The post New Robert Craven 30-Day Growth Challenge got 48 comments. It clearly hit a nerve.
So, we launched "the challenge".
We had 100% turn-up on the day.
The Challenge was - "you have 30 days to improve your business (based on a workshop with me). After 30 days we'll ask you what you have achieved. Only at that point will we consider asking for payment. You will pay what you want.
So, great excitement and anticipation. We already have some serious results. But we will wait till Thursday when the 30 days are up. To what extent will the experiment have worked?
Based on results so far we have decided to proceed with not one but two Growth Challenges at the start of the New Year. Book in now.
Spend half-a-day working with me. Wait 30 days and I'll call you up. You tell me what the improvement has been.
You then decide what to pay for the results you have achieved.
The catch? None.
A thought: we live in times when people do not want to just buy "more of the same"... people want stuff that delivers and that they should pay what they, the customer, considers to be a fair price. (Try employing a solicitor!!!) More professional service firms should charge on results and not on selling time.
RELEVANT LINKS
UPDATE: Robert Craven's 30-Day Growth Challenge.- London & Bristol in April 2011
New Robert Craven 30-Day Growth Challenge - the post that got 48 comments
Being Disruptive Pays - blog post
87 comments:
So what you are saying is that you can charge based on results. No change, no charge. Have I got this right?
And if I cock up then you get nothing. So how do you stop time-wasters and the like. Do you take any old business? What stops people from exploiting the system.
The pay what you want restaurant in your earlier post is clearly a nonsense and this looks like a similar project. I can't see why you are doing this?
Jamie
Not sure if you can see this through the right pair of specs. The challenge (as it says) is for both you and them to get YOUR business to deliver. You pay for results or for the experience, if you feel happy to do so.
Craven will interview you first to make sure you are happy and understand the process. This is a very different busienss model form boring consultancy. This is also a bit of a tease to help them find businesses who want to do things differently.
Based on what happened at the first event, I believe that other stuff started to happen. New realtionships and new opportunities will happen.
"Gosh" is my first thought. "How does this work?"
If it does what it says then it is win-win.
What is the "downside"? Seems like this is a very different thing from the standard consultants offering.
Will check out the webpages.
And next steps is to call you guys?
Sharon G
Could you provide some insight on the experiments you have been doing and the results? I have never heard of this model before (but for music download).
I've read about the idea before...but never seen it done....given my previous experience with consultants we have used ourselves - both retainer model and one time fee - this model is interesting and clearly has advantages in theory....but will it work? Will clients value services correctly? How to educate them? Give them guidelines? Upper and lower levels? How to pre-select them?
Would I use this model in my own services business?....gulp !!
Actually, I think it does have merit. Of course consultants may already have a number in mind as to their value for a particular project, it also reveals how clients perceive the value of the consulting services being offered. I would guess that in many cases, these numbers have a huge gap.
The thoughts that come to mind are the prisoner's dilemma and multiple iterations. This model works best, I think, with some sort of social structure that dissuades free riders.
It also gets the buyer to set the price which is always something that good negotiators try to persuade the other side to do. That said if I can pay based on value.... But if the value is only achieved in 6 months, or 24....
Right, a few answers.
The first 30 day challenge (finishing this week) was/is an experiment (we call it market research).
It was a challenge to us (can we improve their profits in 30 days? will they pay us?) and a challenge to the delegates (will profits increase?)
Just because something is difficult to do doesn't mean that it shouldn't be done.
Yes you need to agree the ball park parameters and manage client expectations.
Yes sometimes benefits take a long time to materialise BUT clients will be hacked off if they cannot see/recognise the value you offer so you must demonstrate the value you add.
Some clients may not play the game? Here we enter a circular argument. Clients should not pay if they see no benefit.
In this model, with a number of attendees at a workshop, it works because those who benefit will pay (and those who don't see the benefit will not pay). Back to the circle. It is up to the consultant to 1) demonstrate value and 2) and to filter attendees so that they have people who "get it" in front to them.
Results: The first 30 day challenge is about to be up (Thursday) so can't give final results yet but it should more than wash its face in terms of new contracts, leads, testimonials, referrals, proposals and work added to the pipeline as well as the "dividend" promised to date. Can't really give a final result for some time yet.
More importantly the benefits to clients attending have been remarkable and I use the word remarkable advisedly. Boosts to turnover and profitability have surprised all concerned. Because of confidentiality I am not able to say any more than that right now
Will keep you posted.
We have come across the concept before but have never actually tried it, probably because we didn't have the courage. However very recently we have been talking to a new prospect and given the currrent economic situation it is something we are seriously thinking of offering. I would be interested in any lessons.
