I was at lunch with a peer and friend the other day, telling her a story about how a mutual acquaintance had called me out of the blue to ask for some marketing counsel, which of course I gave her. My lunch companion said, “I hope you charged her.” Gulp.
I’ve been in the business for 20+ years. Owned my own agency for almost 13. I know better. But I still give away too much milk. And then I get frustrated when no one wants to buy the cow. I know I am not the only marketing professional out there who struggles with knowing when a simple conversation turns into a billable opportunity. Am I?
I’m not suggesting that I carry a time clock in my pocket and start punching in every time someone asks me a question over a cocktail or at a networking event. But when someone asks you to have coffee or if you “have 10 minutes” at what point do you know this has turned into a business transaction?
And, how do you gracefully let them know it has turned into a business transaction? I don’t want to even think about how much money I have left on the table over the years because I didn’t have the answer to those two questions.
Don’t get me wrong. I want to be helpful. I want to be generous. I’m even okay with being an absolute fool now and then. But, I also want to be a smart business owner.
As Steve Lovelace said in a post on this topic: “Nobody expects their architect to work free… so why would you?”
Have you figured this one out? I really would love to hear how you handle these kinds of situations.
Wow…what a timely post. I’m in a dispute with my business partner right now. He loves to just give away our expertise and undercharge for services, fearing “pricing us out of the market.”
I’m anxious to see what other posters have to say on this matter. It is really a delicate dance. Once “friends” get accustomed to having free “coffee,” it becomes almost impossible to start charging them for the milk and Splenda.
Drew,
Like you, I give away lots of milk. I don’t see that changing. Giving is a good thing, and I believe doing so helps the bottom line more than it hurts our income. When we are generous with our ideas, we reap the rewards of that generosity in referals, leads and lots of happinness.
On the bright side, at least the milk is drinkable.
I provide lots of milk – in varied flavors! – on my site. So, when people want to “pick my brain” over coffee, I keep it short and set the tone up front – something like, “I’m always happy to chat for 15 minutes” but I do normally charge for consultations – if you’d like to do more after our initial conversation, that would look like..” And, I refer them to the pre-packaged advice (and my free e-letter) for more if they don’t have a budget yet.
I don’t know what it is about marketing – but somehow people think we should work for free.
P.S. The more I charge, the
more (good) business I get.
Would you be happier giving it away, or charging money for the times you do?
Figure that out, and you should be able to answer the question
Drew-
Like everyone else, we do the same thing and hope it leads to $$. I think it’s the nature of urgent vs. non-urgent needs in the service business.
If you have mice in your house (urgent), you call an exterminator and pay. But, if you just want to know the best repellent to lay around the foundation to prevent mice from entering (non-urgent), you call an exterminator and he probably tells you for free.
Dawn,
I thought (and hoped) that I was not the only one who wrestles with this from time to time.
It is a balance. The question is…what triggers you shifting from free to consultation AND how do you have that conversation. Like you, I am eager to hear the other’s thoughts.
Drew
Thanks Lewis…I thought I was alone in this. True, you always get back what you give. But when it gets to the point where it becomes stressful paying the bills, then too much is being given away.
Mary, you’re right. People seem to think marketing is magic and therefore your time isn’t worth anything. I’ve also stressed to my partner that it’s better to have a few really profitable clients, than a ton of clients we’re bearly making a living with.
Wish me luck…
Lewis,
You are too savvy a business man not to have a boundary about how much to give, though. That’s my question.
I am not saying I want to give less. I am not saying we shouldn’t share and share some more.
But we run a business. So how do you know when it’s time to turn off the free channel?
Drew
Cam,
LOL! Very true. And I don’t want to leave people parched. But I do think there’s something about our industry that de-values what we sell. We all talk about the new agency model being one where we sell ideas.
How are we going to do that, if we don’t know the answers to these questions?
Drew
Mary,
Does anyone bristle at your “but I usually charge” comment? I suppose if they do, you know they’re probably not a good potential client anyway, eh?
So you give away a little milk so they can swallow the “next time you need to pay” pill.
I also like the way you position the info you have already bundled as a “here’s how I can help if you don’t have a budget yet.”
