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Five lessons learned about paying consultants for Net Promoter Scores

Since our initial deployment of the Net Promoter Score (NPS) for variable compensation at my Professional Services Organization (PSO) two years ago, there are five lessons learned that are broadly applicable for other PSOs that are considering adding NPS to the mix. We chose to deploy NPS because consultants can strongly influence the outcome and benefit from the results. NPS measures whether or not your consultants are creating advocates or adversaries for your brand, which is critical to landing add-on sales at existing clients as well as new customers.

Forecasting Bottom Line Profitability at the Professional Services Organization

Most Professional Services managers or directors annually participate in the management accounting exercise of forecasting future billings and profitability. The prevalent model in experience-based Professional Services Organizations (PSO) are time and materials-based billing projects, where charges to the client are based on the actual hours consumed, typically up to a not-to-exceed number. However, the dominant model in an efficiency-based PSO is deliverable-based billing, often at a fixed price. Two distinctly different formulas are required to calculate billings and profitability across these practice areas and billing types.

Strategic Client Portfolio Management for the Professional Services Firm

Strategic client portfolio management is a challenge for most Professional Services firms. As a result, professional services managers at a significant number of firms are just avoiding the topic. This is unfortunate, as it means sales teams and senior partners are pursuing potential and existing clients based solely on their own intuition rather than a systematic assessment. Firms that strategically decide on which clients are the most important for their limited sales and marketing resources have a competitive advantage when compared to spreading these resources too thin.

Traditionally, Professional Services Key Progress Indicators (KPIs) focus on the financials of the embedded Professional Services Organization or firm. KPIs are useful as a dashboard for understanding and communicating the health of the business, and for decision-making. However, those decisions primarily concern the Professional Services Organization and are of limited interest to the rest of the firm. Bookings, billings, backlog, revenue per region, utilization – these are not top of mind for a sales team.

Utilization is one of the more common Key Progress Indicators (KPI) for a Professional Services firm. Firms will often set the utilization KPI between 65% and 80%, and expect their professionals to spend the rest of the year on non-billable activities, training, holidays, and vacation. While the number of days in a calendar year is a standard amount, there are several ways of calculating the number of possible workdays in a year. It is important to understand the ramifications of that calculation and how it affects the Utilization KPI.

I thought about our old customer survey process in the course of preparing for upcoming staff reviews. The old process consisted of sending a customer a short email and a link to a five question survey. If the customer hadn't replied within a week, we sent them a reminder about the survey. The email addressed the customer by name and included my phone number in case the customer wanted to speak to me. The customer survey used the Netflix rating system, which is a five point rating scale ranging from "I hated it," to "I loved it." This isn't a unique process. We recently chose to replace it with a process we feel will be more effective.

My colleagues produce art, and I apply engineering methods to measure that art. This simple discipline has become part of our staff retention efforts.

A consultant typically has a simple set of tools to work with. They might have a basic template for a document that they will prepare for a client, or some template illustrations that can be re-used across clients. In the hands of the untrained practitioner, these templates might seem like a simple exercise of filling in the blanks on a form, or re-arranging box and line illustrations. The consultant uses these basic tools only as a guideline, alongside a series of conversations or workshops with customers. Those conversations are an inherently artistic, creative process - to use the existing tools and their individual experience to create something new for a client.