PWYW Consultancy - Sounds very interesting. I have heard of restaurants who have done this successfully where customers simply pay what they thought the meal was worth, but this is a slightly different model to yours in that there is a wealth of benchmarking available to customers for them to base their judgement on (We all know what a pizza costs and what we can expect for a £30-£40 a head night out). Can you explain how the concept works? I understand the principle of PWYW, but do you have any parameters/guidelines? How do you guard against blaggers? Is money taken in advance? Against what criteria are clients judging the worth of your work? etc, etc
It'll be interesting to see if people have applied your suggestions, if they turn up and offer to pay ... some may reflect, "It was me that had to do it so I added the value, therefore I'm not paying nothing."
My bet, based on the logic that half the people are honest, is that some of the no shows will be avoiding eye contact ... most will have struggled to implement changes due to basic inertia and the realities of day to day life ... and a few will turn up with cheques ... fingers crossed that 1 has a proper number on it.
Let us know the general results after you've been to the bank ...
If you really are right then this could be the way forward. But very few businesses, especially the larger ones, will have the bottle to run a business using such a random business model.
BUT over time the stats will sort themselves out. Run the programme 10 times and you'll get a pretty good idea of the how the numbers pan out.
Of course the concept has legs and what a great idea. You will only take up a consultancy where you are convinced that you can show growth in thirty days and that by geting those legs of yours under the table they will refuse to let you go on day 31. The very best of luck to you and have a great Christmas.
Tim M
I do a lot of work with a social enterprise and so most of the work I do is on a "pay what you can afford" basis. This is slightly different to "Pay what you want" but there are similar issues.
I've found that it's the setting of ballpark figures and good communication that are important to making this work correctly. Otherwise clients will just keep on waiting for you to send them that final invoice, or they'll lose interest half-way through the project and have no reason to pay you because they're unhappy with the results.
Profit and Loss predictions become a little less stable depending on the amount of work you're doing. If you're doing fixed-scope jobs of similar sizes (ie. workshops) then you'll soon be able to average out your profits for future predictions, but with larger or variable scope projects that's not so easy. For this reason I've not gone completely down this route, but all invoices and quotes for my services are sent out with a note attached describing the final amount as a suggested amount only.
Sometimes people will ask for a reduction because they are low on funding. Other times people will understand that this suggestion means we're using any extra to provide cheap/free services to others and so will increase the amount they pay (usually asking for a new invoice).
In theory I can see "Pay what you want" vs. "Pay what you can afford" will increase the quality of service you provide. But actually I'm not sure that it will, since if you're not already providing excellent quality of service you'll be losing customers to your competitors. In any given job there are four variables: quality, scope, speed and cost. Since reducing quality should never be an option that leaves scope, speed and cost to juggle with. To take cost out of this equation means there's no restriction on how much time and effort you put into the job in order to make the customer happy, and that strikes me as very dangerous unless you can be sure you're going to get paid an acceptable amount.
Alice
Coca Cola recently announced that they would pay market research agencies according to the value provided in their work - a very similar concept, I think.
Nigel L
The Pay What You Want business growth challenge is a radical approach by The Director’s centre, and just the kind of ground breaking initiative Robert Craven, known as the entrepreneur’s Guru, is justly capable of. The model is not of course new, and is a traditional way many independent business consultants have underwritten new business, though it is much less used these days.
What is interesting is that Craven and his team at Director’s centre have broadcasted the pilot scheme using social media, and especially LinkedIn, now widely accepted as the No1 Business Social media network in the UK.
Despite seeming a reckless or pointless move initially, upon reflection, the project for RC is a no-brainer. Why?
Read more at
http://www.businessservicefinder.co.uk/blog/pay-what-you-want-business-consultancy/
An interesting idea - I would like to know if you put any boundaries on it. To deliver what you think is a good job and not get paid anything it not great, but to have a range of say £5k - £10k and the customer has a choice depending on what they think you have delivered might be interestingly It is certainly very strong customer feedback!!.
Steve
I have just finished a new edition of a book 'Accounting for Everyone' and gave out some chapters free (on a drip, drip basis). One recipient emailed and said could he get hold of it all now. I said 'make me an offer'. He sent me £20 and apologised that he didn't think it was enough, but then again he hadn't seen sight of the rest of the book.
I certainly put faith in basic human morals and ethics. After 25 years in the software business I have yet to come across anyone who has blatantly tried to rip my company off (we do accounting software, I imagine it is very different in, say, the games market).
