Written by Vineet Sethi
A good consultant is worth their weight in gold. They will come into your business, get to know it from the inside out, improve, and leave after enabling a culture of continuous improvement in your organization. Your business will change for the better.
- But how do you know if they are doing their job well?
- What metrics should you track to see if they meet their objectives?
- How can you tell if they are helping or hurting the company?
These questions will help you determine whether or not your consultant is successful. To build trusting relationships while still measuring performance and maintaining accountability, both parties must understand what they expect from each other before signing any contracts.
Once you know precisely what you are getting from your consultant, you can create measurable goals and expectations to ensure everyone wins this game of trust.
Here are some tips for measuring a consultant’s success:
1. Know what you want from your consultant
Before hiring a consultant, you should know what you hope to get from them. You should clearly understand your business needs and have a short list of issues you need help with.
To ascertain the type of person required is also crucial. The one from your industry with the most technical qualifications may not always be the best fit. A consultant should be able to build rapport and take internal teams along in the improvement journey.
Once you hire them, you will want to ensure you have a way to track and measure if they meet your expectations.
2. The Basics
You do not want to get too fancy when measuring the success of your consultant. Hiring a consultant is a three-way commitment. It is a commitment from you to give them the money they are due, an obligation from them to do the work you have hired them for, and a commitment from both parties to complete the job promptly.
The most critical measure of a consultant’s success is his ability to be an enabler, transfer knowledge, and make the internal teams self-sufficient. It is how quickly the consultant can achieve this and leave rather than keep selling more consulting hours. All changes made during the consultants’ tenure should be sustainable by internal teams and continuously improve after that.
3. Ensure You Are Measuring the Right Things
If you are measuring the right metrics, you should be tracking some key performance indicators (KPIs). A KPI is a ratio or comparison between two variables. For example, your lead-to-customer conversion metric is the ratio of how many leads you receive versus how many customers you acquire from those leads. A good consultant will help you increase your KPIs, thus helping you make more money. Your consultant is doing a good job if your KPIs are going up.
4. Track the proper KPIs
Your metric might be increasing recurring revenue, lowering churn, improving gross profit, or decreasing customer complaints. It would help if you closely tracked the metrics most important to your business. One of the best ways to measure a consultant’s success is to track the progress of your most essential metrics before, during, and after the engagement.
5. Establish KPI Benchmarks
You can also benchmark your metrics against the industry average. For example, if your average gross profit is 19%, but the standard in your industry is 23%, you know you need to do something to increase your profit. If your gross profit is lower than the average, it may have nothing to do with any consultant and more to do with your company not performing as well as others in your industry. A consultant who can help you beat industry averages is a good measure of success.
Another way to benchmark your metrics is to set benchmarks for yourself based on your goals and expectations. For example, you may have a plan to increase your revenue by 10% over the next six months. If your current average revenue is $100 per customer, you will want to set a benchmark to increase your ARR to $110 per customer by the end of the next six months. They are successful if you work with a consultant who helps you achieve this goal.
6. Look For Small Changes
Consultants can make what seems like a small change that has a significant impact. For example, a consultant may find that your website is not optimized for mobile devices. This consultant may find a solution to fix this and make your website much easier to use. You might not see an immediate increase in traffic or sales, but you will see a difference if your statistics are tracked.
It all comes down to trust:
- Do you trust your consultant enough to give them access to your data, ideas, and people?
- Do you trust they will provide the right solutions to your business’s problems?
- Do you trust that they will put your interests first and provide honest feedback on their findings?
- Do you trust that they are enablers and will make your internal teams self-sufficient?
It can be challenging to know whether or not a consultant is successful. However, if you know what you want from your consultant, track the basics, ensure you are measuring the right things, look for behavior changes, track the most critical metrics, and measure the right things, you will have a much better idea of whether or not your consultant is successful.
(Picture credits: Pexels)
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