3 Ways To Look At Value Creation In Consulting
Perceived value is not derived from a single question.
The "value problem" is one of the topics that spur endless discussions in the consulting industry. The fact is that even clients who have a positive view towards consultants are often highly skeptical whether their investment in consulting projects is actually generating value for money.
This discussion lead us to explore the many ways in which consultants can increase their actual and perceived value. But before that, we must pose a central question: What do clients mean when they talk about the value of consultants?
We can find some interesting insights in a recent research published by Source Global Research, "The Value Of Consultants" report. It turns out when we talk about value in the context of consulting, we're really talking about three different questions, with very different answers.
Researchers identified three different levels at which clients think about the value created by consultants:
- Level 1: Delivering against expectations. Did the firm deliver what they were contractually obligated to, in the timeframe and to the budget that they promised?
- Level 2: Differentiation. Did the firm help us to achieve something that we couldn't have achieved through our own resources or by working with a different service provider?
- Level 3: Personalization. Did the firm do anything to make my life easier, help me achieve my personal ambitions, or strengthen my position within my organization?
When one of your consulting clients assesses the value you created, they start from the bottom and work their way up. You can create a highly differentiated experience (level 2), but it will be irrelevant if you fail to deliver on your basic marketing promise (level 1).
The author of the publication also argues that the greatest opportunity for consulting firms to influence perceived value is by focusing on differentiation (level 2), to which I agree.
Delivering against expectations (level 1) is doing the bare minimum to create value. Overpromising and underdelivering means the client is likely to see a low - or even negative - return on investment, and it's the exact opposite of selling value.
Personalization (level 3) is the highest level of value creation, but it requires something that not all consulting firms have - a more intimate relationship with the client's leadership. Solo consultants and advisors, however, can benefit from their strategic and upstream position to make this a source of value.
If you do agree to focus on differentiation to maximize the value perceived by clients, the next question is straightforward: What do we bring to the table that no one else can?
I'll explore the different ways consulting firms differentiate tomorrow.