Chapter 13: The Situational Assessment
The situational assessment is a proposal structure that focuses on client needs and outcomes before discussing your services or pricing. It prevents sticker shock by establishing value first.
What You'll Learn
- Components of an effective situational assessment
- How to co-create the ROI model
- Building your expert network for premium tiers
- Proposal structure that converts
Why Situational Assessments Work
Traditional proposals start with "Here's what I do and what it costs."
Situational assessments start with "Here's what I understand about your situation and what's at stake."
| Traditional Proposal | Situational Assessment |
|---|---|
| Leads with services | Leads with client situation |
| Price feels arbitrary | Price feels justified |
| Client thinks "is it worth it?" | Client thinks "they understand me" |
| Comparison-shopped on features | Differentiated by understanding |
Book Recommendation
This approach comes from Alan Weiss's books "Million Dollar Consulting" and "The Consulting Bible"—highly recommended resources for any consultant.
Components of a Situational Assessment
A complete situational assessment includes five sections:
1. Situation Analysis
What you learned about their current state: - What is at stake - Current pain points and their costs - What solving the problem would unlock
Example:
"[Company] is currently experiencing a 15% monthly churn rate, resulting in approximately $200K/month in lost revenue. The engineering team spends 40% of their time on fire-fighting rather than product development. Leadership has identified AI-powered customer intelligence as a strategic priority for Q3."
2. Objectives
What the company needs in concrete terms: - Specific, measurable outcomes - How success will be measured - Timeline for results
Example:
Objectives: - Reduce churn rate from 15% to 8% within 6 months - Free 20+ engineering hours/week from manual processes - Deploy customer intelligence system by [date]
3. Values and Benefits
What they get from achieving objectives: - Business outcomes (revenue, efficiency) - Emotional outcomes (confidence, reduced stress) - Long-term advantages (competitive positioning)
Example:
Benefits: - $120K/month in retained revenue - Engineering team focused on growth, not maintenance - Data-driven insights for product roadmap - Competitive differentiation in customer experience
4. Methodology and Accountability
Your approach and responsibilities: - How you'll solve the problem - Who is responsible for what - Timeline and milestones
Example:
Approach: - Weeks 1-2: Data audit and system assessment - Weeks 3-6: MVP development and testing - Weeks 7-10: Deployment and team training - Ongoing: Advisory support and optimization
5. Options and Investment
Multiple ways to work together: - Service options at different price points - Fee structure and payment terms - Guarantees or assurances
Co-Creating the ROI Model
Never show up with an ROI model after the fact. Build it together during discovery.
The Process
| Step | What You Say |
|---|---|
| Agree on inputs | "How many hours does this process take today?" |
| Validate assumptions | "What's the fully loaded cost of those engineers?" |
| Calculate together | "So that means this is costing you $X per month" |
| Project outcomes | "A 50% improvement would save $Y annually" |
Why It Works
When clients agree on inputs, they rarely challenge the outputs. You've built the business case together.
Example Dialogue
You: "How many support tickets does your team handle per month?"
Client: "About 2,000"
You: "And what's the average handling time?"
Client: "About 15 minutes each"
You: "So that's 500 hours a month. What's the fully-loaded cost of your support team?"
Client: "Around $40/hour"
You: "So ticket handling alone costs about $20K/month. If we could automate 60% of those..."
Client: "That would save $12K/month."
You: "Exactly. Our engagement is a fraction of that monthly savings."
Building Your Expert Network
A strong expert network allows you to offer premium tiers with specialized expertise.
Model 1: The Curator Model
Position yourself as the curator who brings in experts: - You remain the primary relationship owner - Bring in experts for specific challenges - Mark up their rates by 20-50% for coordination value
Model 2: The Partnership Model
Create formal partnerships with complementary experts: - Share revenue based on contribution (typically 70/30) - Co-deliver engagements with clear roles - Build recurring collaboration relationships
Model 3: The Collective Model
Form or join a consulting collective: - Pool expertise across 3-5 senior consultants - Share leads and collaborate on large engagements - Maintain individual practices while leveraging group strength
Premium Tier Components
| Element | What It Adds |
|---|---|
| Expert access hours | 10-20 hours of specialist time |
| Rapid response | 24-hour guarantee for critical issues |
| Specialist matching | Custom match to specific challenges |
| Knowledge transfer | Ensure team learns from specialists |
| Executive briefings | Monthly sessions with multiple experts |
Including Experts in Your Proposals
Include a markdown file with short bios of specialists you can bring in for different types of projects. When you use AI to generate proposals, it can intelligently recommend relevant experts based on the client's needs—strengthening your premium tier offering.
This approach creates price anchoring. If a client has executive alignment issues, you might include a leadership specialist. For fine-tuning work, bring in experts working on sentence transformers. Very few clients actually select the premium option with all the experts, but seeing that tier makes your middle option feel like better value. The expert network isn't just about capability—it's a positioning tool.
Sample Proposal Structure
Section 1: Executive Summary
One paragraph summarizing situation, solution, and investment.
Section 2: Situational Assessment
Your understanding of their current state, pain points, and stakes.
Section 3: Objectives and Success Criteria
Specific, measurable outcomes with timelines.
Section 4: Proposed Approach
Your methodology and what you'll do.
Section 5: Options
Three tiers with clear differentiation.
| Option | Price | Best For |
|---|---|---|
| Advisory | $15K/month | Teams with internal capacity |
| Comprehensive | $50K | Teams needing hands-on support |
| Premium | $150K | Maximum speed and certainty |
Section 6: Joint Accountability
What you'll do and what client commits to.
Section 7: Investment and Payment Terms
Fees, payment schedule, and guarantees.
Section 8: Next Steps
Clear call to action with timeline.
Pricing Model Options
When uncertain about pricing approach, present model choices:
| Option | Structure | Best For |
|---|---|---|
| Option A | $100K fixed + 10% of improvements | Confident in outcomes |
| Option B | $500K fixed fee | Risk-averse client |
This approach: - Demonstrates confidence in your value delivery - Lets risk-averse clients choose lower upfront cost - Often leads to Option B being chosen (to avoid complexity) - Gives you courage to quote higher prices
Time Investment on Proposals
For a $30K-50K proposal, spend 1-2 hours writing it.
"These are things that will help you make $30,000-40,000. I tend to spend about an hour or two working on these things."
The Process
- Get transcript from discovery call
- Use AI to generate first draft
- Customize with specific client language
- Review for accuracy and positioning
- Send within 48 hours
Don't agonize for days. Momentum matters more than perfection.
Action Items
-
Create your proposal template. Build a situational assessment template with all five sections.
-
Practice ROI co-creation. In your next discovery call, try building the business case together with the client.
-
Identify potential experts. List 3-5 people you could bring into premium engagements.
-
Time yourself. Track how long your next proposal takes. Aim for 1-2 hours for standard engagements.
-
Build your options. Define three clear tiers for your main service offering.
Key Takeaways
- Situational assessments establish value before discussing price
- Five components: situation, objectives, values, methodology, options
- Co-create the ROI model—when clients agree on inputs, they accept outputs
- Expert networks enable premium tiers at 3-5x your base rate
- Spend proportional time on proposals (1-2 hours for $30-50K)
- Use AI and transcripts to accelerate proposal creation
- Send within 48 hours while momentum is high