Hi Robert,
Congratulations on this great and very bold concept. It definitely shows that you guys know what you are talking about.
I just wish people don't just look forward to spoil the loopholes in the idea and be honest (which I think people usually are).
Please do share the outcome of this challenge once you know the results on Thursday and wish you the very best for the same.
Best Regards,
re coca cola
Mentioned in point 5, Pay for Performance, in http://www.greenbookblog.org/2010/11/22/the-winds-of-change/ by Simon Chadwick. Apparently fairly common in advertising.
Why would Robert not offer this model. He's proven over many years that he can add value to a client's business and this just gives him the opportunity to prove it to those that are adverse to paying up front for consultancy.
What is at risk is his and his staff's time. As long as they can cover the risk of losing that time against the opportunity of being paid by clients they would otherwise not have attracted, it's a winner!
We offer a similar approach. We review the client's profitability and then measure, very precisely, the key marketing performance indicators contributing (or not) to that profitability. These would include such items as numbers of enquiries and conversions, values of sales, up-sales and cross-sales, numbers and values of client referals, client loyalty (frequency of orders, retention period etc.). We review, based on standards for their industry etc., how they perform against each of those KPIs currently and we evaluate how well their existing marketing strategy is structured to address each of them. We then produce a plan to rectify all the problems and estimate how much each KPI can be improved - and hence the precise effect on the bottom line. We then offer to do all that work for half the actual improved profit figure over a 6-12 month period. No increase in profit = no fees. We also tell the client what we would charge them up front (and ongoing monthly) as an alternative. The performance-related total, over 12 months, will normally be at least 5 times as much as the up-front/ongoing monthly figure (although in one case it is nearly 20 times as much - wish we'd got that one on that basis!)
So far, every single client of mine has opted for up-front. They say "if you are that confident that you can produce those results, why should we incur those downstream costs?".
If anyone were to accept the offer (it has happened to other colleagues), then we do put conditions in place. For instance, if part of our plan depended on the client distributing monthly newsletters or doing a blog - and they fail to do so - then we will undertake those functions for them and charge them the appropriate cost - that way, we avoid the time-wasters.
It's a courageous project and I applaud your cahones! As many commentators will note...it's during recessions that many of the most innovative ideas/projects are conceived.
Although this type of approach is used in different industries, this is the first i've heard of it in consulting.
Creating a win/win is at the foundation of all fruitful long term relationships. I hope you find the right companies who judge you on your reputation for performance - win/win = reward/reward.
I was told very early on in my sales career that I should seek to get a client "a little bit pregnant". Clearly as a metaphor - not a direct instruction :)
But the point is a good one and relates to Robert's offer. If a potential client is willing to engage with this model, where previously s/he'd seen daily consultancy charges as a barrier that blinded them to the benefits of having an acknowledged expert like Robert involved in the business, then it's worked.
We all need to work differently in changing times and Robert must be applauded for allowing more clients to benefit from his extensive experience at his risk.
did have a taxi driver in India who adopted this model, "you pay me at the end of the week what you think I was worth". The haggling came at the end rather than the start, a slightly odd negotiation and to be honest I think he came out on top (ie.I probably paid above market rate). Ironically I didn't feel as in control of the negotiation as I probably should have, my "thrifty" self conflicting with my "fair" self made it a bit of a 3 way negotation.
We have just run a sequence of Mastermind Sessions (part of National Freelancers Day) up and down the UK with freelancers touching on how to avoid commoditisation and thrive in the modern economy. We covered a few models, but sadly this one didn't crop up. I will try to introduce into the online discussions referencing this post.
I believe it works in some sectors, not in others. We 'supply' language services, i.e. translations, interpreting and language tuition, which are then delivered by qualified linguists. We therefore have to ensure that these freelancers receive their rates and earn a little bit on top for running the projects. Therefore I believe that 'Pay What You Want consultancy' cannot work in our field.
Interesting model. Leaving it open means customers may exploit. I think the key is maintaining customer relationship and feedback.
Very exciting...
I'd alos be interested, particularly to see what teh perceived value of consultancy is ? Will the results be catergorized in terms of cost per particlary area or expertise ?
I think that "pay what you think the meal was worth" restaurants have shown that people tend to over estimate what they would have paid for an equivalent meal in another restaurant and therefore pay over the odds - does this correlate with your findings?
My sincere best wishes for those trying this! I think all new initiatives are worth trying at least as a pilot, but I do have some caveats.
First: many really valuable consultancy interventions take quite a long while to quantify and prove. How long are you prepared to wait before agreeing their worth?
