Value Based Consultancy – Fixed Cost Consultancy

As the recession swings in, more clients are looking to fix their costs, especially in areas such as legal and consultancy, where huge costs can be ran up.

The benefits to the client are clear, but few lawyers or business consultants are keen to embrace Fixed-Time, Fixed Price Consultancy models.

The demand for flat fee consultancy will not go away and can be very successful in attracting new business. It is also playing with fire.

How to Run Fixed Price Consultancy Projects (Just a short top level review, books are dedicated to such things)

1. Protect Your Brand. Ensure offering fixed price services does not diminish your brand by appearing to be discounting. Some people like reassuringly expensive, that’s one reason why Magic Circle Lawyers and McKinsey Consulting do well (apart from they are also very good).

2. Watch for canibalisation. Calculate revenue canibalisation from existing clients demanding a move to a Flat Fee Model

3. Look Ahead. Introduce Flat Fee models only in areas where you have very accurate knowledge of time/resource costs for the next 12 months. I recently bought US contractors in Dollars and then saw the £ drop 15% below my currency hedge. Nasty.

4. Resist scope creep at all costs, make it clear up front that the project will needs to be very well scoped/planned and that creep will be proactively managed.

5. Stick to what you know. Favour Fixed Price Consulting where “We’ve done this thing a million times before”, NEVER when “I think my estimates look ok, it’s a bit like what we did last time, I guess we can do this”. Make sure there is clear start point, clear process and clear sign off, use time and materials for everything else.

6. Be realistic. Fortune favours the brave, Fixed Cost favours the very realistic. Count all the time it takes to do a project including client management.

7. Add a safety margin: Calculate the hourly rate to carry out the project and then add 15%.

8. Look for time savings: Calculate how much time can be saved on time tracking and complicated billing that is removed by a flat fee. Treat that saving like it’s VAT and save it in a project fund called “Oh My God – I looked away for 5 minutes and now have a huge overrun on a fixed cost project”

9. Focus on efficiency: Introduce new equipment and efficient processes wherever possible in relation to fixed price projects. Efficiency has to be invested in.

10. Delegate. Now the client is not paying for a named individuals time, offload the simple tasks to a junior staff member who should enjoy a more varied workload

11. Talk to customers: Is there a demand for fixed price services in your industry, if demand is weak then consider shelving the idea until demand grows. If you do run with a Flat Fee service offering, get as much feedback from those trialing the model (staff and clients) and modify as needed. Openly say to happy fixed price clients “This pricing model is quite new for us, we’d like to try it out with more clients, is there anyone you know open to trialing this model. It’s a direct request for a referral, but there clearly a benefit for the new prospective client.

12. Try it out: Once you have a plan, start small and try it with a single client. A few weeks later you will almost certainly have made a few tweaks. Continue to roll out the pricing model slowly and make sure your financial backers such as banks understand what is happening so they understand the benefits as well as the risks.

The aim should be to maintain or grow revenue and profit whilst differentiating yourself in the market. Win win for clients peace of mind and consultants finances.

When buying online media it is useful to compare website user statistics to offline audience figures so you don’t lose perspective.

When buying media or generating revenues strategies for online publishers I compare costs/incomes to audited offline media such as newspapers and magazines.

Whilst there are huge differences in what you can do online compared to a printed page, at the end of the day advertising dollars should follow the audience and the biggest ROI.

One online network is charging around £6.00 CPM for a mass market run of site marketing campaign, yet I can buy the same quality eyeballs and attention in a London morning newspaper for slightly less in terms of comparative presence and audience impact. I will use this to leverage a discount where possible.

Regardless of being an offline or online marketing consultant, it is important to tell your client where to put their money to gain best effects, and sometimes that is where you traditionally buy.

ABC provide a PDF certificate of distribution for many publications. For instance The London Paper is distributed at 641 locations including 173 locations around train stations and has a average distribution of 501,329 issues per day, and carries around 39% advertising content. I know this and can show my client this because it’s certificated: http://abcpdfcerts.abc.org.uk/pdf/certificates/15571687.pdf

.Net magazine has 18,001 copies distributed but I would wager money that many of the advertisers do not realize 34.6% of copies are sent internationally and never reach a UK or Ireland address. Over a third of the readers are unlikely to buy their UK targeted services. How do I know..because I have a calculator and…the audit certificate http://abcpdfcerts.abc.org.uk/pdf/certificates/14775673.pdf

Surprisingly, offline media has much better transparency in some areas, assuming you take the figures with a small pinch of salt.

