Set Fees Based in Value, Not Time Spent

Consider establishing fees based on value of the services you will provide and not on the time you spend on the project. Clients will judge the wisdom of your services based on their own agenda. They want to know if your services will help solve a problem, or if using your services will benefit them equal to or more than the cost of your services. Your fees must reflect value to the client.

You must be willing to estimate the total time needed to get the job done when you are quoting fee on a time and materials basis. Just telling the client you charge $200 an hour plus expenses is not always sufficient. Howard Shenson recommends you let the client know the number of hours you will take to produce the desired results. To properly estimate requires careful analysis and attention to details, says the late Shenson, the consultant’s consultant.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Charge for Travel Using a Per-Diem Basis

You may want to consider charging a per diem for your travel expenses (hotels, meals and incidentals) rather than direct reibursement. Most clients prefer the simplicity of per-diem expenses and this arrangement avoids any criticism about how you spend expense dollars.

Think about having multiple per-diem rates, the late Howard Shenson, the consultant’s consultant suggests. You would have one per-diem for expensive cities and another for smaller markets. Set per-diem rates and define the quality of your life on the road in a way that is consistent with the style and expense that your client feels is appropriate. People are more comfortable when you do things the way they do them.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Get something back when you giveaway a “freebie”

So now you are a successful consultant!

As a professional in the field of consulting, you will be frequently asked to give your clients “little favors” and since you can rarely collect a fee for them, the best term we can use is that these are “freebies.”

These “freebies” can include everything from answering a quick question by telephone to sending them copies of articles and documents. The list can be quite endless.

 However, these free services can be turned into a profit center for you with the “one-minute commercial.”

Here’s the secret.

When asked for a “freebie” or a favor, quickly respond with one of these answers:

• “I will be glad to take care of that for you … if you will make a deal.”
• “I’ll help if you make an agreement with me.”
• “It’s free, no problem … but there is a catch.”
• “Sure, I can help … but you must make me a promise.”

So, what is the deal? What is the Catch? What is the promise?

Well, it’s simple really … They simply promise, agree or make a deal to call you first when they need the services you provide. Add some spice to your one-minute commercial by also getting them to promise or agree to recommend you to others or to provide you a testimonial (which you can offer to draft for them).

This one-minute commercial can be fun for you both, and is a powerful sales tool for your firm.

However, we recommend you use this technique only when you have done something for free or extra for a prospect or client.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Don’t nickel and dime your clients

Don’t quote fees or invoice for services in any way that will communicate that you are petty or not delivering solid benefits for the services you provide.

Almost all clients would prefer to pay a little more per hour or per day than to be burdened with small charges for support services, activities, or costs that they feel should be included in the already high fee they are paying.

A feeling that fees are reasonable and predictable and that invoices are not filled with “nickel and dime penny ante stuff” will encourage referrals and future business with your client.

Until next time.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Starbucks is Getting Serious Again About Customer Service

Starbucks nationwide to close for emergency re-training Feb. 26

Sarah Gilbert hits the mark with her latest post. The issue of customer service is at the forefront of one of the nation’s biggest coffee bars. For a company that has been praised by Joseph A. Michelli in is book The Starkbucks Experience: 5 Principles for Turning Ordinary into Extraordinary the company is now hurting from its failure to follow-through and ensure exemplary training of all its employees. Two weeks ago I had my first unacceptable customer experience at a Starbucks near Tullahoma, Tenn. Sure enough the youngsters there were more interested in listening to their music than fixing a decent espresso. In fact, it was the worst cup of coffee I had had in a long time! Maybe the Feb. 26 shutdown for re-training will turn the company around. If not, like so many companies we may have to give them our “Stinking Fish Award” and that would truly be sad for a company we once thought set the standards for exceptional customer service.

Posted Feb 13th 2008 7:46PM by Sarah Gilbert
Filed under: Starbucks (SBUX), Employees

I know I’m not the only one who’s complained that Starbucks baristas don’t know how to make a decent latte any more. Far from its roots as the reliable place to get coffee made exactly right, the chain has lately become famous for its automatic machines and the hit-or-miss quality of its products.

Howard Schultz is here to change all that: by shutting down Every Last Storenationwide for three hours on Tuesday, February 26. Starting at 5:30 p.m., baristas in the coffee giant’s 7,100 stores will learn how to do things better. They’ll learn how to make a perfect shot, how to steam milk, and (if we have anything to say about it) how not to burn coffee, and how to wipe the milk steamer before switching from dairy to soy milk. (Vegans everywhere will say thank you.)

While it’s doubtful that three hours of training will reverse years of gathering mediocrity, it’s certainly a symbol of a company that cares about quality. If Howard is serious about this change stuff (and it’s obvious that he is), he’ll consider switching back to manual latte machines, at least in some stores located in serious coffee markets (like certain neighborhoods in Seattle, Portland and San Francisco). Speed and convenience is no price to pay for really good coffee. Some customers will agree; others will probably mutter swearwords under their breath as they pull up to their local Starbucks only to find it Closed For Training in a couple of weeks. Which customer are you?

