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Analytics Magazine

Real World: How to Sell Analytics to Skeptics

Spring 2009

This is a modified version of an article that appeared in OR/MS Today (

A consultant’s guide to finding business, managing projects and succeeding in a difficult environment.

Warren Lieberman

Warren Lieberman is president of Veritec Solutions.

By Warren Lieberman

Experience matters, but is it the right kind?

As the meeting went on, the operations research consultant sensed that he had an engaged audience. Whether everyone in the room agreed that he was the best person for the job, however, was well beyond his ability to forecast.

Prior to the meeting, the consultant had been briefed that the cruise line’s senior vice president of Operations would make the decision regarding which of the two firms being considered for the assignment would be hired; assuming, of course, that the project was carried out. The extent to which the members of his staff would influence the decision was less clear.

The SVP had been the last person to enter the room and the seat at the head of the table had clearly been reserved for him. The consultant recognized his good fortune that he had not mistakenly taken that seat. Up until this point, however, the SVP had said little. The few comments he made were skeptical in nature and appeared designed to convey the impression that the consultant could not possibly know enough to help the cruise line.

The SVP’s staff had asked many questions. The discussion was lively, although the consultant was somewhat concerned that the SVP had not weighed in with his perspective.

And then it happened.

The SVP asked a question. But not just any question. To the consultant, the question went to the very heart of whether or not his firm would be hired for the assignment. And to be fair, it wasn’t really as much a question as it was a test, even though it might not have been intended as such.

“So, you say that we’d earn significantly greater profits by being more aggressive in the number of bookings we take for our cruises. You’ve described how deliberately accepting reservations beyond a ship’s capacity — overbooking is the term you used — could be seen as a customer service opportunity because it gives more people a chance to book with us, their preferred cruise line, rather than contact our competitors. That was interesting. But let me tell you that we can’t have people showing up on the pier with their luggage and then ask who wants to volunteer to take a different cruise. That may work for the airlines, but it won’t work for us. What do you think about that?”

As the consultant thought about the question, or really about the concerns that had been expressed by the SVP, he began to smile. It was a great question.

It was a great question because it meant that the SVP was listening and thinking about the ideas that the consultant had expressed during the past 30 minutes. It was a great question because the SVP was correct. Indeed, it would not be a good idea for the cruise line to try and emulate airline policies and procedures.

It was a great question because the SVP wasn’t sure how to answer the question. And, it was a great question because after taking a few moments to think, the consultant believed he had an answer that would satisfy the SVP.

Indeed, as he later learned, it was the consultant’s answer to the question that led the SVP to tell his staff that this was the right person to lead the project. Based on how the consultant responded to the question, the SVP felt confident that any pricing programs proposed by the consultant would reflect the particular circumstances and business needs of the cruise line; what worked in another industry would not be blindly applied at his company.

What was it that enabled the consultant to get the SVP to be “on his side?” And how might you have responded?

Before going further, let me say quite explicitly that this is not an article on “the 10 best ways” for consultants to sell their services. Nor am I going to suggest the “10 most effective techniques” to launch a consulting business or carry out any other aspect of consulting. There are many books and articles that provide excellent insights into more effective consulting; references for two of those that I found stimulating and worthwhile are provided at the end of this article.

What I do hope to accomplish is to provide a brief and interesting glimpse into some of the key factors that are enabling me to have a successful consulting career. The suggestions and experiences described here are those that have been of value to me and of interest to my colleagues during our discussions; I hope they resonate with a larger audience.

Now, back to our story.

In the above situation, the consultant paused for a short time (perhaps for effect or perhaps because he needed time to think) and told the SVP that of course he was correct. The procedures adopted by airlines were not appropriate for a cruise line. He agreed that cruise lines would need to find passengers willing to volunteer to take a different cruise well in advance of their departure date. The consultant then outlined a process for how this could occur.

Finally, and this is what appeared to truly grab the SVP’s attention, the consultant suggested the cruise line could learn a lot by initially contacting those who had reservations on cruises before it was “necessary” to do so. This would enable the cruise line to experiment with various offers and assess the difficulty of finding cruisers willing to shift their vacation plans. The cruise line’s booking policy should reflect this. No one would be forced into changing their plans, and the cruise line could position the offers simply as opportunities. Indeed, it should be communicated that the offer was being made to a select few so that those receiving the offer would feel fortunate and pleased to have been chosen.

In the end, it was probably not the specifics of the consultant’s ideas that mattered most, although they gave needed substance to his ideas. Rather, it was the SVP’s perception and expectation that this consultant would give careful thought to circumstances relevant and specific to the cruise line when designing pricing programs. In short, the SVP trusted that the consultant would solve his problems and not someone else’s.

