Bill, great insights! And yes, the retail world would be in sad shape if it was depending on me for revenue. However, the domain name people, fruit and herb tea suppliers, and Circuit City seem to be making up for it by successfully taking the bulk of my money! <smile> I am shameless in how I purchase without much concern for cost when it comes to technology and things for my business, and yet, if you go grocery shopping with me, I'm checking the price per ounce of EVERYTHING at the supermarket!

Anyway, in regard to my interviewing some of these companies, I have seriously considered that...I just get sidetracked by focusing on the businesses at hand. But there are a few that I think really deserve attention. I'll work on that, Bill!

Lastly, your comments made great sense. I loved the analogy about the coffee machine - describes the concept so well. You can therefore afford to lose some monies up front (as the cellular phone people SUPPOSEDLY do) in return for long-term contracts and consumable sales. Very nice.

Thanks again for taking the time to comment, Bill. You are officially the winner of the 3rd MP3 player. Who will win the last 2????

Penny Haynes, 1st Podcast Publishing

Thanks for a most informative edition of your podcast magazine “Brainstorm”. What a wealth of ideas can be contained in a half-hour programme. This really is the sort of material I’d love to listen to on an in-flight audio channel.

The piece on the construction industry was interesting because it emphasised the importance of specialising and knowing your market. This has a double or triple value, in that not only are you an expert in what you do, but you become an expert in what your customers do as well, even sometimes to the point of knowing more about their business than they do themselves. After all, you, as a company specialising in that area, will see and will know in depth a greater number of businesses within the sector than your customers will. Of course, you treat all such information gained from their competitors confidentially, but nevertheless, you build up an expertise in how a particular sector works so that you can be more valuable to your customers. The effect of trust and word of mouth recommendation can be astonishing. This ties in completely with Pacific Paving Stone’s strategy of cycling customers through a series of services, products whether provided by yourself or by affiliate companies. The point is, as was said, to be a one-stop-shop. Again, trust is a key element in building up this kind of rapport with your clients.

Consumables are interesting. One thing which wasn’t mentioned is how the consumable item can be used as a mechanism to finance the capital purchase of equipment. On a small scale we see the common example of the office coffee-making machine which is given free by the coffee supplier, and is in fact of course paid for by the long-term contract to supply the coffee. It is also, of course, a means of tying your customer into using your coffee. On larger scale, we can imagine all kinds of industrial capital equipment whose purchase can be at least partly financed through the supply of the consumables materials that this equipment will use over a life of perhaps ten years.

The sliding scale of fees has been often seen in the sports world. A European soccer club recently signed a new 16-year-old player for several million dollars, which was, frankly, a bargain price for this very promising talent. But still, he was untried, and so something of a gamble. Therefore, in the contract, there was a clause which meant that the selling club would go on for several years after the transfer of the player receiving income based on his number of appearances for his new club. Sliding scale: great idea ! In the business world, it also shows a commitment to your new, and growing, smaller customers. It’s as if you’re showing faith and confidence in their ability to succeed. They’ll like that.

Finally, it’s a good thing for the business world that not everybody in the consumer world is like Penny, with no camera and only one purse ! Penny: why not try and do some interviews as a part of your podcasts with some of the key personalities from the successful companies you mention ?

Bill, UK

(Mary McDonald's response to the question: Do your sliding scale clients make up the difference later on, or do you just give them a discount early on, period? )

They qualify for a reduced fee in the beginning with the understanding that they will go to full rate. No, I don't make up the 'lost revenue' -- but these clients are the most loyal I have since I was willing to work with them when they didn't have a lot; one of those clients has turned into a rather sizeable account! I consider it my 'pay forward' as well as my 'marketing costs'.

Mary McDonald, CEO McDonald Consulting

Rolando, that's a great point - a consultant who is confident that he can help a client succeed inspires confidence in the business owner. This is because the consultant will work at somewhat of a loss unless the customer prospers, and will not recoup the additional fees if the conditions of the agreement are not met (if he doesn't help the customer as promised).

And you are the winner of the 2nd mp3 player!

Penny Haynes

If I hire a consultant who uses the sliding scale scheme with me, I will always take it that he knows what he is doing, that he is quite confident that my business will be around at least until the time he gets back the rest of his fee. I am contemplating on going the consultancy biz too and I just might use a sliding scale. Insightful pocasts by the way.

Rolando M. Asis, Jr.

Thanks for the input, Mary! You, of all people, would be a great person to ask about this, with your specialty as a Process Improvement consultant. I do want to stress, though, that I mentioned a 25% (not 75%) discount at the beginning (75% is like kamikaze suicide! (smile)). Do your sliding scale clients make up the difference later on, or do you just give them a discount early on, period? AND by the way...You are the winner of MP3 #1! Congratulations!

Penny Haynes

Sliding scales - yes, I use them already with my clients. I don't use as radical a sliding scale as you are suggesting (75% discount at the beginning) since I think that the client needs to have a bit more 'skin' in the game. I give a 30% discount for struggling companies at the beginning - and since I do process improvement consulting, they can quickly recoup their investment through less scrap, waste, and more efficient processes!