Thursday, July 25, 2024

How to Best Qualify Your Customers

Q. I am new to the consulting business. Many of my friends, some/some consultants, some not, tell me I should be qualifying my clients. I don’t know what it means. I know how qualify is used in sports and when applying for a job, but what does it mean when working with customers? …From a small business owner named Carl.

A. Carl, you are not alone in wondering what the term “qualifying customers/clients” means and how it is or should be used. I believe it is a term that is often misused. Yes, it is important to determine if a customer has the ability to pay your fee which is one of the uses for the term. As the fee goes up and the size of the business or the time they have for business goes down, the importance of determining the ability to pay becomes more important.

Other than the ability to pay, I find more consultants qualify more customers out the door than in the door. There is, I believe, a reason for this. Most consultants’ marketing materials do not quote a fee structure up front. If they did, they would find that customers would do the qualifying and the problem goes away.

Clients, most likely, have a figure they believe they might spend for the service or project they are looking for, even though they do not have the slightest idea of what they are asking for. If it is close to the maximum they believe they want to pay (in their minds they do not want to sign up for funding a consultant’s annuity program) or is one they believe their associates will feel comfortable with, they will, by continuing the conversation with the consultant, indicate what they can pay and will pay for the program. They may even be willing to go a bit higher if they believe that spending 10% more brings them 25% additional in benefits. If clients are unwilling or unable to pay for such a program, then they will discontinue the negotiations — disqualifying the consultant so to speak. Understand, when it comes to money, that it is the client who qualifies/disqualifies the consultant’s ability to deliver for the fee quoted and not the other way around.

There is another aspect to qualifying customers that has nothing to do with the ability to pay but will affect their willingness to pay. That aspect is how does the program fit into what the firm is doing, planning to do or would like to do, or a combination of two or all three of these situations? One consultant I know asks their potential clients, “What, in addition to what we are discussing, are your other problems or worries?” Why does he do this? “Well,” he told me, “no problem is an isolated one; it is the result of many other problems.” He went on to say that the discussion opens up the flood gates which leads to a more comprehensive program or one that the client never thought of. This increases the willingness to pay.

Now, back to the original question — the ability to pay. Of course, there is a credit check. Secondly, the terms for the payment of the program needs to be stated or spelled out in as much detail, almost, as the detail of the program: — payment time(s), payment penalties, cancellation policy and charges, limits on travel/lodging/meals (example: I state in my brochure and agreements that my meal allowance will not exceed my hotel rate) etc.

So, Carl, “qualifying” customers has two meanings: 1) the ability or willingness to pay, and 2) that there is a fit between what clients think they are looking for and the ability of the consultant to fill the need. One without the other is failure for both the client and the consultant.

Printed with the permission of the author, Alan J. Zell, Ambassador Of Selling. A member of cadre of speakers, coaches, and trainers. Winner of the Murray Award for Outstanding Achievement in Sales & Marketing. Chairman, PNW Sales & Marketing Group.

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