How to deliver winning proposals - part 12

How to deliver winning proposals – part 12

Posted May 10, 2016

In Featured, Industry News, Our Own World

The proposal is the very last stage of the sales process. It is the confirmation of what we have already agreed during our discussions with the client. If you make the proposal too early in the sales process then the probability of losing the business will increase substantially. There should be nothing in the proposal that comes as a surprise to the client.

This post is about the sixth section of the proposal: Terms & Conditions.

Terms & Conditions

This series of posts are inspired by Alan Weiss and his books” “Million Dollar Consulting Proposals” and “The Consulting Bible.” Alan Weiss has also written a book on how to price management consulting engagements: Value Based Fees. Highly recommendable if you are making a living from practicing solo consulting.

As recommended by Alan Weiss the Terms & Conditions section includes:

The options and the associated fees
The payment terms
Expense reimbursements
Termination options
Warranty

The options and the associated fees

By now it should be clear that we deliver measurable value and not hours. Management consultants should never charge Time & Material.

The options you propose contain various levels of value and/or increase the certainty that the value is converted into results.

Examples:

Option one: Partner Program Development

We will assist you with the development of a partner program enabling new partners to build a solid pipeline and win new customers within 12 months of signing the partner agreement .

The average value of a new partner is estimated by you to be at least €1M over a 36 month period.

The fee for option one is: €125.000

Option Two: Partner Program Development and Partner Recruitment in Germany

In addition to option one we will assist you in recruiting the first partner in Germany.

The fee for option two is: €175.000

Option Three: Partner Program Development, Partner Recruitment in Germany and Sales Training Program Design

In addition to option two we will assist you with designing the sales training portion of the partner program and assist with delivering the first instance of the sales training to the new German partner.

The fee for option three is: €225.000

The options are never related to input

In the value based approach inputs are irrelevant as a measure for the fee. The fee is based on recruiting and enabling partners that can produce revenue and make a profit as soon as possible. Option three includes option two and option two includes option one. The options are not a “menu” of independent services. They are packages with increasing levels of value.

Value versus results

If you are working with CEOs of small and medium sized companies, who are not used to working with management consultants, you may experience pressure for you to accept payments against the ultimate results. They will try to create a scenario where they pay you with your own money. According to my experience this behavior is based on either a lack of funds for making the necessary investments or genuine mistrust of management consultants. You should detect such behavior very early in the sales process when you check for alignment of values. When you detect such attitudes you should walk away gracefully, but fast.

Investing your experience, expertise and time in the client´s business is a completely different scenario. This is an investment scenario >>Why the Independent Management Consultant Must Think Like a Business Angel.

Are you an investor or are you a management consultant? These are two completely different scenarios.

Ultimately only shareholders are paid for results. Executives and other hired hands have a substantial fixed remuneration and then a variable portion based on various (and sometimes measurable) results. The Executives have the long term operational responsibility for the business. The management consultant is called upon to help out with very specific issues where the organization has limited experience or needs an external expert. By definition the management consultant cannot assume the operational responsibility and cannot be held responsible for the results. The management consultant must assume responsibility for the quality of his work and I will comment on that in a later post.

From my own world

I exclusively work in the software industry. Therefore I may have an easier life than management consultants operating in other industries.

Software is priced based on three considerations only:

The value the software can provide the user
The substitution options
The platform environment

There is never ever any relationship between the price of the software and the cost of making the software. Thus, software CEOs are used to thinking about a value based pricing framework. The question is always: How much can we charge? The question is never: How much does it cost us to make the software?

The software industry is the most dynamic with the lowest barriers to entry and the smallest windows of opportunity. There is a frantic clamor to enter new markets, which makes the value and the fastest path to results much more important than saving a few thousand euros.

The structure of the proposal is suggested by Alan Weiss in his book “Million Dollar Consulting Proposals.” I can highly recommend getting and reading this book and his other books as well.