Redefining The Consulting Business Model With Coffee and Donuts
Consulting firms have a problem. Winning work often means tenders, and making a living off tenders is a damn tragic way to live. Unfortunately if you’re a consultant in the building industry where I spend my time, life’s damn tragic.
Tenders are hard, like preparing a paper for your Uni finals, and painful too, like a Uni final that you bust your ass studying for only to get flogged in the end. To make matters worse, tenders also provide a fixed template as to how you are to present your best foot forward, a square box which does not allow for much in the way of differentiation.
Surely there’s a better way than throwing out fishing lines with fixed fees attached to the hook in the hopes that the bait you are using is better than the guy sitting next to you on the dock? I started thinking about ‘better ways’ not too long ago while watching some folks at my office going through the tender gauntlet once again. Maybe that MBA I did a few years back and have in a desk drawer at home could help?
Perhaps, but the solutions we need are as readily available as a cheap coffee and a donut. That MBA came with a pretty hefty price tag, which still eats at me a little bit (and definitely continues to eat at my finances), considering I have since realised that a lot of what is taught can be witnessed in plain sight, if you know what you are looking for.
For example, on the nearest street corner you’ll find a smorgasbord of strategies to win work that push beyond consulting’s boring black and gray boundaries. Please follow me as we head down to what may seem an unlikely place to learn how we’re going to reinvent the consulting business model. And don’t worry if you’re feeling a bit peckish: we’re going to 7-Eleven.
Before we push our way in the door, a word: you may feel that the only abundance to be found at 7-Eleven extends to rubbish food, lollies, and surly looks when you request to top up your public transport card, but you’d be wrong. 7-Eleven are masters at parting a fool from his money, and to that end they offer an abundance of product marketing strategies that we in the consulting business should take note of. To follow are four strategies for winning more consulting work, as spotted at your local 7-Eleven.
Loss Leaders — a.k.a The Cheap Coffee Strategy: One of my favourite strategies is that of the loss leader. You probably know this one even if you don’t really know it. A retailer offers up a certain product or a handful of products at low prices, often so low that they don’t make any money selling them, in order to get people in the shop and buying up other stuff. Milk is a typical supermarket example, something that they price dirt cheap because everyone buys it and everyone knows they buy it so why go someplace where you’ll have to pay extra for it? And then since you’re here, why not grab that overpriced $10 tub of ice cream you really need right now (but don’t really need)? Break down that barrier that’s keeping you from coming through the door, that’s all it is, and it’s brilliant.
Coffee is no doubt the loss leader at 7-Eleven. The place is, above all, an outpost for cheap and dirty coffee, spat out from a lifeless machine in gigantic sizes which do justice to 7-Eleven’s supersize ethos and can no doubt awake a 100 kilo punter from a dead sleep after a hard nights drinking. It is, price wise (and otherwise), cheap.
I’d love to imagine a consulting firm assigning the loss leader role to a single person. See Russell over there, sitting in the corner? He’s the company loss leader. If you need cheap and cheerful, bog standard service, speak to Russell. That’s unlikely, though, which is unfortunate, but the Cheap Coffee Strategy is still a sound one. One example from my current experience, in building industry consulting, managing the construction phase of a project is often the most tedious, repetitive and process heavy gig, one where success is often a matter of simply being present and accountable, which thus lends itself to being a loss leader. So price this part of the work as low as you can go to get people in the door for the more intellectually labour intensive, and more profitable, work.
Complementary Goods — a.k.a The Coffee AND Strategy: Let me gush a bit more about the importance of coffee at 7-Eleven. Coffee just so happens to go very well with all those muffins, donuts, and slices of banana bread that 7-Eleven has sitting in feed troughs all around the place. All those baked goods are natural pairs — complements — to the coffee.
This strategy is an easy one for consultants to take up, particularly those in the building industry. Most projects follow similar life cycles from concept to design to construction, and follow similar templates in terms of the consultants that they bring on board. So if you are a project manager, for example, you could bring those quantity surveying skills in house, and vice versa. Or you could provide advice on real estate or town planning matters, advice which could often lead to project management gigs.
Bundling — a.k.a The Cheap Coffee and a Donut Strategy: It’s always time for coffee at 7-Eleven. You want one? It’ll cost you $2. You want a muffin or a donut? It’ll cost you $3. Buy a coffee and a muffin and they’ll hook you up for the bargain price of $4. That’s bundling.
Building industry consultants bundle their services all the time, so that’s not anything new. An architect, for example, will propose a typical suite of services for a typical project that will include a number of standard things — design, consultation, reports, etc. But what if they were unbundled? What if you provided bespoke services, one piece at a time, on an as needed basis? You’re probably thinking that most companies will do that already, to suit an individual client. But how about if you marketed yourself that way? What if you had a ‘menu’ of prices posted on your website? In a time when most consultants are going the other direction and providing turnkey solutions, the all-everything answer to all your problems, there’s value in simplicity and differentiation in being an a-la-carte consultant who provides a bit of transparency.
Low Involvement Products — a.k.a The Cherry Ripe Strategy — Certain products don’t require a whole lot of thought on the part of a customer for a purchase. You’re not going to sit at home grinding over online reviews of Kit Kat and Cherry Ripe before heading off to the store to make that critical purchase. These are things you grab at a moment of weakness and this is why 7-Eleven sticks them right next to the cashier — so you can throw them in with your purchase at the last minute, without even thinking about it.
The Cherry Ripe Strategy has a lot of value in the consulting business. Say you’re going to undertake a piece of work for $10,000. Win that work and it’s a good day. However, your proposal could also include a handful of $1,000-to-$2,000 useful add-ons that could end up being very profitable. The key is that they are a low dollar value compared to the main piece of work, thus in comparison they are quite cheap, easily approved and thrown in.
Fees and pricing are more than just a means to an end, they are a strategy in themselves and a way to generate more business.
The problem in much of the consulting industry, and relying on tenders to a great extent, is that it’s lazy. When your pricing strategy, a massive element of any product marketing, is basically only a reaction to the tender that is handed to you, expect to bounce along with the rest of your competitors.
It’s also a missed opportunity. When consulting services are beginning to look more and more homogenous and the masses are starting to compete solely on price, doing some interesting things with your product and pricing is worth an effort to see what may stick.
So step away from that mind numbing tender for one moment, smash a donut or suitable alternative to jump start your brain, and start rethinking your business model today. And grab a coffee while you’re at it — coffee goes well with everything.
