6.4 Business Development

There is one aspect of the job which does not usually come naturally to quantitative people: they also have to be business people. Business development (BD) is anything that helps to develop new business (for the company or for the self).

Most of the material in this section comes from [60], [61], [62], and from a presentation provided by Colin Daniel (of APEX RMS).

The material of this section is also covered in the following videos:

6.4.1 Basics

Consultants have two types of clients: external clients (the usual stuff: organizations/individuals with whom they contract to offer services) and internal “clients”, especially in larger consulting shops, where consultants

  • sell their services to project managers, and

  • support project managers in delivering to their clients.

Under this view, pretty much everything that a quantitative consultant does can be referred to as providing “services” to “clients”. BD is crucial for consultants: it allows them to be (and to remain) employed. In spite of this, quantitative consultants are not usually very fond of BD, often feeling that this task is beneath them.106

Drumming up business is not a waste of time – pragmatically, efficient BD leads to more time for research, development, and quantitative analysis. A better understanding of clients and their motivations is essential to design a better BD plan, which hopefully turns into satisfied clients,107 which hopefully turns into repeat clients.

And when consultants do not have to worry about where their next project is coming from, they can focus their mental energy and efforts on offering good services.

6.4.2 Clients and Choices

Unless consultants have also been on the client side, they may not understand what drives client choices.

The Client Experience

From the client’s perspective, a consulting project is a risky endeavour. There is a level of personal risk: they are putting their affairs in someone else’s hands, and are relinquishing control over the analytical process (even if they are brought in as domain experts).

There is an axis of insecurity: clients may wonder whether the consultant really wants to help them or is just out to help themselves, or whether the consultant will make the problem more complex than it really is (based on past experience with consultants and/or academics).Finally, the client may be skeptical, having been “burned” by consultants before.

They may be concerned that the consultant will not keep them informed, will be hard to reach, or will lose interest in the problem. From the client’s perspective, buying professional services is not usually a pleasant experience – they would rather be buying solutions to their problems rather than buying a consultant’s time.

So how do clients choose a service provider?

The Client’s Choice Process

Part of the difficulty is that qualified quantitative consultants are commonplace – unless their skills are truly unmatched by competitors, professionals are rarely hired because of their technical capabilities.

Excellent quantitative capabilities are required to be considered, but it is other things that get a consultant selected – maintaining long-term business is more about relationships than it is about what the consultants have to offer, technically. Among the set of qualified candidates, clients ultimately seek the ones they can trust.108

6.4.3 Building Trust

Trust is a necessary (but not sufficient!) requirement to successful consulting projects.

The Trust “Equation”

Trust is built using various factors:

  • credibility, reliability, and intimacy (all positive), and

  • self-orientation (negative).

The relationship is sometimes expressed via the trust “equation”: \[\text{Trust}=\frac{\text{Credibility}+\text{Reliability}+\text{Intimacy}}{\text{Self-Orientation}}.\]

  • Credibility refers to the consultant’s technical expertise and ability to project confidence in the latter in the client’s mind;

  • reliability, to dependability and consistency on the consultants part (work done well and on time);

  • intimacy, to the idea that business relationships require awareness of mutually increasing risk (clients and consultants are in this together), and

  • self-orientation, to advisors who appear to be more interested in themselves than in the client.

Credibility

Consultants commonly achieve this component via qualifications and references, by presenting themselves in a professional manner, and by being accuracy, precise, and complete in their work.

In general, it is not obviously clear that clients can distinguish outstanding work from merely competent work, unless they are themselves experts in the field. Most clients who leave a business relationship with a quantitative consultant do not do so because of technical incompetence, but due to small dissatisfactions with service.

Even sophisticated clients will come to focus on the quality of service rather than the quality of work. This can sometimes be baffling to recent quantitative graduates, but it is similar to the notion that how we say things matters just as much (if not more) than what we say, in many contexts.

Reliability

As the number of interactions with the client increases, reliability can be demonstrated with consistent consultant behaviour:

on time + on spec109 + on budget + “extra” touches.110

Why does this prove important? Marketing is painful and not usually that effective, in the final analysis; great customer service is probably the most effective and least expensive marketing strategy.

And this does not apply only to repeat clients; current clients can serve as references for future projects – the least that they should be able to say about a consultant is that they are reliable.

Intimacy

According to experts, “lack of intimacy” is a common failure in building trust. Mutual increasing risk brings clients and consultants together; candor and honesty are crucial.

These experts also claim that consultants should aim to become clients’ “friends” and confidants, but we feel less confident about that: there are power dynamics at play, and the potential for abuse exists.

We will have more to say on intimacy in the next section.

Self-Orientation

Quantitative consultants should not appear to be more interested in themselves than in their clients; self-orientation is the greatest source of client distrust. They say that the client is always right, even when they are not right… within reason.

In practice, this translates to consultants never telling the clients flat-out that they are wrong, without first offering them alternatives or a way out.111

In the consulting world, what this really means is that the clients’ true needs should come before the consultants’ “desire to create a monument to their own technical ability”. Clients will smell that something is off if the consultant is just out to pad their CV.

Ultimately, the best way to appear interested in the client’s project is to BE interested in the client’s project, and that is best accomplished by taking on projects that are interesting to the consultants.

Back to Business Development

People who know an awful lot more about BD than we do estimated that it is “5-10 times more profitable to sell new services to an existing customer than to sell a first service to a new customer”, and that it is “at least 5 times as expensive to get a new client than to keep an old one.”

