January 31, 2001, 11:24 AM

Tales from the frontlines: Why it pays to check out that consultant's claim before you hire

(Page 2 of 2)

Effective communication between the consultant and the client requires finding a middle ground. On the one hand, it only makes sense to listen to the consultant’s input-even when what the consultant says is unflattering. “Sometimes it’s so obvious to the consultant that what the person wants to do won’t work,” says Zientek of Christine Columbus.

At the same time, Internet retailers need to make the consultant explain unclear recommendations. If the bill starts creeping up, the retailer and consultant jointly should figure out how to bring it back down. When it comes time to pay their consultants, some Internet retailers offer equity in addition to or instead of cash. Both e-retailers and consultants say this can work in select cases.

Several problems can crop up with an equity deal. Grossman says that equity won’t always motivate. “We have to pay people fair market value,” she says. “Otherwise we won’t get their full attention.” Zientek points out that a consultant compensated with equity is connected to the company for a long time. And e-retailers planning to go public may not want to spread their stock among various consultants.

With the right partner, however, an equity deal can work, says Steve Hochman, vice president of sales operations with Lucy.com, a multi-channel retailer of women’s athletic products headquartered in Portland, Ore. Before using equity, Lucy.com’s management team spends enough time with the consultant to be confident that the two firms will make good long-term partners. They have decided against it in some cases. However, “Once that benchmark is passed, it’s a great tool,” says Hochman.

After her initial experience in trying to find a consultant, Zientek has hired several. Her experience since then has been positive. “I attribute that success to the research we do to find consultants that fit our specific needs, and to having several meetings with them prior to working together,” she says.

Karen Kroll is a Minnesota-based freelance business writer.

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