Did a colleague forward this newsletter? Sign up to receive your own copy: Last month: Eleven Principles for Great Consulting Web Sites Blog & Buzz Steve Shu interviewed Mike McLaughlin in his BusinessWeek Online blog, 9/22/05 RAN ONE's review of Guerrilla Marketing for Consultants 9/05 MarketingProfs, The Four Myths of Professional Services Marketing, 10/05 The American Consultant's League Consulting Tips Newsletter, Write the Perfect Article, 9/05 End mind-numbing PowerPoint presentations with the 189% solution. Guerrilla Consulting Blog, 9/23/05 Tom Sant guest posts on The Law of 250: How to be the World's Best. Guerrilla Consulting Blog, 9/18/05 Keep your focus on marketing with the “2/4/8” formula. Guerrilla Consulting Blog, 9/12/05 Have you optimized your frictionless ecosystem lately? If so, it's time to take a look at the Consultant's Jargon Generator. Guerrilla Consulting Blog, 9/3/05 Upcoming seminar: The Art of Guerrilla Marketing for Consultants, Institute of Management Consultants Confab 2005, Reno, NV 10/24/05 Registration & details. Additional Resources for Consultants Management Consulting News Interviews with consulting leaders, articles, research results, job data, and news. This month: » Interview: Don Peppers and Martha Rogers on maximizing your Return on Customer rate. » Articles: Creativity and consulting value, handling the media, an e-newsletter resource, and more. Guerrilla Consulting Web site Guerrilla Consulting blog

The Guerrilla Consultant – a newsletter dedicated to applying the principles of Guerrilla Marketing to the work and lives of consultants.

Your Seat Cushion May Be Used as a Flotation Device

We’ve all heard that familiar phrase during an airline safety briefing. As much as I’d like to believe my cushion is a safety device, it seems improbable.

In the consulting business, the notion that external marketing alone will lead to a profitable business is just as improbable. Client-level marketing is more likely to provide a safe landing for your practice, so this month we focus on the importance of client account management.

Enjoy the article, and let me know what you think.

Mike McLaughlin
Co-Author, Guerrilla Marketing for Consultants

What Consultants Can Learn from the Airlines

From the time you book an airline flight until that plane lands, your pecking order in the airline’s customer hierarchy determines your travel experience. To the airlines, all customers are not equal—they are segmented and managed according to profitability, loyalty, and frequency of travel.

Like the airlines, consultants have embraced the concept of client relationship management, yet many consultants struggle with execution. Client relationship management is based on the premise that a subset of your clients will purchase the majority of your services, and that you should manage them differently. All clients are important, but some are more so than others.

In a past issue of Management Consulting News, Jack Trout, consultant and coauthor of Positioning, says that many consultants have a misguided client relationship strategy, which “…is simply to stay on at their clients, no matter what problem needs to be solved. “ Hanging on, hoping for more work from your current clients is not so much a strategy as the lack of a coherent one.

A client relationship strategy that differentiates your clients can reduce your cost of sales, simplify your approach to complex relationships, help you deliver services to clients more efficiently, and increase the profitability of your practice.

More Eggs in Fewer Baskets

At the core of a productive client relationship strategy is a shift in mindset. Consultants are often too willing to chase every new opportunity, when instead they should focus on the clients they’ve got and the referrals that can flow from those clients.

Just as with an investment portfolio, though, spread your marketing resources among selected clients—don’t focus on a single one. Otherwise, you risk the consequences: If the work dries up, your cash flow slows to a trickle.

Is It Right for You?

The first step is to decide if a client relationship program is right for your practice. For larger firms with long client lists, the decision is a no-brainer. Those firms should use a program to focus investments and people on targeted industries and clients.

In smaller firms, the percentage of forecasted revenue from a client relationship program may be less than in a larger practice. Some commitment to client relationships is usually desirable. But not every consulting firm needs a formal client relationship strategy.

Build Your Client Portfolio

Choosing clients and prospective clients to include in a client relationship program is complex, no matter the size of your firm. Assign clients to action categories according to their relative importance to the firm at a given point in time. This initial classification of clients is a one-size-fits-none exercise. Let your practice, culture, clients, and business objectives guide your decisions.

Consider these questions about your clients:

• Relationship potential. Is the client interested in a long-term relationship? Can you realistically expect to sustain a relationship based on mutual benefit?
  
• Compatibility. Is there a good match between the client’s long-tern needs and your firm’s capabilities?
  
• Profitability. Do historic and forecasted account activity and profitability justify an investment in cultivating a long-term relationship?

Use the simple 2 X 2 matrix below to assess each client on the strength of the existing relationship and the potential for mutual gain.

The clients you place in the upper right quadrant have the greatest potential and are your key accounts. The clients in the upper left quadrant are the next generation of key clients, assuming you can build effective relationships with decision makers. The goal should be for clients in the upper left to move to the upper right category.

The strategy for clients in the remaining quadrants could range from letting some clients go (lower left quadrant), to educating clients on opportunities for mutual benefit (lower right quadrant).

This point-in-time snapshot is just the beginning. Regularly revisit each client’s potential and adjust your use of resources.

Take a First Cut at Your Strategy

To achieve the promise of client relationship management, create a specific marketing strategy for each key client that addresses eight elements.

1. The top five issues your client faces
2. How you can help with those problems
3. How your practice stands out from others in meeting the client’s challenges
4. The status of your relationships with key decision makers
5. Which relationships you’ll build and which you’ll shore up
6. The marketing tactics you’ll use to position your practice in the minds of key client decision makers and influencers
7. Your marketing budget for the client in terms of time and money
8. How you will measure the success of each client relationship.

Once you’ve created the outline for your plan, seek client input. The ideal client relationship strategy is one that’s developed with your partner, the client. Without some client consensus on what you hope to contribute, your plan is wishful thinking.

But Will It Fly?

If your firm chooses to manage key clients in this way, it may seem risky. After all, you could invest the bulk of your marketing resources on a small group of clients who fail to generate the profit you need. So don’t give up on other marketing activities that generate visibility for your practice. As a guideline, commit roughly 60% of your marketing resources to your key accounts, and the remainder on filling your pipeline with prospective clients.

Patience is the key. If you’ve selected the right clients to include in a client relationship program, you work the plan consistently, and you have the right level of accountability, the program will pay dividends in the form of long-term profitable relationships, referrals for new business, and a simplified approach to marketing.

As Noel Capon, author of Key Account Management and Planning, points out “Key accounts are the firm’s single most important asset inasmuch as they supply the majority of sales revenues to support its investment and cost structures.” To be successful, consulting firms must do more than just accept this concept. It must become part of the operating practice and philosophy of the business.