Customers

I recently came across what I consider to be a bad use of technology for the B2B service provider.  It is a case of using technology to conduct a “conversation” that needs to happen verbally, not electronically.  Here’s the case.

A SaaS provider of billing software for B2B service providers has a feature in their software that allows the service provider’s clients to login and view activity. Fine. I suppose that some clients would see this as added benefit.  However,  the software service also allows the client to log into the system and mark an invoice as “disputed”.  This is a bad business practice for the B2B professional on a number of levels.

First off, this practice leads the client to believe that by physically marking the invoice disputed, there is some chance that they will not need to pay the invoice.  The shear physical act contributes to a future expectation that will need to be managed soon.

Most tragically, though, the act of allowing a client to mark an invoice “disputed”,  does not address the fundamental problem.  The problem being a breakdown in care for the client or a breakdown in understanding of the Conditions of Satisfaction .   This is a conversation that should never be had via electronic means.  Email exchanges are bad enough.  The marking of an invoice as disputed, takes this practice to a very bad place.

This practice is no different than your customer taking a printing invoice, stamping “Disputed” on it, and mailing it back to you.  Imagine how you would feel if that happened.  Can you feel the animosity building?

As professionals, it is our job to set the proper expectations with clients.  One of those expectations should be the method the client will use for communicating any dissatisfaction with our services.  Until phones cease to exist, phone calls or in person conversations must be the method.  The client / consultant relationship is too important to trust to electronic means.  Voice to voice, interactive communication is key to understanding the depth of the problem and devising the solution.  Voice inflection, tone, degree, and give and take cannot be deduced by a carte blanche marking of the invoice by the client.

Your thoughts?

To your success!

Scott 

What are your billing terms to your customers?  What should they be?

If you are giving terms greater than “Net” you are leaving money on the table.  Terms of “net” send a clear signal to your client that you have performed the promised services.  The client has received the benefit of the services.  It is time for them to pay.

Why do some companies offer extended payment terms like “net 10″ or “net 30″?  These terms originated in most industries where a hardgood, raw material, etc. was sold to be converted by the buyer into something else.  The reason for extending the more liberal terms was to allow the buyer time to realize the “value” of the material by selling it to another party in the case of a distributor or converting it into something else in the case of a manufacturer.

As providers of services, the actions we perform for clients, in most cases, have an immediate impact and realization of value.  In the past I have had certain clients push back on “net” terms.  Their argument almost always goes something like this, “we offer our clients 30 days to pay, why don’t you?”  Well, the next time you need to have this conversation, try educating them on the value you provide and the timing of when it is realized.

Action: change your terms to net

Your thoughts?

To your success!

Scott

It’s Friday, 5:00 pm.  Your deadline for delivering the project to your customer.  You didn’t make it.  You broke your promise.  You broke trust with your client.  What happened?  Why was the deadline missed?  Did you simply forget?  No.  Did you not work hard enough? No.

The most common explanation for not meeting deadlines for the B2B service provider is that someone else you teamed with on the project did not deliver. Surely, your client will accept this.  Not a chance.  They don’t care.

We call the cause of this event a breakdown of a “downstream promise”.  In many of our projects we are individually insufficient to provide all of the services our client requires.  The graphics designer who makes the offer to create a website often needs help from technical folks  (CSS, HTML, PHP, etc.).  The architect, in putting together an estimate for a new project must rely on promises made by the sub-trades.  The consultant that leads a seminar at a hotel must rely on the promises of the hotel’s event manager.  All of these professionals are relying on downstream promises to reach the conditions of satisfaction agreed upon with the client.

The skill of your downstream “promisors” greatly impacts your identity in the marketplace.  If they can’t keep their promises to YOU, you can’t keep your promises to your clients.  Broken downstream promises result in missed deadlines, broken trust, lost clients, and most importantly damaged identity.  Your ability to attract new clients will be impaired. 

To insulate ourselves from broken downstream promises, we must devote time and effort developing relationships with those that can help us and can be trusted.  Trusted to make good promises and keep those promises.  How do we act upon this?  Identify the skills that the marketplace is asking for that you cannot provide.  Identify providers of these services and vet THEIR identity by:

* talking to other service providers and clients

* do they keep their promises

* how long have they been making and keeping promises, i.e. how long have they been in business

Our client relationships are too valuable to risk based upon the unknown.

Action:  review your roster of downstream promisors.  Assess them based upon how well they have delivered on their promises.

Do you need new resources to depend on?

To your success!

