Why (and How) We Leave Money On The Table

Clients told us they couldn’t estimate or quantify the value of consulting. We came up with a way to measure it - and incentivise ourselves to deliver. Find out about Upstart’s value based fees for consulting.

So?

Value. It’s one of the most over-used words in business. It’s frequently found before a pitch to sell something intangible, or feel-good “magic” that can’t be objectively measured.

When we created Upstart we weren’t alone in our frustration with long and opaque sales and delivery.  In every conversation we had, it took just minutes to uncover a wellspring of discontent at how strategy was difficult to buy - and even harder to gauge the value of.

So What?

Where customers see friction and pain,  there is opportunity for those who can take it away.

In the beginning, we gave thought to how we could show a pathway to measurable value before we sold.  We needed a way to build confidence in our process and outcomes, not outputs or meaningless “deliverables” (aka meaningless PowerPoint).

We work with health and life sciences clients. Here we saw how business models were moving from volume - a basic fee for service payment - to value, with part of the reward depending on improved outcomes for patients and payers. We used that as our inspiration.

Our formula is simple. We agree three outcomes before starting. if we underperform, we leave money on the table. If we over-deliver, we share in the result of that success.

We agree to make 20% of our fixed-price fee value-based. This incentivises every member of our team to give of themselves and to help clients towards the best outcome. Each of our Upstart sessions has this value-based component.

Does it work ? Every time we’re using it, we’re building, measuring and learning.

Most importantly, It’s produced a positive result for every client, with 80% of projects delivering maximum satisfaction for clients, and all of them reporting positive outcomes.

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So Now What?

To produce this formula, we pushed ourselves to deliver a business model innovation. It had to be one which took away the pain points of an opaque sales process and delivered the client what they need; transparency in price and measurable “skin in the game” from strategy consultants (Whatever next?)

So If you’re thinking of bringing about similar business model innovations, ask yourself three things:

Customer First.  Strategy consulting is stuck in a “seller-first“ model which still serves incumbent players and not clients. Every disruptive business model - from Dollar Shave Club to free search - has put customers first. In the 21st Century, it’s the only thing that can possibly win out.

Pain points. What is the most hated part of your cost structure or buying experience?  How can you remove it ? Late fees for car rentals, bank charges for letters, or utilities providing appalling customer service are just some practices which are leading to the demise of legacy players in those industries.

Showing faith. What can you put on the table which demonstrates in a “money talks” way that you are serious about what you’re delivering ? Something that will benefit you by doing a good job, and have a meaningful impact (think hard cash) if you don’t.

Bottom line: if you want to change things, walk the walk, don’t just talk the talk.