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Congratulations to everyone on the team. This project involved over 5 people and it was very tricky to display all of the listings on the web in an efficient manner. Hopefully, Google/Yahoo/Live.com will love it and pick it up!

Michelle Golden wrote a great response and I must cross post and comment. Emphasis added is mine.

I agree entirely with “‘demonstrate don’t assert’ remains the key to effective use of web technology, and that websites need to have voluminous amounts of easy to search and easy to find content, so that you can you can prove that you have something to offer (and are generous and professional enough to share it.)”

Here is what I struggle with…

The perspective, “I suspect that key decision-makers and buyers are not spending much time on the net. Their staff subordinates (HR people, marketing directors, strategy people etc.,) may use it more, and you may be found that way, but I doubt that there is much of a direct executive audience.” is purely anecdotal. Web use studies show that high percentages of US business owners–of all ages– rely on the web, especially for research to precede decision-making (such as reading partner bios before agreeing to meet with a firm).

Partners in firms tend to be very myopic. It’s our job (as marketing experts) to change their perspective. They think everyone else behaves they way they do and likes what they like. That’s why practically every CPA or law firm website looks like the others. And they all have to make sure that all the partners like the site so, in most firms, everything gets reduced to the lowest common “preference” denominator.  In other words, just about everything cool or unique gets stripped out by the time approvals are granted.

When creating a new site, the first thing partners say to web developers is: “go and see what all the other [insert type of firm] firms are doing.”

What they should be saying is “go see what our clients are doing” or go see what “service experience leaders” like Fed Ex, Disney and the Ritz, are doing or go look at other service sectors are doing such as hospitals/medical, insurance, financial/investment management, high-end event or destination wedding planners, cruise lines, and other big dollar personal services.

I say “who cares” if the partners like it, UNLESS they are the intended audience (usually not). Let those marketing to them offer them boring, brochure sites if that’s what partners are attracted to. There is nothing that says firm’s audiences like or want dull and conservative and empty meaningless text.

In fact, fewer than 1% of clients even go back to a firm’s website. Why is that? We have given them no compelling reason! There’s nothing there!

Often when we, as innovators, come in and develop cutting edge content and approach, partners will insist upon editing the content and redirecting design to make it look, navigate, and sound like everyone else’s!

For instance we strip out BS and fluff and unsubstantiated claims. They add it back in! We beg of them to stop presenting themselves to the world by creating their sitemap to mirror their org chart and to be more client-centric. And yet they get all caught up in their internal politics and insist on navigation schemes that are illogical, non-intuitive and unclear because “that’s how our departments are set up.”

…

Today’s web is an interactive marketplace and they need to adapt because they are already being left far behind.

She’s right on target. Today’s partners might not notice the change in their personal business and income but future partners will. Design for your customer, not for your own company.

Hourly pricing is bad. Tracking employee time by hours is bad, too, but that’s another discussion.

Here’s one reason why: no matter the service provided, the time required is just another item to track and is not indicative of the end result.

Example: if I tell a client I can move a pile of boxes from point A to point B in 10 hours for $100.00 total (or $10/hr), then my client will expect it to be done in 10 hours and to move the boxes.

If I finish early, the client may expect a discount. If I finish late, the client may fear an additional fee to compensate me for my time.

Counter example: I tell a client I’m going to move his boxes for $100.00. The client expects only that I move the boxes.

In the second example, I removed time from the business relationship and it only comes into play when we set on a start date and assuming I do not choose to finish at a later, unreasonable date.

So, the first reason is because we add an element to a business contract that has no value to the service provided.

The next reason is because time-based pricing does not account for value. Value is provided in many ways: doing something right the first time, providing long term value, educating others, etc…

Calculating value is tough sometimes. Buyers might not know how to quantify the dollar vale of a particular result. Organizations do not typically train people about how to dollarize issues. Without this info, sellers cannot help buyers figure out the value of the solution — not to mention the value of the seller’s specific additional value.

The exercise in dollarizing should be a part of every project before it begins. It’s the only way to figure out if a solution is more costly than the problem we’re trying to solve or the result we are trying to achieve.

We can all think of extreme examples: a Rolex watch. Does one really need to spend thousands on the ability to tell time? Wait! A Rolex does more than tell time. It’s a statement about one’s values and it communicates those values. To my father, it’s a waste of money, to one of my good friends, its worth more than the price he paid for it.

Finally, one should be paid what he/she is worth. I cannot really say what’s at the root of this issue better than the folks at VeraSage in their recent post. Self-esteem is an interesting factor. I agree with them wholeheartedly. Believe what you sell is worth what its really worth.

