Creating Luck

Ideas that will grow your business

Using a Loss Leader to Get More Consulting Business

Retail companies use a loss leader all of the time to get more business. You’ve probably seen sales for $1 or even $0.01 products that are clearly priced below their cost. Retailers use this strategy to get you in the store in the hopes that you will buy much more than the loss leader product. Usually those loss leaders are scattered throughout the store so that you see many other products that you might want to buy along the way. It usually works. Web sites place loss leaders near related high-margin products to encourage more sales (and typically charge for shipping to discourage people who only want the loss leader at the heavily discounted price).

You can also use a loss leader for a consulting business, but in a different way. Since your “product” is consulting services, offering yourself for a $1 rate would sound ridiculous to a client and would devalue what you bring to the table. Never discount yourself like that! Instead, you can offer to do a small project for free. This would be something that takes you an hour or two, or a little more if you are comfortable with that.loss leader

Offering an initial consultation like this does two things: 1) gives the client a taste of the value you will bring to their organization and 2) gives you an opportunity to see what working with this client is really like.

Free “high value” consulting session

I had a client who was almost ready to engage, but was slow in pulling the trigger. During our conversations, I asked several questions that uncovered a laundry list of ways I could help. My consulting rates aren’t cheap. They seemed excited, but they were hesitant because they weren’t sure of the value they would get. So, I picked one of their most pressing topics as my loss leader and offered a free one-hour in-depth consulting session about it.

During our conversation, I didn’t keep track of time and we did run over an hour. I also did not sell my services during this free consultation because I wanted them to experience what it would be like to actually work with me. I only focused on their problem and asked probing questions that got deeper into the real issues. I was able to offer several on-point solutions that provided a direct benefit very quickly. They were able to see that I had their best interest at heart.

When they compared the value they received to the price of my rates, it was clear that they were getting a good deal. They made back more than they invested. After that dialog, they were ready to ask more questions about other issues they were facing. When you provide rock solid consulting services, people see the value.

Responding to Push Back

To ward off attempts to gain more of my consulting insight for free, I asked if they would like to tackle some of their other issues as well under a more formal agreement between our companies. That helped them understand that  I wasn’t prepared to give more away for free. You can use responses like these if a prospect keeps trying to get your advice for free:

“I appreciate your question and it is definitely something I can help with. Shall we go ahead with our formal agreement so that we can get started right away?”

“This question warrants a deeper discussion and I want to make sure that the time that both of us invest in solving these issues is spent efficiently. There’s no 5 or 10 minute solution to this topic so rather than start a dialog that we can’t finish, how about we move forward with an engagement letter? This way, I can make sure you’re on my calendar and that I can give the topic the full attention it deserves.”

“I hope the value you gained from our prior consultation illustrated how we can help go deep into solving problems. So rather than start a conversation that only touches the surface, let’s proceed with moving forward in a more formal way. Shall I send you our engagement letter?”

If you encounter a company that isn’t ready to engage you even after your initial consultation and after trying the responses above, watch for signs that they do not have the budget to hire you. The worst situation you can be in is engaging a consulting client that can’t pay you.

When Not to Use a Loss Leader

Not all consulting services lend themselves to a loss leader consultation in which you can provide in-depth advice. Often, consulting requires deeper, long-term commitments. In these cases, your initial consultations need to focus on problem discovery so your proposal addresses the client’s key questions and not something that you think they want.

For those times when you need to nudge a prospect to close a deal, give them a taste – just a morsel – of what you can do for free. Don’t discount your services because then your value will be the discount, not your knowledge.

Advertisements

Single Post Navigation

2 thoughts on “Using a Loss Leader to Get More Consulting Business

  1. Mohamed Shafraz on said:

    very good, this was helpful for my Holiday Selling business. It would be much better if i had tourism case study like one above.

    • Mohamed, you could offer something related but slightly different for tourism. For example, you could create a series of tourism guides. These can be checklists of places to see and things to do based on the type of travel – couples vacation, family trip, etc. You could even create a generic “What to Pack” guide that covers travel to different locations and in different climates. Give out these checklists and guides to prospects. It will help build a reason to purchase a tourism package through you instead of others because you will be seen as an informed source. You can also offer a $50 prepaid Visa debit card or some other award for purchases over a certain amount. Good luck with your business!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: