11 Buyer Warning Signs IT Service Firms Should Watch Out For - Part 2
By Tom "Bald Dog" Varjan
The year was around 258. Denis was the bishop of Paris, and he was highly successful at converting pagans to Christianity.
With Denis' seemingly unending conversion success, soon the pagan priests got rather pissed off with losing their congregations to Christianity.
Eventually Denis got the short end of the stick and the long end of the executioner's blade. In plain English, he got martyred by getting his head chopped off.
And while this action would ruin most people's days, Denis decided to break from conventional wisdom.
After losing his head, he unceremoniously stood up, picked up his head and, holding it in his hands, he started walking.
Legend has it that his body walked a few miles while his head was nonchalantly preaching until he fell, dropped his head and really dropped dead.
The Basilica of Saint-Denis, which became the burial place for French kings, marks the place of Denis' death.
While this is an interesting story, the sad reality is that if you let "red flag" buyers enter your client roster, sooner or later, you may feel the urge to chop your own head off and, while walking around carrying your head in your hands, quietly reprimanding yourself for filling your firm with clients with more red flags than you could see back in the communist days on Moscow's Red Square during the Red Army military parade on 1st May.
But by then, it's too late.
So, after looking at the first six warning signs, let's look at some more, so you can avoid them with delicious dexterity.
Buyer Warning Sign #6: The "Confused / Disorganised" Buyer
Buyers are either really disorganised or so over-organised that they have no time left to respond to you.
When buyers vanish, my standard enquiry is...
"In your opinion, where should we go from here? Is there anything else to discuss or are we done?"
I send this message out three times four days apart. If, after 12 days, the response is still silence, then I quit.
Some experts say, you should never quit chasing prospects, but, I believe, smart people know when to stop chasing something that they are unlikely to catch. And although I'm not that smart but even I know this.
In their 1984 album, Perfect Strangers, Deep Purple singer, Ian Gillan informed us, in the very first song, Knocking at Your Back Door, that...
"It's not the kill, it's the thrill of the chase."
Well, a lot has changed since 1984 in the backyards of both Deep Purple and IT business development.
Mind you, Gillan's voice is still as brilliant as it's always been.
But in this case, instead of heeding Ian's advice, we'd better pay attention to Sun Tzu in the Art of War.
"What is essential in war is victory, not prolonged operations."
Paraphrasing Sun Tzu... what is essential in business development is landing the right kind of clients, not the prolonged busyness of chasing after everyone with a pulse and a purse.
Clients have two reasons why they haven't achieved certain objectives.
- Gap of expertise - Clients don't know what to do and/or don't have the required expertise and experience to do something.
- Gap of resources - Clients don't have enough pairs of hands to do the required work.
The best projects are caused by lack of expertise first and only then by the lack of resources.
Think of the gold rush in Alaska or California a few years ago.
First, gold prospectors needed and experts to tell people where to dig.
In reality, your clients almost never have the required expertise to plan and implement their projects because they've never done it.
By contrast, you do it every day.
So, unless your clients allow you to do the brainwork (diagnosis and prognosis), then you'd better reject the opportunity because you can burn your fingers down the road. And rest assured, every failure will be pinned on you.
Buyer Warning Sign #7: They See You As Their "Employees"
We know from various studies that most people become entrepreneurs for freedom not money.
Yes, they plan to make more than they do in their jobs, but the primary motivator is to get away from their dreary jobs and psychotic bosses.
Is this how you started your business?
Then you bump into a great project.
You know you would enjoy every moment of working on this project, but there is a snag.
Your client declares himself (99% of those idiots a guys) to be your boss and wants to treat you as an employee.
He expects you to work set hours and submit a daily activity report. You have to account for your breaks, so they can be properly deducted from your compensation.
But then you get totally fed up, and, hopefully, you dump the idiot.
But, and it's a big but here.
Whose fault is when clients boss you around, push your buttons ands and pull your strings?
