I've been coaching startups and entrepreneurs for over a decade. But recently (over the last couple years), I've started working with freelancers. And in case you were wondering – it's a different thing. So today I want to highlight two skills that I think every consultant – but especially freelancers – needs to develop. If you're a consultant wanting greater profitability, you need to learn new M&A skills.
When a customer calls you and is in a panic and stressed, some people will encourage you to speak slowly. Something about calming the situation down. I've never done that. I've done the opposite. I hear the stress and I hear “urgency” and so my vocal pacing goes to match theirs. I've found it works.
That's what I call mirroring. It's the art of matching everything you can so that you and the other person you're talking with feel a quicker and closer connection. I am willing to adjust my posture, my vocal pacing, my language, and the level of abstraction (big picture, low level details) to mirror what I'm hearing.
Why? Because the person on the other side of the table, or on the other end of a call, may not know you. They don't know your skill. They don't know your track record. They don't trust you. And the best way to help them feel that trust is to mirror what you're seeing.
I used to have an employee work for me that was always casual. I hated it. I'm an intense kind of guy. He was smart and worked pretty well. But he spoke slowly. So you can imagine what it was like when we had an emergency situation and a call, and he would sound (on the phone) like nothing in the world mattered.
See what just happened there?
His vocal pacing suggesting something about his motivation. Even if it wasn't reality at all. But it did because I was moving fast and he was moving slow. Had he picked up his pace, I would have felt like he was “with me.”
How does this help consultants? Well, first, as I've already stated – it helps with trust development. But there's another way it helps.
I know a lot of consultants that like to quickly talk about the world they know. Whether it's development or design, they want to get into details. But a customer may be working at a different level. Talking business. Talking politics. At that moment, I know you might be thinking, “Why do I care? Let's get to the good stuff.”
But if you can mirror their language and stay at their level, you'll win more business, and potentially more profitable business.
Wait a minute…
Did you read that last line and wonder what I was talking about? No problem.
Here's the thing – mirroring only goes so far. It helps develop trust. And it helps keep you focused on the right level of discussion, which can lead to an easier discussion around value-based pricing (which could lead to greater profits). But I know you're thinking that's too many dependent links to make a case. And you're right. You need one more skill.
If you're like the folks I spend time with, you'll likely tell me that you're unique. You're this special person who has figured out how to do everything – you do strategy, you do design, you do development, you do content, and you even do SEO & social media consulting. You also do support. And you do hosting. Because your customers love a one-stop shop. Right?
Are you wondering how I know? Unless I have a web cam at your place, you're wondering how it's possible I know you so well – given how unique you are. Guess what? You're not unique. At all.
And here's the other truth you need to hear – you're leaking profits. Sure some of what you do makes you good money. But other parts of what you do drains you of all your profit. And it's because you're not doing analysis.
Want better consultant profitability? The trick is doing what pays more. Now hold on, I know you're thinking… I read this all this way to hear that?
You need to monitor everything you do. Track it. Get a program, buy some software, sign up for an online tracker. I really don't care how you do it. But track everything – even your time talking on the phone. Especially your time on the phone.
Then go back and analyze the time you spent as it relates to the parts of the projects you were paid for. Compare it to the revenue that comes in for each part.
Now, determine which parts pay you the most, and focus there.
But don't skip the parts that are called the “cost of sale” – which is code for stuff you do to win the client over.
Here's a silly sample
- Drive to a talk: 15 min – $0
- Give a talk: 45 min – $0
- Talk to customers after: 15 min – $0
- Design logos for 5 customers: 100 hrs – $0
- Code web sites for 5 customers: 20 hrs – $12,000
- Hand over sites for 5 customers: 10 hrs – $0
- Send customers to my site videos for support: $400
It's silly but it's a true scenario several years ago.
The first 3 lines were “cost of sales” – so I couldn't give that up. But line 4 was stripping away all my profits. And these sites were for folks who may not even have needed logos (in my opinion).
So what did I do? I took line 4 out of my line-up. I didn't want to be a designer. So I would (I know, get ready to close your eyes) send them to a site where they could pick any logo they wanted, have it tweaked and sent back to me for $99. For my target audience – they loved it. And me? I loved it more!
The other place I was losing profits? Line 7. But not how you see it here. I used to create my own videos. But that would cost me hours every time WordPress released an update. So I switched to WP101 and let them handle the burden. I had a yearly fixed-cost spread across all my projects (with videos hosted on my single domain).
The net result was that for one talk, I could generate $12,000 of project revenue. If I spent 31 hours on those 5 sites, my calculated hourly rate would be over $380/hour. But if I added the logo work (with revisions), my calculated hourly rate would drop to $90/hr. Now that's not bad, but I like the other one better.
Greater Consultant Profitability
Here it is in black and white for you: if you want to earn more, you need to specialize. That helps you develop short cuts and gets you highly efficient. High efficiency gives you greater profits and a better calculated hourly rate.
So start mirroring and analyzing your effort. It's the new M&A skills you'll need to be successful.