When will your company start consistently billing clients for all Customs and International Trade Consulting as industry standard? This question is directed towards U.S. Customs Brokers and other International Trade Compliance professionals.
I have a problem with importers constantly calling me for research information. Now don’t get me wrong. I like being popular. There is a kind of intangible benefit to it. However this "consulting" is taking up allot of my time. I’m sure many of you know what I’m talking about. These are the ”clients” who call 100x a day and ask questions . Many of which require research.
Now I enjoy spending time with existing, profitable clients or large accounts. However in most cases these are the those “potential accounts” which hang themselves out in front of you, dangling on a string like new business; when in fact they are shopping around or mining your brain for free information on their imports.
U.S. Customs Attorneys charge up to $500/hr for these services yet these same importers have no problem calling Customs Brokers and quite frankly getting it for free. This is valuable information for them and they are getting a free lunch. Back in the old days they were charged. I think this needs to stop. Now don’t get me wrong. I love consulting. And I’m sure many of you do to. But it's taking up allot of my time. And time is money.
Does anyone know what I am talking about?
Clarification added 8 months ago:
Example:
I received a call from James, a prospective client who was importing coffee from several African ports including Djibouti Ethiopia, Mombasa Kenya, Madagascar, Togo, and Ghana. He found me on the internet. Recently he landed a contract with the Coffee Bean and Tea Leaf Co. According to him there would be approximately fifty 40 ft high cube containers per month. We met for breakfast the next day. He presented me with his papers and a huge list of questions. He wanted detailed rate quotes Ex-Works-Door to Door for each African port as well as U.S. Customs compliance, FDA regulations and labeling applicable to coffee. In addition he wanted warehouse storage rates for several U.S. ports (in order to supply when stock ran low).
I contacted each agent/supplier in Africa and received rates for every cost port to port. Every time I presented each quote to James I would get a barrage of phone calls nickel and diming me on each cost. James would call about line 3 for example. I would explain the charge. An hour later he would call about line 5. I would explain that charge. And so on.
Most of the time, the phone Ethiopia did not even work. In addition to every microscopic cost I’m researching to provide the most detailed information in regards to CBP and FDA regulations. It may sound routine enough. But it was a detailed project (mostly getting the exact costs for each port). And no stone was left unturned. Between the overseas agents, phone calls, the research, emails, assembly etc. It took up an extensive amount of time like you would not believe. Not to mention the work put on the shoulders of the African agents while I was up at 1:00am working on getting these costs. And it was my pleasure because it was worth it for such a good profitable account.
As it turns out “James” was an engineering student at USC who was “thinking about starting a business importing coffee from Africa”. He needed my rates and CBP/FDA compliance info to “start his new business”.
Answers (7)
Hi Michael:
Indeed, this can be a problem. I think brokers have it especially tough, as it's such a competitive arena, and you want to keep people happy and attract new business. I think importers feel "entitled" to free advice from brokers more than from attorneys and consultants.
As an attorney / consultant, I guess I have it easier. Hourly billing is our norm, so most customers are not shocked if their phone questions show up on their bill. (Many tines, I don't bother billing for simple things, as billing is more hassle than answering the question was, but certainly bigger issues warrant billing.)
I think the only thing you can do is spell out the relationship with the client as well as possible, and let them know up front that you will treat such questions after a certain point as consulting business and bill them for it. This may offend some, but I don't know of any other way to limit this situation. Your information and advice are valuable commodities. It's your option to give it away freely as a customer relations move, but also your option to charge for it.
Finally, you have expenses and responsibilities that must be met. And in the event your advice or answer turns out to be incorrect, the importer will blame you just the same for any bad outcomes, whether the advice was free or paid for.
So I guess I have no answer other than if your business drifts into consulting, then the billing practices eventually have to follow. I hope this is somehow helpful.
Don
Ron C
Owner, ImportExportHelp.com
Best Answers in: Exporting/Importing (2), Offshoring and Outsourcing (2), Information Security (2), Web Development (2), International Law (1), Internationalization and Localization (1), Direct Marketing (1), Guerrilla Marketing (1), Internet Marketing (1), Business Development (1), Search Marketing (1), Manufacturing (1), Computers and Software (1)
Hi Michael,
Talk about a question striking a raw nerve!
It seems that the number of these free advice seekers has increased ten fold in just the last year.
Our import export business web site deals with a lot of different resources and up until about 2 or 3 months ago I followed the thought process that Robert Dugger talks about of trying to give in the hope these people would ultimately turn into customers.
Unfortunately, the 10 fold increase and tracking of these type of calls has provided clear evidence to me that the conversion to an actual customer of these freebie seekers is nil or none.
One of the resources we offer is a database of USA, Mexico and Canadian businesses - we promote on our web site and pass the inquiries to the database owner who pays us a commission on sales. He has gotten so many of these "freebie" research calls in the last 3 months that he now charges an upfront $250 research fee which he advises the "potential" customer will be applied against their first order.