Consider Charging Clients for their Initial Session

When dealing with small and sometimes more impoverished clients, it’s usually in your best interest to charge a fee (even if it is small) for that initial consultation.

This fee will rid your marketing hours from time wasters who are unable to afford your fee. For many clients, the advice they obtain during the first 30-minutes or hour meeting may be sufficient to meet their needs.

Such a strategy may not be a good idea when dealing with large, well-financed prospects, however. Most often, these clients are not in need or seeking free advice. Your larger clients will be interested in results over the long haul.

Don’t hesitate to charge for diagnostic and needs-analysis services. Determing  what the problem is may be the most valuable service you can provide. Giving the answers away for free in the hope of getting an opportunity to implement your solution is simply — poor marketing.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Exemplary Public Relations for Starbucks

In the January 15, 2008 issue of Bottom Line Personal, there is an article about a man who wrote a book entitled, “How Starbucks Saved My Life.” 

The book is about a man who was a former six-figure advertising executive, and by age 63 was divorced, unemployed, nearly broke, and diagnosed with a brain tumor. 

Because he was in desperate need of health insurance and a regular paycheck, he took a job serving coffee at Starbucks for $10.50 an hour.  He ended up loving the job.

Today he is healthy, has sold his life story to Hollywood ( and it appears that Tom Hanks will probably play him in the film) and yet still plans to work at Starbucks because he enjoys the job. 

This type of public relations for a company simply can not be bought at any price!

This type of public relations is simply priceless and it couldn’t come at a better time for Starbuck’s, who has raised its prices twice in the past year and is facing major competition from McDonald’s and Dunkin Donuts. 

It also showcases a company that has created an exemplary working environment.  Simply, great work environments attract great employees, who offer better customer service, which makes for better sales.

Now this my friends is the best of all worlds.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Don’t Jump at the Opportunity to Cut Your Fee

Don’t accept a request for a reduction in your fee unless the client is willing to reduce the scope work.Bargaining makes you less desirable and creates the wrong image. If you communicate w willingness to accept less, you are letting the client know that you are hungry and desperate or that your initial fee was inflated.

Some clients aren’t happy and may not do business unless they can bargain. In such cases, again, cut your fee only in exchange for a reduction in time and resources provided. This approach allows you to save face and permits the client to get the deal he seeks.

Be especially cautious and reject offers to cut your fee or to provide services because of “exposure” and “potentially beneficial contacts” you will receive from the project.

“Potentials” don’t pay the mortgage! Think: When is the last time doctors, dentists, or lawyers reduced their fees for you? Set a fair and justified professional fee and stay with it!

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Put a Client’s Fears to Rest Before Beginning Work on the Project

Be sure to identify the fears that prospective clients have about working with you. It takes some effort, but they will be reluctant to use your services until you have:

1. Identified their fears
2. Discussed their fears with them
3. Laid their fears to rest

For example, one of the greatest fears that a client can have is do you have the ability to produce the desired results on a timely basis?

Always provide the client with a schedule that identifies with precision, when the various elements of your work will be completed. The schedule may change once work is underway, yet it serves as a reassurance to your client that you have concern for their most important priority — timely completion of the project.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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Help the Client See You as a Source of Value and Not a Threat

(My apologies to all - the post I sent out last night had some spelling errors that have now been corrected. This happens when I write it on the road and forget to spell check and reread it. Thanks to Susan Gaffney-Evans for pointing this out. D.) 

BNA — It’s sometimes hard to do yet I highly recommend you not accept a client who doesn’t value your services or with whom you have a personality conflict. Frankly, and I know this from experience, these clients will create more problems in the long run no matter how hard you try to be of service to them.

When working with the client’s staff, you will probably be perceived as a threat. You can reduce the degree of the threat feeling by ensuring that the client properly introduces you and explains your role. You can further reduce the threat by communicating the fact that you want to work with the staff to ease the tension and motivate them by showing how their role will benefit them as well as the company.

Your continued success will greatly depend on your ability to bury your own ego and let the key players in the client’s organization get recognition for your accomplishments. Those who are important for future business referrals will know that you are responsible for these achievements.

Don’t allow your relationship with a client to deteriorate into one which is adversarial. Your role is to serve the client first and only. Keep your lines of communication open and honest. If they do deteriorate, stop providing services until the communications are patched up.

Always be viewed by your clients as giving the most you can give. Always give them extra value - or what we call lagniappe. You will benefit by having others understand that you will always give more than is expected.

Dr. Darryl

L. Darryl Armstrong

ARMSTRONG and Associates

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