There’s a particular type of consulting engagement that’s extremely valuable to your clients and to your consulting firm, yet it can be nigh on impossible to sell. You can correct that mismatch.
Diagnostics are an interesting class of consulting projects.
In a diagnostic project, your consulting firm provides your client knowledge of what is required to achieve their desired state, but you don’t perform any of the indicated work. Your job is to simply to point out what’s wrong and what’s needed. Similar to when a radiologist examines your x-rays, or your mother-in-law inspects your house.
In all likelihood your consulting firm embeds diagnosis as the first step in most of your projects. You include some level of assessment and understanding of your clients’ situation.
However, the benefits of a standalone diagnostic offering are multifold for your consulting firm.
- They’re typically less expensive than your standard, full consulting engagements; therefore, they are excellent foot-in-the-door projects.
- Your consulting firm gains the information you need to deliver outstanding results from the next phase of work, which may be a large, follow-on engagement. Again, that makes them an excellent place to start.
- Diagnostic projects grant your consulting firm intimate knowledge of your client, which allows you to become a trusted advisor and a go-to resource.
Despite these advantages, it’s typically quite difficult to sell a diagnostic as a solitary consulting project.*
Most executives (a.k.a. prospective clients) believe diagnosis is inherently their job. They prove their leadership prowess by demonstrating they understand what is happening in their company (or division or department) and how their organization should respond.
In addition, a diagnostic project drains your clients’ coffers without providing any relief of their symptoms. Your consulting firm’s diagnosis only provides knowledge about what the client will have to spend more money on to solve their problem or achieve their aspiration.
It’s like being told your firm’s culture is toxic, or your house has termites, or chocolate bars aren’t actually the healthiest breakfast. Even though the information is helpful, your happiness plunges.
Why Diagnostics Do/Don’t Sell
Five factors determine the sellability of a diagnostic effort, all based on your clients’ perception:
- Specialized knowledge is required for proper diagnosis
- Diagnostic data are difficult to gather
- Diagnostic data are difficult to interpret
- Benchmark data are not widely available
- The cost of poor/incorrect knowledge is high
For instance, consider a common cold. Anyone (pre-Covid) could assess their sneezing, lack of fever and close proximity to a snotty-nosed kid then conclude they have a totally non-threatening rhinovirus. Kerchoo! As a result, there’s not much demand for a common cold diagnostic.
Diagnosing sickle-cell anemia, on the other hand requires information on the shape of your red blood cells, which is not something you can easily check, despite your possessing a sharp pin and your mother-in-law’s very strong reading glasses. Even if you borrowed her microscope, would you know which cells to examine and what they should look like? Since sickle-cell anemia can be fatal, that’s a diagnostic purchased by every newborn baby’s parents.*
Developing Your Sellable Diagnostic
You can apply the same thinking to your consulting firm’s offerings.
- In your area of expertise, what data are difficult for your clients to gather or are difficult for them to interpret?
- Where can you develop benchmark data that clients want and are not easily accessed elsewhere?
- What conundrums are your clients facing that promise dire consequences if they choose incorrectly?
For instance, are candid employee opinions or objective customer data difficult for your clients to gather? Do variations in your clients’ success stem from processes only an expert can interpret?
When your consulting firm develops a compelling, easy-to-sell diagnostic project, you’ll have created a new revenue stream that delivers many loyal, long-term customers.
What are one or two symptoms your clients experience that they might pay to diagnose?
Text and images are © 2023 David A. Fields, all rights reserved.
In the financial world a diagnostic review is relatively easy to sell. But yes, at times there are some clients who resist it and want to dive straight into “the solution” (even though it’s not known fully what the problem is yet). So one way that seems to work well for those who are resistant to paying for a diagnostic engagement is to (1) charge a “standard” flat fee for it, paid up front, (2) provide a written report of your findings and a meeting to review it – this is the deliverable to the client that they can use whether or not they engage you for the larger project, and (3) you can optionally offer to apply the “cost” of the diagnostic engagement to the larger project, should the client decide to work with you (making it feel like a great investment).
In my line of work, nearly 95% of new clients start with a Diagnostic Review. As you say, David, that is definitely a win-win! Hope this is helpful for at least some of the readers.
Great case study, Gabrielle. As you said, you’re fortunate to consult to a market that is fond of diagnostic reviews. (Also audits, which can be a lucrative offering.) Your approach exactly matches what I’ve used myself and seen successful with others: flat fee diagnostic producing an outstanding deliverable and, in some cases, some portion of the diagnostic fees applied to the follow-on work.
I appreciate you posting your experience and am absolutely sure other readers will gain from it, Gabrielle.
David, over the years we’ve offered a “BPA-business performance analysis” looking at where and how a firm makes money and or wastes it. Also a Marketing and Sales Effectiveness assessment vs “good practices” versus trying to generate a benchmark study. And finally, an Innovation Readiness assessment that looks at organization, leadership, funding, planning and culture vs identified strong innovation characteristics. In all cases we both highlight the findings and suggest approaches to improvements. Finally, we often try to get management/ leadership to agree to an assessment of firm strategy, resources, processes and organization and try to understand where management is aligned or where there are real differences of opinion, ie topics for important dialogue and possible action.
Those all sounds like good, diagnostic projects, David. Very similar to what many consulting firms (try to) win from their clients. Any time you show a client how they stack up versus a benchmark, best-practices or even their ambitions, you create valuable learning. Whether they see it as valuable enough to pay for, though, is another question!
Thanks for sharing what you’ve done, David–excellent case study for everyone.
Great article as always David. I have done several projects like this but had never thought of them as diagnostics until now. I always called them gap analysis or compliance assessment, etc which I now think could sound negative to a client whereas diagnostics brings up the image of fine tuning an already well run machine to make it perform better. Also depending on the in house resources of a client, such work by an external consultant is not always welcome as it can be perceived as showing up the poor performance of particular teams or individuals within an organisation. To counter this I have always insisted on input from employees at all levels which increases transparency and trust in the process which continues to be valuable if the diagnostics work results in future projects with the same client. Following the diagnostic, I feel it is valuable to have a meeting with the client to focus them on how to proceed and not lose sight on what they are doing well. Regards from Ireland, Francis
You’ve brought up quite a few important points, Francis. Internal staff do resist an assessment that could show them in a bad light–you’re absolutely right about that. Hence, it’s important to couch your project as a win for them or, at the very least, a joint effort to defeat a common enemy (competitors, benchmarks, etc.).
How you describe your diagnostic project matters. As you said, a gap analysis sounds unflattering. A scorecard is better, though it can be scary and bring up school-age trauma. (Yikes!) A benchmark study somehow sounds more objective and less threatening. An opportunity assessment sounds aspirational. All depends on the client, though.
Thanks for sharing your example and experience with me and other readers, Francis. Very valuable!