As you would expect, I spend a lot of my time promoting ITB Partners to prospective clients who may need our consulting services. Additionally, I talk with many people who want to affiliate with our company to leverage their resources and create a sustainable independent consulting practice. This week was typical in that respect.
Of course, all my meetings are interesting. I learn a lot from these conversations. One conversation stood apart this week. I received a phone call from a lady I have known for many years. A millennial, she’s been developing a sideline business. She started by purchasing unclaimed freight and reselling that merchandise through Facebook. As she learned about her customers and her skill set, her business became focused on selling women’s clothing. She has positioned herself as a fashion consultant. Her unique selling proposition is helping women purchase clothing that best suits their body type and personal style. As her business model requires consultative selling, I was very interested to learn how she connects with her clients and the process she uses to generate business. She was very gracious as she answered all my questions.
Consulting services are categorized as intangible sales. The product we sell is an improved future ‘state of being’ compared to the current situation. The desired ‘state of being’ cannot be experienced physically. One cannot see the outcome with their eyes; they cannot touch or taste the product as it currently doesn’t exist. The product may be a significant increase in revenue, lower operating costs, greater profitability, or reduced risk. These states can be measured only after they have occurred. Those of us selling consulting services must conduct ourselves like a physician. We want to make our clients feel better.
Last week I wrote about the value of listening which I believe to be an essential skill. I am convinced that it is the most important tool required to be a good consultant. I have been faithfully working to improve this skill. Toward that end, I remind myself to concentrate on what the other person is saying and to squelch thoughts about my response. As with most sales processes, my meetings are about gathering information to qualify prospective clients, not to debate. I endeavor to listen carefully and ask questions that yield useful information. Asking the right questions is required to keep the conversation flowing.
I am fond of using the physician as an analogy for the consultant. Before the physician can convince the patient on a course of action (to resolve a problem) she must gain the patient’s trust and confidence. The patient must be assured that the physician is prescribing a treatment that is in their best interest and that the physician is competent. It is the same process for an independent consultant. The first step is to gain the trust of the prospect and then to establish confidence. To begin the process of creating trust, the consultant must establish rapport. We do that by asking questions and listening thoughtfully to the prospect’s response. Questions that reveal the prospect’s situation, concerns, and fears help the consultant understand the nature of the problem to be solved. It also demonstrates empathy which establishes rapport. Like a physician, we want to know ‘where it hurts,’ and to understand the prospect’s ideal situation. Asking follow-up questions shows the prospect that you have a sincere interest to help them resolve their problems. Sincerity on your part will establish trust.
When you’ve established trust, you can work to gain confidence. Establishing confidence is based on quantifiable results. In other words, how many times have you completed the prescribed work and what is your success rate? If you are a surgeon prescribing a heart transplant, the patient will want to know how many heart transplants you’ve completed and if you lost any patients. This is a good time to have references available to ‘sing your praises.’
To be successful selling an intangible product like consulting services requires that you create a bond with the prospect. Creating a bond, or establishing rapport is accomplished by listening carefully to understand the prospect’s pain. Asking follow-up questions to completely understand the extent of the prospect’s situation helps ensure that you will close the deal. So, take time to ask good questions, listen carefully, and close more deals.
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Jim Weber, Managing Partner
ITB PARTNERS
North Fulton Business RadioX Interview, September 26, 2019
Author of: Fighting Alligators, Job Search Strategy For The New Normal
I landed a new client this week, referred to me by another of our coaches. The client, John, had recently purchased a franchise for an online business. He reached out to us because he’s having trouble generating revenue. John’s an occupational therapist. This is his first experience as an entrepreneur; however, he has the presence of mind to know that he needs help. As we were getting to know one another over the phone I asked about the training he had received from the franchisor. He provided a brief overview but admitted that he wasn’t comfortable with some aspects of the Brand’s training, especially regarding customer acquisition. That revelation gave me a clear direction for our first meeting. There is obviously a disconnect between John’s desire to have a business and his willingness to follow the franchiser’s model for success. To be helpful, I must understand his rationale for acquiring the franchise compared to his personal strengths and interests.
