If you ask a freelancer or agency what they wish for the most, they’ll usually say “more leads and clients and recurring income.” Retainers are a popular way to get monthly recurring revenue (MRR). But retainers are not without issues and they should definitely not be considered “passive income.”

Retainers in a Nutshell

In the most basic of terms, a retainer is an agreement between an agency or freelancer and their client, to perform a service on a regular basis for an agreed price. Another version of this is a retainer that stipulates terms of access and availability. Retainers are usually paid monthly and in advance.

In other words, a retainer is type of subscription. It’s not too different from how your favorite boating magazine shows up in your mailbox once per month for an annual price of $49.99. You pay in advance with the benefit of being protected from price raises and the publisher can pocket the money immediately.

Why Retainers Are Advantageous to Both Buyers and Sellers

A retainer arrangement is beneficial to both client and consultant for many reasons.

Advantages for the Client

• The benefit of knowing the price in advance which simplifies planning and budgeting.
• The comfort of knowing that they’ll have access to the consultant when they need him or her.
• Knowing that the consultant or agency will take a lead in ensuring the client gets what they need and when they need it.

Advantages for the Consultant, Freelancer or Agency

• Being paid on a regular basis and in advance, which helps improve cash flow.
• Ability plan the upcoming work and set time aside in the calendar.
• Having the ability to foresee their work and earnings which helps when making financial planning, preparations for major investments or making hiring decisions.
• The idea that retainer client work presents some kind of tradeable asset (contracted work) which can be sold as part of the firm (a debatable idea since retainers usually depend on key individuals).
• The sense of being elevated to being a partner with the client and working on long-term engagements rather than short one-off stints.

The Problems With Retainers

Retainers might seem simply fantastic at first glance. Imagine being a freelancer and getting paid every month and not having to worry about winning work or finding new clients. Or being a client and knowing your favorite agency will always have time for you. It sounds like the best win-win situation ever. It certainly can be.

But recurring revenue contracts bring their own set of issues. These problems are not inherent to retainers themselves. Instead, they’re often the result of retainers done wrong.

Retainers Encourage Easily Quantified Commodity Work

A way many digital marketing agencies, especially those working with inbound marketing or content marketing, have set up their recurring revenue arrangements is to do repeat work. This makes sense since consistency is necessary in digital marketing. Marketing habits create buyer behavior, whether it’s about posting to a blog or sharing pictures in social media.

Some of these agencies rely on the (not so) good old hour for billing even for recurring work. Others have made more creative arrangements to deliver a set number of something on a regular basis – such as three blog posts per month. But even if the work is high quality and the advice that comes with it is highly strategic, the repeat delivery risks devaluing it in the eyes of buyers.

MRR Work Can Be Hard to Combine With Value-Based Pricing (Though Not Impossible)

Most agencies set up retainers to involve a set number of hours of service per month as part of the agreement. This is nothing but classic cost-plus pricing. While projects can be value-priced as fixed prices in tiers, retainers work differently.

One attempt to get around this is point-pricing. Agency advisor David C. Baker argues that even point-pricing doesn’t get around this problem since it’s just a “sleight of hand.” I’m not fully convinced since point-pricing captures some of the value since you price the client. Suffice to say that it’s hard to price by value using retainers.

Retainers Can Lead to Reduced Quality Which Puts the Entire Client Relationship at Risk

Recurring work tends to get boring, even if it’s your best friend for financial predictability. Working with the client becomes a matter of using up the allotted time or resources you’ve promised, not always being at your very best. As a result, quality risks dropping which puts the entire client relationship in jeopardy. The risk of this happening is even greater if you start viewing your retainers as “passive income.”

Working Successfully With MRR Work Requires A Person With Account Management Skills

To work effectively with retainers, you need to manage the client relationship. This means that someone needs to take lead and keep the client communication flowing. The account manager needs to be a people person, someone who can enthuse others as well. They need to feel for the client and their challenges and transfer that passion for the work to everyone else working on the retainer. Not all agencies have the right people to pull this off.

