Greetings from Iowa … we are getting some routine service work done at the Winnebago factory. Along with the work we had done at my in-laws in Wisconsin, we will be in tip-top shape – inside and out – for our continued travels.
I hope you found our last conversation about service providers vs experts to be useful and that it gives you ideas on how to become an even better expert … because none of you are “just” service providers, right?!
On to this week. So yeah, I got this phone call from the AICPA on Monday. I spoke with someone on the media relations team for the FVS Section. But it wasn’t about other qualifying professionals getting the ABV credential. It was about something totally, and surprisingly, different … which tells me someone is paying attention.
And if you’re new to the blog, welcome aboard. This is what we do!
Imagine my surprise. Someone at the AICPA read my blog post, Has anyone noticed that we are being disrupted? Here’s why he wanted to chat:
I’m gathering info on the challenges these free valuation calculators present to the valuation profession (and risks to biz owners who use them). Looking forward to getting your thoughts on this important topic!
So I was impressed … not just that somebody in the FVS Section was reading my blog, but that they were looking for input from professionals like me to combat the problem I wrote about.
And it became apparent that my interviewer was looking for ammunition to shoot down those free (or near-free) valuation calculators. He was surprised that I couldn’t give him the bullets. Why? Because I didn’t think it was in the best interest of our profession to make someone, or someone’s product, bad and wrong.
Rather, I wanted to arm him with information that could make us better and stronger. Here were my 5 major points:
#1 – We don’t control the client’s buying process
The inner circle of any client’s team of trusted advisors is an accountant (who is not necessarily an appraiser), an attorney, and a banker. This is due to the sheer number of occasions that those professionals have to interact with the client.
If those advisors don’t understand the value of what we provide, or they do understand and still believe a less expensive option is “good enough” for the intended purpose of the valuation, the free calculators will win out.
Solution: The valuation profession needs a concerted marketing campaign aimed at influencing trusted advisors to explain the value of what we bring to the table. We still won’t win every engagement, but at least our tributes are out there.
#2 – We don’t walk the mile in our client’s shoes
Too many of us hear but don’t really listen to what the client needs. Psychology research reveals that a stated problem is rarely the problem … it’s usually something else. So investing the time to understand the problem is critical to preparing a proposal that solves the problem.
And even when we do put ourselves in the client’s shoes and understand the problem, we must recognize that not every prospect is an ideal client. S/he may be someone else’s ideal client (including the free calculators), but not ours, and we need to walk away.
Solution: We need to get over the fear of not being able to immediately respond to the inquiry, “How much will it cost to value X?” There is just so much more to it than that.
#3 – Those free calculators don’t necessarily come up with a wrong value
We imagine that the free calculators produce black box values that aren’t worth the paper their inferior reports are written on. But have you taken a look at any of these free calculators’ reports? Or the client list these free calculators have served? Because there are plenty of people who believe the results are, again, “good enough.”
And there is no guarantee that a professionally prepared report will produce a more accurate result. Gasp! Give two qualified appraisers the same data, and we all know there will be two results … sometimes widely divergent. One of them is closer to the correct value than the other. But which one? Are we willing to bet with our money?
Solution: The latitude conferred by “professional judgment” (or what passes for it) is the bane and the bounty of our industry. But when someone steps out of bounds (requires a whistleblower), there must be serious penalties levied by our credentialing organizations. But that might impact dues.
#4 – The free calculators are not biased
Whether we admit it or not, we are all biased. At the foundation, we each have our own set of business and life experiences that we have interpreted to mean something. Then, we don’t get all of the information. Or we only hear one side of the story. Or clients lie to us. And, oh yeah, clients pay our fees.
The only bias in a free calculator is that of the person doing the data input … the calculator is agnostic as to what it does with the data.
Solution: Report reviews … that second (or third) reality check that will root out even the unintentional bias. But according to poll questions answered by hundreds of attendees in 25 report writing webinars I’ve given, 70% of appraisers say they have never had their report reviewed by a technical editor or proofreader, and 35% say they do not have someone in their firm who is qualified to review their reports.
#5 – There is the belief that these free calculators will not disrupt us
LegalZoom. TurboTax. RocketMortgage. SquareSpace. I imagine the people in the industries disrupted by these products said the same thing.
There is serious freaking money behind these free calculators, more than you and your 100 closest colleagues will ever make doing valuations. And they are in it for the long game.
Solution: Cher belts out “If I Could Turn Back Time,” and she really can. Then our competing organizations could focus on tearing down walls instead of building them.
In real life
Before you get the wrong idea, I am not pro-free-valuation-calculators.
But as a BVFLS practice development coach, I am a pragmatist.
And to be sure, the best of the best professionals are not just surviving but are thriving in each of the disrupted industries I alluded to above. I believe that will happen with the best of the best valuation experts if they focus on their positioning (who they serve), messaging (what makes them different), and marketing (where they show up).
Steve Jobs said we can only connect the dots by looking backward.
The question is where do you want to be when that reckoning happens?
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