I hope you found last week’s conversation about vitamins (sold by subject matter experts) and painkillers (sold by thought leaders) useful. What you sell depends on how well you’re positioned. And becoming indispensable to clients and referral sources requires being positioned as a thought leader in your practice area. You get there over time, not overnight.
On to this week. I want to go on record that I am not immune to price compression. And if I haven’t said that before, I’m saying it now. But if I’ve been more fortunate than others it’s because, in the 7-8 years since the Great Recession began, I’ve focused more on the solution I provide rather than the report I deliver. I’m getting there over time, not overnight.
And if you’re new here, welcome aboard. This is what we do!
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Our competitors offer reports at lower prices. It’s tough to win when they are “giving away” what they should be selling.
That’s what we tell ourselves anyway. (It’s what I used to tell myself.)
But there is nothing we can do to control or influence our competitors’ actions. We can only do something about our actions … and thoughts … and beliefs.
Based on my own during- and post-Great-Recession experience, as well as constantly talking with BVFLS friends and colleagues, I’ve come up with three very basic reasons about why we struggle with pricing relative to “those” competitors.
#1 – We don’t believe our value
If we don’t believe in our heart – with every fiber of our being – that we are creating more value than any other competitor’s alternative, then we shouldn’t expect to capture more value, i.e., charge a higher price. And if we don’t believe our solution is worth more, than no one else will believe it either.
I believe this particular issue stems from our profession’s maniacal focus on the technical aspects of the reports we deliver to our clients. We’re so worried about the latest quantitative methods, the most recent court cases, and the current professional standards that we forget we were hired to provide a solution to fix someone’s problem.
#2 – We can’t justify our higher price
Number of hours times an hourly rate is a price, not a value. If we want to capture more of the value we create, we need to be able to justify our higher price. We need to help our clients understand the additional value they are receiving by going with our solution. And we may even need to go further by helping our clients defend our solutions within their organizations.
If we want our clients to perceive the value, we have to be able to clearly articulate what makes us different and how/why that difference matters in their world. Then give them evidence (e.g., references testimonials, sample reports, case studies) to defend that value.
#3 – We aren’t selling to our aspirational clients
Aspirational clients (a phrase I first heard used by Mercer Capital’s Barbara Walters Price) are the clients we want to have because they have intellectually challenging assignments, see the value in the solution we provide, and are fun to work with … though as Meatloaf sang, two out of three ain’t bad.
But instead of proactively seeking out these clients (or investing time in our positioning so that they seek us out), we are reactive – aggressively waiting for the phone to ring (a phrase I first heard used by keynote speaker Sam Allread at last year’s NACVA conference) so someone will invite us to submit a proposal. We end up selling from behind, so to speak, which eliminates the ability for us to create value during the “buyer’s journey” (Google this term).
I think it’s good to keep in mind that there will always be some prospects with systemic challenges to paying for value. In some cases, they might believe what we do doesn’t create enough value. In other cases, their low margins prevent them from making the necessary investments in their businesses. And there are some who have the mindset that only accepts the lowest price as the greatest value. Keep a stiff upper lip when you encounter these prospects … and remember it’s business, not personal.
What do you think?
– If you like what I write about, tell a colleague.
– If something resonates and you want to reach out directly, email me.
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