value pricing

Steps 7-12: Selling and Qualifying Clients in the Hollywood Model by Matthew Cook

Over the past two weeks I started a run-through of selling and qualifying clients in the Hollywood Model on a step-by-step basis. This week I’ll wrap it up, but first, how about a recap?

In The Prequel I talked through some things that needed to be put on the table before digging into steps:

  1. The business model I work in is called the Hollywood Model.
  2. The process I’m outlining assumes sales are driven by reputation, referrals, and attraction.
  3. This process is designed for a two-man (or woman!) team.
  4. These steps are designed to qualify clients, not just sell them.
  5. A major goal in using these steps is to push potential clients that are a bad fit for you toward a “no”.
  6. I’ll be framing everything by how I work with Arbitrary

In Steps 1-6 I covered the first six steps (surprising, right?):

  1. The initial contact
  2. The handoff
  3. Producer contact
  4. Initial questions
  5. Initial call
  6. Project options & project net

Let’s get back to it, right in step.

Once we’ve figured out a few ways to approach the project and we’ve checked the viability of each to make money, we toss them into a [7] Bullet Email. We send the client an email with each of the two/three/four options fleshed out. Here’s the general content:

Hey Client (Jamie on cc),

As promised, we’ve put together a few options for you to look at which outline how we think Arbitrary could be a good fit for your team. Each of these proposes solutions for the needs we talked about. However, these aren’t final numbers or deliverables, rather it’s the first draft at a solution. We’d hate to end the conversation here based on price or anything we did or didn’t cover. Let’s be sure to set a time to chat this week. Let’s dig in!

Option A

  • Description
  • Team
  • Deliverables
  • Timeframe
  • Cost

Option Turtle*

  • Description
  • etc.

Option 

  • Description
  • etc.

That’s it for now! Again, we look forward to chatting through these and hearing your thoughts. What time works best for you this week? 

Cheers!

*If you’re confused about “option turtle” see last week

Usually after the bullet email, we wait. Some clients reply immediately, some take weeks. Following up is a delicate balance of pressure and cordiality, but the fact is that we lose more potential projects here than anywhere else, and that’s ok. If a client doesn’t fit with how you think about work or how much you are worth, it’s better to lose them here than have them fire you in a couple months and refuse to pay. 

If your client comes back with a positive response it’s time to [8] Contact Contractors. As mentioned last week, sometimes we do this earlier, or later, but now is the optimal time. We’ve given our potential client a set of approaches and they’re pretty happy with the overall idea of working with us even though we’ve said some hard things. This gives us solid basis to talk with our contractors, and if they’re interested and committed to the idea, we can talk about our potential team members with the client. 

Once we’re prepped to chat about our client’s reaction to the bullet email and we’ve contacted our project partners, it’s time for the [9] Full-Team Call. Jamie will make his debut here, and if we feel it’s appropriate we may add in a potential contractor or two (but usually not). On this call, the producer sets up the conversation, but takes a back seat when it comes to the meat of the interaction. For Arbitrary, this means the client usually comes prepared with thoughts for a single approach they like, a rough budget idea, and a potential start date. They feel like they lack a clear picture of what it’s like to interact with our expertise, but they understand how Arbitrary works. This is a perfect scenario. Jamie talks a lot–usually about projects similar to this one that we’ve done, why he’s excited about this potential client, what he thinks/feels about their competitors, and how excited he is to get underway when the client signs on. The main purpose for Arbitrary on this call is to create good feelings and remove barriers. The main purpose for the client is to verify that we’re reputable, and communicate their likes/dislikes in our options. 

The result of the full-team call is for us to go away and come back with a [10] Final Option. This is the easy part (usually). We make a few changes to cost, timeframe, or deliverables and send another email. We update our contractors, we double-check our schedules, and then wait for the client to say “yes”. Sometimes this takes another call or two, sometimes the client surprises us by saying “no”, but at this point we’re simply following up and making sure our client is equipped to make the decision. 

If the client gives the green light, we [11] Draw up the Statement of Work, and make sure everyone agrees. This usually takes a week or two to hash out complete terms.

After the SOW is agreed upon, we [12] Get Signatures and Payment, then start preparing for the kickoff where we lay the foundation for specific project interactions with the client. 

