Ability

Finding the right person inside a firm is an art, not an act of will or science.

Clients buy when they know who you are, know what you do, feel like what you do is relevant to their goals, think you can do the job, and trust you. But that is not enough. They also need to be able to pull the trigger and the timing needs to be right—the subjects of this chapter and the next one.

In the world of sales, the term of art for asking if a would-be client is able to engage with you is “prequalifying.” The logic goes, “Don't spend time on dry holes. Drill a test, see if there is oil there, and only then commit resources.”

Intuitively we know how prequalifying works. If you are fifty-six, have a slight stoop from too much time hunching over a laptop, have a dent where your wedding ring was, and walk into a Porsche dealership, they will let your test drive the 911. You look like the type of person who would be serious about buying a Porsche. If you are sixteen, the red dots on your face look like a constellation, and your shorts hang impossibly low on your hips, you're not going to get a test drive.

Karen Swim is a twenty-year public relations and marketing communications pro. CEO of her own firm, Words for Hire, she is a wonderful writer—able to capture the essence of a truth in pithy, well-crafted prose. In a recent blogpost, she summarizes how to size up clients before wasting too much time in conversation with them.

I prequalify every opportunity to:

1. Evaluate if there is a real opportunity.
   1. Sometimes a prospect is on a ‘fishing expedition,' while other times it's obvious they won't be able to get the needed buy-in internally. Are they trying to leverage information to get a better rate from a current provider? Are they gathering information to determine if PR services are something they may have interest in implementing someday (rather than now)? In the worst cases, a “prospect” has no intention of hiring outside counsel: they're hoping an unwitting PR pro will give them ideas in a proposal they can use without paying for them. Asking probing questions initially will help you uncover a prospect's motives—if you're lucky, you'll find that they are very interested in hiring you.
2. Determine fit.
   1. Does the company culture align with yours? Are the expectations realistic? During this prequalification phase, prospects often give clues about how organized they are—both personally and internally within the company. You can also ask questions about their goals and how they are measured, which will tell you a lot about their internal culture and what will be expected of you.
3. Identify if there is a budget.
   1. Many independent consultants feel intimidated to ask this question, but don't be! Budget signals a commitment and allows you to determine the scope of work. “Do you have a defined budget for PR/Communication Services?” is a professional question to ask.

If the opportunity qualifies, and a proposal is requested, I move to a more in-depth pre-proposal interview—this early step ensures that a written proposal is merited. Using this process has allowed me to write fewer proposals, but with a much higher close ratio.

There's a lot of truth in what Karen has written. If would-be clients have no interest in buying, have crazy expectations, or have no money, spending too much time with them in the short run may not make a lot of sense.

Art Gensler, author of Art's Principles and founder of Gensler, puts it this way:

It is important that you sit across the table from an empowered manager who can make a decision. If that individual is unable to control the selection, then enlist your original contact to be your advocate. Have that contact guide you to the right person who can make the decision.

—Art Gensler, Art's Principles

As good as this advice is, here's the thing: ruthlessly prequalifying leads before deciding to engage with them goes completely against the idea that you should invest in your network over a lifetime and believe in a kind of karmic business model—where what you harvest is a direct function of what you sow.

In fact, we think this idea that we should prequalify buyers early-on is often wrong. Of course, would-be clients have to be able to buy from you—they have to have both authority and budget—but we have found that engaging with people who do not have authority and budget is often the only way to figure out who does.

Some of us have the luxury of having smaller firms as clients. With them, it is possible to sit down over coffee with the founder or CEO and cut a deal, but others also work with very large organizations that can be triple-matrixed across business lines, geographies, and functional expertise. In organizations like these, rarely can someone make a unilateral decision to engage with us. More precisely, even when they can unilaterally decide to engage with us and have the authority and budget to do so, they rarely do so because they value the advice of their colleagues and are eager to bring along partners, direct reports, and other stakeholders. In the twenty-first century, where it is axiomatic that good managers encourage wide participation across the team, decision making is either a team sport or a goat rodeo depending on the day.

Looking back, I can see that the thing I always underestimated was how if you hire a consultant, it's a career risk. The bigger the prize, the bigger the risk. I knew it, but now I understand it on an emotional level. I understand how important it is to sell internally and not just to the person. I see how you need to sell your services to a person's colleagues in a way that it will make it palatable or understandable. I now know that if someone is thinking about hiring us, they are thinking, “How will this be accepted by the rest of the organization?”