Don’t assume online is the best place for your clients money, and if it is…leverage offline advertising rates to bargain down to a rate based that reflects the cost of marketing to that audience (regardless of medium). 2009 is a year to negotiate down the rising costs of online marketing.

Top 10 US Airlines Measured by Passengers Carried in September 2008.

With Ad Targeting this good, where do I sign up?

How to isolate yourself from customers with a Christmas Card

In the last week of December I received 40 or so Christmas e-cards from companies I had dealings with in 2008. Most were amusing or bland but one stuck out.

The memorable greeting came from an SEO company where I occasionally speak to their Managing Director.

The unnamed company sent me an e-card that was little more than a flyer for their services and a list of their products, tagged with Happy Christmas at the top.

Apart from the debatable ethics of a business contact feeding my email address into his CRM, the e-card touted a number of services my team offers and thanked me for my good custom in 2008.

Since I’ve never bought from this SEO and indeed we compete in some areas, this message was wholly irrelevant. Moreover I consider it fairly impolite to send customers a sales flyer disguised as a Christmas card.

Issues of taste aside, this SEO companies approach was a lose/lose method of doing business.

If I’m a valued customer this is a crude and impersonal messaging that suggests I’ve been blended with cold sales leads, or worse, my relationship is of little importance.

If I’m a cold sales lead I feel no warmer from such an untargeted spammy sales message.

If I’m a business contact or competitor I get an understanding of how nascent my associate/competitors CRM capabilities are.

It’s easy to criticize so I should state my approach, by no means a perfect example, but more respectful:

I avoid Christmas giving as not all my clients are Christian or in Christian countries, I’ll face to face/verbally wish people a happy holidays as relevant. Crunch or no crunch my clients get something (Sarbanes-Oxley compliant) they can enjoy as a New Year Thank-you for the year past.

I send a Happy New Year present such as Champagne, Port, Dinner and Cinema tickets, an iTunes or Starbucks credit, accompanied by an unhurried handwritten Thank You card from me. It takes ages, literally several evenings but my client took hours or days to select my company’s services, the least I can do is spend a few minutes writing a card to say thanks.

Legal restrictions stop me giving anything more generous but it’s a personal touch and I remove my sales head well before I start writing Thank You cards. One thing is for sure, clients do not get a sales brochure disguised as a Christmas Card.

Regardless of my tastes, the net result of sending a heavily sales focused Christmas e-card is that I’ve gone from respecting this unnamed SEO Company to doubting their ability to segment a customer base, deliver relevant messages or understand how to sell. Generally my clients are not receptive to a big ticket sales message in the last week of December; I doubt many of their clients were either.

Considering SEO is all about relevance and appropriateness, this SEO companies 2008 Christmas card just lost them any business I could put their way in 2009.

If the troops at the Somme could take a day out of a war and respect Christmas, there is no reason SEO providers and Digital Agencies cannot do the same in a recession.

The Business Development Director of a significant Search Engine Marketing player in the UK contacted my office a while back.

I sit on the IPA Search Panel with one of his colleagues, so making contact could have been easy.

The following cold call email arrived with our receptionists and found its way to me. It sat in my inbox for a while, and I’m yet to respond anytime soon.

From: xxxxx xxxxx [mailto:xxxx.xxxxx@xxxxxxxxxx.com]
Sent: Wednesday, November 26, 2008 10:47 AM
To: Front Desk London
Subject: Search Marketing Partnership
Hi,

xxxxxxx is looking for partners and we would like to invite you to consider a relationship with us. We specialise in Search Engine Marketing (PPC & SEO) and we have an Agency model that we would like to introduce to you.

If you are interested in discussing this further, then please don’t hesitate to contact us.

Regards,
xxxxxxx.

Top 100 UK Online Agencies 2008 as reported in New Media Age’s 2008 Rankings.

Sapient comes in 1st place for the second year running.  See 2007 UK Digital Agencies rankings.

I’ve added in revenue per staff member based on the quoted earnings declared. Craik Jones Watson Mitchell Voelkel came in higest billings per head at £213,691 while  e-InBusiness revenues suggest a mere £33,649 per head.  Mean Average revenues per head were £88,729 across the ranked agencies.

How warnings of being “Penalized by Google” can sometimes be the online equivilent of the big bad wolf.

Clients are often be told by SEO consultants that a wide range of technical issues will lead to their website being “penalized by search engines”, notably Google.

