Why Free Consulting Is a Bad Idea
On Friday of last week, I posted a list of 10 strategies for outselling a huge competitor. Based on reader comments, one of those strategies ("No Free Consulting") proved a bit confusing.
To clarify: It is perfectly reasonable to provide the benefit of your expertise and opinions during sales conversations in order to generate credibility. However, even in this case, you should expect to be "paid" for that expertise--not with money, necessarily, but with information about the prospect.
The reason you're providing value to the prospect isn't out of the goodness of your heart, but because you want to further qualify the lead and learn how best to sell to them. It's an equal trade; it's not free consulting.
Similarly, if you're asked to perform labor (beyond the give and take of a normal conversation), you should expect to be "compensated" by some concession from the prospect that makes the sale more likely.
If you fail to do this, you run a huge risk of being used as free labor, especially if you're selling to large company.
Are You Being Used?
It is not at all unusual for large companies to hold out to small companies the carrot of a big sales opportunity--simply to solve their own internal corporate issues.
For example, suppose a CIO has already decided to buy integration services from IBM, but corporate purchasing rules demand competitive bidding. In that case, a bunch of small system integrators will get an RFP in their inboxes. Some of them are going to spend time and money writing proposals, even though there's not the slightest chance that they'll get the sale.
The only way that a small system integrator might possibly beat out IBM would be to get "inside the account," do an end-run around the CIO, and muck up IBM's lock on the deal. That's a tall order in any case--and a proposal, no matter how well-written, isn't going to do the job. That's why you must ask for a concession.
Ask to Meet the CEO
For example, a small but savvy system integrator might ask to present the proposal directly to the CEO. If the CIO balks, that means that the opportunity isn't real, so the small integrator should simply walk away—without wasting time and money writing the proposal.
If, however, the CIO agrees, then 1) you know that you've got a chance in the first place and 2) you just increased the likelihood that your proposal will actually win.
What if a prospect asks you to provide for free a product or service for which they would normally pay money? In most cases, your best response is to either laugh or bail out.
One of the reader comments to the original column pointed out that it might make sense to provide a free product to a highly visible customer (e.g. Warner Bros) in order to create a reference account.
Unfortunately, this kind of "reference account" has little marketing value once it becomes know that you provided the product for free. Rather than burnishing your reputation, the "free product" merely makes you look foolish.
There is, of course, a perfectly viable business model that provides a limited product for free, and then charges for add-ons. But that's a special case, because the "free" product is actually functioning as advertising for the "paid" product.
In most cases, if (as part of the sales process) you end up giving away a product for which you normally charge money, what's probably happening is that you're afraid of losing the opportunity and are discounting in order to win the business.
And in this case, you're discounting all the way down to zero--which is, frankly, idiotic. All you end up winning is a headache that cost you money.
In other words, you should always expected to be "compensated" for any value that you provide to a prospect.
In the case of a conversation, you should be compensated with information that either helps you sell or tells you whether you should bail.
In the case of more extensive sales activities (things like proposals, requests for in-person meetings that involve significant travel, etc.) you should expect to be compensated with concessions that, again, either help you develop the opportunity or tell you that you should bail.
Free (or heavily discounted) products should only be supplied during a sales cycle if there's specific plan in place to sell follow-on products. If it's not part of your business plan, you're just fooling yourself that this is a real opportunity.
In short, no free consulting. No free anything, in fact. Selling isn't about giving things away for free. It's about the exchange of value. Get it?
GEOFFREY JAMES | Columnist
Geoffrey James is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know.