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10 Oct

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On good business (or why lock-in is bad practice)

October 10, 2010 | By |

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 victims clients.

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.

Comments

  1. Well I can only confirm that reputation. We have the same philosophy even though it has a peculiar effect on potential clients: they simply won’t believe that you aren’t trying to sell them. In English, one can label it differently by stating to be an “advisor”. Sadly, there is no synonym in German that I am aware of though. (It doesn’t seem to help much to say that you aren’t “that kind” of consultant.)