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"Factory" or "Consultancy" - What is Your Offline Business Model?

by Dan DaSilva
11 replies
Dear Warriors,

I wanna start a discussion related to the question of your chosen business model. Do you favor a "John-Durham" approach and focus on selling one thing and only one thing (like a directory site entry) for a small price and scale it a million times OR do you rather follow a "Jason Kanigan" model and project your venture as a consulting firm with higher rates, upsells, crosssells, customization, having less customers but charging substantially higher(consulting-like) fees, working more exclusively?

There are pro's and con's for both business models but everybody has only 24 hours a day. So, what do you think is more efficient, more hasslefree, more lucrative etc. as a reason you chose it. Maybe you didn't even think about this question yet and would like to take a moment to think about how to position yourself in the market. Either way, I think, every now and then, each of us should reflect about how we go about positioning our offline marketing venture in order to differenciate it with a good reason.

Thanks,
Dan
#business #consultancy #factory #model #offline
  • Profile picture of the author bob ross
    I like the consultancy approach but I make sure not to become too attached to the client. Because I deal with small to medium sized businesses and not super large ones, I have to make sure that I'm not giving away too much time since they can be so needy sometimes (and don't always have the budget to make up for it).

    I've got a pretty good system of keeping my clients very dependent on me without having to be someone who acts like a servant to them. I think a lot of people who provide services like web design fall into that trap and I feel bad for them because I know how crappy that can be.

    I don't really know if a lot of people on here are able to take a consultant approach because so many of them are limited to providing a small amount of services that will only take them so far. If you're focusing on web design and mobile marketing, if you're not bringing them a solid ROI you're probably not going to get more money from them, especially not for any kind of consulting work.

    I think that most people on here seem to just want to email their clients in their underwear and collect checks for one or two services.
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    • Profile picture of the author Dan DaSilva
      Originally Posted by bob ross View Post

      I like the consultancy approach but I make sure not to become too attached to the client. Because I deal with small to medium sized businesses and not super large ones, I have to make sure that I'm not giving away too much time since they can be so needy sometimes (and don't always have the budget to make up for it).

      I've got a pretty good system of keeping my clients very dependent on me without having to be someone who acts like a servant to them. I think a lot of people who provide services like web design fall into that trap and I feel bad for them because I know how crappy that can be.

      I don't really know if a lot of people on here are able to take a consultant approach because so many of them are limited to providing a small amount of services that will only take them so far. If you're focusing on web design and mobile marketing, if you're not bringing them a solid ROI you're probably not going to get more money from them, especially not for any kind of consulting work.

      I think that most people on here seem to just want to email their clients in their underwear and collect checks for one or two services.
      Ross,

      I think you are right when you say that many marketers are not set up to deliver a consulting sequence but maybe they think that's what they do. Selling single digital properties can be easily devaluated because prospects tend to shop on price only.

      Selling a solution to a problem therefore must include more than just a "tangible" piece of the internet which allows the prospect to compare.

      One way to be successful with the factory approach is to sell slightly (or if good process management is in place) possibly substantially below average, you could position the business as a discounter. Every extra is standardized and clearly predefiined already. Every step or task needs to take only a very short amount of time and can therefore still be profitable if executed with strict dsicipline. One advantage of such a model I can think of is you could scale this into the stratosphere, challenges though would be the controls/management skills you need in order to deliver in a timely fashion and seperatiing work processes which would involve larer workforce, incl. outsourcing.

      Dan
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      • Profile picture of the author TheShark
        Consultancy,

        Factories close, China undercuts, rules change, office managers leave...consulting with the decision maker, adding unexpected value regularly sends you and the family to Hawaii.

        TheShark
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        • Profile picture of the author David Miller
          I wouldn't define what JD does as a factory approach. Like John, I have owned and operated phone rooms.

          Most successful phone rooms (for lack of a better term) are able to offer different products and services, including consultancy. In this particular forum, many people like the idea of calling themselves "consultants" for no reason other than not wanting to be called a sales person.

          So if the guy in one of JD's phone booths makes 300 calls in a day and sells 2-4 websites we call him a telemarketer.

