From the Board

• Would you like to become known to speaker coordinators of other organizations?
• Would you like to learn about upcoming meetings of interest?
• Would you like the ability to influence the speakers you get to hear at upcoming ICCA meetings?
• Would you like to increase the page ranking of your web site?

If you have between 15 and 60 minutes during an upcoming month, we have a no-cost way you can accomplish all of the above!

We have volunteer opportunities to assist the chapter in identifying potential speakers at upcoming chapter meetings. You get to choose from the four different ways to accomplish this task.

In case you’re wondering how volunteering for this opportunity would increase the page ranking of your website, for three months we maintain a "thank you" listing on our highly ranked website that includes your name, your company name, and a link to your website.

To take advantage of this opportunity or for more information, email Norman Daoust, Past President, at pastpresident@icca-boston.org. The sooner you do that, the sooner you can begin reaping the rewards!

Norman Daoust
Past President, ICCA-Boston

Feature Article

Introduction
In October, 2007, BusinessWeek ran a story of a woman who for 20 years had shown up to appointments with her investment advisor with bags stuffed with every slip of paper connected with her investments—proxy statements, annual reports, dividend notices, the works—expecting her advisor to go over each one with her. The advisor wanted to offer good service, and this woman had a $1 million account with the firm. After some financial analysis, it turned out that even with a million-dollar balance, this client wasn't a winner. She spent a lot of time with the investment advisor, but because her holdings didn't change much, she paid virtually no fees. The principal of the firm was shocked to find that she was losing money on this customer every year.

How many of your clients might fall in the same boat—seemingly profitable but actually draining your profits? In the early stages of a business, you may be tempted to look at any customer as a good customer. When you have no other clients that may be true! However, as your business matures and you have the luxury of selecting one client over another, it becomes very important to know which ones to choose, which ones to turn down, and which ones to let go of so you aren’t in the position of this financial advisor, losing money at every meeting with a poor client. This is even more important during difficult economic times such as we’re facing now when you cannot afford to waste any of your precious time on customers that aren’t going to remain loyal, pay your fees, and help carry you through austere periods.

In this article, we’ll talk about how to identify your best clients so you know which ones to keep and which ones perhaps you should let go of.

Why Must You Differentiate Between Your Best & Worst Clients?
Differentiating clients helps you better track profits, deliver greater value, and enhance the right relationships. Contrary to popular belief, not all customers are created equal--there are some that you’re better off without. Do you have clients that negotiated you way down on your fees then asked for more after the deal closed? Or perhaps some that are never satisfied, have nitpicky complaints, or may even be abusive? Or how about a client that threatens to leave if you don’t measure up? How about the other extreme—those clients that truly appreciate your work, recognize and honor the scope of your agreement, or that refer plenty of business to you?

Beyond simply making your life easy, there are three significant financial reasons to differentiate your best from your worst customers.

The first major reason to differentiate clients is that you can better track profits. One small business owner told me last week that the Pareto or 80/20 rule is alive and well in his business when he did the analysis and found that 20% of his clients provided 80% of his revenue. One pricing study of manufacturing companies found that 20% of customers provided 220% of their profits. The remaining 80% actually drained profits. I don’t know about you, but I can’t afford to have 80% of my clients draining my profits.

The second reason to differentiate clients is to deliver appropriate value. Not all clients need, appreciate, or are willing to pay for the same level of value. The customers of one of my clients, a very well known financial services firm, wanted direct, immediate access to industry analysts and were willing to pay extra for this privilege. Other clients were content to read a quarterly research report. Clearly, delivering the same level of value to both these client groups is problematic and costly. One group may not be receiving enough value and the other group is receiving too much for free!

The final benefit of differentiating clients is in providing priority. I spoke with the CEO of a credit card processing company who told me of a particularly nasty (and clearly unprofitable) client they had that called into their call center 52 times in one day, and spent an average of 5 minutes on each call. Imagine how many valuable clients were unable to conduct business because this problem client was wasting resources! Segmenting your customers provides a priority yardstick so you can determine which customers need preferential treatment.

Bottom Line: you can’t afford to get and keep any more of your worst customers—so you have to be able to differentiate between your best and worst.

How Do You Separate the Best from the Worst Clients?
First identify the criteria you’ll use to evaluate the best and worst customers. Candidates for best customers might include: low cost to serve, places a high value on your services, pays on time, honors commitments, buys on value—not price, fully implements joint accountabilities, provides referrals, etc. After completing work with perhaps my best client ever this past week, I just added another attribute to my list: has strong customer relationships. If my clients value customer relationships and strive to improve them, they’ll strive to ensure their relationship with me is fair and equitable. It is important that each of these attributes is phrased in the positive. Write these down in columns across the top of the page.

