A lot of the questions have been asking how to make your prospect or client realize that the status quo is hurting them, probably costing them money, and in some way blocking their ability to move forward.
You must try and do two things.
1. Show them how the status quo is hurting their current situation.
2. Show them the value you can bring by changing the status quo.
Let’s have a look at a Cost of Inaction I worked out with a company that became my largest client, in a past business. They were losing a lot of money and talent by sticking to the status quo.
I started, owned, and operated an IT staffing business a number of years ago. It grew to over 200 people and about $22 million in annual revenues.
The best companies to have as clients were large companies. Although initially tough to crack into, you always knew you were going to get paid, accepted higher rates, and they generally saw you as a long term advisor, after they become a client.
My Client Example
The client was a large Canadian bank. Canada has only about five or six banks, and they offer all of the financial services you can think of.
All of them have large IT departments, and they all used contractors for various projects.
In this bank, almost all of these contractors were independents. Each IT department hired its contractors as they needed them, and then let them go after the project was completed.
These contractors all billed the bank individually, and the IT group, as a whole, mostly didn’t know what each of them did, unless they were in their department of IT.
I had been trying to get into this one bank for about two years.
I knew the difficulties they had, and the value my company brought to my clients.
I did a lot of digging and found out a lot about how I could not only help, but protect the senior IT people from government interference, and also help these senior IT people get more salary.
I found out that it took about three months to train a new employee or contractor on how the IT department worked, and what was common on each project.
Because no one in one department knew the skill sets of these contractors that were working on another project, they were let go after the project was complete. The three months of training went down the drain.
Also, the government had been sniffing around about this time, because many of the independent contractors were either not paying their taxes on time, or in some cases not paying taxes at all.
The government was deciding if these contractors were actually contractors or pseudo employees. If they were considered employees, then the bank would be on the hook for these contractors’ taxes, if the government found that any of these contractors couldn’t pay their taxes.
Also, the bank’s senior executives were partially paid on holding expenses down, and bringing projects in on time.
So I approached the bank with a proposal on three fronts.
My company would take over all of the independent contractors – at that time over 100 of them – and we would pay them, send the bank one invoice only, and assign an account executive to manage all of these contractors.
We showed them what the COI was, and the value they would receive by my company managing these contractors for them.
1. They were no longer on the hook for these people’s taxes. That was my company’s responsibility now. Since they were now paid by my company, but working elsewhere, the government considered them real contractors. I also ensured they paid their taxes by withholding some each pay period. Therefore none of the bank’s employees would go to jail.
2. The bank would only get one invoice for all of the contractors, based on a signed timesheet. So that simplified their accounting, and lowered each department’s expenses, and gave the department executives a small bonus for watching expenses. This also allowed for much easier accounting practices.
3. The best benefit was delivered by the account executive. The AC would find out what all of the projects were going on in the entire IT department. He would know what skill sets each contractor had, and when a contractor finished one assignment, if he/she had the right skill set that contractor would simply be transferred to the next project, regardless of what department it was in. Because it took three months to train a contractor, if they left after one assignment, all of that training went out the door. This was costing about $25K per contractor. And the bank had a turnover rate of 50% a year for contractors. We saved the bank over $2.5 million a year by simply managing their contractors better.
So, you can see by showing this client their COI – cost of inaction, they were losing not only a lot of trained talent, but also quite a bit of real money, by leaving things as they were – the status quo.
You too can show your prospects and clients how they are losing by doing a bit of digging into the company. You do need to know however, what value your products and services bring to a client.
And realize it is more important to know the value your products and services bring, even though they can differ from one client to another. This will allow you to get at each prospects’ COI, and because you are the one to show them, you have now differentiated yourself from your competition.
If you want to know more, and how you can work with a client to deliver their COI, please leave a comment below.