Well, very often it's not theirs. They deal with their employees all they, so they just lump you into their gangs.
Since perfect clients are not born, it's your job to indoctrinate then to become perfect clients. You have to clearly communicate your expectations to them.
And when you work with a client who treats you as an employee, then watch out because, in the words of the mighty Judas Priest, you've got another thing coming.
Some buyers are scanning the horizon for special deals, and if you give one shred of indication that you're a sucker for deals, you get quickly sucked into the vortex of never-ending haggling.
Those clients say they would pay you the same as if you were their employee.
Pay is one thing and treatment is the other.
Also, payment is overt. Clients tell you how much they are willing to pay you, and if you don't like it, you reject the gig.
But treatment is covert. It sneaks upon you from behind and grabs you in a rear naked choke.
When you start the project, everything is fine and you're being treated with respect and dignity as a real expert is supposed to be treated.
But then the quality of treatment starts sliding, clients...
- ... become less responsive to your requests.
- ... demand quicker response from you to their requests.
- ... gradually turn requests into demands. l
- ... insist on using their oddball communication channels.
- ... expect you to track and report your time and activities.
- ... expect you to blend into the company's culture, and as a good employee, to take on extra work.
Many of the above problems boil down to one single cause: Some clients feel threatened by your expertise, and they believe if they can "tame" you to the level of a normal rank-and-file employee, that elevates their statuses.
But besides hindering your performance, those firm leaders hinder the growth of their firms as well.
So, how can you counter idiotic demands?
When it happens to me, I ask clients...
"And how will that contribute to the project's goals?"
In most cases, they can't give me and answer, so I suggest that we drop the idea and move forward.
In the rare cases when they insist, I dump them.
The good thing is that if you have a steady stream of sales leads, then you can easily dump misbehaving clients without worrying about the financial consequences.
Buyer Warning Sign #8: They Want To Pay You With Referrals, Exposure And The Promise Of Future Work
This offer is something to consider. Ask yourself if you can use exposure and the promise of future work as currency to pay your mortgage, car or groceries.
If you can, then maybe you can accept them in lieu of money.
But if not, then insist on real money.
This is also very dangerous because it shows you're dealing with a rank amateur.
Let's say you work with the COO and the CTO of a mid-sized manufacturing company with $500 million annual revenue.
That COO or CTO won't become your bird dog to ferret out lucrative opportunities for you. They are busy enough to run their own departments.
So who makes these absurd offers?
Broke-arse losers who are passively sitting in their offices waiting for the roast duck to fly into their gaping mouths.
They have no money, no clients and no prospect in their sales funnels.
What they have is a truckload of false charisma to present themselves as some kind of super-successful gurus.
"I have been saying for many years that we are using the word 'guru' only because 'charlatan' is too long to fit into a headline." ~ Peter Drucker
Just think of those shady internet marketing commercials that pop up during YouTube videos.
Yes, there are exceptions. There are cases when highly reputable, even Fortune- or Inc.-listed, companies play this soft payment game.
So, you have to think carefully. Such offers may look sweet in the short-term, but they can undermine your brand in the long-run. Sooner or later the word goes out that you work for the proverbial food and shelter.
I also discourage you from bartering. There are no two services that offer the same value.
Imagine a $15 per hour babysitter bartering with a $750 per hour lawyer. It just doesn't work. It may be a winning deal for the babysitter, but not for the lawyer.
Pay the real price to others and require real price to be paid to you.
And now let's look at their referral sources. You know, the people they refer to you.
Imagine someone refers you to businesspeople in his network.
Some people in the network will soon ask how much the referrer has paid you for the service in question, and sooner or later it's time to come clean.
If the referrer has paid you $100 per hour, then everyone the referrer refers to you wants to pay $100 per hour max.
I had a start-up software developer client in 2005, and at that time Allison charged $125 per hour.
One of her clients referred a friend to her and the friend expected to pay the same amount. But the referral happened in 2018.