Next list your customers on the left side of the page. For each column, score your client as follows:

Once you’ve gone through your customer list, add up the score for each customer across all attributes. One of the things I teach my clients is how to weight the different factors so that significantly more important criteria are properly considered. You can find a downloadable template on my website at http://predictiveconsulting.com/templates/ClientPrioritizationWorksheet.xls

Customers with the higher scores are obviously your best customers. Lowest scores are clearly the worst customers. There is a ton of work that you can and should do with the middle customers, such as determining whether or not it is possible to migrate them to the “best” classification, trying to keep them from turning into your worst, or simply finding an appropriate level of service that satisfies them at an acceptable profit level. However, as you’re getting started on this exercise, it is best not to worry about the middle ground and focus your efforts on the two extremes.

Your best customers are those that you absolutely, positively have to keep delighted with your services. Sit down with them and find out what they think of you, what additional value they would like you to provide. At the very least you must make sure there aren’t any dissatisfiers that could cause them to shop around.

Your worst customers are a challenge. Is there something that you can do to decrease the level of service you provide them, commensurate with their value to you? Is it time for some straight talk to get them back on track so they aren’t in the “worst” category? Or is it perhaps time to amicably and politely part ways?

Conclusion
Using this simple tool, you can broadly differentiate your best from your worst customers. While it may be hard to imagine treating some customers better than others, when you examine how much it is costing you in real dollars, emotional toll, and in lost opportunities, it becomes clear that you must differentiate your customers so that you get and keep the best ones and at the very least, mitigate the risk of your worst ones.

Feature Article

Have you ever thought about or noticed a competitor utilizing “thoughtleading” as a business development strategy? Positioning yourself and your firm as leading-edge thinkers in your field involves publishing articles and books, speaking regularly to professional groups, getting yourself noticed by the media and surveying your target market in order to produce research data that only you possess.

If that sounds like fun, or simply a potentially advantageous way to distinguish your firm’s services, one major hurdle to choosing to implement such a novel strategy might be the question of ROI, specifically: Does evidence exist that a thoughtleading strategy really will generate new business growth? Is there any way to accurately measure this? Can a “thoughtleading Return-on-Investment (ROI)” be quantified?

Happily, the answer to all three questions is “yes.” Studies indicate that a quantifiable ROI can be, in fact, discerned, and, just as happily, indications are that results will be overwhelmingly affirmative. Getting to the heart of the issue, however, first requires an understanding that age-old ways of measuring ROI may not always apply here. That’s because a new equation in our economy—one that’s mistier than traditional bottom-line measurements—demands alternative methods of measurement. This new equation is the economic asset of “intellectual capital” (IC).

The concrete ROI metric standard until now has always been based on “I-can-see-it-with-my-own-eyes.” This still applies to material goods, of course, but IC’s decidedly non-Industrial Age elements can be harder to fathom. Mary Adams, who is Managing Principal of Trek Consulting LLC, which specializes in the developing study of IC as a measurable asset, explains it this way:

Such relatively “soft” questions leave the interpretation of data and resulting ROI conclusions in the hands (and minds) of analysts to a greater degree than has been true of traditional ROI measurement with its clear numbers and black-and-white company balance sheet. As one example, Kennedy Information, the nation’s premiere management consulting think tank, which regularly conducts surveys of management consulting compensation, has found that firms and individual consultants at the topmost point of the compensation chart are paid way, way better than the remaining 99% below. When asked how the top 1% manage this, the response is crisp and clear: “Oh, those highest revenue-producers are the ones who regularly publish articles and books, do speaking engagements, and connect with the media,” the Kennedy people explain. “They are the thoughtleaders.”

Another recent study has also correlated increased revenue with publishing, speaking, media and other individual thoughtleading actions, adding that thoughtleading’s ROI will be measurably higher when thoughtleading actions are integrated with a firm’s more traditional marketing and sales activities. Article-publishing ROI, for example, incorporated in the marketing and selling pipeline, can be measured easily by asking prospects if the firm’s published articles had played any part either in their initial decision to approach the company or in their ultimate decision to do business with the company.

Solidifying Prospect Interest
" I always load my briefcase with all my published articles before going out on a sales call," says Dave Vogel, Founder and President, Intertech Engineering Associates. "I like to have one of everything ready. At the right time in a meeting, I pull out the right article, one that covers the service this prospect is most interested in. It always helps to solidify the prospect's interest."

On one sales call, I took one of my staff along whom I had invited to co-author an article with me. He had been showing little interest in doing so as he couldn't see any great value in it. But when we left the meeting, his mind had changed.

"If only we had that article to show him," he gushed. "A reprint would've sold them for sure."

