On good business (or why lock-in is bad practice)
October 10, 2010 | By Peter Bihr |
Last night our office neighbors, the good guys of Your Neighbours, celebrated their first anniversary. At the party I had the chance to talk to a whole bunch of great folks. There was one conversation though that I found particularly memorable.
A student asked me what I do for a living, and I told him about our company and how I freelanced as a consultant until very recently. We started talking about consulting in general and how the field has a certain reputation: often consultants have the reputation of being rip-offs, of coming in for a lot of money without any real stakes in their clients’ organizations, and leaving behind a trail of destruction after they move on to the next project. Not all that rarely consultants also sell clients services they don’t really need just to make a few extra bucks, in other words: they milk their
I told him I was aware of that reputation, and I’d do my best not to follow this poor business practice. In fact, almost all my clients ever hired me on the basis of a recommendation. When I’m asked for advise I often send potential clients away, straight to my competition or my peer network, or I send them some information if I think any of these sources might be more helpful than my services. I prefer capacity building over lock-in any time. I compared client lock-in to the two-year contracts that many phone carriers force you to take, and how much I disliked them. I had the impression this student didn’t believe me. He kept inquiring.
Yes, in the short run that means I might lose some quick sales. Yet, I think it’s much better business practice to give the best advise you possibly can, even if that means sending clients away. Trust is the best basis for long-term relationships, in business just as in private life. In other words: I’d rather send a potential client away and help them reach their goals then lock them in with a long-term contract and have them try to get out unhappily. It’s better for their business, it’s better for mine, and it most certainly is a lot more fulfilling than a quick buck.
I hope I could help this fellow re-assess some basic business philosophy in order for him to have a better life later on. Really, it isn’t more than a common sense approach to running your business.
That said, we’ll have a launch party for Third Wave Berlin soon. I’ll post the date as soon as we have it.