—Walt Shill, formerly of McKinsey and Accenture

A Miscalculation

Yes, if you offer high-end data analytics to firms who actively hedge their supply chain inputs, maybe you shouldn't be knocking on your local dry cleaners' door, plying your wares. But beyond that high altitude sift, rushing to eliminate would-be clients because technically they can't buy is a mistake. In fact, we think prequalifying companies and executives with anything other than a very wide screen is a miscalculation. Here's why:

No one is ever able to buy your services. No one ever has budget. Not at least yet. A tight screen will eliminate them all. All of them can buy, however. They can speak to the need for budget given a compelling enough case.

Consider the following prequalifying conversation:

“It's been fun getting to know you. You seem like you care about supply chain analytics and are focused on optimizing your hedging strategy, which makes you unusual in our experience. At the risk of being direct, do you have budget and the authority to pull the trigger on a firm like ours?”

No need to read further. You already know the answer.

“There are others I would want to bring in on this. And, to tell you the truth, we're being asked to make cuts across the organization. Next year might look different.”

Judging from that answer, does this prospect pass the prequalification test? No. But we'd say you'd be crazy to cross them off your list. You offer expert services. Expert services are provided to a network of people who you get to know over a lifetime. This is not software. You don't have a boss breathing down your neck measuring dials per hour and sales funnel yield. A much better question is, “Under what conditions would this prospective client be able to act?”

The Magic Formula

Universally, clients report they are able to buy when presented with high return-on-investment (ROI) propositions and when they are at the right level to rally the troops around a given opportunity. The magic formula is:

For nearly a decade Tom worked in the private equity business as a finder. He was the dog whose job was to bring back the ducks—companies that would make good investments.

In that role, he crisscrossed the United States, earning way too many airline miles and learning a thing or two about what makes businesses tick. “If a company makes money,” he says, “it can distribute that cash to shareholders or invest in growth. If a CEO decides on the latter strategy, or if she is looking for outside growth capital, she needs to understand the return dynamics inside her businesses. If you open four new stores and each cost a million dollars, the key questions are how long will it take for them to break even and begin to earn a return, and what does that return look like over time? Is it better than what her shareholders could earn in other opportunities on a risk-adjusted basis?”

Tom often hears a plaintive cry of fellow business owners in search of capital. “There's no equity funding available. All the VC and private equity firms are focused on the big cities. We need more access to capital.”

He thinks this perspective is wrongheaded. In his experience, capital will bust down doors, travel great distances, and contort itself in unnatural ways in an effort to invest in high-return opportunities. For capital, the problem is not enough deals; it is the dearth of high-performing business models. Listen to what Bain says in their 2016 report on Global Private Equity.

The difficulty of putting capital to work, combined with ongoing investor enthusiasm for the private equity asset class has led to a new record amount of dry powder, now totaling $1.5 trillion across all PE fund types globally.

You read that right. There are 1.5 trillion dollars sitting on the sidelines, waiting to be invested in companies who can demonstrate they know how to earn strong returns on capital. Sit down for breakfast at the Peninsula Hotel in Manhattan, eavesdrop on the private equity partners nattering away as they nosh on their twenty-dollar granola parfaits, and you will hear the same thing year after year. “There are no good deals anymore. Too much capital is bleeding out all the returns.”

What they are saying is that money is starved for high ROI opportunities.

It's no different in the companies we hope to serve as consultants and providers of professional services. While our clients are more likely to be working in a downtown Minneapolis office building and not supping in Manhattan on 55th and 5th, their concerns are exactly the same.

They don't talk about dry powder or the need for proprietary deal flow. Instead, they say, “Should I ask for budget?” and “How can I spend money that will move the needle for my company?” It is the same thing, however. It's a cry for attractive returns.

Return on Investment

ROI is a simple concept. How much money is being spent and how much does the investment earn either in profits or savings?

But in some ways, ROI is a misleading calculation. Better is to ask, “what's the rate of return?” adding the element of time.

Making a 50 percent return on money over a year is better than making it over twenty. Time makes a difference. That's why when we are talking with potential clients about helping them with our services, and they ask us about ROI, we respond by saying, “Over what period of time?”