The fundamental message this sends is inaccurate. This message can lead to dogged adherence to change without good business reason or SEO advice being disregarded as scaremongering.

There is only a small range of activities that search engines actively penalize, yet many reasons for poor performance that could appear to be penalties if cruedely interpreted.

This is not to say that search engines do not heavily favour certain sites for reasons other than pure query-document match relevancy but thats another post altogether.

Being organized and conforming to expected standards = Good SEO (blazing a trail is to be encouraged but be aware search engines take a while to catch up, and only follow the trends that have significant human user traffic already)

So here is my offline metaphor to explain why the penalties are not always penaties. Lets compare SEO and crossing international borders.

Event: Imagine arriving at JFK to change flights to San Francisco, on a last minute bargain single ticket & forgetting the address of your hotel. Casually mention your girlfriend lives in SF and it’s a romantic surprise visit. Several hours later, as you leave secondary interviews, you’ll have missed your onward flight with no recourse, face overnight hotels at your expense, a 24 hour delay and the costs of an airport issued ticket home to reassure US Immigration. Your Intentions? Good, Your Outcomes?, Bad.

But it’s important to realise none of the inconvenience “caused by US Immigration” was motivated by a desire to punish.

Analysis: The passenger was not trusted to perform as expected, had failed to conform to system requirements and had to be processed in a secondary manner requiring multiple research activities from a resource constrained team and systems.

Unlikely as it seems this scenario happens every day at airports around the world.

Event: The online equivalent of this story is a website re-launching without a URL cutover strategy, integrating large volumes of third party feed into it’s pages, not publishing a valid sitemap at an easily found location, with hard to interpret dynamic URLs and no inbound links as years of link equity is lost to 404 error pages. Site traffic drops precipitously for 90 days while the programme sponsor rides out the turbulence spending valuable time reassuring senior stakeholders everything is going to be ok and there will be a positive ROI. Of course it normally does, but it’s been stressful.

None of the inconvenience “caused by Google” was motivated by a desire to punish.

Analysis: The website was not trusted to perform as expected, had failed to conform to expected standards and had to be processed in a secondary manner requiring multiple research activities from a resource constrained team and systems.

Unlikely as it seems this scenario happens every day at huge online companies around the world.

Top 10 MBA – Top 10 Business Schools

According to the Financial Times list of top full time business schools the US has for the first time conceeded more than half of the positions in the top 50 business schools list to non US establishments. The US still dominates with 24 of the top 50 places, followed by the UK with 12 schools in the top 50. China now has 3 business prestigious business schools and Spain maintains 3. Cambridge and LBS are within the Top 10 MBA programmes.

Top Business Schools: Source FT.

Detect Duplicate Content – Think Like a Search Engine

A client’s copywriter recently went to lengths to show how he could reword copy to avoid duplicate content challenges by merely moving paragraphs and sentences around.

The copywriter was certain any search system could be outsmarted by moving text positions and syntax around because that would be theoretically so complex to monitor on a large scale that surely a search engine would not have the resources to cope.

Without going into the depths of duplicate content systems, content , scalable search systems or if he is right that you can blag it… it is worth thinking like a search engine for a minute but keeping things simple.

Rather than use search engine results or search systems to examine his plan, I resorted to the suitable unassuming MS Word.

By using a MS Word macro to calculate word frequency and total unique word count you can quickly see shortcuts to calculating document uniqueness without stopping by MIT for 4 years.

I compared two identical documents, with word orders shifted, paragraphs moved and sentences inverted etc. I crazied the format up until mr copywriter was good and happy.

The output of the macro was identical results for both documents.

1171 unique words per document and the 18 keywords listed below occuring in exactly the same frequency order in both documents.

To have exact unique keyword volumes and identical counts on keywords between two 3854 word documents is statistically very unlikely. So without a single Search system to hand, it can be seen how easy it is to compare document duplication.

