Archive

Posts Tagged ‘company’

Consultants; HOW and WHY Pay Per Performance Works (Part 2 – continuation from last post)

April 19, 2010 Leave a comment

After writing my last post I had several great comments showing me that 1) I did not delve into the actual performance model, but more so the overall business model 2) I didn’t give any helpful examples 3) I didn’t speak about the variables that are needed for success 4) I didn’t say why this pricing model would work; so to continue on my past posting.

I contend that consultants that utilize a ‘pay for performance’ model are more likely to get and retain clients as well as make more money.

Reasons this model works:
1. Client is taking on little of the risk – more likely to give you the business
2. You can charge more money on the backend of a consulting ‘gig’ than you can if you charge up front as you are taking all of the risk.
3. Long Term, there is a higher likelihood of people coming back to you for jobs as they like the model of taking minimal risk. You also may be able to get signed on a retainer because businesses like people who are confident and have made them money in the past.
4. You can also set up pay for performance deals ‘long term’. So, instead of getting paid 1 lump sum, you can get paid a percentage of revenue from your project or product every month for a year, 2 years, etc.
4. By taking on the risk, you are showing the client you are confident in your abilities.

In my experience, the variable(s) critical to success are 1) Knowing what you know and knowing what you don’t know; this model alleviates you taking on projects you cannot complete successfully, however it also affords you the opportunity to refer the ‘right’ person. Instead of taking a commission or money for your referral, you can go through the process or project with the person you have referred it to – therefore expanding your skill set and learning. 2) Knowing your industry 3) Experience. If you know your industry, have had numerous experiences, and have a stand out skill set, this will likely be a good pricing model for you.

As noted from other comments, there will inevitably be variables that impact your success. These variables change dependent on the business, however this is where experience comes into play. If you have done similar projects, you know what obstacles may come your way and can account for those obstacles when building out your contract, pricing model, and / or plan.

Examples of “Pay For Performance” consulting:

Business Development Consultant (easiest):
A company brings you on to consult in bringing them more partnerships, vendors, or clients. You can structure your payment plan so that you only get paid “if” you bring on a partner. This is analogous to a broker’s fee and can be set up in a few different ways depending on the situation. The easiest way is to get a ‘finders fee’. In my arena, I typically set up larger deals by which partner companies are purchasing from the client. I get paid 10% of total revenue for a year post the deal going live.

Training / Performance Improvement Consultant:
When you first speak with a company, you will need to see their metrics. For example, if you are wanting to work in ‘sales training’, when you go in – the current metrics are at 5% lead to close. Before you put together your proposal, you will need an assessment day (possibly more) where you listen to the current sales pitches, review any content / scripts, etc. You can then assess (based on your experience) how much you can increase the sales conversion rate as well as how that will affect the business overall. This is how you arrive at your pricing. So, if you are working in higher education online and you go to a company that has a 2% conversion rate – and you assess that you can bring it to 2.2%. This doesn’t sound like a lot, but if you look at the average lead cost ($30), your cost per acquisition on 2% is $1500; while your cost per acquisition on 2.2% is about $1360. If a higher education institution enrolls (sells) 10,000 students per month and you are able to raise that 2% to 2.2%, you have saved the company $1.4 million dollars in just 1 month or about $17 million per year. The way I would be paid in this situation, I would ask for $50 for each enrollment (or sale) that closes at over 2.1%. You could also just give a flat price / tiered pricing like…If conversion for the month = 2.1%, you get $15,000. If 2.2%, $30,000, etc.

To Be Continued Later This EVE

Consultants; Why Some Make it…and some CRASH

April 19, 2010 10 comments

When I stopped working FT a few months ago, I wasn’t sure what direction I was going. Three schools of thought: 1) Start my own company. 2) Be a consultant 3) Get another job.

I knew I didn’t want another FT job (at least not right away) as I’m a ‘start up ‘ junkie. I like to build businesses, departments, strategies, and ideas…and then take from conception to “LIVE”; and make them profitable. So that left me with either my own business or consulting. I realized, the two did not need be mutually exclusive. So, while building a business plan, I’ve been consulting and contracting. As higher education, specifically online higher education, is an incestuous industry; as soon as word got out, the phone calls and requests came in. It seemed that this would be easier than I thought – at first.

I quickly realized that to be successful in consulting, to be referred, and to work with numerous clients, it would take a lot more than a great past track record. It would take patience (something I don’t have much of), discipline to NOT take every job offered, and more so, this was yet another great experience where I was learning to ‘check my ego at the door’. In return, and the reason I love consulting, I was learning just as much from clients as they were learning from me. I quickly took the revenue driving sales and marketing strategies I had employed in higher ed and took them across numerous verticals.

