Wednesday, September 11, 2013
Customers Typology: The Good The Bad, and The Ugly Part 3: The Ugly
This post is the last of trilogy of posts named after Sergo Leone's movie The Good The Bad and The Ugly. In previous posts I described The Good Customer and The Bad Customer
I start by describing the challenges of a Freelance Consultant, before dwelling on The Ugly Customer.
You will soon discover that the two topics are related.
The World of a Freelance Consultant
I refer to a Consultant with no Long Term full time employing customer.
Unlike a Salaried Employee, he has to take care of many administrative tasks such as paying VAT, paying Income Tax and Paying National Insurance fees.
One of his challenges is income instability and the number of work hours instability.
Sometimes his working hours are similar to working hours of typical salaried employee. During these periods his income is reasonable or good.
Periods of too much work to do
Periods of too much potential assignments are relatively easy to take care of: The Freelance Consultant could pick more interesting and challenging assignments and/or higher payments.
The Challenge is to reject assignments without relinquishing future opportunities to work for the customers he rejects.
For example, I worked concurrently for three organizations:
First Customer I managed a project with a 10 people team.
Second Customer I lead a process of Strategic Software Product selection
Third Customer I wrote A Strategic Information Technology opinion.
What should I do when a Fourth Customer asked me to bid for consultancy assignment?
It should be noted that the Fourth Customer's CIO spend time and efforts to find me, because the previous occasion we done business was more than ten years before this assignment (He was not CIO ten years before).
I had no time left for full time assignment for few months concurrently with the three assignments I was doing.
If I would not bid, then the Customer may not ask for my services in future opportunities.
If my bid would be a low quality bid, then he may not ask for my services as well.
If the Customer would have chose me to perform the assignment, I could not obligate and could not perform the task as well. I could forget about any future assignment for this Customer.
The solution: Bid a good quality professional bid but lose the RFP.
There were only two reasons not to chose my proposal: high price and relatively longer time to complete the job.
The most difficult periods: No assignments or not enough work to do
The low income during these periods is a problem, but the main problem is uncertainty: The Consultant do not know if and when he will had more assignments and higher income.
During these difficult periods the Consultant is ready to compromise: He would do less interesting and less suitable assignments for less money. He may even work on assignments outside his domain of expertise.
The meaning of working on such assignment is studying the new domain with no payments for the long hours spend. The result is a lower hourly tariff even than the low hourly tariff he asked for.
The Public Sector in my country prefers contracts with companies, therefore in many cases the Consultant could have no choice other than being a subcontractor of a company, i.e. paying 10% or 20% of payments he receives to the company.
In that case the Consultant have two Customers: The Customer and the mediating company, which sometimes is doing nothing except getting paid.
Back to the Ugly Customer. In that case of two customers, each of them could be the Ugly Customer.
The Ugly Customer
Like The Bad Customer, The Ugly Customer could also be the other types of customers, except The Good. He could also be The Customer who Knows Everything, The Captive, The Self-deprecating or The Paralyzed Analyzer.
The unique quality of the Ugly Customer is unfairness. Usually the unfairness is not limited to unfairness towards the Consultant.
The unfairness could be manifested by deferring payments, paying less than he should pay according to the contract and even refraining from paying any payment.
Tie this unfairness of payments with the previous section about the most difficult periods, and you will understand the problematic situation for the Consultant (In better periods he would probably chose other types of customers).
Two examples of Ugly Customers I worked for.
Example 1: Payments 6 months latter than he should.
I worked for a customer about 40 hours a week for many months. However, he did not pay me for 6 months, although he should pay each month according to the contract he signed. After 6 months he paid.
It was not personal: He did not pay for 6 months to all the other Consultants worked for him.
Example 2: Paying extremely low tariff and complaining about the document format
I performed an assignment during a very difficult period. I would never perform such assignment in brighter periods. I had no idea about the topic prior to performing the assignment. The number of hours dedicated to studying, with no payment, resulted in a ridiculous hourly payment.
The Customer told me that he knew that the tariff is very low. he told me that a competitor would pay me ten times more for the same assignment.
The product was a Design Document. The customer was satisfied with the Design but complained about the packing or the format.
he thought that I could add 10% to 20% to the number of hours (It was a Fixed Price project) to add nicer illustrations.
Another type of customer, who is paying 10% of what is competitor would pay, would be glad that the design he received was perfect and would ignore or repair the format.
The unfairness could be also manifested in case of failure. The Ugly Customer will always blame others: vendors, Consultants, employees etc.
If it would have been a success story, it will always be the Ugly Customer who should get the credit.
Even if the reason for failure is the way the Ugly Customer chose to implement the Consultant's excellent advices, the Consultant would be blamed.
I was impressed by the behaviour of a CIO who was ultimate example of the opposite of the Ugly Customer.
He had to present my Strategic consultancy conclusions and directions to the upper management.
I and IT managers participated in the meeting.
Business managers complained about IT employees and IT managers products. He has only single answer to any complain: Blame me. I am responsible as their manager (I am sure that at least some of the complains were nothing to do with the CIO, however he protected the people he managed).
What should a Consultant do when he finds that the Customer is an Ugly Customer?
If the Consultant could afford not to work for the Ugly Customer, this is exactly what he should do. He should complete the current assignment and work for other Customers.
If he has no choice (The income is necessary and he does not have alternative customers) he should minimize damages.
He should anticipate the Ugly Customer behaviour and plan how to react.
As already mentioned, in many cases the Customer is not a single entity: Organizational Customer could be composed of multiple managers and employees.
The Consultant should carefully find a way to work with more "Beautiful" people composing the Customer entity instead of the Ugly.
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