I was just talking with another gentleman who advertises on our web site who related to me how many "free" market reports he has been doing in the past few months and how the majority never turn into actual customers. I apprised him of the database owner's new $250 research fee to be applied to their first order and he thought that was a great idea and is going to implement it.
I had forgotten about this method over the years but it was originally introduced to me by the owner of a vitamin manufacturing company who would receive innumerable for free samples from "potential" importers in other countries. He related that this problem was finally resolved when he began advising this people that samples were available upon request at the wholesale price plus shipping and that their sample order up to $500 (I believe it was) would be applied to their first full order when they became an actual customer.
I really believe this is a reasonable request to make and it really does seem to save time and tends to "separate the wheat from the chaff" as the old saying goes.
Ron
You're right. It's a tough call. You almost have to look at the free advice as a marketing expense. Some calls will come in from folks that have absolutely no intent of using your service, but its hard to distinguish between the freeloader and the potential client on a first call...and you definitely don't want to cut-off the opportunity sell your services by eliminating calls for advice because there will always be another broker out there that will take the call and he'll end up with the business from the callers that are actually looking to pay for your services.
However, in the case of "chronic freeloaders" it's just necessary to be frank and expect them to understand the costs of providing the time/research/advice and indicate that future consultations will not be provided without a consulting fee or expectation of using your brokerage services.
It's a personal preference and a case-by-case decision, but sometimes those free consultations help to develop relationships that will pay out generously in the future.
Matthew E
Traffic Manager at Parksite
Best Answers in: Supply Chain Management (2), Purchasing (1), Exporting/Importing (1), Starting Up (1)
Having been on both sides of the transaction it's definitely a thorny issue. Of course, an existing client would always get an answer from me. However, it has always caused me to question why brokers charge a "flat rate" per entry as opposed to a retainer/hourly billing model. The houlry model may be of benefit to many importers. We all know that various importers have a "degree of difficulty" in their entries. Usually this isn't really recovered. Sure a textile importer might pay more for entries, but is it really porportiante to the workload?
Now that I am on the import side, I only fish with existing relationships and it's usually to further investigate an opinion from one broker that I don't necessarily agree with. If I were asked a basic question that really requires no added thought beyond the phone call, I'd answer it. If somebody out of he blue were to ask me classification advice, that would be a different conversation.
Best of luck,
Matt Erion, LCB
Michael,
Be careful crossing the line into consulting without contracts with indemnity clauses.
As a customs broker, you are only responsible for your entry work. And you probably have limits of liability on the back of your invoice that cover your activity related to that shipment Whatever advise you give for free is worth about that much in damages if you are wrong and you get sued. But when you charge for your advice, you may be outside the scope of your liability limits, and working without a net.
Over the years, I've been a customs broker, managed trade compliance in-house, and consulted. No savvy consultant or lawyer would work without a contract that limits his liability.
Evelyn C
Product Development & Regulatory Affairs Consultant for Biotechnology, Food, Cosmetic & Dietary Supplement Sectors
Best Answers in: Exporting/Importing (2), Starting Up (2), Biotech (2), Internet Marketing (1), Packaging and Labeling (1), Quality Management and Standards (1), Distribution (1), Ethics (1), Using LinkedIn (1)
Michael,
Sounds like import experts face the same conundrum that all niche experts do--how much information do you give away to convince the client that they should hire you? Are there any good, concise books or online material that you could refer folks seeking information on importing products to? I provide services to FDA-regulated companies and come across many that need help with importing. If anyone could refer me to a reference for them that would be great.
I recommend writing a book with downloadable chapters that folks could buy for a nominal fee. How about selling a downloadable "import kit" that provides a checklist of steps to follow to ensure compliance? If you have such a product to offer you could then say, something like, "We offer an inexpensive importing guide that you may find helpful; however, some of your questions require more in-depth answers. We charge x for such services."
Let me know if any of you have such resources--I know folks who need them.
Regards,
Evelyn
Clarification added 7 months ago:
Michael,
After reading all that you did for "James", it seems that your work consituted a billable project. Researching "Jame's" "company" may have tipped you off before you spent so much time. You perhaps could have flushed out the truth about James by telling him your hourly rate and providing an estimate of the time required to help him. That's what I do with potential clients with lots of questions. If they balk at a potentially large bill, I offer to limit the inital contract to a small number of hours so they can see how much they get for an hour of work.
Good luck!
Evelyn
Justin T
Global Trade and Technology Executive
Best Answers in: Exporting/Importing (3), Customs, Tariffs and Taxes (1), Packaging and Labeling (1)
I'm not a lic CHB or an Attorney but have worked for both/with both. It seemed to me that the specialized research was nearly half the biz. Filing trade forms is pretty straight forward stuff. I was on the phone with foreign ministries/port authorities constantly trying to find out why containers were stuck in foreign ports, determining what was needed to release shipments abroad, researching Non-tariff barriers as well as pre-compliance regs for US imports for ATF,FDA,FCC. Also significant time required to research and cross the denied persons list for export compliance as well. This a simple short answer as it's very late night---I'm available should you want to outsource some of this research work. j_tarrants@yahoo.com