That’s it for selling and on-boarding! In wrapping up here, let’s run through a few weaknesses and strengths that I’ve observed and that I’m still playing with.

Weaknesses:

  • RFPs and Pitches. It’s really hard to create 70-page pitch documents and follow an RFP process with a two-person team. It takes copious amounts of time, the chances of winning are usually abnormally small, and the clients are usually abnormally difficult.
  • It’s High Effort. Selling projects takes time and discernment, and that means we’re not spending effort on other things. Neither Jamie nor I are truly, deeply passionate about sales; so this process can be taxing and we can get in over our heads before we realize it. We’re always talking about when the right time would be to bring on another person to help with sales. We aren’t at that point yet.
  • The Process is Centralized. This is a lot of information and tools to put into two guys’ heads. On top of the tools I’ve shared here, we craft emails, discuss potentials privately, draw up schedules for months in advance, create sales pipelines, maintain rolodexes, and find time to promote our work and write/speak. It’s a lot of work, and sometimes it can burn us out–especially when we lose a project we really wanted.
  • The Asshole Perception. When we make mistakes in this process, one of the most common side-effects is that our potential client thinks we’re total jerks who have an inflated sense of self-worth. Sometimes the line between “really valuable” and “totally full of it” is razor thin. We have to be perceptive, committed, and stable in front of our clients.

Strengths:

  • Removes the Budget Conversation. This process helps keep our clients mind on value, and turns budgets into a way for them to gauge the talent, involvement, and deliverables that they can afford. 
  • Preserves the Mystique. These steps keep us honest. We don’t over-commit our time or emotions, and we guard ourselves from doing free work. We also set up Jamie to look like a total wizard, and we build excitement and anticipation for a kickoff. 
  • Value Pricing and Small Teams. We avoid talking about our costs, and we build confidence in a small team of highly adaptive experts. This lets us work with friends and also point the client toward the work we think is best, not necessarily what they come looking for.
  • Flexibility and Lifestyle. This process allows us to approach many different kinds of work, rather than being pigeon-holed as a production partner or freelancer. It also allows us to adapt for personal life and plan crunch time. Nobody likes working weekends or missing vacation, and this process allows us to set client expectations for our availability and involvement. We know if we’re going to be busy, and we compensate for it. We plan for when we need time away, and we take it (most of the time).

I love talking about this stuff. As always, shoot an email over to mattecook(at)gmail.com if you’d like to chat more.

For more on how Jamie Kosoy and Arbitrary talk to to clients and run projects, you can harass Jamie on Twitter or find him in a classroom or at a conference in San Francisco. 

Steps 1-6: Selling and Qualifying Clients in the Hollywood Model by Matthew Cook

Last week in The Prequel I talked through an introduction to selling and qualifying given my experience over the past few years. Here’s a quick recap:

  1. The business model I work in is called the Hollywood Model.
  2. The process I’m outlining assumes sales are driven by reputation, referrals, and attraction.
  3. This process is designed for a two-man (or woman!) team.
  4. These steps are designed to qualify clients, not just sell them.
  5. A major goal in using these steps is to push potential clients that are a bad fit for you toward a “no”.
  6. I’ll be framing everything by how I work with Arbitrary

It’s time for steps 1-6 of 12, let’s continue! Everything starts with [1] The Initial Contact, when a person or company reaches out to Arbitrary. It may be a personal friend of Jamie’s, a larger agency, or an end client looking for a small team. We treat each potential in light of how they relate to us. It’s bad manners to reply to a friend like a stranger, and it’s uncomfortable when you’re too chummy with a big corporation.

After the potential client gets in touch, our first reply back is [2] The Handoff. Jamie replies with a personal note saying thanks, expressing interest, and passing the baton to me, the producer. The goal is to keep Jamie’s time sacred while also building trust in the producer role. Lots of potential clients are testing to see if Arbitrary is an actual company or just a front for Jamie’s contract work. The client should feel like they’re discovering the company structure and being given a personal contact, not like I’m the gatekeeper to Jamie.

Next comes the [3] Producer Contact. I step in, echo Jamie’s interest and appreciation, then start the conversation.