Let us leave the numbers aside for now: the main advantage of working with old clients is that consultants do not need to build trust with them, and they can move on to the quantitative part of the project sooner (while maintaining the trust, obviously).

Furthermore, “the average sale is made after the 6th contact, but the average person quits after 2nd.” While consultants need to be able to take no for an answer,112 they also need to realize that they do not need to make a pitch on the very first contact; contacts can be used to build trust.

The BD order of priority should be as shown in Figure 6.3:

Business development priorities.

Figure 6.3: Business development priorities.

In general, it is easier to sell to an existing client that is not yet aware of a new need than it is to sell to a new client that is aware of their needs. The same experts also say that “at least 70% of your business should be from past clients and their referrals; […] very profitable firms often reach 90%”.

If the working relationship with the current client is great, this is where consultants should focus their efforts first. The key to efficient BD is to deliver on existing projects and then keep in touch with the client, as future work can usually follow with lowered effort levels.

If existing clients do not need a consultant’s services anymore (or in the foreseeable future), client referrals are the next option – they may know someone in their network who could use such services. Trust must still be built in these cases, but the process has been jumpstarted.

Having said all that, there is such a thing as client fatigue; consulting should not become a prison. If consultants do not like working with a client on their project (for whatever reason), they do not have to return to them indefinitely.

Most clients are reasonable and will accept a professionally-handled “break-up,” but some will try to pressure the consultants to return against they will.113 Consequently, consultants might benefit from having an exit strategy.

6.4.4 Improving Trust

Serious consultants should always be seeking to improve the components of the Trust Equation. Credibility is often more important with new clients – presumably, repeat clients already find consultants credible. Reliability and intimacy can be improved both with old and with new clients.

Improving Credibility

Consultants can improve credibility by:

  • pointing to publications (peer-reviewed research papers and white papers, etc.) or to academic honours and teaching;

  • preparing peerless marketing materials (current and customizable project-based CVs, client testimonials, portfolio, updated and functional website, blog articles on variety of topics, (e-)brochures, business cards, social media presence, etc.), and

  • managing client expectations: clients are satisfied when consultants deliver more than they were expecting.

Consultants should try to strike the right balance – prospective clients could get scared by a portfolio on steroids. Perhaps not every detail of a consultant’s history needs to be publiclyavailable; it is easy to provide clients with more information on demand. Conversely, consultants might need to spruce up their portfolio, especially early on in their career.

Improving Reliability

Consultants can improve their reliability by:

  • doing the basics (delivering on time and on budget and solving problems instead of generating them);

  • being available (via mobile and email, being proactive with status updates even when the news are not good), and

  • being responsive (responding to questions or comments within a 24-hour window114).

Consultants should also be informing “clients” by:

  • providing timely budget and proactive project status updates (both internal and external – one of the biggest consulting obstacle is waiting too long to let the clients know that something is not working out);

  • being organized (preparing for meetings and taking the lead on agenda items), and

  • managing their time intelligently (at times, it might be preferable to turn down work – it is better for consultants to deliver an A+ to a few clients rather than a C+ or an F on many projects).

For long term clients, reliability is as important as technical competency!

Improving Intimacy

Consultants should seek opportunities to push the boundaries of the relationship, to be candid and offer weaknesses – in other words, they should avoid trying to pretend that they are perfect.

Connections can be made by both sides looking for commonalities, moving beyond the small talk, and sharing personal experiences (at user conferences, etc.). Advisors sometimes also suggest that consultants should think of clients as their friend.

This is an area where judgment must be applied – the potential for abuse increases when people make themselves vulnerable. Neither safety, well-being, nor dignity should be sacrificed for the sake of maintaining a relationship with a client.

Reducing Self-Orientation

Consultant self-orientation may be caused by various fears: the fear of not knowing, of not having the right answer, of not being intelligent enough, or simply, of being rejected by the client.

It could also stem from a little streak of selfishness and self-consciousness, or from a need to appear on top of things, or from a desire to look smart. For clients, self-oriented consultants seem to:

  • relate the client’s stories to themselves;

  • finish the client’s sentences for them;

  • need to appear clever, witty, bright;

  • provide only indirect answers to the client’s questions;

  • be unwilling to say “I don’t know”;

  • recite their qualifications at inappropriate times.

Clients understand that consultants are usually looking for future projects – it’s not necessary for consultants to be the star of the show. As the saying goes: “You have 2 ears and 1 mouth. Use them in that proportion”.

Consultants should be listening to the client (and letting them talk), and by demonstrate knowledge and understanding of the client’s need through good questions.

The best way for consultants to get what they want, which is to say, to get more paying work, is to help the client with their problems. Recommending that clients consider using other service providers, as needed, is a very good way to reduce self-orientation (and of offloading work in “boom” periods) – it could prove useful to have a list of “rivals” on hand.

Finally, it is important to remember that not every client is going to play by the rules – a minority of clients will try to take advantage of consultants. It might sometimes feel as though “looking out for #1” is the only reasonable approach to take.

While it remains important for consultants to protect themselves, focusing on reducing self-orientation is more useful in the long run, in our experience.

References

[60]
D. Maister, Managing the Professional Services Firm. Free Press, 1993.
[61]
R. Crandall, Marketing Your Services: For People Who Hate to Sell. McGraw-Hill, 2002.
[62]
D. Maister, C. Green, and R. Galford, The Trusted Advisor. Free Press, 2001.