From the other side of the table – the (de)commoditization of consultant’s services

About one and a half years ago, I made the transition from being a consultant to being a consultant’s client. I effectively moved to the other side of the table. I have written before about decommoditization of consulting services. This is a revisiting of some of that earlier work from my new vantage point.

Consultants fear commoditization

Believe it or not, but underneath that power seller across the table from you is a person afraid of not making their sometimes very high revenue targets. Being confronted with a client which plays one provider against another raises the very real spectre of service commoditization. Consultants all fear commoditization of their services.

And they are right in doing so. Commoditization of traditional consulting services, from reengineering to strategy development, has led to a price competition in which all competitors have lost. Now, you’d think that we, as clients, would have reaped the benefit. But it turned into an aggressive race to the bottom. Those are never pretty, not even for clients which appear to benefit.

Why? I note a significant decline in the quality of service as the pressure to sell more and more catches up with the quality of service delivery.

Where commoditization occurs

I’m convinced quality decline of this nature should not occur and can be avoided. From where I’m looking at it, most consultants fail to understand the mechanism of commoditization, or at least see it differently from their clients.

How? Well, consultants believe service commoditization occurs at the level of the solution they provide. Now, it is true that most consulting organizations offer similar services. But what consultants fail to understand is that to a client these are rarely a commodity. If they are relevant to the need that exists in the market, they are an answer to a problem. While they may seem similar, the people delivering them have their own experience, expertise and approach, which will either be a unique fit to the my needs or no fit at all.

So what consultants erroneously consider to be a commodity is in the best case not a commodity at all because of the way in which individual consultants combine their understanding of the problems the client faces with the standardized services of their organization. If we get what we pay for, they will develop a unique solution for me. Unique, hence not commoditized.

I believe the added value of the individual is more important than the relevance of the solution the company provides from its solution framework. Sadly, rather than attention to the expertise of the individual, most proposals focus on generic methodologies which I can read in any management book.

Knowledgeable sales approaches are the basis for removing the commodity status of services

Let’s start from the assumption that the biggest challenge for a consultant is not finding the market, but truly understanding the market’s needs. Even better would be if they would understand the needs of individual clients in this market. The only way a consultant will ever understand the market’s needs is through its people.

Therefore, consultant collaborators need to be trained in attentive listening skills and in respectful probing of issues. But before that is possible, they really need to learn how to bring a current or potential future client in a position where he or shee feels safe enough to speak to them about his fears and uncertainties.

Let’s be clear, the highly assertive sales pitch by the smooth and slick consultant will not do it. The big car in front of the door does not give me assurances you know what you are doing. It only confirms that I may be paying too much.

No, you will need to invest in building that trust relationship over the longer term. You will need to make it clear that it’s worth working with you.

The lesson

As a client, I am convinced that even this crisis hit market with significant budget reductions, especially in public services, is plenty full of commercial opportunity for consultants. Now, the market is abundant enough, but it needs to be thoroughly understood and respected. In order to see how plentiful it really is, companies will need to let go of their aggressive stance to the market and abandon the hard selling method.

Why, because as a consultant you may not understand this, but hard selling profiles a business as a commodity. And as stated above, whereas the services may seem similar, the people delivering the services make all the difference. They are not purely intellectual assets which are replaceable, they are people with skills in talking to people.

The organization or the individual consultant which will come out on top in the next five to ten years will not be the firm with the best or most innovative solutions. It will be the firm with the best listeners, the firm will to invest in developing long term relationships with clients on a basis of equality.