No wonder you’re so successful! If someone takes the free coffee and calls again for another….how do you handle that?
Drew
Wow, can I relate. It’s a tough , tough place to be.
UGH…DID I SPELL “BARELY” WRONG?
UGH…DID I SPELL “BARELY” WRONG?
Great post Drew…Judging by the comment activity, you’ve struck a nerve.
I often chalk up the giving of milk as a marketing expense. In the high-touch, relationship-driven service business, we’re happy to trade a few minutes of counsel for the awareness, credibility and networking we get in return.
The challenge lies in gracefully transitioning the conversation from the marketing phase to the sales phase- where we scope out the job, agree on terms and close.
One way to do this is by following these lactose-laden conversations with a short document that recaps the challenges, goals and general recommendations, and lists specific areas we can help. No pricing, but a little more formality than a conversation over coffee, a reason to follow-up and a framework we can use for a proposal.
Drew -
I can totally relate to what you’re saying. I tend to be a bit of a “milkmaid,” myself. There are days when I walk away from a conversation doing a Homer Simpson (DOH) over how much I spilled on the table.
Some days it pays off – and sometimes it doesn’t. As a rule, however, I find that giving away too much milk means they’re no longer thirsty.
Lately, my approach has been doing the initial discussion for free and then offering a reduced fee for an initial consultation. Initial consultations last for 2-16 hours at my discretion… depending on the work at hand. The client will always walk away with written counsel that they can use however and wherever they like.
During the initial consultation, I try to:
1. Zone in on the problem they really want to solve
2. Solidfy whether they have intention, willingness or money to spend on a SOLUTION
3. If they don’t have money or willingness to pay for larger scale help, I try to give them a high level view of potential APPROACHES they might take to tackle their challenges. I do not get overly specific or provide solutions in an intial consult, if I can help it – although sometimes I do throw in some cream as bait!
4. I also provide them with a realistic scope of work and estimate that outlines what it will take to have me solve the problems for them…
While some people get weird when I tell them I need to charge for consultation time, I find that those people usually aren’t serious about anything other than picking my brain.
I find that those willing to pay for an initial consult are WORTH the reduced fee initial consultation.
This approach is working pretty well so far. In the end, I get paid fairly for a small investment of my time. I don’t resent giving advice in the initial consultations, and I use them to create realistic bids for future work. The initial consultations often work into larger scopes of work.
Not a perfect solution… just an idea…
Ryan,
Well sure….nothing would make me happier than to simply give away my time and talent to people and organizations that I believed in. I’d love that.
But that won’t pay my mortgage, college tuition or the salaries of the 7 people who depend on me for their families.
So we can’t make it be about what would be more fun or make us happy. There has to be a business strategy and a balance to it. That’s what I am wondering about…how do you define and then honor that balance.
Drew
I like what alot of you are saying. Networking is a key to a successful life. I would be cautious though in answering questions that you know could lead to a sit down conversation that you could then bill for. Friends are great to have, but when they start impacting your bottom line that is where you need to ask the question, How good a friend is this really? Are they only friends with me because I give them great advice? If the only time that you hear from your “Friends” is when they are in a bind or need a solution, then you know how important of a friend they really are. I go by the motto, Give a Little, Get back More! Never give away your professional opinion and education! You Worked TOO DAMN HARD to get ahead! Friends taking you to coffee is a great gesture! Friends who ask you all the time for business advice, might be time to find some new friends! DO NOT GIVE AWAY YOUR BUSINESS for FREE! You will kick yourself all the way to the unemployment line!
Jeff,
Love the mice analogy!
So how do you move someone from the free counsel to a paying relationship? Do you have a strategy or trick you can share?
And as I asked Mary — so let’s say they have hit you up for the free coffee counsel once and call again for another.
How do you handle that?
Drew
Hey Drew,
Great post. This is probably more of an issue than many care to admit. But it’s a thorny one, which I suspect is why you’re raising it.
It reminded me of what I read in David Maister’s Strategy & the Fat Smoker. In it, Maister presented the difference between sales plans and relationships; the former is a way of getting while the later is part of giving. If you’re more interested in relationships than the sales, the choice is clear. And if you appear to be more of a trusted advisor rather than simply an expert, the relationship should blossom.