          But the "consultant" working from his spare room makes 300 calls and sells a few websites. This guy may make more money, but I don't see any other difference. Perhaps he may also build the site, but it could also be outsourced just as it may be in the case of the TM.
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          The big lesson in life, baby, is never be scared of anyone or anything.
          -- FRANK SINATRA, quoted in The Way You Wear Your Hat
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          • Profile picture of the author John Durham
            Originally Posted by David Miller View Post

            I wouldn't define what JD does as a factory approach. Like John, I have owned and operated phone rooms.

            Most successful phone rooms (for lack of a better term) are able to offer different products and services, including consultancy. In this particular forum, many people like the idea of calling themselves "consultants" for no reason other than not wanting to be called a sales person.

            So if the guy in one of JD's phone booths makes 300 calls in a day and sells 2-4 websites we call him a telemarketer.

            But the "consultant" working from his spare room makes 300 calls and sells a few websites. This guy may make more money, but I don't see any other difference. Perhaps he may also build the site, but it could also be outsourced just as it may be in the case of the TM.

            Thanks David, I didnt appreciate the pigeon holing much either...you can see some spins on this thread huh?

            Personally I'll do , and have done, either and both.

            However, I have a whole thread with 10k views here that explains my position on it.
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          • Profile picture of the author Dan DaSilva
            Originally Posted by David Miller View Post

            I wouldn't define what JD does as a factory approach. Like John, I have owned and operated phone rooms.

            Most successful phone rooms (for lack of a better term) are able to offer different products and services, including consultancy. In this particular forum, many people like the idea of calling themselves "consultants" for no reason other than not wanting to be called a sales person.

            So if the guy in one of JD's phone booths makes 300 calls in a day and sells 2-4 websites we call him a telemarketer.

            But the "consultant" working from his spare room makes 300 calls and sells a few websites. This guy may make more money, but I don't see any other difference. Perhaps he may also build the site, but it could also be outsourced just as it may be in the case of the TM.
            Interesting take, David! The TM in your example may make less but if he's good at what he's doing he will sell more items than the consultant who will make more money on the other hadn but needs to come up with a solution to provide the service(s) he sells. That again has to be deducted from the sales turnover.

            The one who makes most in that equation though might be the employer of the TM... ;-)

            Best,
            Dan
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  • Profile picture of the author globalpro
    Having just started out this year, I have gone with the consultant approach.

    Since I have been doing the 'service provider' route for several years, I jumped on the offline bandwagon for the difference in what I can charge offline businesses for services I am doing already (online marketers).

    The problem I was running into is I can offer so much that I wasn't sure what to offer.

    As I got to researching (and a lot of time here on the forum) how every business is different and has different needs (products, services, etc.), and wanting to focus on the recurring income, I am going with consulting with long term strategies.

    Depending on what they are doing already, it's a given they need a website. But that is not enough. Add a mobile site, GP listings goes a long way, but driving them to the top (or as close to) of the search results is even better.

    Lead generation (list service) works well for some, but not for others. Just like SMS.

    Online networking is the same way (linkedin, Facebook, twitter, etc).

    So while I am still going after the initial sale (need a website, sure no problem), I am also going after the long term relationship as a valuable consultant (marketing strategist) that is there to help get them more customers, not just in the door, but more customers period.

    Example. Just started working with a local accountant (am using her for accounting and she got me set up with LLC) and in talking to her (she is wanting a website) I asked if she would like to get more business. She said yes, of course, but the walk in traffic just isn't there. I told her it could be, but could she handle clients from a distance (not local).

    She said she never thought of that, but yes, she could do that.

    While the Internet is great for local, it also provides a global venue. Think big.

    So, while providing services is great, providing long term solutions is better.

    Just my opinion, but hope it helps.

    Thanks,

    John
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    • Profile picture of the author JR Rich
      I (generally) only provide email list-building services to offline clients these days. List-building is the one service where the clients can see almost instantaneous ROI once they hire you.

      As mentioned above, many offline clients have the tendency to be 'needy' - constantly contacting you for reassurance that they're spending their money wisely. List-building seems to keep this neediness to an absolute minimum.

      Occasionally, I'll throw in a short, 10-15 page report aimed at their niche to feed their list. I'll even create a generic ebook cover for it so that they can place it on their website/Facebook page.

      This keeps them happy - and more importantly - paying me!

