Is price competition driving your rates down to the point that you can no longer be profitable? If you follow these five steps to provide value before, during, and after the sales process, you will get the fees you know you deserve.
One of the most common laments I hear from service business executives goes like this:
“Our services are becoming a commodity. Everyone is out there saying they can do the same thing we do, pushing fees further and further down. Prospects are just buying on price.”
Unfortunately, some aspects of what we service providers offer have become commodities in our markets. This can create rampant price competition for those services.
However, if you follow these five steps to provide value before, during, and after the sales process, you will get the fees you know you deserve.
Step One: Concentrate On Your Value
In his book The World is Flat, Thomas Friedman discusses how even such services as tax preparation and writing of legal briefs are being outsourced to India, China, and even Russia.
1) To survive and 2) to get higher fees, forward thinking accounting, law, consulting, and technology services firms need to concentrate on delivering value in the services that cannot be outsourced. These are services such as business analysis, business counseling, and visionary ways of delivering services — services that require a deep relationship and trusted advisor role.
Concentrate on the value your services provide beyond tax preparation, writing legal briefs, and writing code. Delivering these services that cannot easily be outsourced to someone 5,000 miles away will separate you from the crowd. It will allow you to receive higher fees, because you are offering something different, and more valuable.
Step Two: Know And Validate Your Value
I recently attended a roundtable discussion on branding with chief marketing officers of major law, accounting, and consulting firms. The speaker asked the audience, “What are the differentiating aspects of your services?” The response from the audience was uncomfortable silence.
If you and your colleagues do not know what is genuine and distinct about your services and what keeps your services from becoming a commodity, how do you expect the marketplace to know? To know your value requires deep and unnerving introspection. And, once you think you have your answer, it is essential that you validate it by asking the people who really know — your clients.
All too often, what we believe to be true and what the market believes to be true are two different things. In order to concentrate on the value of your services, you must know what that value is in the eyes of your clients and prospects.
Ask them:
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If you were to recommend me (my firm) to a colleague, what would you say are the benefits you get from working with us?
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Finish this sentence, “Our firm is a leader in the area of…”
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What makes my firm distinct is…?
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When you are looking to hire (fill in your service area) what is most important to you?
Be prepared for some tough answers. Maybe you are not a leader in anything. Maybe they cannot see the difference or the benefits of your services. If they can’t, you have to go back to step one. If they can, then start spreading the word.
Step Three: Articulate Your Value
Perhaps it is because most service firms do not know what it is that they do for their clients. Or perhaps, they just have poor marketing skills. Whatever the reason, if website copy is any indication, it is no wonder why everyone is lamenting about services becoming a commodity. All too often, I see something like this on websites:
We deliver solutions to our clients’ problems through excellence in our processes, people, and technology.
But, WHAT DO YOU DO? Once you know the value you provide, say it in a way that is meaningful to your prospects and clients. Say it in their words. Say it in a way that is clear, to the point, and distinct.
For example, consider this testimonial from a website I know: “They pushed back and made my brain hurt. It wasn’t always what I wanted to hear, but they got results.” This message may not speak to everyone, but the value they provide is clear. I am sure that there are company leaders out there who would love a consulting firm to cut through the clutter to get something accomplished.
Step Four: Sell Your Value
Many selling methodologies talk about finding the pain and alleviating that pain. That’s not enough. If you stop at a simple question of fixing problems, you cannot sell the full value of your services.
To get to the complete value you can provide, you must help the prospect articulate the impact of relieving the pain (afflictions) and, just as importantly, achieving their dreams (aspirations) during the sales process. Such questions as:
- What would happen to your business if you could improve this process?
- What affect would this change have on your bottom line?
- How much faster do you think you could grow if you were able to put this in place?
- What won’t happen if you don’t solve this problem at all?
The more you can position your services as a packaged solution that has an impact on the business, addresses aspirations as well as afflictions (pain), and presents how the future will be different for the client when they work with you, the less susceptible you will be to price competition. If you just uncover “pain” and present an easy-to-find commodity solution to that pain, you should be facing price competition.
Step Five: Deliver Your Value
Deliver your value and satisfy clients. Satisfied clients means repeat business, increased business with current clients, and referrals — the holy trinity of success in a service firm.
The Good And Bad News
The bad news is, it is hard work to understand and articulate your value. The good news is, by demonstrating your value in the sales and marketing processes, you position yourself as a trusted advisor early on. So few firms make the effort to know, articulate, and sell their value. When you do, you differentiate yourself by the very act of positioning yourself not as “just a provider of a commodity service”, but instead as the seller and deliverer of value.
John Doerr is a Principal of the Wellesley Hills Group, a consulting and marketing services firm that helps service companies to grow. He is also a founder of RainToday.com. John can be reached at jdoerr@whillsgroup.com.
