What is Paid Discovery? (And Why It’s Finally Time to Start)

Karl Sakas — August 27, 2019 Follow @KarlSakas

— August 27, 2019

See why your agency (and clients) might benefit from doing Paid Discovery projects.

Business development can feel like an emotional rollercoaster: Closing a deal is exhilarating… and losing one is crushing.

But the worst is when a “great” prospect suddenly says they’re not interested any more… or they disappear entirely. No closure… and no revenue.

What if there was a nearly foolproof way for agency prospects to prove their interest before you invest a ton of time? What if that process also helped you decide whether you actually want them as a client? And what if it helped you create an easier-to-close sales proposal?

There is: Paid Discovery. The concept has been around for a long time, but many agencies still haven’t adopted it.

Today in Part 1, I’ll share the definition of what it is at agencies, and why it’s time to start using it. Next week in Part 2, I’ll share how to get started. And in a future Part 3 article, I’ll share how to continuously upgrade your process over time.

Definition: What is Paid Discovery at agencies?

Paid Discovery is an initial mini-project that prospective clients must buy before you’ll propose a larger project or retainer. You might think of it as a paid trial or a paid test. Agencies typically frame it as an “audit,” “initial plan,” or “workshop.”

Most agencies will charge $ 3,000 or less for their discovery offering, and it’s structured to encourage clients to ask for a sales proposal on followup work (a project and/or retainer) to keep going. Let’s look at why to do it, what to include, and what it’s not.

Why do Paid Discovery at your agency?

Paid Discovery is a win/win for agencies and clients. Why? Here are the benefits to your agency:

• You learn more about the client’s challenges, including whether their initial assumptions are accurate.
• You get to know the client—including their competence, their internal politics, their turnaround time, and what it’s really like to work with them.
• You’re getting paid to dig into the client’s situation, instead of doing free consulting to create a sales proposal.
• You’re building momentum with the client, which increases your odds of successfully selling follow-on work… and the client’s willingness to agree to a longer-term arrangement.

And here are the benefits to your new clients:

• They don’t have to pre-commit to a big project or retainer.
• They get to know the agency, including your competence, turnaround time, and more.
• They can get moving on something they’ve likely been discussing internally for a long time.
• They get a “portable” deliverable that they could potentially use internally or with another agency.

Now, let’s look at the five factors that distinguish Paid Discovery.

What needs to be included in Paid Discovery?

Paid Discovery is an initial mini-project that prospective clients must buy before you propose a larger project or retainer. As I noted above, agencies typically frame it as an “audit,” “initial plan,” or “workshop.”

Be intentional—for everyone to reap the full benefits, I’ve identified five qualities to include:

1. Confidently Portable: The deliverable must be “portable.” That is, the client could take it to another agency (or use it in-house). Otherwise, it’s hard to justify charging for the work. You’re also showing the client that you’re so confident about your sales pipeline that you’re indifferent if they go elsewhere, but also so confident in your abilities that you know they’re likely to stay.
2. Forward-Looking: Rather than a dead-end deliverable, you share something that makes a sales proposal (on further support) a logical next step. That next step might be a more in-depth strategy, implementation support to fix the items you found, or guidance to help the client prioritize next steps.
3. Productized: Remember that this should be relatively easy to sell and to deliver. This means you can’t create something custom every time. Depending on your agency, you can choose either a structured deliverable (e.g., an audit based on the same template across each client) or a structured process (a standard-schedule workshop that produces a TBD list of findings).
4. Mutually Informative: The ideal mini-project lets everyone learn about each other. That is, your process gives the client insights into what you do on the bigger engagement. And you get a window into how the client operates, and whether you actually want to keep working with them.
5. Priced Right: The price should be less than 10% of the future engagement’s budget, but not too cheap. At most agencies, Paid Discovery costs less than $ 3,000, although on-site workshops are more. (And don’t literally call it “Paid Discovery”—more on that next week in Part 2.)

To address common misconceptions, let’s review what this isn’t.

What is not Paid Discovery?

The following examples are not Paid Discovery:

• Doing a free audit. (Because it’s not paid.)
• Doing a paid one-off consulting call. (Because it doesn’t give you enough information to inform a followup proposal.)
• Doing a custom initial project. (Because it’s not productized or otherwise standardized.)
• Doing a project that’s unrelated to your core business. (Because it’s not a good preview of your capabilities.)
• Doing an expensive initial strategy project. (This is good, but it goes beyond discovery.)
• Creating a deliverable usable solely by your agency. (Because it’s not “portable.”)

Might you want to skip Paid Discovery? Potentially. Read on!

Should some agencies skip Paid Discovery?

Paid Discovery offers a lot of win/win benefits—but it’s not right for everyone. Here are circumstances where your agency might not need to offer the mini-project:

• You’re happy with your current pricing… and you regularly get a 70%+ close rate on your larger-engagement proposals.
• Your services are cheap enough that clients don’t need to think hard about paying for your help.
• As the owner, you’re the only person who can create the Paid Discovery deliverable.
• You offer Paid Discovery, but a majority of new clients ask to skip it (to go straight to a bigger engagement).

What if a client asks to skip it? It depends on the circumstances; more on that next week in Part 2. Speaking of getting enough information…

How exactly are you getting “paid” to write a sales proposal?

Consider how you normally create a sales proposal today. In short—you do a discovery process to evaluate the client’s needs, and identify how you might solve their problems.

Without Paid Discovery, you’re doing that sales discovery process on an unpaid basis. This means you generally want to complete unpaid discovery as quickly as possible—because you’re not getting paid, and the sales opportunity may never move forward. This leads to cutting corners… which you’re likely to regret if the deal does move forward.

In contrast, Paid Discovery means you’re getting paid to do much of that discovery process. By the end of each initial mini-project, you’ll likely have a good idea of what to propose as the followup engagement. You can be more careful about your work, and clients ultimately get stronger proposals.

Next week: Part 2 on how to get started!

Next week in Part 2, I’ll discuss how to get started with Paid Discovery—including what to include, what to name your discovery offering, and how to price it.

In a future “Part 3” article later this year, I’ll share how to troubleshoot problems as you implement Paid Discovery.

Question: How will your agency benefit from Paid Discovery?

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