Interestingly, the executives with whom we speak ask about ROI but then shy away from the actual math. Instead, they talk in coded language that acts like a kind of stand-in for ROI calculations. “What will my boss think?” “Will this make me a hero?” “Could I lose my job over this?” “If I don't do it, what are the costs associated with inaction?” “What are others in the industry doing?” “How will I budget for this?” Despite all this soft language, the logic driving a would-be client's ability to act on your proposal is always, “What kind of efficiencies will this effort bring or how will this increase our top line?” The logic of returns is immutable.

In a minute, we will discuss getting to the right level in an organization, but make no mistake, a high-return opportunity with very low risk will attract attention. It's the kind of thing junior people talk to their bosses about in excited voices over turkey wraps in the cafeteria and what C-suite executives call subordinates to discuss over the weekend. Trust the private equity professionals. The world is short of high-return opportunities. Craft one for your clients, and they will sprint in your direction.

The Right Level

There is no one too high or too low to speak with if your goal is to build a network over a lifetime. In any organization on any given day, there are a few people who are best positioned to champion your services to their subordinates, peers, and corporate bosses. You will need them because no one makes decisions in a vacuum.

As you target larger businesses, the decision-making power is not as clear as in smaller units. As the decision making becomes more complex, decision-making power is spread among more people.

—Troy Waugh, 101 Marketing Strategies for Accounting, Law, Consulting, and Professional Services

There are two dangers to watch for when trying to identify who to focus on in an organization:

Shooting too low. You go to an industry conference, put on your best blue blazer, and head down to the cocktail party ready to talk it up with potential clients. Waiting to grab a drink from the bar, you start talking with a young man in a royal blue suit that rides up high enough that you can see his striped socks. You feel a little old. He is pleasant enough, though, and, as it turns out, he works for a firm you would like to work for.

What do you do?

• Prequalify him out and move on? Right firm, but wrong level.
• Chat him up, then ask him if his boss is there and would he make an introduction?
• Talk to him seriously as a peer, engage him on the future, and ask him questions on where he sees the world going. Follow up with an interesting article that is relevant to what he was saying?

The right answer is the last option. Your job is to create relationships. You have no idea where those relationships will lead. This young man with whom you are speaking could be the next CFO of a hot start-up. He might be tapped for his talent to run a division in your niche, or he might just be someone you could interview later for information. Take his card and give him a call in a week. “It was great to meet you. I am wondering if I could ask your advice. I'd love to work for you guys. Who should I be speaking with?”

Do you feel like you have worked hard enough in this world that you should only speak with peers and not have to mess with “little people”? That's crazy. We are all equal in the eyes of the market. Talent and insight win, not seniority, age, or title. Treat others as you would have liked them to have treated you. When you were twenty-six, you would have died to have a serious conversation with an experienced consultant. You would have remembered that conversation for years.

Shooting too high. Interestingly, this is a bigger problem for consulting and professional services pros. Frustrated with the politics of engaging with large complex organizations, we often seek to solve the puzzle by going to the top. That strategy, though, it is often as unsuccessful as shooting too low, as the preponderance of decision making is not in the C-suite at all but in divisions and units. Yes, your founder went to prep school with a CEO and that resulted in a new engagement, but mostly, we are selling to the “head of retail operations” or the “director of compliance.” These are the problem solvers in an organization. The notion of an omnipotent leader is a myth, even if they are the CEO. All buyers exist in an ecosystem even if it is a sole proprietor going home to her husband to check on whether to spend the money on a new website or visit his parents in a month. Your job is to focus on the fact that the locus of decision making is often a group, not an individual.

Tactics—What Works

Determining whether or not a client has the ability to hire you is a high-touch task, meaning that it requires a high degree of one-on-one human interaction. This important step cannot be digitally automated, outsourced, or streamlined by an efficiency expert. It requires you to think and act a bit like an investigative journalist, asking lots of questions.

The important thing when it comes to determining a prospective client's ability to hire you is to know the important topics to think about well in advance. These thoughts are second nature to a seasoned rainmaker, happening almost subconsciously as a business relationship begins to take shape. For those new to the role of client development, these conversations can seem awkward, like you are asking someone out to a dance, but they needn't be. Clients are accustomed to having business partners ask about future engagements.

Here are a handful of key questions to keep in mind as you develop a new relationship with a prospective client:

1. Is our prospective client the right person in the organization to be speaking with? Is she responsible for the area of the organization that our work impacts or do they work with that person?
2. Do you know the others in the organization who will influence the final hiring decision? Have you met with these individuals as well?
3. Is her budget or funding capability in line with your customary fees?