Scott

So here I was.  A young, eager, hungry, software consultant.  Business was going o.k. with a fair amount of small jobs coming my way.  Then I got “the call”.  The call came in from Jody, the V.P. of manufacturing of a fairly large manufacturing company.  Jody had heard about my work / identity from another client.  Jody was looking for someone to design a software system for their manufacturing process.  She needed to “start right away”.  The funds for the project has been budgeted………and it was a BIG number.  ”When could I start?”, was Jody’s only question for me.   

Well, that was easy.  Pick up phone. Listen patiently. Get contract.  This is my kind of business!  Or so I thought.

With gusto, I plunged into the project.  I spent hours upon hours researching analyzing, examining, and documenting their arcane manufacturing processes.  I then produced a report of recommendations.  Not just any report mind you.  This was art.  A masterpiece, laying out in every detail, the specifications for a new system.  Revenue here I come!

Now for the presentation.  I’m talking charts, graphs, circles and arrows.  Lasted about an hour.  At the time, it didn’t strike me as odd that they didn’t have any questions as I flashed my forty-fifth Powerpoint slide. Must be stunned by my brilliance, I concluded. 

me:  ”Questions?”

Jody: “This isn’t what we wanted.  You just told us what we already know.  We need “X”, and you gave us “Y”   (detail omitted here to prevent boredom).

So what went wrong?  I neglected to specify the most important part of my offer, the Conditions of Satisfaction (COS).  Very simply stated, conditions of satisfaction are what you, the service provider, need to produce for the client to declare she is satisfied with your work.  In this case, Jody had a completely different expectation than I did about what was going to be delivered.  In my eagerness to grab the largest assignment of my nascent business, I neglected to specify and agree on the COS.  

So, how to specify the Conditions of Satisfaction with a client:

* be clear, in writing (especially if this is a new client) about what you will deliver

* make a promise of when you will deliver.  There are two dimensions that clients use to assess satisfaction with service providers.  Content and timeliness.

* get the client to agree to the conditions.  Sounds basic.  I like to get a signature and a verbal acknowledgment. 

* here comes the most important one.  Get the client to agree, that if you meet the COS, she will:

1. pay you on time

2. speak well of you in the marketplace and refer other customers to you.  Setting this expectation is critical to the growth of your business.

Specifying the COS upfront, will position you as a true professional and differentiate you from your competitors.  

Action: incorporate COS into your next contract.

Your thoughts?

To your success!

Scott

How do you spend your day?  If I asked you to break down the hours you spent last week into the following categories, could you?

* Performing work/service

* Customer Development (Sales!)

* Education

* Other

When we are have a substantial backlog of client work, we tend to spend almost all of our time performing the work.  This results in a great sense of accomplishment…….and high revenues in the short run.  However, when we are constantly in “perform mode”, we lose focus on the most important aspect of our business, client development.  Not devoting continuous, steady effort to sales, leaves us vulnerable to a dip in revenue once our backlog of work ceases.  The B2B service provider must challenge themselves to pull away from the work and devote a significant, weekly effort, to client development.  These activities should be a mix of new and existing client development efforts.  Now for reality.  Unless you write “client development” on your schedule, for certain time blocks, it will not happen.  You will instead gravitate to what most of us prefer to do……perform work, learn new skills (education), and “black hole” activities.

Black Hole activities fit into the dreaded “other” category listed above.  Anything that does not generate revenue (performing work and client development) or further our ability to make competitive offers in the marketplace (education), is a black hole activity.  These activities must be eliminating or minimized.  Here are my top two black holes:

* Surfing the Web.  Let’s not kid ourselves.  You might as well lie down on the couch and watch Oprah.  Surfing the Web is easily the deepest and most dangerous of all the black holes.  Why?  Because is feels like we are being productive.  If you must surf, mark off some “surf time” on your schedule, say a half-hour after lunch, and have at it.  

* Billing, expense tracking, record keeping.  I realize you can’t eliminate these tasks that are fundamental to the business, but you can minimize them.  Here’s how.  Outsource all admin functions that are cost effective to do so.  As an example, if you typically bill $75/hr for your services, you should be able to finds lot’s of great admin help for less.  I pay my outsourced office manager $20/hr and my outsourced controller $45/hr.  For those functions that only you can do, get the right tools.  Great software tools exist for time tracking, billing and project management (more about these another time).

Here is what I like to see as time allocation for the B2B service provider:

65% performing work

25% client development

5% education

5% other

Recommendation:  convert a substantial amount of “black hole” hours into client development hours

Action:  track and categorize your time for a week using the “buckets” above.  How many black hole hours did you have?  How many hours did you spend doing client development?

What are your black holes?

To Your Success!

Scott