Second:it isn't always in clients' own interests (as they perceive them) to spend too much time quantifying any benefits arising, which in any event may be argued to be subject to many other considerations beyond the consultant's direct influence, control or contribution.
Third: many of those who may be interested in buying such a proposition may not be used to buying consultancy services and thus may have no idea of what you the supplier may think is a fair fee, let alone a 'going rate'.
part 2:
More commonly, one sees offers of a 'free diagnostic' from some consultants - not the least because until you as a consultant have understood, sized and scoped any potential client's need, you may well end up offering solutions to a 'problem' that either doesn't exist, isn't that high on their agenda or may need skills outside your capability.
All rather obvious! But I have direct experience in the past as an MD buying quite a lot of consultancy that guides my own thinking on this, having subsequently set up and run a nationwide consultancy subsequently. I shall never forget buying performance-related consultancy, where diligent quantification of the directly attributable benefits took far more time and effort than my finance colleagues who collated all the data had the time or interest to expend. Nor will I forget being persuaded by a very confident, aggressive and large consultancy to let them do a whole week's free diagnosis night and day with free rein, of a problem my colleagues hadn't solved after years' of their own best efforts - only to find that the squad of consultants provided had little more to contribute after all their hard work than to agree they couldn't add anything. I don't think either of these situations is very unusual.
My own suggestions? If you want to attract more consultancy clients, whoever you are: a) be very clear where your areas of competency lie (both your services and your chosen markets) and focus on them; b) use third-party recommendations to win new business as your very best 'rain-making' tool; and c) be very wary of any buyer who didn't think your talents were worth buying until *after* you have solved their problem!
part 3:
To my mind, the art of great marketing is to acquire great customers who *already* know the value of what you might do and are ready and willing to pay for it. If they aren't persuaded before you start, they may never truly value your efforts afterwards. (And the trap that many consultants fall into is to offer solutions for free or too cheaply, which can so often devalue their expertise... Most great solutions can appear 'so obvious', once provided!)
Further differentiate yourself by exceptional service, deep client understanding and integrity, great relationship-building and interpersonal skills, superior technical knowledge, speed of response, innovative solutions and proven track-record, value-for-money, even a 'money-back-if-not-successful' offer, or whatever? But not by being cheaper (there will always be someone who might do some of what you do at a lower price) or 'wait and see' ?
Selling such an intangible service as consultancy successfully, requires really superior sales and strategic marketing skills - in a very crowded market. Like selling cosmetics or healthcare, you may be selling 'hope'. You also need client commitment at the very start, and I am not at all convinced personally that this comes through 'pay me later when you think you know what I was worth'.
But I wish you well! Tell us how you get on?
Jeremy - wow - what a response...
However I think Craven/DC answer most of this if you read the answers.
The only bit that might need more clarification from RC is where you say
"be very wary of any buyer who didn't think your talents were worth buying until *after* you have solved their problem!"
I think his argument is that they need educatuing/filtering/nudging on this very point.
A big thank you (so far) for all your comments.
To Those Of You who have pointed out the holes/gaps/flaws in the model - a big thank you. Yes, we are aware of many of the variables and issues that have been brought up. Reading you and seeing you flagging up the issues has helepd us confirm/clarify/rethink/examine what we have done to date.
I agree with almost everything you have said and have learnt much. The power of the crowd!
Thanks and keep the comments coming...
Results will be reported soon. The proof will be in the pudding.
Robert
I introduced this thread in a discussion I had at a Top Interim event in London last night. They gave me a signed copy of Robert's book on leaving, it is only when I truned to the profile of the author at the back saw the photo and made the connection. Funny how life joins up sometimes!
Have just spoken to someone who attended your London day.
Seems like a no-brainer to attend. He said that it was the kick up the backside that he really needed. Simple as that.
Well I need a kick - can't do it all myself and seem to be working harder than ever so 2011 is the year to get my act together. With £1m turnover things should be getting easier but it doesn't seem to be the case.
Will apply and see you there, I hope.
Jerry B
Someone who hates solicitors.
Have you tried http://www.fiverr.com or http://www.peopleperhour.com
But being small can lead to big things because it is small. I am purposefully keeping my networking groups on the smallish size because, as evidence shows, bigger numbers of rerrals get passed.
This is an absolutely amazing idea - taking the first pro-bono session (the chemistry test!) that coaches use and REALLY running with it. Inspirational, whilst adding weight to the argument that coaching really does work.
