Friday, October 06, 2006

Expensive Books and Tools

We had a difficult discussion with a client this week.

Let me start with the end of the story, because you know it so well: She's not willing to spend one dollar on the most important application in her business.

We've all seen it.

She has an old DOS and FoxPro application that only runs on Windows 98. Won't run on 2000. Forget XP. Vista? Hahahahahaha.

It's on a failing laptop.

Options:
- Upgrade the application. Too expensive.
- Find a legal copy of Open License w98 media and sell her five licenses with backward compatibility. Too expensive.
- If we can find a legal copy *somewhere* (e.g., unused oem pack), load it onto a new pc. Too expensive.
- Load it onto some old piece of crap from Ebay. Too expensive.

STOP. You entire business relies on this one application. From what I'm hearing, you're not willing to spend even $100 to address the problem?

What the . . . ?

Reality check. It's time to sit down with the client and take a look at the big picture.

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Reality check for you, the SMB consultant:

Are you doing the same thing with your business?

Because I sell a pricey book, I seem to be involved in a lot of conversations about the value of expensive books and tools.

For example, Erick Simpson's new (and excellent) book on Managed Services.

Whine: I don't want to spend $100 on it.

Slap: Stop. You're considering revising every single aspect of your company around managed services. You're going to revise hiring, staffing, hours, contracts and subcontracts, compensation, pricing, packaging, the kind of services offered, etc. Everything. Every little thing from "Hi, my name is" to "Thank you for your business."

And you're not willing to spend $100?

What the . . . ?

We can stumble along in the dark figuring this stuff out for ourselves, or we can turn to someone who has already done it.

Remember your personal Big Mac Index: How many hours of labor do you have to sell or save to pay for this? One. If you said two, raise your rates.

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Expensive Programs are similar.

Here's the analogy from your own business.

When one of your clients has a major problem (e.g., exchange server is down), then they'll spend any amount of money to get the problem fixed. The same is true of hard drive failures, internet outages, and failing switches.

The more urgent the situation, the more money they're willing to spend.

The more they need information they don't have, the more money they are willing to spend.

You're the same way.

The more urgent the situation, the more money you're willing to spend.

The more you need information you don't have, the more money you are willing to spend.

Example One: Ken Thoreson and Acumen Resources

Example Two: Robin Robins Technology Marketing Toolkit

Ken's systems for hiring and human resources are spectacular. But they cost a lot of money.

  • When you hire your first employee, you don't need it and can't afford it. But somewhere along the way, before you hire your tenth employee, you're going to need a _system_ for making sure you hire the right people -- and keep them.

    If you can gain the knowledge you need gradually over the years and put a system into place, then you're set.

    But if you're like the rest of us, you'll suddenly find that you're spending hundreds (or thousands) of dollars a year stumbling around trying to figure out where to find the right people, how to hire the best, and how to stop wasting money with hires that don't work out.

    Your system is down and you'll spend whatever it takes to make it work.

    Now, you can take yourself to school and learn this stuff.

    Or you can lay down some cash and do a quick learn. You probably won't do every little thing Ken recommends, but you WILL get a great big step up.

    That step up will pay for itself. Really.


Robin Robins' toolkit is also expensive. But the argument remains the same. She's figured out how to sell the products you sell to the clients you want.

  • Not everyone wants a "system" for selling. But growing consultancies have to have a system of some kind. You either build yourself or buy it.

    Does Robin Robins have a deep dark secret that only her subscribers know and they can't tell under penalty of death. Maybe.

    No, of course not.

    Her programs are filled with a huge amount of education and common sense, and topped off with a series of proven techniques for marketing in our space.

    You could build this yourself. You could spend huge amounts of time, take classes and seminars, read every sales book you can find, and distill it down for our market space.

    But if you need a marketing program fast, then you're willing to spend the money.

    You won't live long enough to try every campaign idea Robin has in her toolkit.

    Again, you may not use everything here. But you'll have a big step up.


Paybacks

How can these tools be worth $1,000-$1,200 ???