During the course of my career, I have found that potential clients tend to be more willing to place their trust in a consultant who demonstrate an understanding of what most concerns them and can communicate a plan for addressing the concerns.

Twist and Turns

Perhaps it is only indicative of an inability to adapt, but one of the facets of consulting that has not changed for me, regardless of whether I was working for a large or small consulting firm, is the range of efforts I undertake to find new assignments. I have long been intrigued about what works and what doesn’t work in terms of obtaining engagements with new clients. Looking back over the past 25 years, virtually all of my assignments have resulted from only three avenues of business development efforts: references, conference participation and inquiries resulting from someone who came across our firm’s name.

References/introductions. A picture may be worth a thousand words, but for a consultant, a good reference is truly priceless. It is virtually impossible to exaggerate the value of strong references, especially to a small consulting firm. Whether from clients for whom we have carried out an assignment, professors who are familiar with our work (one of the reasons why I am so passionate about having INFORMS undertake initiatives to strengthen the bond between academics and practitioners!), or from colleagues that our staff have worked with at previous companies, I have found that a good reference opens up doors to assignments that we would never otherwise obtain.

Speaking/attending conferences. Thinking back on the assignments that resulted from participating in conferences, it seems that virtually all of them were with companies that I spent an extended amount of time with at the conference discussing the issues and challenges they were facing. Many of these discussions were with individuals who were not actively looking to engage external expertise at that time. In some cases, our discussions led them to do just that. In others, we remained in contact with one another for extended periods of time before they were ready to begin an engagement. Some of the engagements turned out to be multi-year, multi-million dollar efforts and some engagements were as short as only a few days.

Interestingly, and I did not realize this prior to writing this article, as I was going through my files (and admittedly, I might have missed one or two), I could not identify one assignment over the past 20 years with a firm that resulted from “meeting/networking with” a conference attendee for only a brief time and then following up afterwards. Perhaps there really is something to the saying “quality, not quantity is what matters.”

Web site, publications and interviews. Relative to the business development leads we generate (or are generated for us) from references and conferences, the leads we obtain from inquiries that result from reviews of our Web site, articles we have published and quotes that have appeared in newspaper articles are less likely to lead to an engagement. But some of our most interesting and even some of our largest assignments have resulted from being contacted by firms that “came across our firm” as they were carrying out their research on revenue management and pricing. Although it did not lead to an assignment, I’ll never forget the time that someone mailed a movie script to me for review because I had been quoted in a newspaper article; I still can’t figure out that one!

One business development approach missing from the above list is “cold calling” potential clients; that is, contacting people we don’t know who are in positions that might potentially hire us (e.g., via email, telephone, etc.) and providing them with information so that they learn about who we are, with the ultimate goal of having them eventually hire us for an assignment if and when they decide to bring in outside experts to help them address their pricing and revenue management challenges. Such activities have not been very productive. If you’ve had success with this approach, I’d be interested in speaking with you so that I can learn what we’re doing wrong.

selling analytics

Sharing the Risk

Frequently, one or more members of a firm’s senior management team remain skeptical about whether a more scientific and systematic approach to pricing will really pay off. We have found that we can typically do two things that often help us overcome that skepticism. The first is technology-driven; the second is decidedly not.

“There’s gold in them thar data.” Whenever possible, we carry out analyses using our client’s historical transaction data as part of our efforts to provide a quantitative estimate of the potential benefits of an engagement. Typically, we end up analyzing the data in ways our clients haven’t previously done. Consequently, we provide them with “new” information about their business. Sometimes, our findings give substance to their suspicions; sometimes, our findings are such a surprise that our analyses lead to heated discussions amongst the members of our client’s senior management team. When that happens, we know we’ve done well, as these discussions typically lead to productive action.

During one of our engagements, we were able to demonstrate that field staff was offering discounts when demand was high and available inventory was low; exactly the time when discounts didn’t need to be offered. Senior management had been highly focused on inventory utilization rather than on the price of sale; over time, field staff learned how to turn this focus to their advantage, although it was not necessarily in the best interests of the firm. At first, when we presented our analysis, one senior vice president thought we were making this up as a hypothetical situation because our findings couldn’t be accurate. Even before we could respond, another SVP jumped in and started “explaining” to the first SVP why our analysis was right and that we had identified a situation they should now address.