      Best,
      --JR
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    • Profile picture of the author Dan DaSilva
      Originally Posted by globalpro View Post

      Having just started out this year, I have gone with the consultant approach.

      Since I have been doing the 'service provider' route for several years, I jumped on the offline bandwagon for the difference in what I can charge offline businesses for services I am doing already (online marketers).

      The problem I was running into is I can offer so much that I wasn't sure what to offer.

      As I got to researching (and a lot of time here on the forum) how every business is different and has different needs (products, services, etc.), and wanting to focus on the recurring income, I am going with consulting with long term strategies.

      Depending on what they are doing already, it's a given they need a website. But that is not enough. Add a mobile site, GP listings goes a long way, but driving them to the top (or as close to) of the search results is even better.

      Lead generation (list service) works well for some, but not for others. Just like SMS.

      Online networking is the same way (linkedin, Facebook, twitter, etc).

      So while I am still going after the initial sale (need a website, sure no problem), I am also going after the long term relationship as a valuable consultant (marketing strategist) that is there to help get them more customers, not just in the door, but more customers period.

      Example. Just started working with a local accountant (am using her for accounting and she got me set up with LLC) and in talking to her (she is wanting a website) I asked if she would like to get more business. She said yes, of course, but the walk in traffic just isn't there. I told her it could be, but could she handle clients from a distance (not local).

      She said she never thought of that, but yes, she could do that.

      While the Internet is great for local, it also provides a global venue. Think big.

      So, while providing services is great, providing long term solutions is better.

      Just my opinion, but hope it helps.

      Thanks,

      John
      Many people unfortunately don't follow up un initial sales or fail in mining enough information of the prospect/customer in order to provide longer business relationships. Like this, they end up starting from scratch every month or so, except if they sell monthly services. It's much easier to sell more to existing customers than to acquire new ones.

      Best,
      Dan
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  • Profile picture of the author Dan DaSilva
    I have no appreciation neither for the 'consultancy' nor the 'factory' approach, how I am calling them here for the sake of this thread. But it is interesting to compare and fiind out how you can structure your business. One big difference though in my view is economies of scale.

    One prerequisite for EOS is a standardized product. And standardized products can be itemized and sold faster and easier - at a low price, most of the time. Selling services with a consulitng (long-term) approach is more time-intensive, asks for customized solutions and can therfore be sold at a much higher rate. On the other hand it allows for less customers to hanndle and the offering can't be neither standardized nor scaled up.

    Now, what if you would come up with a combination of the benefits of both models? That would be a challenge to look for an it is certainly possible!

    Best,
    Dan
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    • Profile picture of the author ryadams
      I have owned and operated a "consultancy" style business for the past 5 years and while I have made a very good living at it, it is not easy and I am not sure I would recommend this type of business model anymore. I think most people who know internet marketing really well are better off building out their own online assets in an evergreen market and marketing the hell out of it using every technique you know. There are so many good markets out there to make money in, the problem is focusing and picking one you know you can do well at.

      Clients just don't get it and you will forever be giving advice (paid or free) and most won't listen or simply don't have the funds to take it to the next level. If you go the consultancy business model, I highly suggest standardizing pricing like PR2020 does. Paul Roetzer at PR2020 offers some great training on how to run a consultancy style business, its the best I have ever read. Clients want/need complete integrated marketing services and those companies who offer a complete solution stand to capture more market share.

      The other option I have been testing out is a 100% performance based marketing model, where clients essentially pay for leads. If you pick the right market, you can make a great living with 1 or 2 clients and control your own mini CPA network. This takes some capital to setup (as does any real business) but the rewards are worth it. There are tons of local marketing clients in any major city who are all about paying for performance and will pay well for these results. And the best part is that if you set this up correctly and the client treats you poorly you can fire them and find another client that values what you have setup. You are 100% in control of your own destiny here.

      At the end of the day, the client does not care about seo, ppc, social, blah blah blah. They just care about results and not having to worry about how to get those results. If you can create a complete solution around that, you should do very well, but you will need people or outsourcers who are good at what they do to scale and make a serious income. Again, my opinion is a simpler way to make a living in this is to focus on your own projects or team up with a solid business that needs results.
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      Ry Adams
      Internet Marketing Entrepreneur

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