Success Metrics for Consultants

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As I mentioned last week in Eileen Kent’s guest post, Don’t Fish Alone in Federal Waters, “Most businesses use consultants at one time or another. It’s helpful to remember that ultimately you’re in charge of your business. To get the most out of your consultants, be very clear about your expectations, deliverables, and success metrics.”

Business development consultants extend your reach. While a full-time employee might be out of your budget right now, it may also be more than you need at this stage. You might just be trying to figure out if there’s really a market there for you. In either case, you can hire a consultant for a very limited engagement and that’s going to be a better fit.

You’re in charge of your business

A consultant should be a person with very specialized knowledge that you’re hiring for that purpose alone. That being said, just because consultants give advice, doesn’t mean you have to listen. But you do have to measure.

They may know this new customer base better than you, but you know your business.

Let’s say a particular customer is very price-conscious, so your consultant goes in and sells your product as if it’s the lowest-priced option around. Well, if your positioning is all about your technical expertise, and how you deliver features others can’t, then selling based on a low price will just set you up for a disconnect down the line.

What to include in a consultant’s contract

It is every consultant’s goal to provide advice that hopefully will lead to revenue, profits, efficiency or something else that will your business. If you don’t define that something before you engage them, and establish how YOU’RE going to measure whether or not they achieved that goal, then you’re just throwing your money away, and it’s a completely random occurrence whether you’re going to get value or not.

A consulting contract should specify how much is going to be paid, on what basis, how success is measured, and how success is related to the payment. The two most common payment methods are by the hour/day, or a retainer that pays a flat amount of money, usually every month.

You need to be sure that there are termination clauses, and that you have the option to terminate for convenience, i.e., because you just want to do so. That’s the legal terminology for termination that doesn’t have any rationale, versus termination for cause, i.e., because the consultant did something wrong. (By the way, extending similar privileges to the consultant as well gives them the feeling that they can tell the truth – and you really want consultants who tell you what you need to hear, not what they think you want to hear.)

In the federal sector you do have to be careful when you tie accomplishments to payments, because certain forms of commission, while perfectly fine for salesmen, are not okay for federal consultants because of perceived organizational conflict of interest (OCI) issues, and can cause problems with contracts or FAR regulations. Consult a federal legal practice attorney for details. You must be very aware of the rules of the road or you could get yourself into hot water.

At this point you need to establish success metrics – measurable ways for you to identify whether your consultant has, in fact, been successful, and then determine if and how you will tie payments to that.

A common success metric for a business development consultant is how much revenue they brought in, but it’s not the only possibility. You may be looking more for introductions to key contacts, or to build recognition in a particular area. Whichever metric you choose, ask the consultant to report back to you on that.

We’ve talked specifically about business development consultants, but whatever the consultant, the key to remember is that consultants may sometimes tell you things that are not right for you. At those times, you need to be completely aware that you don’t have to take their advice, even if you’ve already paid for it!


One Comment on “Success Metrics for Consultants”

  1. Eileen Kent says:

    Hi Bill,

    I couldn’t agree more! Owners should always be in the driver’s seat when it comes to final actions of the team, despite the advice of a consultant.

    But, if you’re going to hire a consultant because you want to learn something new and you want to implement change, make sure you’re clear about the expectations of change within your organization prior to hiring the consultant.

    You must brace the team and yourself for change and be willing to at least try those changes you’ve hired the consultant to implement. It’s like hiring a work-out coach. If anyone on the team (including the owners) undermine the process by sitting on the sofa refusing to even get up and try the expert’s exercises – then you wasted your consultant’s time and your budget and the entire program is a failure. Believe me, no consultant wants their programs to fail.

    As a consultant, I try to weed out prospects if I believe they will not work the plan I build before we make a commitment. I ask a series of probing questions to uncover their true commitment to their federal sales. Another way I weed out prospects is I encourage them to call my references because my references will gladly tell people what they’re about to experience when they work with me. If the prospect client calls me back within about a week and they’re raring to go, it’s a fit!

    Also, Bill, I want to make a case for charging my clients 100% up front. I charge a very reasonable rate (less than half my competition. Why do I charge up front? Because I leave no room in my profit margin or my schedule…..for collections.
    I am confident about the investment companies make with me and so far, not one client has ever asked for their money back, and in fact, most of them have sent me referrals.

    Also, if I run into a prospect – who has different needs than what I offer – and I have an understanding of their budget – I will be happy to pass them to an appropriate consultant who fits their needs.

    The nice thing about this community is that it is small and reputation is everything – so take extra note when a consultant in the business – refers another consultant. That recommendation is worth its weight in gold.

    Thank you, on behalf of all, for your insightful blog. Your advice is always welcome!

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