Getting good customers
Of course, any potential client's first concern is going to be cost. "But smart companies look beyond what they're going to save; they look at how they're going to use outsourcing to grow their company and be more competitive in their market," says Michael Corbett, whose Poughkeepsie, New York, firm Michael F. Corbett & Associates coaches Fortune 500 firms in strategic outsourcing techniques and whose three-day seminar "The Disciplines of Outsourcing" educates users and providers around the country (for information call 914-463-1110).
To get the smart customers, you need to be a smart provider-that's Corbett's logic. If you just compete on cost, you're going to win customers who are just interested in cost, he says.
"Consultants should really be looking at the customer," says Corbett. "Look at what they want to accomplish in their business through outsourcing and look at how you can contribute to their success."
Know thy customer"Good customers" can't be too hard to find, considering some of the statistics Corbett cites: Â·
- More than 90 percent of organizations outsource one or more activities today;
- U.S. companies spent $100 billion on outsourcing in 1996; Â·
- The largest amounts of outsourcing moneys are being spent on information technology, administrative services, logistics management, and facilities management. Â·
- Outsourcing will continue to catch on. By the year 2001 companies will spend more than $318 billion on outsourcing, Corbett projects. Corbett has little direct experience with environmental health and safety consulting contracts, but sees the current trend as a "big opportunity for EHS professionals to build a business that allows them to be more appreciated than they were in-house."
He calls outsourcing "one of the most demanding and high stakes decisions any manager is called upon to make." And a consultant who understands what that manager is looking for has a better shot at being the provider.
Corbett suggests asking a potential client a few key questions to find out if they're the type of good customer you're looking for.
For instance, ask what is happening in their industry that's causing them to look at outsourcing. "Look at how outsourcing EHS can contribute to the company's success in the marketplace," Corbett says. "Look beyond your discipline to understand how you connect to the company's business objectives. Frequently that's what the internal group has failed to do, which is why it's being looked at for outsourcing."
Any consultant's greatest job prospects are within industries undergoing great change now, says Corbett. Industries experiencing de-regulation, changes in funding, or emerging competitive pressures are good places to look for good clients, he says. Utilities, health care and telecommunications are a few examples.
Another "good client" indicator is the level of management involved in outsourcing decision-making. "The higher up the better," says Corbett. When top managers are involved it means the organization is serious about making changes, he says.
Consultants should also tailor their approach to a customer's size, Corbett advises. Generally, smaller companies have different reasons for outsourcing than larger ones, he says: Smaller companies look for someone to get the job done; larger ones look for experts to support their internal staff.
"Companies with less than $250 million in revenue-and especially companies with less than $50 million-do not have the resources internally to attract and retain the quality of professionals they want for this particular activity. That obviously would not be the problem for companies with over $250 million in revenues," Corbett says. To larger firms, consultants must demonstrate how their talents will provide abilities the customer can't develop internally no matter how much they spend, according to Corbett.
Reward for risksCorbett offers another tip for consultants who are sincere about finding clients who look at more than price tags: No double standards. "You can't say 'I want customers to look at more than just costs' but then say, 'I want to be paid for services no matter what'." That's how providers pigeon-hole themselves into bidding jobs based only on cost instead of their value-added, Corbett says.
Smart companies want to pay for results, not just services, says Corbett. "The more a provider can tie their fees to the results and benefits the client receives, the more receptive the client will be."
Some consultants, for instance, negotiate payment as a percentage of the savings their services gain for the client. Others make deals on stock options or payments tied to stock performance. It's a risky way to do business, especially for EHS consultants, Corbett admits. But it's a way a smaller consultant can gain an advantage over larger ones who are less likely to take such risks.
And, Corbett adds, a client paying you based on results will manage you relative to your results. In other words, the smart company won't try to tell you how to do your job, but will measure you critically according to your performance metrics, whether they are accident and injury rates, or employee perception surveys. The upside is the financial reward you get when you're able to deliver, he says.