Breaking the myth of client pricing: What you need to win
Price is a one-dimensional sales pitch. Your firm is either the lowest priced or you’re not—end of the story and end of the sales pitch.
What clients or prospective clients want from their CPA firm is value for the fee (motivation to select your firm = perceived benefits – perceived cost). A well done and timely-delivered audited financial statement or tax return is not the value they are looking for—those are just the “givens.” What they are really looking for is a CPA firm that will help their business grow and be more profitable—a firm that brings real value to the relationship.
Anyone can sell price. But selling value is quite another thing to accomplish successfully and consistently.
What is value and how does a firm create and communicate to clients and prospects the value your firm brings? Far too many firms believe the value they bring is their product and/or service. Look at almost any CPA firm’s website and 95 percent or more of it is about their services, their people, their areas of expertise and maybe some short client testimonials that no one really relies on to make any retention decision. Although it may exist, I have never seen a firm website that has as its focus the value it brings to its clients. I’m not talking about fair price, great service and top quality. Those are givens claimed by all firms.
If your growth strategy is based on competing on price, your firm must have the organizational model and processes that allow you to be the lowest-cost provider—or you lose. But if you need to figure out how to differentiate your firm, you need to create a compelling value proposition. It is really that simple. The challenges most firms face in creating a differentiation model and value proposition they can deliver on and clients will accept as valuable to their business are:
• Understanding the strengths and weaknesses of the CPA firm;
• Understanding what clients and prospects value and why;
• Understanding the gaps between what clients value and what the firm can deliver;
• Closing those gaps by aligning the firm’s organizational model, talent pool, staffing model, processes and pricing with what clients’ value and creating that compelling value proposition;
• Training the entire firm on the value proposition, how to communicate it to clients and prospects with confidence and clarity and how the firm will deliver on that value proposition, every time.
Let’s start with a definition of value. Value is not defined by what your firm does—it is defined by what your firm delivers in terms of positive impact. A value proposition is a “promise of value to be delivered”—it is a statement that simply reflects in an easily understood message what benefits (value) you deliver to your clients, what problems you help them solve and finally why a client should choose your firm. It is not a slogan or fancy one-liner—it is a statement that separates your firm from the pack.
Creating a strong value proposition requires that the message be impactful to your target market and resonates with what clients’ value. It must be easily understood, clearly communicate the impact your client should expect if they retain your firm and explain why you are different and better. Finally, it should be written so that your partners and staff can easily understand and communicate it with confidence in less than 30 seconds.
A sample value proposition might look like this:
XX & Co provides a suite of services focused on middle market organizations helping our clients achieve their financial goals and improve shareholder value. The client service team will provide guidance and assistance when and where it is needed to ensure that our client relationship grows stronger through the continuous positive impact we provide. We truly care about our clients, their business and their success and we will do all that we can to align our services and team to maximize the positive impact we will have to our client’s organization and success.
Creating a value proposition is unique for each firm and, like best practices, can’t just be copied from another firm. Your value proposition needs to be unique and created with appropriate input from a cross-section of stakeholders. The major steps are:
• It’s important that partners and senior staff get an opportunity to discuss, in an appropriate forum, their views about what clients’ value and their thoughts about the firm's strengths and weaknesses.
• The CEO and other senior management should meet to discuss what the value proposition should be, what the firm needs to do to align its services and talent with the value proposition, and how to price and position the firm to win.
• Discuss what you have developed with some key clients to get their feedback and adjust your decisions from the above two bullets as appropriate.
• The value proposition should be communicated throughout the firm and training provided to ensure everyone understands the value proposition and how to communicate it to clients, prospects, COIs, etc.
• Finally, an analysis needs to be completed focused on the alignment of the firm’s services/processes with the value proposition to ensure you can deliver on it 100 percent of the time.
This is a process best facilitated by an outsider but can be done internally. Creating an effective value proposition will challenge many of the myths that exist in the firm, will force some out of their comfort zone and will require strong consensus building best done with the facilitation of an expert.
Creating a value proposition takes time, effort and investment, but it will doubtless increase your firm’s win percentage, increase cross selling and up-selling success, improve client retention and unite the entire firm behind a common message.