I would be interested in seeing some hard numbers as a result of your experiment. To be direct, how much *would* the work have cost at commercial rates and how much did you actually get paid? You're making some confident claims - care to publish?
I too would be really interested so see if the model works.It's an appealing principle. Do clients pay more, less or the same than they would if they were charged? (This assumes value is offered of course).
It sounds impressive. I presume that in order to assess the effectiveness of your intervention there needs to be some form of metrics and evaluation in place - who decides on what these are and how they are evaluated? The exception of course is a financial goal which is easily measurable, but 30 days is not long to make a real impact on financial gains so I assume the goals cover more strategic issues which are less measurable.
Robert very interesting subject, many owner managed businesses are worried to talk to other businesses about this subject. My comments would be to look at the owner of the business and bring in a person with the skills that the owner is weak at. I know many would disagree. take a situation where the owner is good at selling his product or services and finds his paperwork as a challenge and he hires another sales person to grow his business, this will bring in more business but could be harder to cope with the technicans work. The challenge of making and breaking the business depends on great backup. I hope these comments are fair and would like to hear more on this
Was reminded today of another eg of this model:
http://www.littlebay.co.uk/london.html
This restaraunt trialled pay what you think we were worth back in Feb 2009. I recall in the press at the time, that the claim was that people were paying more than the original cover, but note that it was a limited trial and not something they have repeated.
Iain
See http://robert-craven.blogspot.com/2010/09/bold-pay-what-you-want-restaurant.html for 'more pay what you want' restuarant details.
RC
This looks interesting. So when you are saying you've had a successful pilot, was that in London or Bristol or both? And you are now looking for delegates in which part of the UK?
Just replying to get this up to 50 for you!
Robert very interesting subject, many owner managed businesses are worried to talk to other businesses about this subject. My comments would be to look at the owner of the business and bring in a person with the skills that the owner is weak at. I know many would disagree. take a situation where the owner is good at selling his product or services and finds his paperwork as a challenge and he hires another sales person to grow his business, this will bring in more business but could be harder to cope with the technicans work. The challenge of making and breaking the business depends on great backup. I hope these comments are fair and would like to hear more on this
This is an absolutely amazing idea - taking the first pro-bono session (the chemistry test!) that coaches use and REALLY running with it. Inspirational, whilst adding weight to the argument that coaching really does work.
Someone who hates solicitors.
Jeremy - wow - what a response...
However I think Craven/DC answer most of this if you read the answers.
The only bit that might need more clarification from RC is where you say
"be very wary of any buyer who didn't think your talents were worth buying until *after* you have solved their problem!"
I think his argument is that they need educatuing/filtering/nudging on this very point.
part 2:
More commonly, one sees offers of a 'free diagnostic' from some consultants - not the least because until you as a consultant have understood, sized and scoped any potential client's need, you may well end up offering solutions to a 'problem' that either doesn't exist, isn't that high on their agenda or may need skills outside your capability.
All rather obvious! But I have direct experience in the past as an MD buying quite a lot of consultancy that guides my own thinking on this, having subsequently set up and run a nationwide consultancy subsequently. I shall never forget buying performance-related consultancy, where diligent quantification of the directly attributable benefits took far more time and effort than my finance colleagues who collated all the data had the time or interest to expend. Nor will I forget being persuaded by a very confident, aggressive and large consultancy to let them do a whole week's free diagnosis night and day with free rein, of a problem my colleagues hadn't solved after years' of their own best efforts - only to find that the squad of consultants provided had little more to contribute after all their hard work than to agree they couldn't add anything. I don't think either of these situations is very unusual.
My own suggestions? If you want to attract more consultancy clients, whoever you are: a) be very clear where your areas of competency lie (both your services and your chosen markets) and focus on them; b) use third-party recommendations to win new business as your very best 'rain-making' tool; and c) be very wary of any buyer who didn't think your talents were worth buying until *after* you have solved their problem!
I'd alos be interested, particularly to see what teh perceived value of consultancy is ? Will the results be catergorized in terms of cost per particlary area or expertise ?
Interesting model. Leaving it open means customers may exploit. I think the key is maintaining customer relationship and feedback.
I believe it works in some sectors, not in others. We 'supply' language services, i.e. translations, interpreting and language tuition, which are then delivered by qualified linguists. We therefore have to ensure that these freelancers receive their rates and earn a little bit on top for running the projects. Therefore I believe that 'Pay What You Want consultancy' cannot work in our field.
I was told very early on in my sales career that I should seek to get a client "a little bit pregnant". Clearly as a metaphor - not a direct instruction :)
But the point is a good one and relates to Robert's offer. If a potential client is willing to engage with this model, where previously s/he'd seen daily consultancy charges as a barrier that blinded them to the benefits of having an acknowledged expert like Robert involved in the business, then it's worked.
