If you’re in professional services or consulting, many times you’ve heard the phrase: “Give me a proposal.”
You’ve responded by spending several hours and investing hard-earned dollars in putting together a first-rate proposal. You’ve tediously explained your background and your approach.
Well, perhaps it’s productive in only two instances:
- For a large firm that has the luxury of personnel dedicated to responding to requests for proposals.
- You’re really tight with the prospect and you’re a cinch to get the deal.
Otherwise, ouch, the sales opportunity costs are too high. I speak from experience in having seen the movie – or, as they say: “Been there and done that.”
Yes, you think that many people will hire your company off a detailed proposal. That’s true.
But many prospective clients are arrogantly tempted to think and react: “If that’s all it takes, I’ll do it myself.” However, the prospect usually fails in execution of your ideas, and you’ve suffered unnecessarily from sales opportunity costs.
It’s far more profitable to successfully brand yourself so you don’t have waste time writing proposals. Stand out by pre-selling yourself with successful self-marketing, which includes a great elevator pitch.
About 18 percent of the population will only buy from you if charge the cheapest fee. Avoid such prospects.
Note: Size doesn’t matter but image, professionalism count. From my article, The Seven Steps to Higher Sales, there are five value perceptions that motivate quality prospects to buy from you:
- What clients think of you, and your employees – 52 percent. The key characteristics are integrity, judgment, friendliness, knowledge, empathy and value.
- Image of Company – 15 percent. They are concerned about the image of your company in the community. They want to be proud of you.
- Quality of Product or Service Utility – 13 percent. The client is subconsciously asking the question – “What will this do for me?”
- Convenience –12 percent. Clients like easy accessibility to do business with you. That includes your Web site, telephoning you, and the convenience of communication with you.
- Price – 8 percent. Price is important, but it’s the least concern among the five value-perceptions.
So, instead of writing proposals, what’s an effective alternative?
Strategic consultant advocates a deal memo
A widely acclaimed Los Angeles consultant and valued friend of mine, Joey Tamer, advocates using the “deal memo” with prospects. (Ms. Tamer made her stellar reputation as a strategic consultant to entrepreneurs in technology and digital media, and to experienced consultants in all fields to maximize their practices, and she’s a frequent contributor to this business-coaching portal.)
“The deal memo is an outline of proposed terms for providing services to a prospective client or products to a prospective customer, or both to a strategic ally,” she says. “It is a Hollywood term that has come into use in other industries. It is a useful, short-form way of verifying what you have proposed or agreed in a meeting, before you move to a long-form proposal or contract.”
Why a deal memo?
“Too often I have seen people act as ‘vendors’ and provide a full outline of their strategies and tactics (as a proposal), only to have that valuable information ripped off and implemented without them.”
Her deal-memo format outlines the following:
- What will be offered
- The value it will provide
- Start date
- Limitations on the scope of work
- Payment schedule
“This deal memo is never longer than a single page, written in authoritative language in bullets,” she explains. “It is polite but clear. With this page in hand, any misunderstandings, confusions or objections can be discussed or re-negotiated before concluding the agreement.”
She also suggests “a template or two that will apply to most of your offerings…a quick way to sort out the tire-kickers from the prospects you can actually close, saving you lots of time in proposal-writing, contract-writing and re-negotiation…”
Her next step: “I write a contract (not a proposal) only after this discussion and the resolution of details is complete. And I send an invoice for the first upfront payment with the contract.
Ms. Tamer says two important elements are often omitted in agreements, but should be included:
- The value that will be delivered. Of course you understand the value of what you are offering. You are very close to that information every day. You know what happens if you don’t deliver that value. Although your clients or customers may agree that your offer and deliverables are valuable, they may not be able to articulate them — to themselves or to their management which must approve the deal. You need to do that, in writing, to support your value-based pricing. Defining the value the clients or customers will receive from these deals will settle their minds, will give them ammunition for moving the deal through their bureaucracy, and will defend your price to all concerned.
- The limitations on the scope of work. Specifying what is not included in this offer at this cost is critical to good relations with your clients or customers. Addressing these limitations in your discussions, and writing them into the deal memo at the beginning saves misunderstandings later. All clients or customers will push the limits as far as they can, to get what they want or what they believe they deserve. For you to maintain your profit margins, this “scope creep” must be defined, addressed and controlled. Of course you can provide more when asked, as long as there is additional payment for it.
Ms. Tamer’s Web site: www.joeytamer.com.
From the Coach’s Corner: see these related resources:
6 Tips to Increase the Quality, Quantity of Your Client Referrals — To obtain great referrals, Make sure you’re a good steward of your already-existing circle of associates and clients – potential centers of influence.
Consultants / Service Firms: Why Hourly Billing Isn’t Best — One of the first lessons I learned in business-performance consulting was to sell results, not my time. Here’s a case study on client relationships and billing practices.
Your Dream is to be a Consultant? Develop Your Vision Plan — So you’ve got the entrepreneurial bug. You have nothing against your boss, but it’s time for you to run your own show. Here’s how to develop a vision plan.
“My greatest strength as a consultant is to be ignorant and ask a few questions.”
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.