It all comes down to what you’re willing to put into the short-term to (hopefully) gain in the long-term. It’s a business cost you’re undertaking with your firm, much as you would with R&D, equipment or talent, only this is an investment. So rather than being amortized as an expense over time, it’s an outlay against future revenue.
At a certain point, you’ll use your people skills to understand who’s hanging around to see if they can get as much free milk as they want, and you’ll send them to another farm. But if they’re really looking for a trusted advisor (and Maister’s research indicates that 80% of businesses are), there’s going to be some giving on their side as well.
Jon,
Thoughts on how it should be handled?
Drew
This brings two thoughts to mind:
1) Everyone has ideas, so therefore ideas without action aren’t worth much. It’s been my experience that when I give away advice, it usually leads to being hired to help implement the advice.
Even when talking about consulting, the best consultants don’t just report their observations and give advice based on what they see. The best consultants have to immerse themselves into the company culture to create action steps.
2) It’s easy to spot a free loader. You know the person. They come to you with the intentions of sucking all they can out of you. They try to mask it, but you can tell what their true intentions are. Then they will either try to go and do whatever they were needing help with themselves or they will look for the cheapest way to get the job done. These people are dead end connections and a waste of time as far as I’m concerned. I have no problem rationing the milk to these types, and completely cutting off the supply if necessary.
Dawn,
You’ve got me laughing at my desk here. Not only did you spell it wrong…but then you posted the fact that you spelled it wrong TWICE!
Boy, this topic has you rattled! ;-}
Drew
Drew-
RE: Do you have a strategy or trick you can share?
See Todd Cabral’s post. That’s how we roll. Sometimes it works, sometimes it doesn’t.
Drew,
Wow! You want all my secrets. OK. But you have to promise not to share how I limit my giving:
1) Clients–I give them four free hours for every 10 that I work on their solutions. I don’t charge for our meetings, except expenses.
2) Potential Clients–Often find me by reading something I’ve written. Therefore, they have achieved their “freebie” limit until they become a client.
3) Professional peers–I share and share and share some more.
4) Former clients–Get one year of answers for their questions, as long as they don’t share those answers with others.
5) Friends who will never become clients–They get some basics as “freebies,” and then I refer them to someone who charges less than I.
Todd,
I like the follow up with a recap idea. That clearly says…and now we would start charging you to proceed.
Agreed on the marketing expense comment, by the way. Without a doubt, you need to give free samples. I have always been a huge proponent of that.
The trick is knowing when enough is enough and how to, as you suggest, gracefully move from one stage to another.
Drew
Respectfully, but totally, disagree.
Give it away big time. Blog it, share it, speak, write, whatever.
You ideas are your selling tools. Give enough away and real clients will pay for even more.
I give away 100 books/month ($25 each), blog everything, speak for free. And the more I do, the more work I get.
Demonstration: I’ll send a free book to the next 5 people who ask for one (use blog comment form).
Andy Sernovitz
Author, Word of Mouth Marketing: How Smart Companies Get People Talking (http://tinyurl.com/2twm77)
Drew,
This is a great article and the comments are great too. I would like to re-print the article on my blog with your permission.
I couldn’t agree with you more and in fact I agreed with you so much that I created a company and a web site that allows individuals to monetize their business relationships. No more free-rides for linking up people with business.
http://www.salesconx.com
Hey Andy, I’ll take you up on your offer! I’m a reader of your blog already and obviously a fan of your work.
It is very disturbing to me that we are afraid to get compensated for doing our jobs. If your friend was a broker and you were buying a home through him who you expect him to forgo his commission? If you went to your friend the physician for a check up are you charged a fee? So why do we allow our assets to be given away for free simply because someone asks nicely? Is your knowledge in marketing any less valuable than the physicians knowledge of medicine. Your friend the broker gets commission simply for showing you a property.