We all need to work differently in changing times and Robert must be applauded for allowing more clients to benefit from his extensive experience at his risk.
We offer a similar approach. We review the client's profitability and then measure, very precisely, the key marketing performance indicators contributing (or not) to that profitability. These would include such items as numbers of enquiries and conversions, values of sales, up-sales and cross-sales, numbers and values of client referals, client loyalty (frequency of orders, retention period etc.). We review, based on standards for their industry etc., how they perform against each of those KPIs currently and we evaluate how well their existing marketing strategy is structured to address each of them. We then produce a plan to rectify all the problems and estimate how much each KPI can be improved - and hence the precise effect on the bottom line. We then offer to do all that work for half the actual improved profit figure over a 6-12 month period. No increase in profit = no fees. We also tell the client what we would charge them up front (and ongoing monthly) as an alternative. The performance-related total, over 12 months, will normally be at least 5 times as much as the up-front/ongoing monthly figure (although in one case it is nearly 20 times as much - wish we'd got that one on that basis!)
So far, every single client of mine has opted for up-front. They say "if you are that confident that you can produce those results, why should we incur those downstream costs?".
If anyone were to accept the offer (it has happened to other colleagues), then we do put conditions in place. For instance, if part of our plan depended on the client distributing monthly newsletters or doing a blog - and they fail to do so - then we will undertake those functions for them and charge them the appropriate cost - that way, we avoid the time-wasters.
Hi Robert,
Congratulations on this great and very bold concept. It definitely shows that you guys know what you are talking about.
I just wish people don't just look forward to spoil the loopholes in the idea and be honest (which I think people usually are).
Please do share the outcome of this challenge once you know the results on Thursday and wish you the very best for the same.
Best Regards,
I have just finished a new edition of a book 'Accounting for Everyone' and gave out some chapters free (on a drip, drip basis). One recipient emailed and said could he get hold of it all now. I said 'make me an offer'. He sent me £20 and apologised that he didn't think it was enough, but then again he hadn't seen sight of the rest of the book.
I certainly put faith in basic human morals and ethics. After 25 years in the software business I have yet to come across anyone who has blatantly tried to rip my company off (we do accounting software, I imagine it is very different in, say, the games market).
The Pay What You Want business growth challenge is a radical approach by The Director’s centre, and just the kind of ground breaking initiative Robert Craven, known as the entrepreneur’s Guru, is justly capable of. The model is not of course new, and is a traditional way many independent business consultants have underwritten new business, though it is much less used these days.
What is interesting is that Craven and his team at Director’s centre have broadcasted the pilot scheme using social media, and especially LinkedIn, now widely accepted as the No1 Business Social media network in the UK.
Despite seeming a reckless or pointless move initially, upon reflection, the project for RC is a no-brainer. Why?
Read more at
http://www.businessservicefinder.co.uk/blog/pay-what-you-want-business-consultancy/
Coca Cola recently announced that they would pay market research agencies according to the value provided in their work - a very similar concept, I think.
Nigel L
I do a lot of work with a social enterprise and so most of the work I do is on a "pay what you can afford" basis. This is slightly different to "Pay what you want" but there are similar issues.
I've found that it's the setting of ballpark figures and good communication that are important to making this work correctly. Otherwise clients will just keep on waiting for you to send them that final invoice, or they'll lose interest half-way through the project and have no reason to pay you because they're unhappy with the results.
Profit and Loss predictions become a little less stable depending on the amount of work you're doing. If you're doing fixed-scope jobs of similar sizes (ie. workshops) then you'll soon be able to average out your profits for future predictions, but with larger or variable scope projects that's not so easy. For this reason I've not gone completely down this route, but all invoices and quotes for my services are sent out with a note attached describing the final amount as a suggested amount only.
Sometimes people will ask for a reduction because they are low on funding. Other times people will understand that this suggestion means we're using any extra to provide cheap/free services to others and so will increase the amount they pay (usually asking for a new invoice).
In theory I can see "Pay what you want" vs. "Pay what you can afford" will increase the quality of service you provide. But actually I'm not sure that it will, since if you're not already providing excellent quality of service you'll be losing customers to your competitors. In any given job there are four variables: quality, scope, speed and cost. Since reducing quality should never be an option that leaves scope, speed and cost to juggle with. To take cost out of this equation means there's no restriction on how much time and effort you put into the job in order to make the customer happy, and that strikes me as very dangerous unless you can be sure you're going to get paid an acceptable amount.