So combining the factors together: forget charging by the hour — charge for results. Set a base price for any service you perform no matter how small — so your value and experience is compensated. Base part of your fee on a portion of the dollarized value of the problem to solve or result to achieve.

First, let’s look at this question: “Should everyone in the company be eligible for a commission?” Yes. Everyone working at the company has an interest in its continued operation. People may not always think of the company and its well being, but once a person has a taste of the red meat of commission, a new desire is known. You could use a commission as one element in a strategy to convert people from thinking “I have a job” to “I’m building a career at this company”.

The sales team should happily give up a portion of its commission to the person who helps bring in new revenue.

Next, let’s look at the make-up of those involved in a sale and how they might be commissioned. Typically, a professional services firm will have various “levels” of consultants and no true “all I do is sales” people. Everyone is supposed to bring in business, but its the senior partners who are really in charge of this process along with other management responsibilities. These senior execs do not often handle the technical work performed though. We now have a situation where the following can occur:

1. Mr. Big lands an account while golfing with some club buddies
2. Mr. Next in Line scopes the work and performs the grunt work involved in contracting the account
3. Messrs. Just Hired and Just Got My Visa actually perform the work contracted.

So here are four people who should get some form of commission. These people also require administrative support and I believe everyone should get a piece of the contract if his part is successfully executed.

Here is what I’d like to see in a new project, new client deal:

These are examples related to a firm that has recurring business and does not desire to grow like a weed. The commissions are designed to give everyone a piece of a contract.

The thinking behind this plan is that Mr. Big is going to continue to look for deals, Mr. Next in Line wants Mr Big’s cash comp and will learn the ropes of contracting prior to promotion, and Messrs Just will try their darndest to make it a profitable project. Administrative support should seek to provide as much assistance possible and keep the number of their staff low so the commission is split with fewer people.

If this was not new project, new client, but rather new project, existing client then I would make sure to compensate the person who brought that client in to the firm originally, too, even if he is no longer servicing the client. Why? Because everyone should benefit from thinking about new sales. The commission should only be about 1-3% if he is no longer working with the client.

Next, what factors really affect the achievement of new revenue? Is it the number of appointments? Is it referrals from existing clients? Make sure to factor this into your compensation (not commission) plan. If its number of new appointments, then reward the person who is setting the most new appointments.

Next, what type of business do you want people to focus on? New sales, repeat sales, sales of things, sales of services, local sales, sales in an industry vertical, etc… Make sure you grant greater commission on the types you want and make it clear why. I met a guy who actually paid less on larger deals. Um, yeah, let’s keep the deal size small…

Next, do you need “pure hunters” — those people who only bring in new leads and close business deals? This is a sticky subject with some firms. The reason why is because they often make the most money and other staff perceive them as not working as hard since they are out of the office a great deal. This is a results-only position. Effort does not matter. I like the idea myself, but it is very difficult to do in a professional services firm where relationship building is critical. If you can do it, your company will reap the benefits of a successful hunter and rich client relationships.

(For those of you interested in the hunter’s perspective this video is a funny take on selling activities.)

Other factors to consider with commissions:

Do you pay a pure sales person full commission if a project he sold turns out to be a money-losing deal?

How long do you pay a commission? For the life of the account or for a finite time period?

Do you pay commission when a contract is signed or after the project is complete and profitable?

What do you do when a client is late in paying an invoice?

Brief Commission Examples

Small Company interested in attracting new clients

pay sales more for new clients; pay support for retaining business

Direct sales software firm interested in its stock price

pay higher commissions on sales of new licenses and support plans, but lower on professional services (this increases revenue without increasing cost)

Small professional services firm (10-50 people)

pay great commissions for new clients

Large professional services firm (over 100 people, but not a behemoth)

pay great commissions on recurring business with existing clients and new projects with new clients

I’d love to hear your thoughts on the idea in this post. If you are interested, I can dissect a real sales compensation plan for a small It services firm to give you an example of the pure hunter compensation.

Have you had to lead a project to get the information needed for a proposal or a report to management?

When I speak to groups and ask these questions, almost everyone in the room raises their hands. What strikes me as funny is this: if I took everyone with a raised hand and put them in project teams, who would follow? There would be too many leaders!

Seriously, the number of natural leaders in any given group is small. Most people want to be led and do not mind passing ownership and responsibility to someone else — especially in risky situations. Ownership will be avoided when people have nothing to risk, too.

Recently, I was involved in a project with three different areas of a firm – sales, delivery, and a technical team — all involved in building a proposal for services to a prospect. The only group at risk if no business was landed was the Sales team. If the client accepted the proposal the other departments would be at risk. For weeks, the Sales team let the other departments know about the upcoming proposal, its deadlines and did everything they could to make sure there was no last minute rush to get things done.

