Global Creative Director Rei Inamoto, Matt Groening, Jamie Oliver, Internet inventor Vinton Cerf, and RealNetworks CEO Rob Glaser.
“The Webby Awards honors the outstanding work that is setting the standards for the Internet,” said David-Michel Davies, executive director of The Webby Awards. “StartCooking.com’s Official Honoree selection is a testament to the skill, ingenuity, and vision of its creators.”
The 12th Annual Webby Awards received nearly 10,000 entries from over 60 countries and all 50 states. Out more than 10,000 entries submitted, fewer than 15% received this honor and were deemed Official Honorees.
StartCooking.com is the realization of the dream of my wife (Kathy Maister) to find a new way of getting people who are eating packaged and fast food back into their kitchens. As a former home economics teacher, Kathy realized that Internet tools could help her reach out in a fresh new way to people who wanted learn how to cook. So, she rolled up her sleeves and tackled the world of blogs and online video as a 50-something woman web entrepreneur, and startcooking.com was born.
The eight episode of my new podcast series, Strategy and the Fat Smoker, is now live and available for download.
It is dedicated to exploring the themes found in my new book by the same name. Each chapter will be accompanied by an executive summary ebook covering the same material. I encourage you to forward these to friends and associates who may be interested in the topics covered. If you are already a subscriber to my podcast feed, this pdf will be available in your itunes.
“Doing it for the Money”, the eighth episode in the series, talks about the basis for any successful marketing effort: The ability of the provider to convince the buyer that they are truly interested in them and that they are genuinely trying to help. This is no simple task and there are certainly no quick fixes for it. How is it then, that this is so rarely a topic in any firms marketing discussions? This episode looks into how firms can build firm-wide enthusiasm for involvement in business development.
NOTES FOR THE EPISODE:
00:39 – Introduction
01:40 – No quick fixes
06:34 – What’s wrong with “do it for the money”?
09:50 – Promoting enthusiastic involvement in business development
14:02 – Transactions vs. relationships in culture and rewards systems
You can download Doing It for the Money or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. My seminars are always available for download at no cost.