Retainers Can Mask Client Dissatisfaction and Lead You Into a Sense of Safety

Just like how a retainer can lull you into complacent mediocrity, it can also hide client dissatisfaction. That’s an ugly truth that will rear its head suddenly and with no warning.

If you rely on just a few clients, losing a retainer could have dramatic consequences and even bankruptcy. An effective account manager will provide a vantage point and a chance to see what’s over the next hill as far as client relationships go.

Too Often, MRR Work Is the Digital Equivalent of Predictable Assembly Line Production

Some historians say that Henry Ford’s greatest contribution to industry was the assembly line. An assembly line runs well when everything is consistent. It’s the same with retainers. If much of your income comes from retainers, you’ll soon look for ways to standardize your processes to make the machine run even smoother.

But that comes with a price. As your business’s performance predictability goes up, its ability to innovate will fall. We delight our clients with ideas and solutions we come up with during meetings characterized by creativity and even controversy. If you’ve spent enough time working with clients, you will have been in at least one meeting where everything just clicked. Everyone left energized and the project that followed was something you still remember and cherish.

Those meetings happen because we let things happen at random. They will probably not take place within the homogeneous. confines of a poorly structured retainer agreement.

How to Do Retainers Right

There are clearly lots of issues with retainers as a way to create recurring income. They’re not the silver bullet that many hope for and definitely not an easy way to create recurring income. But that doesn’t mean they’re all bad. Retainers can work extremely well under some circumstances. Let’s look at some ways retainer agreements can serve rather than hurt you.

Limit the Engagement and Set Specific Goals

Having a client for life could be a grand thing. Like your grandparents’ happy marriage that lasted six glowing decades and until they both passed away within days of one another. The idea of long relationships stir feelings of romance and loyalty.

But in the world of professional services, that doesn’t necessarily involve a retainer. If you can effectively serve a client for decades, go for it. But that’s very rare. People change jobs and companies are merged, absorbed and restructured. The people chemistry that gave rise to one successful collaboration rarely last more than years, at the very most.

Retainers are seldom effective for that long. For that reason, I recommend setting a time limit to your retainers and specify measurable goals. Retainers are needed since some work requires time to show results. But that time is never “forever” but usually in the span of months to years. A clear goal and a time span will keep everyone’s eyes on the finishing line and help you stay focused.

Offer Degrees of Value By Being Creative When It Comes to MRR Terms

Combining value-based pricing and retainers can be a challenge. But I hold the view that it’s more of an issue of lack of creativity in writing terms than an absolute fact of reality. Some of the ways you can affect the value a retainer provides is:

• Specify the means by which a client can contact you.
• Define the hours during which a client can contact you.
• Write out the promised response time on communication from the client.
• Offer access to information, content or materials that aren’t publicly available.
• Emphasize access to information, content or materials that are publicly available but which the client may not be aware of.
• Offer training of the client and their team.
• Offer access to weekly expert summaries of relevant information – like a panel discussion, written or as video.
• Regular workshops to review progress and kickstart new initiatives.

Retainers can also easily be sold in tiers, allowing you to take advantage of what in pricing is referred to as “bundling.”

Create Retainers to Ensure Client Success

In software-as-a-service companies, there are whole departments dedicated to “customer success.” The reason is simple, these companies know that if someone buys a CRM software subscription and doesn’t see results, they won’t keep paying that monthly bill. To avoid that, they have specialists on payroll who help their customers succeed with their products.

A retainer can be a great way for you to do the same for your clients. In other words, a retainer is a platform for you to provide the services needed to help your clients get the most out of what you’ve delivered.

A blog that was built for marketing won’t generate results without someone post and people reading it. A website will be useless if people can’t find it – ergo it requires search engine optimization (SEO). These kinds of services that are performed after the deliverables are often valued higher than the website or blog itself. In the chart above, the horizontal axis is time and the vertical is perceived client value. The work done as part of a customer success retainer is represented by “ongoing support”.

