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Research Shows How to Close $3 Million in Consulting Business

Rick, a friend and colleague of mine routinely sells $3 million per year in consulting projects for his small, independent consulting firm. Being a quant-geek (like yours truly), he’s conducted some internal research on why he’s able to win projects and why some projects don’t sell.

(Tangential question for you to ponder: Why do you think that consultants who are closing millions in revenue have time to conduct research, write blogs like this one, etc.? Post your opinion at the bottom.)

The findings discussed below are based on a retrospective analysis of 95 proposals submitted over roughly three years. Good, solid research. And, if modern medicine has taught us anything, it’s that research doesn’t lie. (Though researchers do.1 I promise that this is valid, uncompromised research and no sketchy payments from Rick influenced this blog.)

Note that we’re focused on how to close projects, not on how to attract prospects and get opportunities in the first place. Attracting prospects is a different kettle of cod. So, with that in mind, let’s see what the research revealed.

Part 1 – How to Win Projects

  • Talk directly with the decision maker – You know this already. You’ve heard this a zillion times. Now there’s data to back it up. But do you still submit proposals to influencers and gatekeepers? Most consultants do. Relentlessly pursuing the decision maker could double your annual revenue.
  • Meet with the prospect face to face – Rick’s a big believer in face-to-face meetings and has the frequent flier points to prove it. While I’m not as keen on face-to-face, both of us agree that having personally met a prospect at some point in the relationship dramatically improves your odds of closing a project.
  • Clarify that consulting is their primary path to resolving their problem – If you’re familiar with the Context Discussion, you know that the two critical questions about the client’s situation are, “What’s changed?” and “Why are you turning to the outside for help?” Too many consultants are afraid to ask the second question, which is a shame because when your prospect starts selling you on why she needs a consultant she’s simultaneously slamming the door on internal competition.
  • Avoid bidding wars – Well, obviously your odds of winning go up when there aren’t competitors in the picture. The real takeaway is to nurture relationships. That’s how you develop a pipeline of non-competitive opportunities.
  • Discuss price as part of the pre-proposal discussion – Yet another scary conversation for many consultants (and another standard part of the Context Discussion). Many consultants avoid this discussion or give it lip service because they’re afraid of losing the project if they talk about price. Oops. Note that your early talks about price are focused on their budget and a rough range of fees. Unless you’ve determined the value of the project, it’s premature to give precise pricing.
  • Quickly and persistently follow up – Notice the first word: Quickly. I’m amazed that consultants will let a day (or days) pass before responding to a prospect’s call. In our business, responsiveness rules.

Part 2 – Why Projects are Lost

(100% of the projects that were lost over the three years are accounted for.)

  • Failure to work with the decision maker (26%)‘Nuff said.
  • Inertia or internal competition (22%) – Your biggest competition is always inside your prospect. How do you defeat that? Funny you should ask. Last week I posted this: Overcoming the DIY Mentality
  • Value concerns (13%) – Sometimes the fees are simply out of line with the value delivered or else the client isn’t convinced that the project will deliver on its promises. Note, though that this doesn’t happen often. Losing a project because of high fees is a rarity!
  • Competition (10%) – Rick, like me, avoids competitive bid situations. As a result, it’s rare to lose a project to a competitor. If you’re losing 20-30% of your opportunities to a competitor, you either need an uber-efficient bidding process or a different, new-business strategy.
  • Other/Don’t know (29%) – For a sizeable chunk of projects, Rick just wasn’t sure why he didn’t win them. That’s okay. Sometimes, the cookie doesn’t crumble your way. Does a multi-million dollar consultant worry about that? No! When you’ve created a rich stream of opportunities, a loss here or there isn’t a big deal.

Is your experience similar to the research? Which of Rick’s six winning strategies will you put into place more?

  1. Corey Bearak
    October 2, 2014 at 1:16 pm Reply

    The approached outline follows rather closely the tact I prefer to “deploy” in targeting and closing prospects. It can still take time. Persistence matters. Also, informal opportunities to meet outside the engagement pursuit/ negotiating process help juice the process; those situations often include existing clients known to the prospect who just might talk you up right there or in a followup you might learn about after closing.

  2. davidafields
    October 28, 2014 at 10:26 am Reply

    Great point, Corey. Any time you can meet and engage with a prospect injects “juice” into the relationship. Thanks for adding that.

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