Some studies have even produced clear and definitive measurements sufficient to satisfy even the most old school quantifiability standards. One survey of law firms by Levick Strategic Communications and PR Newswire surveyed 200 firms that had gotten themselves mentioned consistently in the legal media. Their survey found that the 25 firms on its list with the highest revenues were also those with an average increase of nearly 20% in overall media presence over the previous two years. Firms ranked below these 25 in terms of income, however, reported a mere 1% increase in media presence.

Is there also anecdotal evidence that thoughtleading produces a measurable ROI? You bet. Jim Masciarelli, Founder and CEO, PowerSkills Solutions, and author of the book PowerSkills: Building Top-Level Relationships for Bottom-Line Results (Nimbus Press), recalls one time when his book clearly led directly to a piece of business that he certainly would not have landed on his own:

“A partner of a top venture capital firm who knew me from my past career as a retained executive search consultant called me up after receiving an announcement of my book PowerSkills, which details a system I created for building profitable business relationships. He said, ‘I understand you’re now doing advisory and alignment work with CEOs and executive teams. We could really use your help!’”

“Their portfolio company had just acquired a major Internet company in a $22 billion stock deal,” Jim explains, “but the CEO did not yet have a plan to integrate these companies. The mere announcement of my book (and, with it, my new practice) repositioned me as an expert in his mind in this new line of work I was now pursing. As a result, I got the introduction to the CEO and ultimately the assignment as well.”

Adds Vin D'Amico, Founder and President, Damicon: “In one contract I landed, I spoke with the prospect on the phone, then e-mailed a copy of my published article on disaster recovery. He read the article and told me, ‘Your article outlined exactly the things we need to do.’ Because of the article, he gave me an appointment and the resulting meeting led to the engagement. Having that article available helped the sales process enormously by establishing my credibility and eliminating the need for reference checks.

Are you wondering if all this means that publishing an article or a book, or engaging in other thoughtleading actions such as public speaking, media and research, will automatically yield you new business and/or drive your incomes levels up above that of your competitors? Well, there are no guarantees in life, so no one can say for sure. But it is clear from all the data and anecdotal evidence that the likelihood is there. Since most of your competitors will ignore it, a thoughtleading business development strategy could be the smartest marketing/sales decision you could make. There are just so very many facts, figures, studies, stories and personal experiences to back you up.

Toolkit for Consultants

Consulting is all about spreading knowledge, and spreading knowledge often requires travel. Willingness to travel is a valuable asset for a consultant. Traveling can improve your consulting business in various ways: increase your opportunities to meet potential clients, expand your diverse technical experience, add to your knowledge of diverse cultures, improve your communication skills, and enhance your self-respect and self-confidence.

More Opportunity
It can be challenging enough finding prospective clients who need your services at a time when you’re available to deliver them. Adding your own location to the list of stars that need to line up for new business to happen adds to the complexity.

Gaining World Renown (or something)
As consultants become known in their fields and establish a track record for specific expertise, consistent delivery skills, and professionalism, increased demand for the consultants’ skills starts to pull them far from home. When opportunities for travel arise, jump at the chance to venture around the globe providing your consulting services (unless you’ve got so many stickers on your luggage already, that it no longer matters).

Products from far away gain a sense of the exotic. For example, rugs made in Persia seem more exotic than those made in North Carolina. Similarly, consulting services delivered in Germany for a U.S.-based consultant seem to have greater importance. And there is some validity to the enhanced sense of renown—the experience you gain from delivering services to clients around the country and around the world can improve your expertise and shake some of your assumptions about technologies and how businesses work.

You’ll also learn, by necessity, to improve your communication skills. For example, you’ll need to articulate concepts without the benefit of expressions, figures of speech, and analogies because many don’t translate well even in other English-speaking countries.

If you’re traveling in places where a language unknown to you is spoken, but where English is spoken, take the time to learn a few polite phrases and pleasantries in the foreign tongue. Such a gesture is usually appreciated and considered a sign of respect, which indeed it is, even if “business English” is the primary means of communication.

Set Travel Expectations in the SOW
It is wise to formally document the frequency of intended travel when negotiating the statement of work (SOW). This helps prevent misunderstandings. Clients may have an implicit expectation that you’ll be on site for the duration of an engagement, while you might expect to be on site only for the parts of the project that are best done on site (meetings and preliminary human communication). Be sure to discuss the amount of on-site time explicitly.

Document the project cost, duration and number of expected site visits, and the total number of days on site. For example, a simple assessment project might require five days of work, over a period of two calendar weeks. You might plan for this to include three days on site in meetings, allowing two days to write up any reports or recommendations, communicate with the client, and account for any reviewer feedback. Make all those numbers clear in the SOW—five days billable, three of those on site, and two calendar weeks’ duration. Be sure to account for the time for people to provide feedback for anything you write and for the possibility that you may also be working with other clients or on other SOWs.