Use MRR Contracts As a Way to Grow Websites and Deliverables in Installments

Last year I interviewed agency owner Spencer Brooks who has been using retainers for years. Unlike the marketing agencies that use retainers to sell deliverables in an assembly line fashion, Brooks’s digital agency uses them to build complex websites in pieces. They consider it a way to manage risk and to ensure the money is used to create the the greatest impact possible for the client over time.

Create a Separate Brand for MRR Work and Digital Production

If the idea of repeat business with recurring deliverables appeals to you, consider creating a separate brand for it. I bounced this idea with some agency owners and advisors a while back. According to them, the biggest challenge with this arrangement is brand dilution – you’ll be spreading your resources too thin. But the upsides are major. With a separate brand, you can let your current brand stand for one-off strategic and high value services. Meanwhile your “factory” brand can take care of the outsourced digital production that isn’t glamours but brings regular ka-chings.

Don’t Hesitate to Use Retainers for Strategic Advising

While there are certainly issues with providing deliverables through retainer contracts, strategic advising is a different matter. If you’re a management consultant, retainers can be a boon. The important thing is not to tie them to hours.

A retainer can involve being available for consultation on short notice during office hours. More value can be created by increasing your availability and allowing the client to contact you by text message or even call during weekends.

This kind of retainer requires that you have a solid standing with the client and absolute trust. You need to be among the very few who “help clients think” and who provide value simply by offering perspective or coaching.

Don’t Think About the Hours, But Don’t Forget Them Either

Don’t consider a retainer a way to ensure you have your time sheet filled or as a kind of “easy money.” Instead, consider a retainer a unique opportunity to work with a client over time to create changes that require consistency and focus.

Do what you can to take hours off the table and instead focus on results. In many cases, hours can be avoided and handled using a “fair use” clause in the contract. This allows you to renegotiate the retainer should it take too much of your time.

An MRR Arrangement Is Only As Successful as the Client Relationship It Relies On

In the end, a retainer is no use unless the client is happy satisfied and trusts you. A retainer doesn’t mean you can stop serving the client. When a client is on retainer, it means you need to redouble your efforts to manage that relationship. That involves staying in touch and understand the client’s expectations and needs to be able to respond and provide consistent value.

The retainer is a formalization of the trust the client has given you. In the end, without a successful relationship there is no retainer, regardless of what the contract says.

Conclusion: Retainers Are Not “Easy Money” and Definitely Not “Passive Income”

I hope I’ve managed to give a more nuanced idea of the advantages and drawbacks of retainers for recurring revenue. Personally, I’ve gone from being a fan of retainers to being more hesitant to recommend them as I’ve seen how some agencies rely on them for all the wrong reasons.

In my view, a retainer should be an expression of a strong client relationship and a sign of mutual trust. It’s not primarily a form of steady recurring and passive income but a way to provide value over time. Done right, it will pay you while you sleep. But you should never think of a retainer as a form of income without effort or you risk losing the retainer and the client too.

Are You Using MRR Contracts? If So, What Are Your Experiences?

Please share your thoughts in the comments section. I read all comments.

The post Retainers: Useful But Never “Easy Money” Recurring Revenue (MRR) appeared first on The Bondsai Blog.

This is the holy grail of pricing services – the one everyone’s talking about but which seems out of reach. In this article, we break down the how’s and why’s of a value-based price and show how you can take the first step.

How a Value-Based Price Works

There’s no shortage of articles on this blog explaining how value-based pricing works. So instead of repeating all of that, I’ll provide a short definition of a value-based price:

A value-based price is based on the value that your product or service creates for the buyer.

In other words, a value-based price corresponds to the value that buying the service or product generates for the customer or client.

It’s easy:

• High value: high value-based price.
• Low value: low value-based price.

By solving or fixing problems that either painful (emotionally expensive) or costly (creating financial loss) value-based pricing lets you get a share of the improvements.

