Pressure on Fees and Profits Got You Down?

Profits

I’m hearing more tales of woe where fees and profits are getting squeezed. A lot of those feeling the squeeze are professional services firm leaders who historically charged above market rates.

When clients buy on price, they see a commodity. That should be a wake-up call.

Your firm may be better than competitors, but it’s getting hard to tell the work products apart. A lot—and I mean a lot—of legal, accounting, construction, engineering, and consulting tasks are de facto commodities or headed that way. LegalZoom isn’t going away, and yet I’m not calling you a commodity.

This creates a puzzling contradiction. Most firms have a cadre of fiercely loyal clients who don’t feel they’re buying a commodity. How can the root task be a commodity, but not the overall service? It’s a head-scratcher until you accept that the primary source of value is no longer the root task. Everyone is pretty good at those. The focus of your marketing should be on the real source of your firm’s value. Let’s call that your secret sauce.

There greater the level of technical expertise, the harder it is to recognize the secret sauce.

Let me help you unlock your secret sauce.

Escape the Trap

If the first question a prospect asks is, “What are your rates?” and you answer, you’ve fallen into a trap. Allowing prospects to filter by rates has you playing a commodity.

Getting out of this trap requires changing the conversation with prospects. This sounds like salesmanship, but Marketing actually plays a bigger and more important role. Marketing sets the table and defines the strategy using your secret sauce.

You become a valuable advisor to your clients by combining expertise with an understanding of their broader needs. It’s not What you do so much as How you do it that clients value. In all likelihood, you’re already doing this for your best clients. This is your secret sauce. It’s “secret” because you’re not aware of how much of your value is involved.

The point of this article is for you to get paid for it.

When clients buy on price, they see a commodity. Click To Tweet

Price in a Different Context

Eventually, you do have to talk about rates and fees. However, talking about price after the client decides you are their best option is a very different conversation. The client compares your cost against the expected value rather than against other providers. It goes without saying that inferior options are worth less.

The conversation won’t happen the way you want—it can’t happen—unless you come out of the gate demonstrating why you are a better choice. Yes, you have to be able to perform the root task, and be good at it. If you’re a CPA, you’d better be able to prepare tax returns or conduct an audit. These are table stakes: if you can’t do them, you’ll lose. But, doing these basic tasks “better” won’t win you the business.

Focus on the Only Vote that Counts

At the end of the day only one vote counts: the prospect’s. When they see options as equal, they shop on price. If you can’t articulate why you are a better choice, don’t expect your prospects to figure it out.

Building marketing around root tasks is a traditional approach that gets you paid like everyone else. Alternatively, you can build your marketing and business development around your secret sauce–why your best clients select your firm.

The real value of getting this right isn’t winning the business; it’s winning the business at rates and fees that reflect your true contribution to your client’s business. 

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