Alice
Of course the concept has legs and what a great idea. You will only take up a consultancy where you are convinced that you can show growth in thirty days and that by geting those legs of yours under the table they will refuse to let you go on day 31. The very best of luck to you and have a great Christmas.
Tim M
PWYW Consultancy - Sounds very interesting. I have heard of restaurants who have done this successfully where customers simply pay what they thought the meal was worth, but this is a slightly different model to yours in that there is a wealth of benchmarking available to customers for them to base their judgement on (We all know what a pizza costs and what we can expect for a £30-£40 a head night out). Can you explain how the concept works? I understand the principle of PWYW, but do you have any parameters/guidelines? How do you guard against blaggers? Is money taken in advance? Against what criteria are clients judging the worth of your work? etc, etc
Right, a few answers.
The first 30 day challenge (finishing this week) was/is an experiment (we call it market research).
It was a challenge to us (can we improve their profits in 30 days? will they pay us?) and a challenge to the delegates (will profits increase?)
Just because something is difficult to do doesn't mean that it shouldn't be done.
Yes you need to agree the ball park parameters and manage client expectations.
Yes sometimes benefits take a long time to materialise BUT clients will be hacked off if they cannot see/recognise the value you offer so you must demonstrate the value you add.
Some clients may not play the game? Here we enter a circular argument. Clients should not pay if they see no benefit.
In this model, with a number of attendees at a workshop, it works because those who benefit will pay (and those who don't see the benefit will not pay). Back to the circle. It is up to the consultant to 1) demonstrate value and 2) and to filter attendees so that they have people who "get it" in front to them.
Results: The first 30 day challenge is about to be up (Thursday) so can't give final results yet but it should more than wash its face in terms of new contracts, leads, testimonials, referrals, proposals and work added to the pipeline as well as the "dividend" promised to date. Can't really give a final result for some time yet.
More importantly the benefits to clients attending have been remarkable and I use the word remarkable advisedly. Boosts to turnover and profitability have surprised all concerned. Because of confidentiality I am not able to say any more than that right now
Will keep you posted.
The thoughts that come to mind are the prisoner's dilemma and multiple iterations. This model works best, I think, with some sort of social structure that dissuades free riders.
It also gets the buyer to set the price which is always something that good negotiators try to persuade the other side to do. That said if I can pay based on value.... But if the value is only achieved in 6 months, or 24....
Could you provide some insight on the experiments you have been doing and the results? I have never heard of this model before (but for music download).
Jamie
Not sure if you can see this through the right pair of specs. The challenge (as it says) is for both you and them to get YOUR business to deliver. You pay for results or for the experience, if you feel happy to do so.
Craven will interview you first to make sure you are happy and understand the process. This is a very different busienss model form boring consultancy. This is also a bit of a tease to help them find businesses who want to do things differently.
Based on what happened at the first event, I believe that other stuff started to happen. New realtionships and new opportunities will happen.
So what you are saying is that you can charge based on results. No change, no charge. Have I got this right?
And if I cock up then you get nothing. So how do you stop time-wasters and the like. Do you take any old business? What stops people from exploiting the system.
The pay what you want restaurant in your earlier post is clearly a nonsense and this looks like a similar project. I can't see why you are doing this?
OK - been, done it, got the T-shirt . Despite my cynicism it does/did work. Amazing that a couple of hours will get the juices flowing. And you are right it was a raw hot piece of red hot ginger.
Why? We all need to be held more accountable. We all need to make the decisions and get on with it...
Seeing your email I thought I should add my comments
Attended London event last montth and a bit like Jono saw benefits of attending.
1) Robert energises you to take action
2) other people in the room energise you
3) Robert makes things seem very clear and explains the options and results
I left very energised but the difiicult bit is delivering within 30 days. I probably failed to deliver on all my action point sbut did enough to take my busienss to a different space. For that I say thank you.
Sandy
The "successful" pilot was back in October. Of 13 attendees, all but one have agreed that their benefit warrants/warranted payment.
Actually "successful" here is defined as they grew their business or will see business growth as a result of attending. One gent quoted an instant saving of £47,000 as a result of attending. Sounds too good to be true.
The results were all very posiitve for the indifiduals involved. It warranted us repeating the experiement ie it is worth our while to run the events... and delegates only pay what they want. SO, the crude conclusion is that the event works for the delegates (in terms of results). And that is the only thing that matters.
RC
PS good to see this thread starting up again.