A value-based price has another benefit over cost-based or cost-plus-prices (your base cost plus a fixed margin) – they reward you for delivering more value. The more value you help create, the more you can earn.

Pricing the Client

Since a value-based price corresponds to value and larger companies have larger problems, large clients pay more than small ones. It’s fair, after all, someone with a large problem (that you solve) gets more value from you than someone with a small problem. This is why we refer to value-based pricing and a value-based price as “pricing the client.”

A Value-Based Price Is Not Contingent

Unlike performance pricing, there’s no “if” what a value-based price is concerned. You’re paid regardless. Though I do recommend delivering on the tantalizing vision of a better future you’ve dangled in front of the customer, or your work till dry up fast. We live and die by our reputation.

It Doesn’t Matter How Hard You Work

Any price that doesn’t promise a certain effort or number of hours as part of the deal is in effect a value-based price. The customer is buying the service on account of what they get, not based on what you do.

The Idea and Vision of Value is Built During Sales Conversations

To shift the buyer’s idea of they get to focus on highly valuable results, you can steer sales conversations to be about value. Such a conversation will be about results, effects, impacts, improvements, and changes rather than commoditized deliverables such as blog posts, social media campaigns, and websites.

Having a Recognizable Brand Is Like Rocket Fuel When Pricing on Value

Companies that have a recognizable brand are in a wholly different position to talk about value with clients compared to those that are unknown. If the client knows you and thinks well of you, then they will value your counsel and input. That’s why it’s so important to position yourself and be an authority in your niche.

A Value-Based Price Requires a Conceptual Agreement With an Economic Buyer

Before you can set a value-based price, the prospect needs to realize the potential of what you’re selling. The buyer himself or herself needs to say what the problem is costing them or what a solution would be worth – in terms of money.

Value-pricing expert Alan Weiss calls this a “conceptual agreement.” Without such an agreement, a value-based price will seem high or unrealistic to the buyer. In most cases, only certain people can make such cost estimations or sign contracts. We call these key individuals “economic buyers” – make sure you’re talking to the right person!

Even If You’re Modest, You’ll Still Earn More Than When Pricing Per Hour

It can be challenging to provide a value-based price early before you have all the information you need. The conversation about value doesn’t happen immediately and you want to establish rapport and trust so that any number is viewed in the right context. Though in case you have no choice, value-pricing expert Alan Weiss recommends:

“If you feel pressured to agree to some number, ask what a conservative improvement would be. Cut that number in half – it will ensure an unequivocal ROI ratio. Even better, ask for a range, take the low end and cut it in half.”

Chances are that even that number, however modest, is multiples of what you’d earn if you were billing hours.

Two Types of Value-Based Prices

There are, generally speaking, two kinds of value-based prices that are common in the freelancer and agency space.

The Fixed Value-Based Price

This is the most common form of value-based prices and the one I recommend to most agencies and freelancers. It’s the idea of selling a service as a package at a fixed price on account of the value it will generate for the client.

If you want to be a bit more advanced you can use options to let customers add more value. You can also present different packages or options in tiers to use psychological effects such as anchoring to sway their choice.

A value-based price allows you to be rather creative in how you present your services. Which is great, since you want to be hard to compare. The harder it is to compare you to your competitors, the more competitive you are.

The Point-Based Value-Based Price

Organizations that comprise more than just a handful of people and which wish to streamline work are starting to use value-based points. This is handy for agencies that provide productized services, such as marketing or content production, on a regular basis using retainers. It makes pricing easier while still avoiding the use of hours.

In a value-based points system, each client pays a pre-defined price per point. That price is set by the salesperson or a special pricing team. The price reflects the value that the client gets from the work the agency is doing. Services are listed on a menu and each item has a predefined price in points.

A client would normally negotiate a set of such services in advance to secure a lower price. When a writer at the agency is asked to write a blog post, they immediately know that it costs 7 points by looking up that client’s services menu.