Immediately following are the [4] Initial Questions, a predetermined set of bullet questions that we change slightly each time we send them. Sometimes steps 3 and 4 are the same email, sometimes they’re separate. It depends on how detailed the client’s initial contact is. Was there an RFP? Do they sound like this is a big project for them? Did they ask lots of questions? I balance the formality of my reply with the formality of the inquiry while also creating the tone of Arbitrary’s communication. This is the first opportunity to display to the client how we’ll talk with them.

The initial questions we send can vary depending on the work, but more important than rewriting the questions, I let the client know that they’re templated. I say that I realize I’m asking them to do some homework which I assign to all potential clients, and tell them why: I want to help both of us make sure we’re the right fit for each other right out the gate. This alleviates my workload so that I’m not generating fresh questions for everyone who shows up, and it puts the client in a predetermined frame of mind. Here’s a paraphrased rundown of what we ask:

  • Can you recap what you’re looking to get done?
  • Have you started any of this work already?
  • Is there a hard deadline for completing this work? What drives that deadline?
  • What does your team look like, what roles do you have on staff?
  • How did you find us, and did did someone send you our way?
  • Are you talking to any other people about this project, and can you tell us who they are?
  • What is your budget for this project?
  • What specifically are you looking for us to accomplish on this project (as opposed to other teams your your internal team)?
  • Anything else?

Dan Mall has a great write-up about this step titled, Prequalifying Clients that I added a few thoughts to a while back. He’s been working on this step a lot longer than I have. It’s well worth reading.

If replies to the initial questions don’t throw up any show-stopping red flags, we move on to the [5] Initial Call. This is a call with only me–no Jamie. It’s important to draw that producer distinction and keep the client’s mind focused on how to set up the work and what they need to communicate. Throwing Jamie in at this point causes the client to feel like he’s just a freelancer (rather than team leader) and changes the topic of discussion from defining the work to testing out expertise, which is the first step toward free consulting. Again, let the client know it’s just them, anyone they feel like bringing, and the Producer. Also let them know the agenda, which almost never changes. It looks roughly like this:

  1. Tell us about your project. What are your hopes, dreams, and fears?
  2. I’ll ask you questions so that we can discuss details.
  3. I’ll tell you the story of Arbitrary; most importantly, why we do what we do, and why that makes us special.
  4. You can then ask me questions.
  5. Wrap up by talking about next steps.

If things went well and the opportunity still feels right, I take all of my findings to Jamie, and we start putting together [6a] Project Options and running them through a [6b] Project Net worksheet (see an example of that worksheet here). 

It’s paramount in this model that we pose multiple options for successfully completing the project. It builds confidence in our expertise, displays our comfort working with complex solutions, and up-ends the budget conversation. The real struggle here is offering multiple options that are truly different. We want to offer Option A and Option Turtle, not Option A and Option B. Clients are good at math. If I offer them incrementally additive options, they’ll subtract pieces they don’t want to pay for and calculate a price difference. I want them thinking about value. The value of the team, value that they put on the work to be done, and the value of one approach vs. another completely different one. This pushes them to think about what they truly want and can afford given the packages I communicate to them. 

The project net worksheet is our way of double checking ourselves. Because this process is set up to work in a value pricing approach, we can sometimes get lost in figuring out how much our services are worth in a given scenario. If we get lost, our client definitely will. These two spreadsheets give us a space for sketching out numbers. We can compare multiple options side-by-side and flesh out the final or preferred option. It’s a way to guess at components and estimate profitability; taking the things we want to do, and helping us think about the cost and income earning potential. This also gives us a jumping off point for thinking about the friends and contractors we’d want to bring on for the project. We talk to the team we want to hire early and intelligently. This is a good place to start looking at contractors, thinking about the roles and potential people to fill them.

That’s it for steps 1-6. If successful to this point, we’ve either pushed a client to realize they’re not right for us or we’ve sold them on the idea of Arbitrary and built confidence that we’ll return with the right project structure. 

Without a clear picture of why we do what we do and the value we have to offer our clients, we have nothing to sell and steps 1-6 will feel hopeless and contrived. Starting the conversation can sometimes feel like grasping at straws, but the better we get at finding the right vision to communicate, the more we can refine how we sell it. 

Next week we’ll run through steps 7-12 and some things I’m still working on. As always, feel free to say hey in the meantime.