These days, much technical work can be done remotely over a virtual private network (VPN) or similar network. However, some things are best done during an on-site visit. While it is possible to hold meetings online, I recommend making the extra effort to visit clients at key project decision points, e.g., kickoff, delivery/acceptance, and perhaps also at key review points. Consulting is only partly about delivering solutions—the most successful consultants recognize the importance of building relationships with clients and that this is done best with some in-person meetings.

Get a P.O. for Travel Expenses
When you travel, it is, of course, customary for clients to pay all travel expenses. Ensure that this is clear in the SOW. To help you get paid faster, you may want to provide an estimate for travel expenses and require a purchase order (P.O.) for the expected travel expenses prior to confirming dates and purchasing travel. You may also want to include in the SOW whatever portion of your consulting fees you bill up front. Providing an estimate also clarifies the client’s expectation about the numbers of days on site and makes the cost of travel clear. While I recommend travel because travel is good for business, I also recommend traveling no more than necessary, since limiting travel is good for retaining your sanity.

The amount of the P.O. should be the highest possible amount you expect to spend. The actual amount you bill will be typically lower if you estimate correctly.

Estimating Travel
When estimating travel, you want a balance between not spending too much time on the task and getting a believable estimate. For example, you could research air travel cost on Expedia to get a good estimate for flight costs. I would just use some rounded off number such as $800 or $1100 for domestic or short-notice domestic airfare. You can usually get tickets for significantly less, but you want an estimate with some buffer included. Estimate high because it may be more trouble than it’s worth to collect travel expenses above those estimated and for which you’ve asked for a P.O.

I use a Travel Expense Guestimator spreadsheet when I do expense estimates, just to help ensure I don’t forget something. If you’d like a copy, write me at cttyler@gmail.com.

It’s nothing magic—just a list of things to account for including per-trip expenses, per-day, on-site expenses, and various recommendations such as using the U.S. GSA mileage rate and Google Maps for mileage estimates.

Plugs and Adapters and Converters
I’m always asked by first-time business travelers, “Won’t my laptop blow up without a converter? After all, we have 120V here in America, where Europe is something like 220V?”

Electrical outlets aren’t the same everywhere. Yes, the two- and three-pronged plug you’re used to will need adapters and possibly voltage converters to work in other countries. Adapters are just very simple, typically small, gadgets that make your plug fit into foreign outlets. Converters actually convert the voltage; these gadgets are a bit heavier than simple adapters and somewhat more sophisticated internally.

Most (if not all) modern laptops and electronic equipment run fine with just an adapter. Be sure to check the transformer (the little box attached to the plug where you plug it in). The transformer should list somewhere on it a voltage range, e.g., “INPUT: 100 – 240 Vac.” That means your equipment can operate from 100 to 240 Volts AC current—which pretty much covers all civilized parts of the world. The United States runs 120V; Europe runs something like 220V. Therefore, your equipment will run fine on either, with just a plug adapter. If you have an older electric shaver that can only run on 120V, you may need a converter. But don’t worry if you forget one; many hotels in England and Europe have a 120V outlet in the bathroom marked “Shaver” for that purpose.

Balance Zen
Running a consulting business makes achieving the Zen of a perfect work/life balance difficult for some, even when dealing with local clients or working from a home office. Adding travel to the equation makes it that much harder, since the Road Warrior lifestyle takes one away from home and not always at the most convenient times on a personal schedule. Alas, this writer has little to offer in the way of advice on this point. I’ll write a future article if I ever figure it out!

Disclaimer
No hitchhikers were harmed in the production of this article, parts of which I wrote in Germany, England, and the United States of America.

By C. Thomas Tyler
Former President, ICCA Greater Boston Chapter

Who are we?

Founded in 1976, the Independent Computer Consultants Association (ICCA) is a national not-for-profit organization of independent computer consulting firms sharing the highest ethical and professional standards.

The ICCA Greater Boston Chapter Mission Statement:
The Greater Boston Chapter of the ICCA supports and encourages the growth of individuals and small firms in the business of computer consulting through education, networking, advocacy, and the exchange of ideas and knowledge among peers.

The ICCA offers great services and benefits to its members including business and health insurance, marketing programs, a National Conference, standard form consulting and subcontracting contracts, and many discount programs.

For additional information regarding the ICCA or to search the National Membership Directory, visit the national website http://www.icca.org or the Greater Boston Chapter website http://www.icca-boston.org

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Publisher: Greater Boston Chapter of the Independent Computer Consultants Association, http://www.icca-boston.org
Copyright 2008, Greater Boston Chapter of the Independent Computer Consultants Association
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