Of course, prices go up over 13 years, so Allison turned down the "great" referral.
Referrals are good, but you can't run your business only on hopes, prayers and referrals.
You also need a proactive approach; a process that you can control.
So, how to avoid this miserable referral and exposure problem?
Write your prices in your proposals in a matter-of-fact language...
"My hourly rate is US$175 per hour, and in my estimation, based on previous projects of similar parameters, your project will take about 250 hours."
Stay away from using apologising language...
"My standard hourly rate is US$175 per hour, but considering your special case, I'm willing to do it for $95 per hour."
This is nonsense. Oh, and what is the special case anyway? Well, the buyer asks for a "better" price.
And even if you get the gig, it messes up your market positioning.
You're no longer a software authority but a budget-priced keyboard monkey.
Software development is lot more than writing code.
In my own trade of copywriting, writing is about 10% of the job.
The rest are pre-production (research) and post-production (making the piece readable).
In the words of Scottish novelist and poet, Robert Louis Stevenson...
"It takes hard writing to make easy reading."
But this applies to any area of life.
Think of Mac computers in comparison to PCs: It takes hard design and development to make easy use.
Think of Tesla cars in comparison to some General Motors electric train wreck. It takes hard engineering to make easy driving.
People vote for their own success with their money. Don't let them use alternative currencies at your expense.
People only value what they invest in., That's why it's called return on investment.
When you invest your money in something, you can expect a return. Without investment, you can only hope for a return.
Huge difference.
Buyer Warning Sign #9: Buyers Expect You To Do Lots Of Free Preparatory Work
Stop for a moment and think about one of your recent projects.
Now make a rough calculation about what percentage of that project was strictly technical, and what percentage was support work. The kind of work that doesn't require your technical expertise, but without which the project would fail.
You may notice that some 50%, or even higher, of the project is not even technical. That is, you're not writing code or not installing and setting up IT systems.
Yes, well over 50% of your work is not visible manual labour but invisible mental acrobatics. Many of your clients don't even realise that mental acrobatics actually exists as part of the project.
Some of them realise but try to wiggle out of paying you for it.
A few years ago, a friend of mine referred me to one of his friends.
His friend had three pigs to harvest for Christmas. Unfortunately, his son, who usually processes animals on the family farm, had just had a car accident, and he was still in hospital with some broken bits and bobs.
So, they needed a custom butcher on a short notice. And since I was processing cattle on one of our farms anyway, and because he agreed to bring his pigs to our farm, I agreed.
We connected on the phone and I gave him a fixed price for the full "project" and a rough time frame.
Then he gave me his idea.
His idea was that he would pay me standard meat cutter's rate ($18 per hour) when I'm actually cutting meat, but would pay me only minimum wage ($14.60 per hour) when I do unskilled work, like carcass cleaning or gutting.
In case you don't know the industry's hierarchy, a meat cutter to an artisan homestead butcher, that I am, is what a coder is to a graduate software engineer.
A coder can code and that's it. A software engineer has a much broader view, including coding, software development, software testing and debugging, problem solving and logical thinking, communication, leadership, teamwork, project management, finance, etc.
The biggest and longest task of processing pigs is properly dehairing the skin and leaving it as smooth as a baby's arse.
Also, he covertly hinted that he would stand behind me with a stopwatch and would document the amount of time I'd spend on specific tasks.
And that was the point when I told him not to bother and that he'd better find someone else.
Granted, I would have rejected his project even for $55 per hour, but his arrogance made the rejection a lot easier.
Yes, your clients have to realise that projects are much more than writing code. That's the tactical work. What about the strategic work of diagnosing clients' situations and then translating that strategy into an action plan?
Do you know that the D-day landings took over one year to plan? And I'm pretty certain all the generals and other staff who worked on the planning got their salaries.
When buyers expect you to do support work for free, it shows you're talking to an amateur.