This makes it easy to bill the client for the work. It also means that people on the team don’t need to be pricing experts to price based on value. The client can buy points in advance as a retainer or subscription, or pay monthly for services rendered.

Who Uses Value-Based Prices?

I sometimes get the impression that agencies and freelancers consider value-based prices to be an exception, not the norm. But that’s only true for our little corner of the world. Looking at any other good or service makes you realize that most prices are based on value:

• Would you ask the car salesman how many hours it took to paint the Toyota you’re about to buy?
• Will you ask the salesperson at the bathroom appliances store how much steel that was used to manufacture the washing machine you’re looking at?
• Did you ask at the paint store about the cost of the pigment used for the house paint you’re eyeing?

The idea to pay for materials or time is the exception. Agencies and freelancers are still using efforts/hours/time/materials only because determining value is seen as hard or even impossible.

Basically, every product you see at a supermarket has a value-based price. The price is as high as you’re willing to pay. Your willingness to pay is based on how you benefit from the product or service. In other words, the value it provides to you.

6 Reasons You’d Want to Use a Value-Based Price

Value-based prices and pricing have been covered extensively on this blog so this section is intentionally kept brief. I’ve linked to articles that go into depth in case you want to learn more about these benefits of using a value-based price.

1. You Want to Earn More and Work Less

When charging for value instead of time, what matters isn’t how much you work but how effective you are at what you do. Value-based prices incentivize you to be better at what you do. Hourly billing isn’t in the client’s interest at all since unprofessional and dishonest agencies and freelancers can simply work slower to boost their earnings. Do you want to be associated with companies or individuals who operate like that?

2. You Want to Solve Real and Painful Problems

When adopting value-based pricing, it suddenly matters what kind of work you do. Since your price is based on the value created, you can no longer profit from work that doesn’t benefit the client. To earn more money, you need to find clients with more expensive and complex problems. Or find a niche for which you can be effective at solving the same problem for many.

3. You Want to Align Your Interests With the Client

A value-based price requires skin in the game and transparency: the client being open about benefits or gains and you being transparent about what’s in the client’s best interest. You can no longer build 50 pointless landing pages (which you know won’t help the client one bit) just because the buyer doesn’t know better. If that work doesn’t pay off, you’re partly to blame. That’s just a plain decent way to work, don’t you think?

4. You Want to Be Valued For Your Unique Competence, Skills and Perspective and the Potential You Bring

As an agency or freelancer that uses value-based prices, you’re no longer “yet another.” You’re apples and the competition is oranges – incomparable. Clients know this and they will value your counsel so much more highly because of it. You will be brought in for your expertise, not because you put the lowest bid on Upwork.

5. You Want to Be Able to Work According to Agile Principles

As I explained in the article about effort-based pricing, agile principles are rather meaningless if all billing is done by the hour. Agile development requires the client to make decisions based on business value, not time spent. As long as you bill for hours, time will be the deciding factor for what work to prioritize, not the value it brings.

6. You Want to Offer a Great Workplace That Attracts the Best Talent

People who join the workforce today want to work remotely and not necessarily always spend 40 hours every week on the job. They know as well as you that they have ups and downs – good days and bad days. Hours as such don’t really count. It’s what they accomplish at work that matters.

Sorry if I offend but to link someone’s productivity in our industry to the number of hours sitting is just plain dumb. Especially when it comes to someone who’s as committed and involved as an employee. Companies that stop tracking employee work hours as a basis of salary have access to the best talent.

6 Reasons Agencies and Freelancers Avoid a Value-Based Price

1. They Don’t Know What Value They Provide

Without you having a grasp of the value you provide, value-based prices aren’t an option. If you truly don’t know, then I recommend you do a little bit of research. These articles should give you some practical ideas:

• Want to Use Value-Based Pricing? Do These 3 Things – on the basic ideas of value-based pricing and how you break down your offer in terms of benefits and advantaged and determine their value to your clients.
• Use This Model to Crush Your Customers’ Worst Problems – on how to interview your clients and learn about what led them to hire or contact you in the first place.