Well, that's pretty simple. 1) When you need it, you need it fast. Urgency=willingness to spend. 2) A good kit gives you enough information and tools to pay for itself in short order.

In the case of Ken's system, look at the costs of hiring, firing, posting, sorting through resumes, etc. It makes me want to scream. I hired a guy last year that cost me about $1,200 to hire, plus weeks of unproductive labor as he was trained, plus training materials and exams. Not counting his salary, he cost me about $5,000 in three months. Then I fired him.

Thanks to Ken, I know how to avoid that forever in the future.

The case for Robin's toolkit is much easier. How many new clients does it take to pay for the toolkit? I hope everyone responds "one."

When I look at the smallest client we've gotten from a Robin Robins campaign, I see a company with one server, three desktops, and two laptops. Their initial job grossed about $10,000. Since then we've billed additional labor. They've signed a contract and will be with us for many years.

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The same is true for many tools. We tend to be like our clients. I can justify a $200 phone, but I'm not willing to buy Beatrice's book on Making it Big in Small Business. Gimme a break.

Be what you ask your clients to be. Create a budget. Put training and books in the budget. Add tools for H.R. and marketing. If you don't have a CRM system, AutoTask, or ConnectWise, put that in there. Same with your managed service software, whether it's Shockey Monkey, Kaseya, or LPI.

I know this is a lot of money. And most people can't do it all at once. But the equation is pretty simple:

You have to either build the stills and build the tools, or you have to buy the skills and buy the tools.

7 comments:

  1. Hi Karl,

    ha ha, speaking your mind are you? Of course we are just like our clients. It's all about how much you are willing to invest in yourself and your business. (And if you are not willing, what does this tell others?) Sometime it does take another with an outside point of view to put you back on the right track. Thanks for the slap!

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  2. What a great analogy, Karl. I always consider myself a student, and continue to invest in training materials and Seminars to learn from others such as yourself, Patrick, Robin, Beatrice et al...

    I always say "boy I wish..." I always wish I had located the resources I need for whatever situation I'm dealing with before it occurs - like the Boy Scouts of America say..."always be prepared"!

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  3. Karl,

    First of all, I have to admit to not having bought your latest book, but I do have Erick's.
    With the $ to £ exchange rate it worked out at exactly one hour's fees for the book. If you can't get an hour's worth of value from this book, then you should hand in your gun and your badge (laptop and Action Pack) and start flipping burgers for a living.

    If you try to sell your solutions based on business value to the end user, then BUY IT (Karl's, Erick's or both) but if you find yourself dealing with too much cr@p at work, don't have the time to educate yourself a bit and think $100 is too much for a book then you REALLY DO NEED TO BUY IT but more importantly READ IT!!! Don't let it sit on your shelf gathering dust.

    Same with clients - if they don't see the value in moving to XP from 9x then you really need to have a chat... If they still don't get it then i'd suggest you ditch the 'F grade' clients and use the time you'll save to find people who see the light.

    Erick's book is worth $1,000 in the first month alone if you use it right.

    James
    Small Biz IT

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  4. Thanks, James, for the approval - I'm glad to hear you received such great value from our book!

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  5. Steve (SLC)9:11 PM

    James has a great point -- it is not only the cost of the book(s) but also the cost of digesting and applying them. Investing in the book is one thing, but that investment should lead to the time to read and apply the information. When it does not, it was too expensive, because it has no ROI benefit to the buyer. Much like bpuchasing a system and avoiding the training costs, so it remains underutilized.

    In doing research on the managed services subject, I noticed you have reviewed Erick's book. So which one do I start with?

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  6. karlp4:55 AM

    What else can I say? Start with mine. :-)

    My book will give you a great intro to properly formulating your company and examining your client relationships, as well as the basics you need to begin the process of re-formulating your company for the changing economic environment.

    -- Thanks for the slow pitch.

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  7. Bo Dikeman2:13 PM

    I love your Freudian slip at the end! You have to build the stills! Which is what I usually want to do at the end of the day, or at least drink what comes out of one!

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