We recently spent 2 hours explaining to two business partners what their business was worth and why. They were disappointed but excited to understand the value and how they would manage the business going forward.
Convergence occurred when I remembered a conversation the prior week with another consultant, Faith. She had told me about an adverse situation created when a patient received a new heart, but the system hadn’t been updated to reflect the candidate’s eligibility for a transplant. That breakdown in the process created a question as to who’s responsible for the $1.4 million approximate costs of the procedure. Faith explained that this glitch was an administrative error as the candidate still needed the heart and was qualified to receive the transplant, however, an updated authorization wasn’t secured. I can only imagine how bad the situation could have been if the patient had died, prevented from receiving the transplant due to an administrative mistake. It occurred to me that the system has a fundamental flaw that can be mitigated with a technical solution. Faith continued by providing an overview of additional risk and complexity created by Federal Agencies and Laws regulating the Health Care Industry.
Last week, one of my clients filed for Chapter 11 Reorganization. Now, two of my clients are in Chapter 11, working to find a path back to solvency. In April, I was engaged by a new client to help them find a way out of Chapter 11. In the case of the two former clients, I can honestly say that I wasn’t responsible for the circumstances leading to their demise. In other words, I didn’t place any executives who caused these problems, and I haven’t been involved in consulting projects that resulted in adverse consequences. To the contrary, I placed an executive to help one client navigate through Chapter 11. Regarding the other client, I placed an executive to help them avoid business failure. Regrettably, Senior Executives sometimes fail to heed sound advice. In each of these situations, failure was predictable. Management failed to adequately penetrate their home markets before moving into new territory.
I’ve witnessed the results of many crazy decisions during my career. Some noteworthy situations include an ice cream brand selling franchises beyond their distribution capabilities. Or a California-based brand that tried to move into the Southeast with a single location. I’ve seen Southeastern brands sell franchises on the West Coast, thousands of miles beyond their management reach and distribution network. A Northern barbecue chain leap-frogged into Georgia with a few restaurants placed across the state. That decision was funny, in a sad way, as barbecue has a distinct regional appeal. Another brand added drive-throughs to dogs with the hope of turning them into profitable restaurants. Sadly, they created dogs with a drive-through. From my perspective, the most egregious yet consistent mistake is the urge for start-ups to enter new markets before adequately penetrating their home base. To be sure, many of those mistakes were made by rookies, entrepreneurs lacking experience or solid advice. However, these mistakes continue to be made by experienced leaders who should know better.
I can speak with authority on this subject as I spent most of my career working on retail expansion. I began my career as a financial analyst assigned to the new store development group. In this role, I performed analytical work on capital expenditures for new stores and other investments. I learned how to evaluate the prospects for a new store, and the penetration required to optimize the return from a larger market, i.e. city, SMSA, or region. I became a strategic analyst and planner shaping retail store development strategy for several national brands. Finally, I held general management positions where I was accountable for return on investment. In fact, one of my first assignments as a senior executive was to identify and prioritize markets for focused development. As a result, I am confident in my ability to build a retail brand, especially, food-service brands. I appreciate the value of achieving significant market share before developing new markets. Believe me, engaging in the development of a new market, before adequately developing a home market can be fatal to a business, especially so for a start-up.
So, if significant penetration of a home market is fundamental for success, why does management continue to violate this well-established rule? Over the years, I have asked this question of countless CEOs, CFOs, and Chief Development Officers. The only consistent response is “sometimes, management becomes so enamored of expansion that sound business practices are ignored.” Imagine, human emotions getting the better of Senior Executives. Who knew? The only solution is to hire accomplished retail development executives, among others, who won’t hesitate to tell the “Emperor that he has no clothes.”