Another installment on Oxebridge’s “How to Be An Excellent ISO 9001 Consultant” series, this time we look at one aspect of billing practices: expenses.
There’s a popular perception that consultants, of any industry, are scam artists intent on nickel-and-diming clients by padding contracts and overcharging for minor expenses. This article attempts to provide would-be consultants a fool-proof way to overcome this perception.
How? Simple. Don’t pad your contracts, and don’t nickel-and-dime your clients.
In the ISO 9001 world, there’s no shortage of consultants, and it’s difficult to stand above the noise of competitors’ websites, magazine articles and blog postings. The mistake some new consultants make is thinking that those are the sole methods of marketing. Unless you are able to afford print advertising — and there’s no guarantee that it works in this business — then you instead will need to rely on referrals. But referrals require customer loyalty.
The surefire way to kill any customer loyalty is by leaving a perception that you have overcharged your clients. You can provide a great service in a timely fashion, but if you leave them with a 2-page bill with itemized expenses for every meal, you will leave on a decidedly low note. Psychologists know that the last impression is the lasting impression, and that final bill can destroy all the good will you worked so hard to achieve during the contract period.
NOT A MEAL TICKET
There are some simple ways to address this. First, stop expecting clients to pay for things you would ordinarily consume anyway. That means (gasp!) food. Even if you are unemployed, you are still going to eat. Having a contract does not suddenly entitle you to pass the expenses generated by your stomach onto the client. This may run counter to every bone in your consultant body, but that’s a good thing, because that instinct is what is keeping you from excellence, and why you are reading this article. If you want your meals paid for, then you get the poor customer loyalty you deserve.
Not only should you not charge clients for meals, you should contrast yourself against all those other greedy, self-absorbed, nickel-and-diming consultants who DO charge for meals, and market your progressive approach to the world. Get noisy. Be sure to tell everyone how you will never charge for meals. Watch the feedback you get: it will be quick and overwhelmingly positive.
Then, extend that to every other expense other than hotel, lodging and airfare. That means no charges for parking, no tolls, no gas, no phone calls, no copy paper, no pens. No hotel water. Nothing infuriates a client more than paying $3 for something you can get for free from the tap.
In short, no matter how successful you think you are, remind yourself that you are not Frank Sinatra, and you really don’t deserve purple pillow mints.
Next, consider a flat fee contract. Clients love these, as they are able to accurately budget their ISO 9001 program, and planning accordingly. With undefined expenses lingering, clients are never quite sure what to expect, and are more hesitant to sign a contract. If your quote includes a flat fee, inclusive of all expenses, while your competitors are obviously hiding expenses in weasle-words, you just rose to the top of the consideration pile.
The trick to flat fees is accurately determining your expenses ahead of time. If you limit your reimbursements to airfare, lodging and rental car, then this is pretty easy. A few minutes researching current fares and prices near your client, and you will have a somewhat accurate picture of what your expenses will be. Add that to your day rate, and determine the total.
Here’s the rub: most of the time you will be accurate, and make the exact amount to cover your expenses. Occasionally, however, a slight deviation may occur (weather forces flight fees to spike, etc.) and you might make a little less.
Get over it. Look at the big picture, and assess your annual revenue. If over the course of the year, you are making money, than the occasional contract which comes in below the quoted price can be chalked up to buying customer loyalty. It’s still cheaper than advertising. Treat it as an investment. If you aren’t reimbursed for, say, $200 of your expenses, but the client gives you a referral that lands you $20,000, isn’t that worth it?
If, on the other hand, you are routinely off on your estimates, and the contracts are not paying for your expenses, you need to adjust your calculations.
Now, once in a while you will experience scope creep, or a more significant alteration of the contract. Be liberal with this, and remember the goal is to keep your customer happy to earn that referral. But if the scope has changed where your contract is dramatically impacted, you need to renegotiate and prep a contract modification. Just try to limit this as much as possible. Contract mods are a sleazy way some consultants offer “fixed fee” contracts to win the job, and later get out of them once the job is underway.
Excellent consultants put themselves in the mindset of their clients, and ask, “what would I want, if I were them?” One of the universal truths is that clients do not want to waste money on expenses, and they want a clear picture of what ISO 9001 is going to cost them up front.
If you can deliver on that, you will get referrals, which are the best, free sales tools available to any company.
About Christopher Paris
Christopher Paris is the founder and VP Operations of Oxebridge. He has over 30 years' experience implementing ISO 9001 and AS9100 systems, and is a vocal advocate for the development and use of standards from the point of view of actual users. He is the author of Surviving ISO 9001 and Surviving AS9100. He reviews wines for the irreverent wine blog, Winepisser.