Why Consulting Firms Fail

Written by lewsauder

June 9, 2011

why consulting firms fail

Why consulting firms fail

Imagine that you have a leak in your bathroom faucet that keeps your significant other awake at night.  As a result, your SO’s insomnia has spread to become your problem as well.  When it comes to plumbing, you invoke the “two-suit rule” – as soon as you own two suits in the closet, you have reached the level of success in which you hire certain tasks out.  You call a plumber who schedules to come to your house at 9:00 the next Friday.

You arrange to take that Friday morning off, but he arrives at 11:00 instead of 9:00, stating that his last job took longer than expected.  You wonder to yourself what he might have scheduled before 9:00 and still allowed time to drive to your house, but you don’t say anything.

Trusting the expert

After showing the plumber the faucet in question, you leave him alone to do his work.  From your office, you can hear him talking on his cell phone to another customer. There is obviously a dispute and he is using foul language -and lots of it- to make his point.  After ninety minutes of plumbing work and phone conversation, he comes to you and states that he is done.  He presents you with a bill for which he wants immediate payment.  You write him a check to get rid of him and watch him drive away.  When you go into the bathroom, you see that, although the leak is fixed, he did a sloppy job.  The washer is visible and doesn’t look very good.   He also left the bathroom a mess.

A consultative approach

Now imagine a different scenario.  The plumber showed up on time and spent the entire time he was there addressing your problem – not talking on the phone. Before fixing the leak, he showed you the cause of the problem, gave you some of the options for fixing the leak and the cost of each, followed by his recommendation for the best alternative.  After following your direction, he made the fix, cleaned up after himself and charged you what he said he would charge.  Additionally, he noticed that the toilet ran longer than it should and made a recommendation to fix it that would cost you less than five dollars.

Which plumber would you hire next time?  Which would you recommend to your friends and neighbors?

Consultants and how they treat their clients are very similar.  There are some consultants like the first plumber that are out to make a fast buck, who will arrive at the client site, do suboptimal work, charge them for time that they deal with other clients’ issues, and leave a mess of issues behind when they leave.

Why consulting firms fail

A legitimate consulting firm develops a relationship with the client. Like the second plumber, they do the work right the first time, focus only on the current client’s issues, and keep the customer’s interests in mind at all times.  Whether they provide a solution that costs the client very little, or they get additional billable work from it, the solution is provided in an effort to help the client improve their business, rather than finding situations to make more money.

The second scenario may be more expensive in the short run. But in the long run, you get more repeat business and more referral business.  Consultants – and plumbers – who do it right, realize that it costs a lot more to get a new customer than it costs to keep an existing one.

See my related post: Are You Keeping a Client Focus

To some, it seems logical.  Do what’s best for the client and the revenue will eventually come in.  But some are less disciplined and go for the immediate gratification, constantly asking, “What is our margin on the current project?”

Which philosophy does your firm follow?

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at Amazon.com

As always, I welcome your comments and criticisms.

Lew’s Books at Amazon:

Project Management 101
Consulting 101
The Reluctant Mentor

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