Do you know how to choose your customer?

publication date 21.11.2006

Poradenství - výběr zákazníka

How to apply the tree of decision in the consulting business, or else Do you know how to choose your customer? A careful selection of customers is a key consideration even in consulting companies. In the consulting business here, which has only recently been developed after the introduction of the market environment, there have been, understandably, mainly newly-established companies that are yet to gain experience. 

Consultancy – choosing the customer

M.Kubr, in his book [1], gives advice to companies how they should choose the most suitable consulting partner. The publication is well written, and the author has taken advantage of his plentiful experience gained during the many years he spent working as a consultant abroad. We cannot but recommed this book heartily to all companies in search of consultants.

The author of this article wants to draw your attention to those nodal points of the decision-making tree in which customer companies ask for consultancy service on the basis of irrational or pseudo-rational reasons. 

Also, even consulting companies should keep in view the need to choose their customers carefully. In the consultancy business, which has only recently been developed here after introduction of the market environment, there have been many newly-established companies that are, obviously, yet to gain experience. In the same manner, the consultancy services have been viewed as a relatively new phenomenon by their customers. It comes as no surprise then, with both sides to this business having so little experience, that their cooperation is far from ideal, and plenty of different obstacles have to be overcome. 

Wrong identification of the customer´s needs is the mistake so often made by consulting companies. Experienced consultants will surely confirm that the very existence of a customer with a seemingly clear requirement like “we need your help with … …“ does not mean the customer´s identification has been made, and it is now possible to go ahead resolving the declared problem.

In the first place, it is necessary to point out that – in particular in our region – the first priority is to identify the customer´s real solvency and their genuine willingness to pay for the service provided. Regarding the fact that a non-payment of invoices has become literally a national pastime here, we have to pay close attention to this problem in particular. It is not before this question has been cleared in a satisfactory manner that we can proceed and focus on the right formulation of the problem that the customer wants us to resolve.

Another mistake frequently being made by inexperienced consulting companies is they start resolving vaguely or inaccurately formulated issues that miss clearly defined outputs. This is why a clear formulation of the problem to be resolved and a subsequent accurate specification of expected outputs is an essential prerequisite for a successful course of any consecutive consulting activity.

Even if the customer identifies their problem quite clearly and accurately, a consulting company should not ignore the fundamental question: Why does the company look for consultancy assistance? For our experience shows there is often a difference between the reason as declared by the customer and the real reason why they seek and order a particular consultancy service. The attached scheme shows us the possible decision tree providing variant answers to this question. Provided that rational reasons for seeking consultancy service have been found, they may be taken for a good base of the next course of consulting activitities. 

Unless the consultancy company detects such real reason, they may ultimately be surprised that their pragmatic conclusion will not be accepted, because the managemetnt expected “a miracle“ (see the variant 2.4), or the results of their hard work will only be filed away “ad acta“  (see the variant 3.4), with the customer company never really intending to use them in practice.

On the contrary, the correct identification of an irrational or pseudo-rational reason may help the company choose an appropriate strategy, tactics and an immediate method in their own consulting activities, if we, for various reasons, decide not to take on such a case and say “no“ to the customer.

In addition, even identifying the precise rational reason will help the consulting company perform their work better and elaborate correctly the final report. It is also useful to realize there are a few variant answers to the following question: 

Why do not companies seek assistance from consultants?

  • Because consultants are expensive!
  • Because consultants are unreliable!
  • Because they do not know how to deal with clients appropriately!
  • Because customers are not accustomed to consultancy business!
  • Because customer companies do not know how to deal with consultants!
  • Because customers do not see consultants as experts!
  • Because consultants are not true experts!
  • Because the company only regards as good those things that were developed in the customer company!
  • Because  such consultancy assistance is not generally known!

If your firm has problems with customers, do not always find faults with them! It may well be your fault resting in an insufficient selection of customers. Therefore, try to analyze the process of their identification and, possibly, improve it. Taking pains will surely pay off here!

Compiled by: doc.Branislav LACKO, Technical University VUT FSI ÚAI in Brno, Technická 2, 616 69 Brno

Literature references

 [1]  Kubr, M.:  How to select a consultant. Management Press, Praha 1994

 [2]  Čestnější A.: Entrepreneur and consultant. Naklad. CEKON, Brno 1994

 [3]  The role of consultants and contractual relations, Chapter 7 drawn from the book: Project Management by Dolanský, V., Měkota, V., Němec V. GRADA, Praha 1996

Why do companies seek assistance with consultants?

1.  For rational reasons

1.1 They do not have the necessary know-how

1.2 They do not have their own expert capacity

   1.1.1. They have no experts of their own

   1.1.2. They need just a partial assistance

1.3 They do not have the necessary equipment or contacts

1.4 An independent “force majeur“ opinion is required 

1.5 They see it as an advantage

   1.5.1.   It is cheaper

   1.5.2. It is quicker

   1.5.3. It is of higher quality

   1.5.4. It is a way of getting other benefits (counter value, reciprocal service, kow-how as a side-effect, etc.)

   1.5.5. Mix of advantages

1.6 They do not know how

   1.6.1. They are in need of an initiatory idea

   1.6.2. They are in need of a feasibility study

   1.6.3. They need help with elaboration of the idea

   1.6.4. They need to set up a project plan

   1.6.5. They need help with a project´s management

   1.6.6. They need help with a combination of the above

1.7 They want to hear a constultant´s view from outside of the company

   1.7.1. Consultant as an opponent

   1.7.2. Consultant as a referee (or a judge)

   1.7.3. Consultant as an auditor ( because they are not supposed to express their own ideas in the company, thus drawing attention to the problem in question)

2.  For irrational reasons

2.1 They want to feel important, or increase the company´s prestige

2.2 It is just a spontaneous, incidental idea

2.3 They want it, because others want it  (their competitors, for instance)

2.4 Only a miracle can save us, and consultants are there to perform such a miracle

2.5 A prophet has little honour in his own country

3.  For pseudo-rational reasons

3.1 Nobody in the company feels like trying it (an exacting, time-consuming work, low confidence in their own abilities and other)

3.2 It is a dirty work, let others get dirty

3.3 It is a high risk, let others bear it

3.4 It is necessary to look bus

Branislav Lacko

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Jiří Střelec Jiří Střelec

The best ideas cross our minds when we are really preoccupied with a particular matter, gathering information, making connections, proposing solutions. In sum, when we deploy all of our capabilities to process the information available. Not just a single day, but longer. When we live the given matter today, tomorrow or even the following week or year. You would be amazed how many possibilities would suddenly emerge. If, while writing the project down, your mind is concerned about the coming sports weekend, the project cannot be brilliant but only formal.