2. They Cannot Explain or Communicate the Value to a Client

Without proper communication or sales skills, you’ll fail to convince the client that you are in fact providing value. I suggest checking out our guide to value-based selling. A value-based price requires that you build a vision of what the world will be like with your help. That’s the vision that you’re selling. That’s the value.

In many cases, clients won’t even contact you due to poor marketing or just a terrible website. Lucky for you, we got an article on that too. Learn how to redesign your website so it starts generating more leads and helps position you.

3. Their Potential Clients Are Price-Sensitive and Cannot Look Further Than the Price Tag

If your clients are cheap-skates and simply unable to view what you do as value-generating, then you’re barking up the wrong tree. Not all buyers get the concept of a value-based price. If your clients are “price buyers” or “window shoppers” then I recommend going back to the drawing board and finding a niche that is willing to invest for results.

You will want to focus on a subset of buyers with whom you have a unique (or perhaps even unfair) advantage. Among these people, there should be ones you know already and who can help open doors for you.

4. Switching From Hourly to Value-Based Prices Seems Hard and Risky

Perhaps you’re already deeply invested in hourly billing and have processes and tools set up for it. Or even worse, fear that clients will leave if you change to value-based prices. In that case, switching to value-based prices can seem scary if not outright dangerous. If the change is not communicated correctly, clients might feel your new value-based prices are simply a euphemism for a price hike. But there are ways to overcome that, as this article explains.

5. Their Employees Really Do Not Value More Control Over Their Time

Perhaps your team is a statistical improbability and prefers to be chained to their desks and being required to check-in at 8 in the morning sharp. If so, congratulations. Twenty-first century Taylorism is perfect for you. But people retire and you will need to hire new people to replace them or to grow your business. When that day comes, just don’t expect to find any hungry traditionalists hanging around looking for work.

6. They’re Happy Billing For Time

Perhaps you like billing for time. You consider it simple, fair, and straightforward. Well, technically you are wrong about almost all those things, but habits can be hard to break. I recommend at least reviewing your pricing strategy in a year’s time and see if you’ve changed your mind.

Conclusion: Value-Based Prices Are Fantastic for Services But Require That You Know Your Clients

Value-based prices are powerful and can potentially transform your business. But they don’t work unless you do the legwork needed. To be effective at using value-based prices you must:

• Know your position and how to differentiate yourself;
• have marketing activities in place and build a brand;
• know your market and customers in and out – pains and gains;
• be able to guide a sales conversation towards vision and value; and
• be perceived as a premium option and always think and act client-first.

It’s no small feat for sure. But totally worth it. Getting this right will build client loyalty and a brand that will ensure the survival of your business for the long term.

What Are Your Experiences of Using a Value-Based Price?

What worked well? What didn’t? What would you have done differently? Please post a comment and share your thoughts. I read all comments.

Coming Up Next: Retainers and Subscriptions

If you’re looking for a way to generate sustainable and recurring revenue, retainers should definitely be part of your strategy.

The post The Value-Based Price: Profit By Solving Real Client Problems appeared first on The Bondsai Blog.

If you’re confident about the results you can achieve for a client and not in dire need for cool hard cash, performance pricing could be an option.

Imagine for a second that you’re a successful engineer and mechanic with a steady trickle of customers – much thanks to your excellent skills with engines and people. You’re also the only mechanically skilled person in your family, for which you’ve become their go-to-person when cars break down.

One beautiful spring day with blue skies and fluffy white clouds, your cousin Eric calls you. Eric is usually short on money but rarely on ideas.

“Remember that old car I have in my garage?” Eric says. You indicate that you know the vehicle he refers to. It’s an old race car that he bought off the Internet some years ago, against your advice.

“Some rich guy I met will pay me 10,000 if I can beat the speed record on that straight on the highway,” he continues. Apparently, it’s an old classmate of Eric who left town, made a fortune on stocks, and is now back and looking for ways to spend his gains.