So, why do some consultants make it? Why are there some of us that get repeat business while others may spend weeks or months marketing themselves and get nothing? Very simple answer: PAY PER PERFORMANCE CONSULTING.

So how does that work? Well, it depends on what you’re consulting on. However – there is one thing we can agree on: companies would rather YOU take the risk than them. We can also agree that if a consultant came to me and said, “I’m so confident in the strategy I lay out for you that you only have to pay me if I execute on it and execute well enough to hit the revenue goals you have set forth”. Why would a company EVER say NO? I know I wouldn’t. There are, however, many of us, that do need that “month to month” paycheck. You can look at this in 2 ways: 1) You can map out your beginning projects as if you are in a start up company. So, you map out your consulting KNOWING you will be “in the red” for 3 months; or until your projects start ‘making you money’. Who better to make an investment in than yourself? 2) You can charge a ‘small’ up front fee…maybe “min. wage” per hour…and get most of your money on the back end while still having money to live on the front end. Every project or consulting assignment is different, however by being paid on performance, you are not only showing your confidence, you are also ensuring yourself you will not take on anything you cannot handle OR if you do choose to take on something you cannot handle, you will make certain that you partner up with one of the best in the industry to learn.

It’s very simple in sales / marketing to set goals and only be paid if the goals are obtained, but what about other industries that have a large number of consultants or companies vying for the same business. Broken down below are 5 areas where I see a lot of consulting and how you can structure your pay on a performance basis.

1. Web Design / Development
– May be held accountable for a) web stats b) number of sales on site c) stickiness of site

2. Free lance copyrighting
– May be held accountable for a) Amount of time user spends on page b) Drop off rate c) CTR

3. Career Coaching
– May be held accountable to getting someone the job they can succeed and prosper in

4. SEO mapping / content development
– May be held accountable to page rank in “x” amount of time

I know there are many more, but these are ones I see the most often on the networks that I am on. As with anything else; if you need work, you need to take some risk. If you’re good, you’ll be rewarded. Consulting models such as this are good ol’ capitalism at its finest.

How Would Jack Bauer Fair in CORPORATE AMERICA?

April 13, 2010 Leave a comment

When my better half walked in from work today he said, “Can you blog about 24?” So…being the dedicated wife that I am, here goes…

I started watching 24 my Junior (or was it Senior – who remembers?) year in college. Like everyone else, Jack Bauer immediately became ‘my hero’. Why is it that so many people are drawn to Jack Bauer? Probably because he has the same ‘charisma’ as most successful business executives today. Let’s compare:

Innovative? YES
Does not listen to authority when it goes against his “gut”? YES
Will die for what he believes in? YES
“Lady’s man”? YES
Works for the betterment of others at a personal sacrifice? YES (is this the same as corporate America? I hope not; but this is what we are becoming…more socialist and less capitalist. Why do people find that intriguing?)
Incredibly persuasive / able to sell himself? YES
Can choose “work” over “personal relationships”? YES

So, it sounds like Jack Bauer would fair well as the CEO of a company, however I don’t think he’d be able to ‘climb the corporate ladder’; he’s too rogue, has too much distaste / disrespect for for authority, and will not back down when he believes in something. Start up company? He could do that. CEO or running his own company? He’d be great. Attempting to work in Corporate America? Not a chance. He’s a “linchpin“.

I don’t have a job…NOW WHAT?!?!

April 13, 2010 6 comments

Boo Hoo. You’re out of a job. You and every one of your 9 friends. We’re all out of jobs, or we’re working for less money, or we’re not getting paid what we’re worth…or the company has cut out our spouses or our parents. Rest assured, we all know someone, most of us – someones – who have been affected by the lack of business or ‘recession’. So, when it happens to you, what will you do?

1. Most importantly; CHECK YOUR EGO AT THE DOOR

I don’t care if you’ve been a Vice President for 15 years; it’s time to work your way up again. If you were a great vice president, as good as you thought, then the jobs would have been poring in from your competitors as soon as other businesses knew you were out of work. If that didn’t happen, then it’s time to get back on the ground floor of a company and do something differently this time.

Most people look at our economy as a ‘mess’ right now; and sure, there are situations that suck and everyone’s is different. But, there is only one thing you can control; YOU – and the attitude you have. A great mentor told me, “everything is purposeful” and it is. If you look back to the hardest things you’ve gotten over in life, you’ll realize these are the times you built character.

