Are You Being Seduced By Silly Math?
- November 9, 2009
- Posted by: Rochelle
- Category: Fees + Revenue
Silly math happens when you take numbers that don’t add up and convince yourself they do. Before you know it, you’re making decisions that cost you real money. For example:
Low paying client = high-paying client. All clients are not the same. Spending more time with a client who won’t pay your top fees rarely makes sense. If you truly enjoy working with them or you’re getting critical experience, invest away. But not because it’s easier than trolling for new, better clients.
One-off project minus investment time= new revenue stream. New consultants especially are prone to this. You get paid for 3 days of delivery but decide not to charge for the 5 days of prep since you’re sure it will open up a lucrative revenue source. If you’re going to blaze new territory, make it a conscious choice with a clear sales plan.
Speaking invitation minus your target audience = great opportunity. It’s easy to be flattered. Instead, take a deep breath, and ask the tough questions. Who will be there? Are they the right level, specialty, industry? Are they buyers? Can you draw a straight line from your speech to powerful new relationships? If not, consider whether you can afford to accept the invite. Ego won’t grow your business.
The challenge then is to leap beyond silly math and make decisions based on what really matters to you—and its true cost. Now if I could only do that at Costco…
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I just had an advertising agency client of mine pitch and win a nice piece of fmcg business from a network agency that was being fired because it was rubbish.
A week after the decision was made the losing agency went to the client (presumably supported by their network on the thin-end-of-the-wedge principle) and offered to handle the business on a no-fee basis.
The original agency was still crap, but got the business back, presumably on the client's missassumption that free crap was better than great work they had to pay for.
The truth of this is actually deeper than it at first seems because bad advertising doesn't just fal to win business, but cost money AND actually loses customers, short and long term.
A definite case of bad math.
Ouch! Bad math AND bad client (theirs, not yours).
Due to a technical glitch, I'm posting the following comments on behalf of Robin from Australia:
"Well put, Rochelle.
I would add,..
Beauty parades = effective business acquisition
Having made a competitive pitch only once in nearly two decades of consulting (at the start of my consulting career), I found it a complete waste of time, cash and ideas.
Far better to get referral calls from qualified and highly motivated potential clients.
Best to you, Robin"
Bravo, Rochelle! All too often consultants seem to get caught up in the chase rather than taking a pause to do the math.
Excellent advice, and a hard lesson to learn! I still find myself making these mistakes, but the more I value my time and have confidence that I can get good, well-paying clients, the less I make them.
http://www.dearnlaw.com
http://www.goodsharks.com
Rochelle,
Speaking of Speaking; you have succinctly stated the case for knowing when it is time to move up to the big leagues. When taking a speaking engagement builds your chops, it’s fine to speak to a few uninvolved sleepy heads. But the time eventually comes when you must speak only to those groups who will be efficacious in building your brand. The group will benefit and so will you. Time is precious and it behooves you to guard it for your own good and all those over whom you have influence… ego notwithstanding. http://www.stevenblanton.com