“I know I can do it. But there’s a catch – I need to patch up the engine, and I don’t have the know-how. If you help me, I’ll split the winnings.”

Your cousin just asked you if you’re interested in performance-pricing your services as a mechanical engineer.

How Performance Pricing Works

As we can see from the brief story above, performance pricing involves two things:

• A pre-defined price or share of something (usually a result).
• A condition for payment.

In the case of Eric’s car, it involves half of the winnings if he wins the bet.

Other performance-price contracts could stipulate a share of some result such as earnings or savings. I once heard of a guy who helped improve the efficiency of a rail network in return for a share of the savings. He earned tens of thousands of euros as a result. The rail company wasn’t expecting that and growled a bit about it but eventually paid. That leads to one of the drawbacks of this type of pricing and which we will discuss in a bit.

Performance-pricing isn’t that different from gambling. The difference is that you can, in fact, control the outcome to an extent. But you’re still leaving many things to chance and there’s always an element of risk involved.

Who Uses Performance Pricing

“Ambulance Chasers” Who Use Contingent Pricing

Contingency pricing is a very common form of performance pricing. Some lawyers practice this form of pricing which means they get a share of the reparations or compensation contingent on some condition – usually the plaintiff being awarded something. This is controversial and by many considered unethical as they argue that it can shift the attorney’s priorities in a way that doesn’t align with the interests of the client. Lawyers that do this systematically are called “ambulance chasers” since they actively seek legal cases in which damages can be sued for, and shared between plaintiff and attorney.

Real-Estate Agents Who Get a Percentage of the Final Price

Realtors often use a similar model in which they get a percentage of the sale price of a home. At a cursory glance, this makes sense. But it’s not without problems for the seller.

It turns out that a commission based on sale price will not encourage a realtor to work harder to get higher bids. The reason for this is that their share of the increase in final price doesn’t compensate them enough for the work needed to get it.

This was discussed in a bestseller titled Freakonomics (paid link). A book I highly recommend. If you’re a frequent reader of this blog, check it out. I’m sure you’ll love it.

Startups Without Cash That Buy Services With Equity

Another form of performance pricing is when the buyer offers equity in return for services. Many developers and designers are familiar with this idea. It’s one way that budding startups try to finance the buying of professional services. We will discuss it at more depth in a bit.

These are just some examples. There are, of course, countless other professions that are paid contingent on a condition or as a share of something.

6 Reasons Why You Should Consider Performance or Contingency Pricing

1. You’re Sure That Your Work Can Make a Measurable Financial Improvement

If the work you do will result in something that can easily be identified or measured, performance pricing is an option. The keyword here is “measure“. Most people aren’t used to measuring the results of what they do. Getting around to thinking this way can be a challenge. Especially since these metrics need to be linked to a financial improvement: reduced costs or increased earnings.

The reason why this is so important is that it affects directly how much you’re paid. If you cannot show that you’re achieving savings or earnings for the client, why should they pay you at all?

Metrics Can Give a False Sense of Objectivity

Measuring can also create a false sense of certainty. Metrics are inherently biased and aren’t as objective as some people tend to think.

In the book Weapons of Math Destruction (paid link), author Cathy O’Neil explores the various ways that poorly-designed software-enabled metrics cause injustice and reinforce segregation. Meanwhile, the hapless users of the software live under the illusion that the metrics are fair. It’s a computer after all, an “objective” machine, they argue.

In other words, if the computer says “no”…

Measuring the “Unmeasurable”

Provided you can theoretically find a way to measure the results fairly, you need to define how it’s done. Data can take many forms. It doesn’t have to be quantitative – as in hard numbers that are fully comparable. It can also be qualitative as in the case of collecting written feedback using a survey. Deciding this is no small task. People spend years of their lives to learn the fine skills involved in research design.

In most cases, measuring is easy. But in some cases, it’s extremely difficult. If you can’t measure the results of what you do easily, performance pricing might be more trouble than it’s worth.

