A small project with a new client could pave the way to a long-term, lucrative relationship with your consulting firm. Alternatively, it could waste your time with a low-margin, low fee engagement.
Let’s say your consulting firm has forged a connection with Esther Bunnie, CEO of Cad’s Berries, a multi-national player in the chocolate novelties market.
Cad’s Berries is completely missing the digital chocolate boom, and your consulting firm could help. If you play it right, Bunnie’s company could become a large portion of your consulting firm’s basket of clients.
Let’s look at four, common scenarios.
Four Foot-in-the-Door Scenarios
Scenario #1:You’d like to offer a Digital Cacao Transformation project; however, when you realize Bunnie doesn’t have the appetite for a full transformation, you offer a few variations of a Cacao Nib engagement to get your consulting firm’s foot in the door. Cacao Nib projects are quite small, but they preserve your premium fees and high profit margin.
Scenario #2:When it’s clear Bunnie would reject a Digital Cacao Transformation project, you propose a few flavors of a Cacao Shavings Remix engagement. The Shavings projects are small and you offer them at a substantial discount to get your consulting firm’s foot in the door.
Scenario #3:Your initial offer to Bunnie is the small scope, low fee, highly repeatable, foot-in-the-door project that your consulting firm recommends to virtually every new, prospective client. You call it a “One Square” project and it gives clients a taste of working with your consulting firm.
Scenario #4:Since Bunnie is reluctant to swallow a large, transformation project, you offer to dig a bit deeper into Cad’s Berries’ data. The output from your analysis, which you’ll conduct for free as a bid to get your consulting firm’s foot in the door, will give Bunnie a more robust, data-based indication of the upside from a transformation project.
Have any of these scenarios worked well for your consulting firm?
We’ve seen three of the four scenarios (#1, #3 and #4) effectively act as the tip of the spear for small consulting firms to establish healthy, new client relationships.
However, Scenario #2 delivers questionable, long-term results. Cutting your margins on your consulting firm’s first engagement with a client sets a precedent that can be difficult to reverse in future projects.
Most consulting firms find their lifetime customer value is substantially higher among clients that start with a larger engagement.
Therefore, as your consulting firm grows, raise your minimum threshold for projects and shift toward Scenario #4. Free is better than low fee.
If you do choose to offer a small project to pry your way into a new client, explicitly explain to your client from the outset that the first engagement is an appetizer and that your standard fare is substantially larger.
You’ll also enjoy more success if you craft a proven path from your consulting firm’s entry-point to larger engagements. This is particularly important if your consulting firm offers a standard, foot-in-the door engagement, as described in Scenario #3.
Net: Don’t discount, offer a small project if you know how to consistently leap from small to large, and eventually abandon bite-size projects entirely.
What has your experience been with foot-in-the-door projects?
Text and images are © 2023 David A. Fields, all rights reserved.
On a new potential client, it seems fair to to do a free short 1-2 day data analysis coupled with interviews as a discovery method. This shows the client that you would not recommend a project without knowing more about the client and the issues, and also that you are willing to invest in the relationship. Most often, the output is a project work plan to review with the client before making an engagement proposal. The client gets to know you better and vice versa. The result is usually a better-defined project than just proposing solutions in the arsenal without fully understanding the problems. Plus, there is no fee discounting for the actual project itself.
Occasionally the client will want to take the work plan and do it themselves, which is OK with me because I provided value and a client that is willing to take your free work product as their own may not be a great client anyway.
Ed, your approach dovetails nicely with the “deep prep” approach to new clients, which can be very, very effective.
When doing deep prep for a new client, you spend a few days (or weeks, for a particularly large opportunity) learning everything you can about the client, their market, their situation, etc. For instance, we’ve conducted market interviews about a client as part of deep prep. Often you arrive at the Context Discussion meeting with a better understanding of the client than they have themselves!
Deep prep isn’t without risk–it’s expensive; however, it’s proven to be effective and, as you point out, Ed, it allows you to walk into a prospective client with a much better sense of how you can create value for them.
Thanks for adding your insights and experience to the conversation!
Great suggestions. What about something between 3 and 4, in the form of a productized assessment that is paid and provides the data to value price a larger engagement?
Great line of thought, Erin. The mix of #3 and #4 is, in fact, #3. (Because free is free, and anything not free is one of the other scenarios.)
In practice, we’ve seen mixed results with a low-fee, productized assessment. An inexpensive diagnostic can be a fabulous introductory product (in fact, we have a new one in development right now), or it can lead to disappointed clients who never return.
The upside is you’re paid to learn about your client and you give them a clear picture of where to go next. The downside is that clients have a tendency to take the results of your diagnostic then wander off into do-it-yourself land, where they flounder and fail miserably. They then sometimes (unfairly) associate their failure with your consulting firm.
That’s why the path from the diagnostic to a larger engagement must be well mapped out and proven.
Thanks for sharing your thinking and sparking additional discussion, Erin.
NEVER discount. I used to do this and not only did I not make enough margin, but I also began to resent the client for it when it was my own doing.
Good point, Raoul. Beware anything that compromises the feeling that you’re in a partnership with your client. Discounting can make you feel underappreciated by the client or, worse, by yourself.
That’s an important addition to the conversation, Raoul–thanks!