I own a small consulting firm that enjoys great credibility locally. Whenever we meet with new prospects, we always get a contract. But I have difficulty generating new business that doesn't come from referrals. I get on the telephone but can't seem to persuade potential clients that we can improve their bottom line. Do you have some insights?
—M.M., Bloomington, Ill.
Getting new business is always the greatest challenge for any small consulting firm. As you've found, a referral from a previous client or former colleague is easily the most cost-effective and powerful way to open doors for new prospects. However, as you've likely also found, relying on referrals alone doesn't generate enough business to keep cash flow positive. And cold calling is typically not an effective way to market a consulting business, where trust and personal relationships are so crucial (see BusinessWeek.com, 2/14/07, "Dialing for Small-Biz Dollars").
Since referrals offer so much potential, start by evaluating whether you are really doing everything in your power to maximize your networking. If you're not already doing it, you should get out of your office at least a couple of times a week, meeting local entrepreneurs who might use your services. Don't just attend Chamber of Commerce meetings and industry luncheons—volunteer to get involved on a committee. That's how you build substantial relationships with entrepreneurs who could take advantage of your service.
Business networking is something of an art, because it involves relationship-building. Some people are more skilled at establishing relationships than others. If you find that you're putting in a lot of time networking but getting paltry results, maybe there's another person in your company who is more suited to the job. There's nothing wrong with sending a friendly staff member to business events armed with brochures, business cards, and a thorough knowledge of what you provide and how to sell your service.
And don't forget that you've been able to leverage word-of-mouth marketing into new business, so you always want to encourage additional referrals. "The key to success for marketing any kind of service firm in a business-to-business situation is to demonstrate and seduce, not assert or assault. It's all about gaining the trust and confidence of a prospect," says Adam Berkowitz, chief executive of ID Society, an interactive marketing firm based in New York City. "The best way to overcome hurdles and show prospects what you can do for them in a discreet, credible manner is to encourage satisfied clients or colleagues to provide referrals, or at least a testimonial or endorsement of your credentials and performance."
Outside of networking and word-of-mouth, you need to develop a focused marketing plan. A scattershot approach tends to be both expensive and ineffective, Berkowitz says: "Avoid the raspberry jam rule—which says the wider you spread it, the thinner it gets. The broader the audience, the weaker your impact."
Do some research and identify your target client. What industry will they be in? What size firm will they have? What specific areas can your consulting service help them with? Why should they choose you? What can you do for their bottom line? Brainstorm with your staff to develop additional questions like these and then answer them. As you begin to fashion a portrait of your "perfect" customer, start thinking about where you'll find that person. What does he read? Where does she shop? What vendors and suppliers and other professionals do they work with?
Do Your Research
"Select potential clients in a category where you have previous experience," Berkowitz recommends. "The No. 1 capability companies look for when choosing a supplier is how well you know their business. Also, offer things that are helpful and relevant to these prospects.
As a credible way to make your company better known to select prospects, you can forward articles to them, make speeches at industry events, conduct small-scale seminars or workshops for them, and do proprietary research where the results can be shared with them." Offer them value, and they will start to entrust you with their business dilemmas.
Internet communications can be less intrusive and less expensive than direct selling via the telephone or direct mail. To generate new business leads, it's important to reach potential customers where they are looking for a service like yours, and increasingly that's through online search engines. Think about tools such as Google AdWords that enable advertisers to target consumers locally or nationally and that can be easily set up by you or your technical support staff (see BusinessWeek.com, 1/29/07, "Small Biz Ads: The Year of the Web").
"Take the time to determine the exact audience you are looking to reach and be very specific when you choose keywords," advises Emily White, director of online sales and operations at Google (GOOG). "For example, if you are a financial consultant, you might get more leads by selecting 'financial consultant Blomington.' Develop 'gotta-click' ads for users searching on your selected keywords."
Since the online advertising environment is a dynamic one, it's essential to keep a close eye on how your campaign is doing, White says. Test different ads to find the one that generates the most clicks. Free conversion-tracking software, like Google Analytics, can help make sure you are getting the most out of your investment.
Search engine optimization is also an important way to drive traffic to your Web site and generate leads. "More than 80% of online purchase intent starts through a search engine," Berkowitz notes. "It is imperative that your company Web site is properly constructed and has relevant content so it can be found by search engines and offered up to prospective customers." If your webmaster is not familiar with search engine optimization, you can hire a consultant who specializes in optimizing Web sites for various search engines. If done right, it's a terrific investment that brings in a lot of new business for many entrepreneurs (see BusinessWeek.com, 7/6/06, "How SEO Upped the Revenues").
Once you've gotten a door open, make sure your introduction and sales presentation reflects thorough preparation and research on the prospect, including some of their key issues and problems, Berkowitz advises. "More and more, management wants everything quantified, especially the ROI. While your focus should always be on how you can add value for this potential client, make sure you demonstrate how the results of your efforts could be measured." Good luck.