Improving Organizational Performance

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Misty River Consulting

• Improving Organizational Performance
• Assisting organizations learn
• why and how to continually improve
• their effectiveness and efficiency

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Maximize Your IncomeandClient Retention
By Donald A. Kerper Misty River
Consulting www.mistyriver.net
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Main ThemeProviding Superior Value Drives
Increased RevenueandClient Retention
By Donald A. Kerper www.mistyriver.net
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What Youre Selling

• Benefits - Your core product is the benefit
• Wood Pile split and stacked nicely
• Product/Services -Items that provide the benefit
• Sharp axes and hardworking respectful workers.
• Augmented Product/Services- Additional but non
  essential value enhancing features or benefits
  that accompany the Product/Service
• Cleans the yard of wood chips,
• disposes of small useless pieces of wood,
• places spacer under wood pile to facilitate wood
  drying, etc.

By Donald A. Kerper www.mistyriver.net
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Point 1Contractual Fee Alternativesand Impact
on Perceived Value

• Small consultancys have a variety of contractual
  fee alternatives to choose from that vary in
  their utility to create a perception of value.
• Select the alternative that has the best
  opportunity to facilitate the creation of
  perceived superior value.
• Doing what is inappropriate harms that perception
  of value.

By Donald A. Kerper www.mistyriver.net
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Contractual Fee Alternatives

• Time Based Arrangements
• Event Based Arrangements
• Project Based Arrangements
• Retainer Arrangements

By Donald A. Kerper www.mistyriver.net
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Time Based Arrangements

• Hourly or Daily Fee Focuses on Efficiency of Time
  Based Revenue Generation
• Hourly Work - Undefined or Specific Project
• Daily Work - Undefined or Specific Project

By Donald A. Kerper www.mistyriver.net
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Time Based Arrangements- Advantages
Disadvantages -

• Advantage You are paid for your time
• Disadvantage Difficult To Emphasize Value

By Donald A. Kerper www.mistyriver.net
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Event Based Fee Arrangements

• Event Based Arrangement Focuses On Clearly Stated
  Objective With A Definitive Start End.
• Pricing Options
• One Price for Event
• Price Per Event Participant
• Minimum Price for Event with Upside Growth

By Donald A. Kerper www.mistyriver.net
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Event Based Fee Arrangements- Advantages
Disadvantages -

• Advantage
• Simple
• Can Leverage Value To Some Degree
• Disadvantage
• Can Suffer if Fee Linked to Number of
  Participants
• Has Definitive End Point

By Donald A. Kerper www.mistyriver.net
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Project Based Fee Arrangements

• Project Based Arrangement Focuses On Clearly
  Stated Objectives That Can Have Real ROIs.
• Specific Project One Price plus Expenses
• Specific Project One Price
• Specific Project of Return

By Donald A. Kerper www.mistyriver.net
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Project Based Arrangements- Advantages
Disadvantages -

• Advantage
• Simple
• Measurable Return on Investment
• Can Leverage Value
• Disadvantage
• You are accountable for the outcomes
• Scope creep very difficult to avoid

By Donald A. Kerper www.mistyriver.net
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Retainer Fee Arrangements

• Retainer One Price for Estimated Work Within A
  Specified Time Period
• Future Work Charged Against This Fee
• Non Refundable
• Retainer One Price for Specified Time Period
• Creates Availability not Work
• Future Work Is Additional Fee

By Donald A. Kerper www.mistyriver.net
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Retainer Based Arrangements - Advantages
Disadvantages -

• Advantage
• Simple
• Provides Ease of Mind for the Consultant
• Can Leverage Value
• Disadvantage
• If something better comes along, you are not
  available
• If client doesnt use you within the specified
  time period, you might not be considered in the
  future.

By Donald A. Kerper www.mistyriver.net
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Point 2Use the Contractual Fee Alternative That
Provides The Highest Degree of Utility

• Example 1
• Large scale organization change initiative should
  not be time and materials it should be a project
• Example 2
• A single workshop on Action Planning should not
  be time and materials, it should be an event that
  has a set fee and extra fees for session size
  larger than some maximum threshold.

By Donald A. Kerper www.mistyriver.net
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Point 3Transitioning to and SolidifyingValue
Based Fee Structures

• The Goal
• - Be Perceived As The Provider Of Superior Value
  -

By Donald A. Kerper www.mistyriver.net
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The Definition of Value

• Value Benefits Cost
• Superior Value
• The Value You Provide gt
• The Value Your Competitors Provide

By Donald A. Kerper www.mistyriver.net
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Creating The Perception of Value

• Avoid Hourly or Daily Work Like the Plague
• Always search for the true need not the stated
  need from the accountable manager (not the HR
  or purchasing manager).
• Collaborate with and gain consensus with the
  client on the project objectives, key measures of
  success, potential strategies of action, etc.
  prior to proposal creation or fee discussion. 
• Work with the client to determine the potential
  return for the project proposed.

By Donald A. Kerper www.mistyriver.net
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Creating The Perception of Value

• Create a proposal that emphasizes the value being
  provided and that deemphasizes the cost of the
  project.
• Emphasize that the projects cost are an
  investment that has an expected return.
• Insist that the client setup and review the key
  measures of success themselves not you.
• Insist that the client track the return on
  investment from the project, not you!
• Guarantee your work.

By Donald A. Kerper www.mistyriver.net
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Creating The Perception of Value

• If the project implementation is actually not
  achieving the agreed to objectives, change the
  implementation strategy or plan and reimplement
  without additional cost, if possible.
• Include other work as needed to keep the initial
  project on track without additional cost to the
  client if at all possible.
• Think of and behave like this project paves the
  way for many new future projects with the client.
• Turn down business that is not value based in
  nature.

By Donald A. Kerper www.mistyriver.net
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Creating The Perception of Value

• Ask Clients To Brag You Up with members of
  their networks
• Write Articles and Get Them Published That
  Impresses People
• Write A Book and Get It Published That Really
  Impresses People
• Become A Celebrity People Pay To Rub Shoulders
  With Celebs

By Donald A. Kerper www.mistyriver.net
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Creating The Perception of Value

• - Bottom Line -
• Focus on maximizing the value that your client is
  getting from you
• Do not focus on minimizing your costs
• Do not focus on charging for services provided
  that are outside your contract scope unless
  absolutely necessary.

By Donald A. Kerper www.mistyriver.net
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Clients Have Choices- Respect That and Leverage
It -

• Clients, like any customer, have the right to
  choose
• Clients will choose that which provides the most
  value and/or ROI
• Clients will continue to return to The Well
  that provides the most perceived value to them
• Be the Best Value Delivery Consultancy!

By Donald A. Kerper www.mistyriver.net
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Conclusion

•  Small consultancys have a variety of
  contractual fee alternatives to choose from that
  vary in their utility depending on the situation.
• Use The Alternative That Best
• Provides Superior Value For You
• and Your Client!

By Donald A. Kerper www.mistyriver.net
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Misty River Consulting
Donald A. Kerper511 South Vine Ave.Marshfield,
WI 54449Phone [phone]Email
misty_at_mistyriver.netWeb http//www.mistyriver.ne
t
For updated presentation notes, go
to http//www.mistyriver.net/IMCnotes