“Partnering: It sounds like a great idea.” When all is said and done, sometimes you have to be able to demonstrate that you have complete and unwavering confidence in what you are proposing. Whenever possible, we offer clients the opportunity to pay less for our professional services by sharing the benefits with us. We try to keep benefit-sharing agreements relatively simple. For example, if a client wants us to carry out the engagement for 50 percent less than our standard fee, we might be willing to do so as long as they also agree to share the benefits on a 50/50 basis for a few years. We let clients choose their desired discount levels, with a corresponding percentage in the benefits sharing level.

Because the annual benefits from our assignments can be three to 10 times as much as our professional services fee, we can afford to develop conservative benefit measures that still allow us to reap great rewards if we are successful. Even if the measures we agree to underestimate the benefits by 20 percent (or more), we still come out well financially. Unfortunately, after our clients “do the math,” they typically agree to pay our standard fee and not share the benefits with us. But the psychology of the offer is so great that simply by making the offer we can overcome a great deal of skepticism. (We still hold out hope that some clients will take us up on our risk-sharing offers!)

Project Management

As noted earlier, the three business development efforts that I have found most effective have been substantially the same, whether I’ve worked for large or small consulting and software development firms. Also, their effectiveness does not seem to depend on economic conditions, although the frequency with which they occur may change. Whether we’re experiencing tough economic conditions as we are now, or periods of economic expansion, the business development methods that have proven to be the most reliable and productive are the same.

I can’t say the same for project management.

I have observed significant differences in the way consulting firms approach project management and execution. Veritec’s approach to staffing and project execution is rather progressive and has been an important reason for our success. I also recognize that our approach might not work for a larger company. Consulting firms typically establish a variety of internal measures of control and profitability for assignments. For example, regardless of whether a project is carried out on a time and materials basis or for a fixed professional services fee, staff compensation may depend on their number of billable hours. Bonus levels may depend on internal measures of an assignment’s profitability; such measures may reflect staff billing rates and the amount of time charged to a project. Especially for fixed price contracts, such factors can incentivize project managers to carry out their projects with the minimum required labor or not take full advantage of the resources of the consulting firm. In short, the consulting firm becomes its own worst enemy; even though it may have the right resources for an assignment, they may not always be accessed.

To avoid that trap, we have adopted a different philosophy. An individual’s compensation has been explicitly decoupled from billable or project time as well as project profitability. Indeed, when we have been in the position to do so after signing a contract, there have been times where we have communicated to clients that we are prepared to allocate additional resources beyond what we have agreed to as long as they pay for any additional direct costs (e.g., travel). Some of our assignments have been of such great interest to our staff that this policy also contributes to increased job satisfaction. As you might imagine, this policy has been well received by our clients and has allowed us to “over deliver” on some projects. As references for a small consulting firm are extremely important for obtaining future assignments, this policy has served as an excellent long-term investment for our success.

Warren Lieberman ( is president of Veritec Solutions, a Belmont, Calif.-based consulting and software development company focused on pricing and revenue management. Prior to Veritec, Lieberman was an internal O.R. consultant to American Airlines, a consultant for Arthur D. Little, Inc. and led the Travel and Hospitality Consulting Practice for Decision Focus/Talus. Lieberman, who holds a Ph.D. in Operations Research from Yale University, serves as Vice President-Information Technology on the INFORMS Board of Directors.


1. Peter Block, 1981, “Flawless Consulting,” University Associates: San Diego.
2. Neil Rackham, 1988, “SPIN Selling,” McGraw-Hill: New York.

Fighting Through Economic Challenges

Tougher economic times typically lead to a tightening of departmental budgets and seem to make corporate restructurings more frequent. As cash flow becomes a greater concern, many companies are also less willing to take on new initiatives, even when senior staff believe the potential benefits are sufficiently high to warrant the effort. Short-term interests begin to dominate longer-term ones.

At the moment, we don’t have a good answer for how to overcome this resistance. But we’ve just made one of our clients an offer that we think will be hard for them to refuse. One of our clients had asked us for a proposal for a four-week assignment that they wanted to engage us for but then decided not to carry out the effort as the company went through a round of lay-offs and departmental budgets were cut. During our discussions with the client, we estimated that the annual potential benefits of the assignment would likely be eight to 10 times greater than our professional services fee. Having a good relationship with this client, we’ve told them that we are willing to work on a high level of trust. We’ve offered to carry out the work without charging them anything until we’ve delivered our findings and they can use them. Then, our client can determine the value of our work and we get paid our professional services fee only if the promised value is delivered. And yes, we’ve told them that they could also share a portion of the benefits with us as well, but that’s a voluntary decision.
– Warren Lieberman



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