Breaking the myth of client pricing
Firms operate based on myths while enduring realities such as slow growth, low profitability, client losses and employee losses.
One such myth is that price is the main reason for lost clients or lost proposals. The reality is that price is only the reason when the sales team or client service team fails to communicate or deliver a firm’s unique value. Of course, a client would choose another firm if the only thing separating firms is price. You can’t compete on price over the long term and succeed unless you have the lowest cost of delivery and that is your value proposition. For most firms, that is simply not true.
Breaking this myth requires a major shift in the sales culture of the firm. It’s hard to establish accountability for wins and losses when the firm accepts pricing as the primary reason. How can you hold the “losing” partner accountable for a loss when you accept price as the reason? Price is a one-dimensional issue. Either your price is the lowest or it isn’t. Failing to communicate a compelling value to a client or prospect is a firm issue. There’s a huge difference in mindset and a huge impact on culture. Can your firm develop a sales culture centered on an impactful value proposition that truly differentiates your firm from others?
The challenge in creating a successful value proposition is to understand what your clients value—what they want and need versus what your firm does. What are the real drivers of the decision to move from or select your firm?
To develop an effective value proposition, focus on the client’s world and not what your firm does—its products and services. Nowhere in the value proposition should there be any mention of price, quality or customer service; they are non-starters.
Your value proposition should answer these questions:
!. Who is your targeted client? Who are you selling to (size, industry, location, etc.)?
2. What do they want and need? What are the business drivers that decision-makers value?
3. What benefits will your service provide with some metric to make it visible? Why move or stay with your firm?
4. What should a client expect from your firm in the way of partner involvement, regular business advice, use of technology, etc.?
Once your value proposition is developed, test drive it with some clients and friendly prospects to make sure it resonates and communicates a unique and compelling value. Then educate every partner on how to communicate the value proposition, how to deliver it with passion and examples, and most critically, why the prospect should care.
The final part of this transformative change in sales culture is accountability for losses. I’m not suggesting your firm will win every proposal or keep clients forever, but if the firm loses a proposal or client, make sure you understand why. The firm’s CEO should call potential clients who did not select the firm and ask how the sales team presented the firm and its value, and why your firm was not selected. If your firm loses a client, the CEO should call and find out why. Based on this intelligence, the firm may amend its value proposition, provide more education to partners on communicating the firm’s value proposition, or if warranted, hold the partner accountable for the loss.
All firms have a unique value to communicate. Has your firm developed a sales culture based on that unique value?