Lessons in Selling Professional Services
#5 - Realize You Won’t Get Every Prospect But Pick The Ones You Want
Marketing is something I really get. When I was in college, I did a lot of consulting work for radio stations. I got really good at figuring out what women, aged 18-34, liked to listen to and what really turned them off. This also made for great fun at parties – but – I digress.
A number of professional service firms are racing to become the low cost leader in their respective space(s). Indian firms have been especially successful in creating extremely low cost firms and performing a variety of services (e.g., application development). Being a low cost provider means one must constantly adjust one’s workforce to utilize personnel in newer, lower cost locales.
The problem with being the low cost leader is that only one firm in a space gets to wear this crown. Wal-Mart has this in retail and many others have perished trying to match them on low cost. If low cost is your goal, then you must be single-mindedly focused on this, now and forever. It’s really hard to be a low-cost provider of services and not be one of scale. Furthermore, low cost leaders rarely have the luxury of being great innovators or of having more than passable customer service/satisfaction levels. Their margins do not permit it.
But beware, the client that likes a low cost solution is often fickle. They’ll move to the next lowest priced service provider at the drop of a hat. Their loyalty is to the almighty dollar and not to your firm, your people or your team. No, they chase the money and you have to keep your offerings on the cheap side to keep them as clients.
Some buyers want a low, but not necessarily the lowest, cost provider that offers a more pleasurable and rewarding experience. They’ll pay a little more to get better service, better people and a better outcome. Many service providers need to play this game better. They need to sharpen their proposals, collateral, etc. to emphasize the enhanced outcomes, people, etc. that will emanate from their work. Sadly, they use materials and sales approaches that are undifferentiated and this gets them in a low price war.
Take this test, if you believe your firm has superior people and solutions but prospects are demanding you cut your fee estimate, chances are your marketing materials and sales approaches are not extolling your unique value proposition and the extra benefits your firm delivers. While any prospect will ask you to drop your price, most will agree to higher fees if the perceived value is worth it. If your prospects aren’t willing to pay the additional premium, then either your Marketing is underpowered or your people/solutions aren’t really that special. To paraphrase a recent dating relationship book, when prospects abandon you, even when you cut your fees, what they’re really saying is that “that just not really into you”.
Only a few service providers can offer a very high premium service and find enough clients willing to pay for it. These firms usually offer a very specialized capability that is in short supply. These firms often have trouble scaling due to limitations in the size of their target market.
Let’s spin this discussion around a bit and focus on the kind of customer/client you want. Some of the more common client groupings I see include:
- Penny-Wise/Pound Foolish – These companies are downright cheap and have no concept of loyalty. Personally, I usually steer clients away from these firms.
- Industry Followers/Sheep – These companies move in lock step with their industry peers/competitors. They really aren’t looking for a competitive differentiation. They want competitive parity. Since they aren’t getting a really valuable solution, they’ll want to pay less than their peers did. This is a huge market segment that requires you to be operationally excellent to make money serving them.
- Leaders and Future Leaders – These firms are already leaders in their vertical and want you to keep them there. These companies aren’t looking for a generic, cheap solution. You need to offer them something really special and insightful. As cool as these clients are, they are too few and too rare to build a large practice.
There are many more categories or segments of prospects but you have to decide which ones are right for your firm and consistent with your brand and strategy.
I’ll continue with additional lessons over the next few weeks.