This doesn’t mean of course that all your time is billable but it also doesn’t mean that you are running a pro-bono service either. And by the way, I don’t buy into the “what goes around comes around adage” as that was created by people who simply wanted something for free. In the situation above I would have told the acquaintance, ‘your situation sounds very interesting and it really merits more than a flip answer. Why don’t you come into my office so we could discuss the situation professionally?’ Now this is the litmus test; if the acquaintance isn’t willing to schedule an appointment in a professional manner than why should dole out counsel for free. Note that I didn’t explicitly say to charge the acquaintance …. you could determine that at the meeting and whether there is an opportunity for some billable time. But, you wouldn’t expect you friend the physician to give you an off-the-cuff physical examination either.
It is important that we recognize that our human capital be it from an expertise that we have, to relationships that we have cultivated, are valuable and giving them away for free only serves to reduce their value.
I think you’ll get into trouble trying to bill everyone for every minute. I think a large part of the reason I’ve been successful is giving away just enough to convince people I’m an expert in a given field, and more often than not they hire me to carry out that work. In part because I didn’t tell them everything and in part because they don’t have interest in pursuing it directly anyway.
On the other hand, I track all my time down to the quarter-hour for just about everything I ever do related to the business. These records sit in a database, and if I end up giving a single client more than one lunch worth of attention, I can see it immediately and decide when to draw the line and call it billable.
I hate tracking time as much as anyone, but it’s a necessary evil. My advice, track everything and use those metrics to decide what’s worth turning into a project or business relationship.
/\S
@Drew: I’m saying there’s usually a point when you can “feel” people doing all the taking, and not offering anything in return. If this happens, it probably won’t give you much pleasure to keep handing out freebies.
Personally I think there’s a threshold here. At some point, passing out advice goes from being enjoyable to being a burden. At that point I think it’s more than fair to expect something in return.
Leigh,
Now that’s a great method. Offer value on the front end but taper down how much you get for free.
I’ll bet you’re right — it allows you to separate those who are serious and those who are just milking you.
Drew
Jeff (Campbell),
If you don’t give away a little (kind of a sampling model) how do you demonstrate your expertise/value to a prospect?
In other words…how do you get around the free milk thing?
Drew
Scott,
No argument from me on that. I’m all for investing in the relationship on the front end. But…at some point, they’re either a pro bono client or you get paid.
My question is…how do you determine where to draw the line and how do you gracefully have that conversation so the client feels good about being moved from a freebie to paying for what they need/want.
Drew
Chris,
Much of what is being talked about and written about in terms of the agency of the future is the exact opposite. Soon agencies will be valued/judged not on the stuff they make but the ideas and insights they offer.
I believe the ideas and knowledge we have is exactly what we should be selling. Sure, we make stuff too. But if the smarts aren’t behind the stuff…a monkey with a PC can make an ad, right?
So…what’s the reasonable middle ground?
Drew
Lewis,
I promise, this is just between you and me!
When you give your clients the 4 hours…do you show them that somehow? Is it credited on an invoice or documented in some way?
I ask because people can’t value and appreciate what they don’t know they have.
So if a potential client wanted to pick your brain over coffee….would you say no? After they “sign on” then they get that advice?
Thanks for sharing your philosophy — you truly are one of the most generous peers I know.
Drew
Andy,
Actually, respectfully, I don’t think you do disagree.
I don’t think anyone who has commented is saying we shouldn’t blog, speak, share, have coffee and offer some counsel etc.
We all do what you are proposing and I would guess many of us who are authors have also given away a ton of our books.
But at some point, we all (you included) need to get paid.
If a company came to you, asking for advice — would you help them create a WOM campaign for free? Without any end of the freebies in sight?
I am guessing the answer is no. Which I think is what we’re all saying. My question is really — when do you know enough is enough? And how do you handle that transition.
So, do you still disagree? If so, I’d love for you to talk more about that disagreement.
Drew
Evan,
I’ll ask you the same question I asked Jeff Campbell. If you don’t subscribe to the sampling method — how do you convince your prospect of your expertise and value?
For example…once a month, my company hosts a free Branding Breakfast and we serve a hot breakfast and an hour’s worth of information/counsel on branding your business.
We put it in the newspaper, we include the invite in our free weekly marketing e-tip…etc.
That’s one of the big ways we demonstrate that we know our stuff.
