A great book exploring the practical principles of business development for professional service firms. Instead of exploring sales tactics or persuasion techniques, the authors' starting point is the client's buying decision journey. Shifting our perspective allows us to better understand what makes selling professional services different from selling a product, and the specific strategies we can adopt to support each part of that buying journey.
This is my book summary of How Clients Buy. My notes are informal and often contain quotes from the book as well as my own thoughts. This summary also includes key lessons and important passages from the book.
The main premise of the book is that consulting is bought differently from products or generic services. Your reputation, referrals, and relationships play a disproportional role. Generic marketing and sales methodologies are ineffective or even harmful to consultants.
Traditional sales training emphasizes what the salesperson should do - generate leads, prequalify them, persuade people. etc. But maybe we should not be asking: "what should rainmakers do?" but rather, "how do clients buy?" It is with that design-thinking perspective that authors explore the business development topic among professional service firms.
Based on interviews, research, and observational data, they put together this client decision journey - which they call the seven elements of how clients buy:
Before exploring each one of them, the authors highlighted a few characteristics that make selling professional services different from selling a product.
Consulting and professional services are credence goods:
Economists call consulting and professional services “credence goods.” Asher Wolinsky, a microeconomics professor at Northwestern University, puts it this way: The term credence good refers to goods and services whose sellers are also experts who determine the customers' needs. This feature is shared by medical and legal services and a wide variety of business services. In such markets, even when the success of performing the service is observable, customers often cannot determine the extent of the service that was needed and how much was actually performed.
This asymmetry is why, to hire expert service providers, clients need to trust them implicitly:
Clients must believe the expert will diagnose their problem correctly. Clients must believe the expert will prescribe an effective solution. Clients must believe the expert can and will do the work in a way that will achieve the outcome they want. Clients have to believe the expert will fairly price the service based on work actually done.
This leads us to trust. According to the authors, trust is transmitted from one person to another in three ways: Relationships, referrals, and reputation.
Relationships—I go to church with an attorney and know her to be a good person. Referral—I have a friend whom I trust, and he recommends the web developer over in the tech park. He says I should ask for Ann. Reputation—I read in the Village Wrap that Criterion Solutions was voted #1 in HR consulting for the second year in a row.
There's also a mention of price signaling and market structure. As we know, there's no perfect competition in consulting - it's more like a monopolistic competition:
In consulting and professional services, the price rarely correlates with either supply or demand. It's because we sell credence goods. Economists tell us that in credence good transactions, it is hard for clients to value quality. The expert, after all, knows more than we do, both about our problems and how to solve them. For this reason, reputation stands in as a proxy for quality.
The authors then proceed by looking at four systemic obstacles that make it hard for us to excel at selling services.
The first one is that business schools equip you to do the work, but give you little guidance on how to sell that work:
Sales, as a discipline, is thought to be beneath the academy. Like other social sciences, it suffered from an inferiority complex as newcomers in the academic ranks. Business departments made up for it by emulating the hard sciences like mathematics and physics, teaching economics, finance, resource management - anything that could be quantified - while eschewing soft skills like people management or sales, which might be better learned standing at the side of an experienced practitioner.
Then, there's a natural aversion to selling. The authors believe the historical aversion to the term selling has a lot to do with the fact that in professional services, we are the product. Unlike those who sell sophisticated software systems, we are selling ourselves. It seems boastful or distasteful to promote ourselves. We've been taught since kindergarten not to be a braggart.
This quote from Marvin Bower, McKinsey's historic Managing Director, stands out:
"It is our policy not to solicit clients or advertise our clients, not because it is unethical, but because to do so is inconsistent with the professional approach. We can't advertise our services and solicit clients without making implied promises of what we can do for clients. Since we do not, at the outset, know what we can accomplish, such promises do not meet high professional standards."
The third obstacle is the ensemble of trends and changes that hit the consulting space. Sophisticated marketing, globalization of expertise, the rate of new technologies, and more players make it harder to sell expert services today than in the past. On firefly ideas:
Researchers at the University of Louisiana, Lafayette studied sixteen management consulting “fashions” (their word and not ours) and found the average time that these concepts are hot is shrinking. In the 50s, 60s, and 70s, management ideas lasted a decade or more. In the 1990s, they lasted less than three years. Today, management fashions go out of style in twelve or eighteen months at best. If your ideas are your product and your product's shelf life is growing shorter, your marketing campaigns grow stale at the same rate. That makes it harder to keep your go-to-market materials current (not to mention the work involved in recasting yourself as relevant). Once, you could camp out on a good idea for a career. Now you have to reinvent yourself constantly.
Finally, the market is flooded with generic sales advice that doesn't work for professional service firms. Specifically, the authors dedicate a specific section to explain why the funnel model - so often used and loved by marketers and sales professionals - is a poor thinking tool for consultancies. In a nutshell:
When selling consulting or professional services, the goal is not to identify prospects and process them like corn flakes; it is to identify a community and position yourself to serve it over time.
Another interesting reflection is on whether we should continue to use the same vocabulary for such distinct approaches to business development. The authors defend that the secret to selling is to "never say sell." That sounds silly at first, but the following Walt Shill's quote certainly rings true to me:
"I actually don't think you can sell professional services. I think you have to help clients buy them. Clients have problems and they need help in discovering, understanding, and tackling them. Once people realize you helped them solve problems, then they will come back."
In the larger part of the book, the authors explore each of the seven elements of the client's buying journey. They provide anecdotes, quotes from interviews, and recommended tactics for consultants to adopt. Get the book to learn them.
Finally, they discuss how you can use the seven elements as a diagnostic tool, how they differ for different kinds of service firms (evergreen, acute, and optimizing service providers), and how to use the framework to plan your business development initiatives.
All in all, this is a great read for micro consultancy partners. Yes, there could be a bigger discussion on the role of digital marketing and how the online world has been changing the behavior of consulting buyers. But as the authors themselves put it:
The book was written to describe how client buying decisions were made in 2018, not how they will be made in 2025 or 2035. Today's corporate decision makers are by and large not digital natives. Like us, most of today's corporate leaders were born before the digital era began.
Still, many of the first principles of business development for consulting services are here. If you're wondering what to read next, go get a copy of "How Clients Buy".