You know how this ends up. At the 11th hour, the other departments decided to participate in the process of putting together the proposal. The end result is a half-baked proposal and inter-departmental resentment.

When any leader considers the concept of ownership, s/he must figure out what drives all people involved to have some sense of ownership. Without this sense, no one really cares about the project. Team compensation and advancement must be based on measurable metrics. One of these measurements should be “# of projects managed to successful completion”. In my example, why not create a metric for “proposals delivered prior to deadline”.

It is also very easy for people to get caught up in daily tasks and not look at the big picture. When planning compensation and looking at the type of projects your teams execute, make sure the metrics are measurable. Otherwise, people can avoid taking responsibility.

In my work with various companies, I find some companies who concentrate on unique offerings to clients. Do you really need to be unique to be successful?

The answer is “No” if your definition of success does not involve being unique. Here’s a question to think about: are the owners of Papa John’s pizza places unsuccessful? Not the ones I know. There’s nothing unique about Papa John’s pizza. The owners of the franchises make good money, enjoy ownership, and have ample free time.

Instant oil changes, dry cleaners, gyms, cereal, concrete delivery, and the list goes on. They do not need to be unique and are not sexy, but all of the owners/executives I know in these industries make great money and enjoy what they do.

If you want to define an industry, being unique is very important. Consider iPods. Apple owns the portable media device market. What about Starbucks?

Being unique is nothing without marketing it. This is where the “sexy” comes into play. Emotions come into play, too.

If you want people to feel something when they think of your company/product/service, then you need to be unique and sexy. Without these two components, you should change your strategy to get into an industry that does not need these two and has less risk for you.

(Before continuing, please understand my thoughts are for people who desire to have a long term advisory relationship with an organization [client]. For one-time engagements, my stance is a bit different.)

Tonight, I read an article at “Ask the VC” about Non-Disclosure Agreements. The premise of the site is to help those interested in learning about venture capital about common questions. The article explains why most VCs do not sign non-disclosure agreements.

Here’s a telling quote:

Reputable VCs, however, aren’t going to go around town blabbing about your plans. Besides, if I pass on your deal, I really don’t see the reason why I’d want to talk about it.  And if I fund your deal, I’m certainly not going to do anything to injure my investment.

This quote reminded me I can help consultants think about whether to sign NDA’s and NC’s.

Non-Disclosure and Non-Compete Agreements are different. The premise behind both is the consultant is paid to understand, think, and advise — potentially implement. During the process and for some time afterward, the consultant should not talk about the work or compete with its client.  

Both type of agreements may be separate documents or contained in a service agreement. Some firms use both clauses in a service agreement and a separate document.

One must be careful when signing these. The terminology is generally overly protective of an organization’s assets. Prior to signing these documents, you should review the reasons you are doing business together — because you both bring value to one another, because you will continue to bring value to one another, and because there is at least budding trust. If you’ve gotten this far, surely an agreement can be arranged.

Just in case…

Litigation

Litigation in the US is too rampant for a solo consultant or small firm to risk signing an agreement that is too one sided. One must keep legal costs in mind — think worst case! — one week of an attorney’s time to respond to a claim will cost at least $8,000.00 not to mention the negative drain on your energy. In a perfect world, we would never work with those who would sue or threaten to do so, but your fees and policies must protect you from our imperfect world. When you enter into an agreement, you are binding yourself to the clauses in the agreement. It would be preferable to have no agreement than a one-sided (bad) one.

Lack of Uniqueness

There’s another reason to be wary of these agreements. As a consultant, you probably work on similar projects for similar businesses. People hire you because you are good at what you do. What are the odds that your client is truly unique and needs protection of an idea or business for more than a few months?

If you are an advising consultant, you are likely to be more unique and work with clients who are farther from acting on the advice you give. The term, if you sign an agreement, may be longer for this reason alone.

If you are an implementing consultant on short term assignment, you probably should avoid signing anything. You are being paid to “do” and the secret part of the work is long over.

Specific Items: Non-Disclosure Agreements

There’s a reason your client may want you to talk about your work. Its a form of marketing — and a very potent one. If you are a consultant it may be presumed you are working with other high profile folks. Read another way, you are in a position of influence.

Another reason: the grapevine. Why put yourself and the client in a situation where you are legally bound to keep quiet about things that the client’s employees will talk about in a few short months?

Final Word: Non-Compete Agreements

You are not going to compete with your client unless you want to run out of clients. Great consultants are trusted advisors who gain business through referral. You cannot get referrals if you do not have the trust of your clients.

This is not an exhaustive list of considerations — if you have ideas, let me know.