Many years ago, Brian Tracy's company did a study on executive performance, and concluded that the average Fortune 500 CEO does 28 minutes of "real" work a day. Yet, they get pretty well paid.
Why?
Because in 28 minutes, they can do what most mere mortals can't do at all. And with those 28 minutes per day, their companies are on the Fortune 500 list.
Imagine, you spend 28 minutes on the phone, resulting in a multi-million-dollar project, and take the rest of the month off.
Some may call you lazy, but you may well have doubled your firm's revenue in 28 minutes.
But those 28 minutes may have required you to do 28 months of careful preparation.
Many buyers have a Leninist view about running a business. Many years ago, one of the three notorious Vlads (Putin and Vlad The Impaler being the other two), Lenin said...
"Running a business involves extraordinarily simple operations, which any literate person can perform. Those in charge of those organisations need to be paid no more than any ordinary worker."
Well, we all can see the results. And I experienced it first-hand for 27 long years.
Obviously, Lenin was wrong because businesses have many invisible moving parts. And the biggest moving part is an entrepreneurial mindset. Something workers don't have.
So, when people fail to recognise the value of your services beyond the visible physical activities, it means you might be talking to a Leninist zealot who believes that even a trained monkey can do what you do.
Just remember what the other zealot, Karl Marx wrote in Das Capital (1867)...
"The value of a commodity can be objectively measured by the average number of labour hours required to produce that commodity."
So, a pebble and a gold nugget lying at the bottom of a stream have the same value because they take the same amount of labour to pick up. Interesting theory.
I suppose, good ol' Karl didn't know better because neither he ever worked in his whole life nor he even bothered to visit a factory or talk to workers.
So, here we are and there you go... on the bicycle!
So, it's fair to say that if clients don't value your contribution as a whole, they don't really any part of it. And if that's the case, you'd better don your hat and bugger off.
Buyer Warning Sign #10: Buyers Want To Pay You Net 90 (Or Longer) After the Project's Completion
Imagine, you start a six-month project in January and - using Net 90 - you get your payment early October. What are you supposed to live on for nine months? Your savings are not for covering living expenses.
And definitely not for covering the growth of other businesses.
Also, what is your motivation to do this project? And how much attention, energy and enthusiasm do you put into this project? Almost zero.
But the real sinister part in this scenario is that you're expected to finance your clients' projects, hence growth, until they pay you.
Yes, I agree with the nothing ventured, nothing gained idea, but I believe the same person who ventures should also gain the rewards of the venture.
Here the idea is that you venture your money and your client gains the rewards from it.
There is a good chance that your successful clients don't have a problem with paying you a hefty deposit to start the project because they know that in this life everything is to be paid upfront.
And most of them do pay upfront.
There might me some clients who push their luck with you because their idea is that it's worth trying.
So, if you have poor lead flow, then you probably give in because the alternative is rather crappy and you end up with nothing.
However, it's important to mention that working with the wrong client is worse than not having a client at all.
If you have no client at all, at least you can take the right kind of action to get one.
But if you work with the wrong type of client, that can eat up all of your extra time and motivation to remedy this rather miserable situation.
If you have good lead flow, you can tell your prospect to behave well or else he gets the boot.
There are some clients who want to do small pilot projects with you to see what it feels like working with you. Some of them mean this honestly, but most of them want to use you as a quick-fix for urgent issues until their normal IT providers are available.
They tell you they pay you slave's wages for this project, but if they like working with you, you'll get lots of properly paid projects in the future.
Well, both "lots of" and "properly paid" are very broad concepts, and British HR expert, Max Eggert, told us in 1990 at a seminar in London, UK…
"If you start low, you stay low."
In this case, if you start low in the organisational pecking order, then you stay low and will be treated, in the best case, as a fungible vendor and in the worst case, as an indentured servant.
And you can't base your mortgage payment on such vague promises.
It can happen with new clients, who've never worked with you before, that don't want to pay your normal 50% down payment, but only 10% and the rest on completion. In some cases, they want to set up a milestone payment plan, and pay you a little bit when you hit a milestone.
The problem is that hitting the milestone has lots of moving parts, and clients control most of them. So stay away from milestone payments.
Buyer Warning Sign #11: The "Scope Creeper"
This happens to timid professionals when selling to pushy buyers.
Those professionals have a hard time to say no either because they don't want to create confrontations or, more likely, they don't have enough sales leads, so they try to turn every lead into a new client regardless of quality of client, interest in the project and the client's budget.
The good news is that as this is a self-created problem, so it can be remedied fairly easily.
It's just a matter of changing your mindset about client acquisition. Once you accept that you have the right to have great clients with sexy, intellectually challenging projects at premium prices, then the change is simple. Neither easy nor fast, but simple.
But what makes scope creep so sinister?
Well, the fact that it almost always happens with imperfect clients. Clients who shouldn't have become your clients in the first place.
Perfect clients never give you scope creep because that's why they are perfect clients.
Now look at those of your projects that have gone in the wrong direction. Have they been projects with perfect clients? Probably not.
So what to watch out for to avoid scope creep?
You need to have an agreement that clearly states what is included and what is excluded from the project. Stay away from legalise but state the obvious clearly.
Once the project has started, no executive on the client's side is allowed to join the project team. Late-joining executives with power can derail the project by changing major parameters. Of course, if the project goes over budget and deadline, you get blamed for it all.
But let's also look at the flipside of the scope creep coin.
That happens when professionals voluntarily offer work that's outside the normal project scope.
This happens when sellers want the project so desperately that they promise buyers the sun and the moon.
Conclusion
So, we've looked at 11 red flags that buyers can wave at you indicating that they have no intention to play a fair game and they want to use your expertise in a sinister way.
Some of those red flags are as obvious as a ham sandwich and some are more covert.
Pay especially close attention to the covert ones. Just like medical scalpels, they are very sharp and you often can't even notice when you get cut. And by the time, you start bleeding, it may be too late. It can be a major artery of your firm that's got cut, and no amount of first aid can save it.
So what's the remedy?
We have to go back to deal flow. And the basis of deal flow is lead generation. You have to be exposed to a certain number of buyers in order to turn some of them into clients.
But since B2B buyers are neither ready nor willing to talk to sellers until they are at least 57% "deep" in their buying processes, you have to create engaging content to connect with them.
And once they've entered your sales funnel, you can guide them, mainly in writing, to the decision-making point.
And to do that, you need three sets of collaterals.
- Set #1: Entering your sales funnel and becoming a market-qualified lead (MQL)
- Set #2: Advancing in your sales funnel and becoming a sales-qualified lead (SQL)
- Set #3: Advancing in your sales funnel and becoming prospect ready for a sales meeting
So, you need...
- 3 pieces of evergreen content
- 3 lead magnets (white papers, executive guides, special reports, etc.)
- 3 landing pages
- 3 email sequences (3-7 emails per sequence)
- 3 sets of advertising that catches interested buyers the first time
Why so much? Because, as a seller, you have to meet buyers where they are in their buying processes.
If you can pull this off, then you have a great client acquisition system and a consistent deal flow.
Unfortunately, if you can't, you're in trouble. Sooner or later, the competition will run rings around you and drink wine out of your sawn-off skull.
So, just get it done.
It's all well and good, but to apply it all, you need to know how your target market perceives your firm.
Is it a fungible IT vendor or a respected IT authority?
It's the market that hangs your brand around your neck based on the outside perception of your firm.
But you can also influence the outside perception by tweaking your firm's inside reality, that is, your culture, by consciously transforming your firm from vendor to authority.
In this peddler quiz, you can check whether your firm is more of a fungible IT vendor or a respected IT authority.
In the meantime, don't sell harder. Market smarter and your business will be better off for it.