How can you evaluate consultants of any kind and know if they are a fit?
Even as consultants, we are often so focused on doing a good job for our clients that we miss the bigger picture. Like any business, we believe in what we do. We do a great job aligning with our customers values and presenting our brand well. We make sure to deliver great results and an amazing ROI. But we do so sometimes intuitively. Sure, we plug in numbers and the ROI works out. But Why?
Let's take a look at a bigger construct. How can you evaluate consultants and objectively know to use them, and which of their services to use... The answer lies in Economies of Scale.
So as a reminder from our Econ. courses, what is it? I have a degree in Econ. and still had to look it up to get the definition clear. Economies of scale are the economic benefit (cost advantage) gained by producing greater quantities of goods resulting in a lower per unit cost. You see, by spreading out the fixed costs over a larger quantity of goods, the per unit cost goes down. We've all seen simple examples of Economies of Scale. You go to a printer to get marketing brochures made up. The first few hundred have a much higher cost, sometimes including a "Setup Fee." Larger quantities can mean a lower price.
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Why are Economies of Scale so important to Consulting?
When done right, Consultants offer a specific skill set that you don't have. Great consultants hone their skills on specific areas of management or process. They then deliver these services across multiple companies that can benefit from a shared "fixed cost" of acquiring knowledge, and from developing experience in specific processes, without having to invest in every component that might be useful elsewhere.
Weary of a consultant that hasn't worked in your industry? Maybe you shouldn't be. Ask yourself, do I want to be the first to work with an expert in this area in my industry? Is the experience and approach relevant to me? If the answer is yes, you might be on to something.
Getting the Conditions Right
What Conditions lend themselves to a consultant fitting our needs?
In a word, FRAGMENTATION. Fragmentation represents your inability, up until now, based on your sector, company structure or trajectory to put the pieces together. Be it a consultant, an e-commerce website or a software product, economies of scale exist when there is existing fragmentation -- small parts that don't naturally scale up to do something.
For us at Dolphin Consulting, we help companies that have a growing sales team, but don't have the economies of scale to afford the fixed cost of Data Science, Research and Cross-sectional high-level CRO and COO experience. Sometimes this means we work with a team of 10-20 sales people with an existing manager; While other times we work with a growing company trying to build up their sales team. Still other times we serve much larger sales staffs in companies split between multiple decentralized offices or project management team who are wanting to take advantage of economies of scale that can exist wit a complete sales and marketing cycle. For companies with strong centralized management and large teams, our best offering is more specialized in specific data projects and workshops. On the flip side, if there is a data project to clean up the database, we might assist in direction, but ultimately most companies can perform this work through a low cost hire internally.
Likewise, if you are evaluating say a marketing company, realize that economies of scale dictate there are specialties that they bring to the table that you often can't. Here are some practical boundaries to set in this example. If you find yourself writing all the marketing copy anyway, or rewriting, only to have someone push a button on the other end to post, you may be better served to take the process on yourself. If, on the other hand, your marketing agency has a strong content curation process and are getting content posted, email campaigns released and improving your SEO, you might be well advised to use their service and expertise which they have acquired by the economies of scale in serving multiple clients.