A shockingly effective morning that leaves you feeling back in control with some incredibly useful action points to get cracking on. It is also a wonderfully stimulating experience to find so many other business people in the same room with the same business dilemmas. You definitely leave feeling clear headed and having a game plan on which to build. Highly recommended especially if like me you have never had any business guidance in the past, in fact it leaves you feeling enlightened and inspired.
I attended the first event with a "Squirrel Design Tree House" hat on and found it a truly inspiring and useful session, delivered and supported by two highly motivated individuals; but all in their own inimitable ways.
I have since been working with the DC on a completely different second start-up business (muggi.co.uk). Three months down the line we are selling all over the world, signing up distributors and retailers, throughout Europe and the States; "I truely believe that we would not be where we are today, with muggi, were it not for the help from DC and more importantly Martin Price" Pretty speedy Robert!
Josh and Trostski - thanks for your kind words.
RC
Sandy and Jono - thanks to your two as well..
RC
The workshop was a breath of fresh air. It was reassuring to know that many business owners face exactly the same challenges. With some sage advice we have moved the business forward in a positive new direction to change behaviour for good, steve@onedeepbreath.co.uk
Steve
Thanks for your kind comments.
RC
No hesitation in recommending the workshop. It was constructed clearly, concisely and with real examples. The meeting was very thought provoking and very true to the concept behind the workshop. I found it very helpful to have a chance to see that the similarities of limiting beliefs and fears between the attendees considerably outweighed the differences – we are all in similar boats. The discussions were pertinent as the participants held so many similarities in concerns that it did not matter that there were a variety of different business there. In fact the variety help create new ideas and perspectives on my own situation.
These workshops give space in the brain to step away from the day to day and take time to evaluate. Something that I certainly don't do often enough. Robert steers the conversation and discussion skilfully to ensure that attendees have their concerns addressed and I know that every person that I spoke to left with a mission objective. It's powerful stuff delivered quick sharp... Thanks so much for the time and energy
Just a brief update.
I found the time with you interesting. It emphasised to me that I knew where I wanted the business to go and that the way forward was to promote the Practice in these difficult times.
I called a Directors Management meeting, and suggested that we have an event with guests this Spring to celebrate our 100 years of continuous business. We are now planning for the party in June
Thank you to Robert and the DC team for an inspirational session - I came away with key action points and strategic direction for my business. It made a real difference to my design business. Highly recommended.
Just a brief update.
I found the time with you interesting. It emphasised to me that I knew where I wanted the business to go and that the way forward was to promote the Practice in these difficult times.
I called a Directors Management meeting, and suggested that we have an event with guests this Spring to celebrate our 100 years of continuous business. We are now planning for the party in June
It is great to hear how things are going. Please do give me a call for a more detailled update.
RC
Pay What You Want Business Consultancy
November 23, 2010 | Posted by julian
The Pay What You Want business growth challenge
is a radical approach by The Director’s centre, and just the kind of
ground breaking initiative Robert Craven, known as the entrepreneur’s
Guru, is justly capable of. The model is not of course new, and is a
traditional way many independent business consultants have underwritten new business, though it is much less used these days.
What is interesting is that Craven and his team at Director’s centre
have broadcasted the pilot scheme using social media, and especially
LinkedIn, now widely accepted as the No1 Business Social media network
in the UK.
Despite seeming a reckless or pointless move initially, upon reflection, the project for RC is a no-brainer. Why?
Craven has a proven method of delivering cost effective business transformation.
‘Pay what you want’ clients who technically ‘fail’ the test…i.e.
cannot respond to the business support they are receiving, will at the
very least
(a) know that Craven can deliver, and (b) realise they are incapable of responding ‘to assistance’.
As a result they will either abandon hope of a brighter future (which
is unlikely) or work diligently to get to the point where they can
accept help only to return to RC later – i.e. future ROI.. [Julian Rowe,
Business Correspondent, Business Service Finder.]
Craven’s successes will earn revenue. The failures will be future
ROI. The pilot scheme will be invaluable marketing exposure. In terms of
credibility, there can be few better examples of ‘putting one’s
reputation to the test’.
It reminds me a little of Anthony Robbins twenty years ago, when he
was launching himself as a ‘success coach’. He went on National TV in
the States and took on other practitioners’ failures. He succeeded to
get people to change using NLP style techniques in twenty minutes. Doing
it live on TV made him an overnight success. Robbins went on to coach
Gorbachev, Princess Diana, Andre Agassi, many top US Sports Athletes,
the US Military and most importantly of all, top financiers prepared to
pay him millions of dollars a year for the privilege.
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