Count   Keyword

83         search

65         seo

55         company-name-removed

51         in

49         project

48         company-brand-removed

41         we

33         team

32         at

29         as

29         will

28         delivery

28         this

27         on

26         our

26         site

25         with

21         performance

The Macro Used: Thanks to Allen Wyatt’s Word Tips – Count Unique Word Occurrences

http://word.tips.net/Pages/T001833_Generating_a_Count_of_Word_Occurrences.html

Sub FindWords()
    Dim sResponse As String
    Dim iCount As Integer

    ‘ Input different words until the user clicks cancel
    Do
        ‘ Identify the word to count
        sResponse = InputBox( _
          Prompt:=”What word do you want to count?”, _
          Title:=”Count Words”, Default:=”")
   
        If sResponse > “” Then
            ‘ Set the counter to zero for each loop
            iCount = 0
            Application.ScreenUpdating = False
            With Selection
                .HomeKey Unit:=wdStory
                With .Find
                    .ClearFormatting
                    .Text = sResponse
                    ‘ Loop until Word can no longer
                    ‘ find the search string and
                    ‘ count each instance
                    Do While .Execute
                        iCount = iCount + 1
                        Selection.MoveRight
                    Loop
                End With
                ‘ show the number of occurences
                MsgBox sResponse & ” appears ” & iCount & ” times”
            End With
            Application.ScreenUpdating = True
        End If
    Loop While sResponse <> “”
End Sub
</pre><p>If you want to determine all the unique words in a document, along with how many times each of them appears in the document, then a different approach is needed. The following VBA macro will do just that.</p><pre>
Sub WordFrequency()
    Const maxwords = 9000          ‘Maximum unique words allowed
    Dim SingleWord As String       ‘Raw word pulled from doc
    Dim Words(maxwords) As String  ‘Array to hold unique words
    Dim Freq(maxwords) As Integer  ‘Frequency counter for unique words
    Dim WordNum As Integer         ‘Number of unique words
    Dim ByFreq As Boolean          ‘Flag for sorting order
    Dim ttlwds As Long             ‘Total words in the document
    Dim Excludes As String         ‘Words to be excluded
    Dim Found As Boolean           ‘Temporary flag
    Dim j, k, l, Temp As Integer   ‘Temporary variables
    Dim ans As String              ‘How user wants to sort results
    Dim tword As String            ‘

    ‘ Set up excluded words
    Excludes = “[the][a][of][is][to][for][by][be][and][are]“

    ‘ Find out how to sort
    ByFreq = True
    ans = InputBox(”Sort by WORD or by FREQ?”, “Sort order”, “WORD”)
    If ans = “” Then End
    If UCase(ans) = “WORD” Then
        ByFreq = False
    End If
   
    Selection.HomeKey Unit:=wdStory
    System.Cursor = wdCursorWait
    WordNum = 0
    ttlwds = ActiveDocument.Words.Count

    ‘ Control the repeat
    For Each aword In ActiveDocument.Words
        SingleWord = Trim(LCase(aword))
        ‘Out of range?
        If SingleWord < “a” Or SingleWord > “z” Then
            SingleWord = “”
        End If
        ‘On exclude list?
        If InStr(Excludes, “[" & SingleWord & "]“) Then
            SingleWord = “”
        End If
        If Len(SingleWord) > 0 Then
            Found = False
            For j = 1 To WordNum
                If Words(j) = SingleWord Then
                    Freq(j) = Freq(j) + 1
                    Found = True
                    Exit For
                End If
            Next j
            If Not Found Then
                WordNum = WordNum + 1
                Words(WordNum) = SingleWord
                Freq(WordNum) = 1
            End If
            If WordNum > maxwords – 1 Then
                j = MsgBox(”Too many words.”, vbOKOnly)
                Exit For
            End If
        End If
        ttlwds = ttlwds – 1
        StatusBar = “Remaining: ” & ttlwds & “, Unique: ” & WordNum
    Next aword

    ‘ Now sort it into word order
    For j = 1 To WordNum – 1
        k = j
        For l = j + 1 To WordNum
            If (Not ByFreq And Words(l) < Words(k)) _
              Or (ByFreq And Freq(l) > Freq(k)) Then k = l
        Next l
        If k <> j Then
            tword = Words(j)
            Words(j) = Words(k)
            Words(k) = tword
            Temp = Freq(j)
            Freq(j) = Freq(k)
            Freq(k) = Temp
        End If
        StatusBar = “Sorting: ” & WordNum – j
    Next j

    ‘ Now write out the results
    tmpName = ActiveDocument.AttachedTemplate.FullName
    Documents.Add Template:=tmpName, NewTemplate:=False
    Selection.ParagraphFormat.TabStops.ClearAll
    With Selection
        For j = 1 To WordNum
            .TypeText Text:=Trim(Str(Freq(j))) _
              & vbTab & Words(j) & vbCrLf
        Next j
    End With
    System.Cursor = wdCursorNormal
    j = MsgBox(”There were ” & Trim(Str(WordNum)) & _
      ” different words “, vbOKOnly, “Finished”)
End Sub