If you need money; don’t wait for the perfect job. Check your ego at the door, take what comes your way FOR NOW while you continue to apply for other jobs.

2. SELL, SELL, SELL

If there is one skill set that will always prove useful in the business arena, that is being a salesperson. If you have experience in sales, go SELL. And don’t just sell anything. Find something you believe in and KILL IT. Be the top producer. And if you’ve never sold before, no better time to get into a large corporation where they will TRAIN you to sell. Once you can sell and market, you can work in any arena. And, if you’re good, you’ll move up quickly; especially if you have solid management experience in your past. While some businesses are slowing down, a couple of sectors have doubled in size. Advice: Get into higher education sales. The market is booming AND if you believe in education, you can sell it. The training programs at the for profit institutions are unmatched as are the opportunities for advancement. Just look at the 2 largest IPOs of the past two years; education stocks.

3. Relish the opportunity

Those who are most successful in this world have 2 things in common: 1) They know what they’re passionate about and have found a way to work with their passion. 2) They are lifelong learners. Take the time you have off to find where your passion is and GO FOR IT. Find a way to market your passion. While you’re researching your passion; learn about it and learn how others have been successful in the field you’re passionate about. This is an opportunity for YOU to find YOU. I want to go say “Thank You” to my last company as these past three months consulting have been the best I’ve ever had. It’s not only one consistent learning experience, but I choose what I do…and I only do what I’m passionate about.

4. Consult!

Employers have had to cut costs and staff across most companies and in doing so are short handed from a resource perspective. If you have been an executive or an expert in your industry, reach out to prior contacts and offer to consult for them. Consulting is much better for an employer than a FTE. No benefits to pay, so the employer is saving about 20% by hiring you over a FTE. Don’t be afraid to put yourself out there; the worst your going to here is “no”; and who cares about rejection; it’s part of our everyday life.

5. Take inventory of yourself

Compare yourself to people in your position who have not lost their jobs. Compare your resume to the ‘job qualifications’ of the jobs you would like. What’s the difference? Is there anything missing? Many times these days it’s education. Use this opportunity to go back to school. I’m actually going back to get my six sigma certification. Can I afford it? Nope. But moreso, I can’t afford NOT to do it. In my area, most people have their Masters or MBA. I don’t. However, I also know myself; and I want to ensure I can be disciplined enough to work at home and go to school online; so, before jumping into a $25,000 program, I’ll take something I know will help me on my resume, something that job seekers are looking for, and something that will help me to “stand out” from the crowd.

Net / Net:
You can sit home depressed and collect unemployment; OR you can do something. I’ve decided to do something…well, some things….what will you do?

Why Do Schools AND Corporations KILL Creativity?

April 9, 2010 10 comments

In every company I’ve worked for, innovation and creativity have been applauded…sort of.

Executives encourage innovation in business, but many times unless strategies comes across to the rest of the business as “their ideas”, the executives are not happy. I contend that this is one of the reasons start up businesses have become so popular amongst the younger generation. Gen Y does not hold back. They are ‘connected’, literally and figuratively, and have grown up accustomed to any information they want at their fingertips. In a corporation, if a Gen Y is sending his ego maniac boss an idea that may be big business, you can bet they have also IMed it to 10 other people too…just to ensure they get credit. I’m on the cusp of Gen Y / Gen X – but I say, “go for it Gen Y”. There is nothing that will slow down a company more than corralling innovation. Gen Y has been brought up in the world of “positive reinforcement” and whether this is monetary or a simple ‘nice work’ email, this is what we have been conditioned to recieve…and you can be sure that we will not sit back while someone else gets the “kudos”. I know I won’t.

Some companies truly do embrace their Gen Ys opinions and have taken the time to understand how to motivate and work with them. These companies currently have the largest profit margins. Apple is a great example of a company that serves the Gen Y population. While Mr. Jobs is running the company, he’s smart enough to know that the people that will “spend money on gadgets” – even if they have to steal it from their parents – should be a large part of all of his strategies.

If we look at how schools teach today; unless a student is part of a Montessori school or private school, they are following the same lesson plans everyone else is. The students in “gifted” classes may get a bit more leeway and have a bit more room to be creative, but not much. Conform, conform, conform is all students are taught. Read the information and regurgitate the information. Education, even higher education, has fallen into this trap as well.

Is it that our businesses have sprung into downplaying creativity because they are a product of our public school system?

Ken Robinson made a revolutionary speech regarding just that at TED 2006

%d bloggers like this: