Initial Consult Fees: Why They Work
Charging an initial consultation fee to prospective clients weeds out the real leads from the proposal hunters.
In 1985, when I first began working in the CE business, if our company had even considered asking a client to pay for an initial consultation, we probably would have received the same blank stare that we got when we asked audio manufacturers to put a TV input button on their receivers.
Those were truly the days of non-convergence. But things sure have changed.
Not only do we have TV inputs on every receiver we sell, we now find it a very normal part of our sales process to request an initial consultation fee from a prospective client.
At first, we began using this fee as a way to qualify new leads that came into our showroom. Was this potential client just "proposal hunting" to compare to the two or three (or five!) others that they had already received from other CE companies?
The technique worked very well. It all but eliminated the wild goose chases that these clients usually sent us on, and we quickly realized that it could be a profit center for us.
As I talk to other dealers from around the country, I find that more and more are starting to implement an initial consultation fee. In the 90s, very few, if any, companies charged for initial consultations.
In part, that's led us as an industry to where we are today. I constantly hear my colleagues griping about their bids being shopped or that they bid on a lot of jobs but get so few.
If we all just charged for the front end consultation work like other professional trades (architects, interior designers, kitchen designers, etc.), we would all be working with highly qualified leads. This would reduce the number of unqualified prospects that are proposal hunting for their project.
You know the feeling when you get the call from a new lead that got your name from someone but they don't remember who? They always seem to know an awful lot (almost too much) about the products you sell and they want you to come out to their house for a free consultation, right?
Some are even bold enough to tell you that they have a number of other bids already but are looking for one more company to bid on the project. These should all be obvious warning signs that you are being shopped.
The best way to stop this process is to make them put their money where their mouth is.
Asking for an initial consultation fee, even when it can be applied to the job you propose, quickly tells you if that new lead is really a potential client or just someone wasting your time.
When we first implemented this policy, we noticed our closing ratio increase dramatically. With so many CE pros running small staffs and wearing so many hats, it can make you substantially more efficient and profitable to charge a consulting fee.
We all want our industry to be more professional. Let's start charging for our valuable time like the professionals we seek to emulate.
Greg Pass is the president of SuperVision Audio+Video, a custom installation and system integration company located in the Pacific Design Center in Los Angeles, California.