How do you accomplish that?
Drew
Ian (and 4 other smart readers) — you’ll love Andy’s book. Filled with great examples and an insightful read.
Drew
Andy,
I agree with you 100%. It is a smart strategy to give away a little, to demonstrate your expertise. There’s not a client at our shop who doesn’t get the “you need to sample” speech.
The idea of tracking the freebie time is interesting. Ryan may be right — there’s probably a gut check level of knowing that you’re starting to feel used. But, having accurate numbers is probably wise as well.
Drew
Ryan,
Excellent point — the gut check. At some point, you feel a little used. Once you get that sort of vibe, you probably know there’s no opportunity on the horizon or if there is — you’d better say something to move the relationship in that direction.
When in doubt, listen to that inner voice.
Drew
Yeah, though at the same time I always seem to be behind on the hour-tracking. It’s a bit of a drag, yet I still keep at it as it seems to always become useful (especially when billing). Until I become a project-only business, I’ll keep doing it.
I’ve been on the other side of this as well, trying to get projects rolling with new partners and players. One of them involved a series of conversations for more than a year, which has recently finally erupted into 4 or 5 jobs to share between us. I was glad to have all the free advice (and some went the other way) but keenly aware that I needed to get some real projects on the table or this would eventually dry up. I imagine any client in the business world would be sensitive to this. And if they are not, it might not be a good match anyway.
Does anyone distinguish the free give away quotient offered to prospective versus current or former clients? I am always generous, but I tailor the amount of free advice to each situation, the established relationship, the cost/benefits balance, referral source, and the effort associated with providing the help sought.
I also am of the mindset that what goes around comes back and this drives me to enjoy being the giver. If you take this to the networking level, then it makes a whole lot of good sense. Being generous almost always pays off in reciprocal relationships, if not immediately or from the same person you gave to, then sometime in the future and from an unexpected source. Few persons are purposefully trying to rip you off. Those who continually abuse your relationship are probably ones that you should distance yourself from. Anyone else reporesents a high probability of giving back, someday, somehow.
DebraFeldman
the JobWhiz
I think it is about simultaneously moving up the value chain and broadening your reach (as Andy suggests). It is not about doing more based on time, but more based on value of your offer multiplied by your network (think of your Disney PDF – imagine if that was a $5 download).
This means investing upfront in process, systems and content. Making it bite sized. Accessible. And probably cheap.
There is nothing new, really, but it sometimes pays to remember the small steps. In case you can’t tell, I have been reviewing Michael Port’s new book
Sorry, I don’t really feel your pain at all. All you were doing was telling someone an idea. The information should always be free. To think that in a world as open as the one we live in that we should still be hording all the “good answers”, you’re kinda living in the 80’s man. What we start charging for is the service. That’s the only thing that’s worth anything anymore and always will be. Stop trying to sell ideas, let those go out for everyone to understand and absorb. Sell your service of getting the job done. An idea is nothing, it’s the agency that can activate on that idea the best which will succeed.
Drew,
You’re right, the industry is changing.
But I think there is a difference between giving away an idea and creating insights and bridging gaps for clients. Neither require us to produce something physical, and I guess we could technically consider them all ideas, but the later is more complete, and I would argue that is where the value is. Give the ideas away.
Drew,
Before we sign a contract, I tell them that I apply a 60% utilization rate, meaning client pays for 10 hrs. of every 14 hrs. that we work for them. Yes, if a potential client asked me to coffee or lunch, I would give them free advice. I’m pretty much in Andy’s court here, although I do have some barriers, which I break all the time. I do believe that giving is good.
“Respectfully, but totally, disagree.
Give it away big time. Blog it, share it, speak, write, whatever.
You ideas are your selling tools. Give enough away and real clients will pay for even more.”
I agree with Andy here. And I am even ok with giving away tactics and strategies. But when you cross over to giving away tactics and strategies that are tailored to specific circumstances for specific people/companies/etc., then you’ve gone too far and are leaving money on the table, IMO.
I have done this a number of times because it just “comes up” in the ourse of conversation. I enjoy it and will never charge close friends for my time unless it is for the sake of a “business transaction.