2. You Trust the Client Unreservedly

A performance-priced project is a promise. The client vows to pay you under certain terms. That requires you to trust the client to make good on their promise to you. Even if the person you’re currently dealing with is trustworthy, people change jobs. Companies hire new people and even CEO’s and COO’s quit or are replaced. The longer time a performance-priced contract lasts, the higher the risk.

A few years down the road, collecting on that promise could mean a painful and time-consuming legal battle with a company much larger than yours. One that your small company isn’t prepared or able to endure.

Cheating small businesses on what they’re owed is an old and time-honored practice of large corporations. Apparently, it’s a crime without any real consequences considering how high some of its worst perpetrators have managed to rise.

Escrow Services Protect Both You and the Client

A way around this is to put the money in escrow. That way, the escrow agent will hold the money and pay it out if certain terms are met. However, these arrangements are likely costly and take time to set up.

Also, the idea might also chill a well-working relationship and expose a lack of trust. Feeling some distrust towards someone you haven’t worked with before is normal, but manageable most of the time. After all, most contracts last months and you often have some leverage. You can usually refuse to work until payment is done.

Not so in this case. With payment years ahead and a lot of work being needed to be done on faith, it shouldn’t wait. It needs to be addressed from the start, which might ruffle some buyers’ feathers.

3. You Can Afford the Result Not Materializing

With a bet like a performance contract, there’s always the risk of the results not being what you hoped. A contract such as this can pay multiples of what you’d earn going at your usual rates. But you also risk getting nothing in the end.

A common piece of advice to people who gamble is to never bet more than they can afford to lose. The same applies here. Never do this out of desperation. You should only attempt a performance if you can afford to lose the money and see other advantages. A performance-priced contract could help you gain a new client. It could also enable you to work with an existing one in a way that aligns your goals and fosters deeper collaboration.

4. You Can Agree With the Client on Objective KPI’s and Metrics That Reduce Costs or Boost Earnings

Even if you can define metrics that are fair and objective, they also need to make sense and be logically linked to financial improvements. Reducing pain is almost always better than improving gain for a client. If your project is to improve an e-commerce store, reducing the number of abandoned carts is one metric that has a clear financial advantage.

One way to go about this is to discuss metrics first, before anything else. Once the metrics are clear, the tasks and work needed will follow. You can use a method such as impact mapping to make this kind of analysis once the client is on board and the contract is signed. The analysis is valuable in itself and not something you should do for free.

For any larger company, decisions such as these need to be communicated and agreed on internally. Whatever metric you choose, be prepared to help the buyer explain the rationale to their superiors and colleagues.

5. You Believe It Will Benefit Collaboration and Create a Sense of Partnership

One of the most appealing aspects of working with goals and performance-based prices is the idea to be aligned with the client. By making their win your win, the collaboration will be improved. There’s nothing wrong with that notion. It may very well be so. But it doesn’t happen in a vacuum. You must establish trust first.

If you’re unsure whether working this way will, in fact, align your interests and improve collaboration, I suggest taking a step back. My experience is that performance-based pricing only improves collaboration if there were any trust in the first place.

6. In the Case of Equity, You Know You Will Be Considered a Shareholder

Startups, high on ideas and low on cash, see equity-financing in the form of performance-pricing as a great way to bring in professional help now and pay later. The problem is, few of them realize a freelancer, agency, and consultant paid in equity is, in fact, a shareholder. He or she will a say, just like every partner and shareholder.

Not only that, as a holder of equity, you are also a de-facto investor. That means that you have the same voting rights and right to insight into the business as any other person or company that has fronted money (or the equivalent in services).

I strongly recommend bringing this up early in case a startup comes knocking on your door. The ones that are worth having as clients will respect your position and work to produce the legal documents needed. Those who start wriggling when you mention this you can safely ignore – consider them a problem avoided.

5 Reasons Why You Would Avoid Performance or Contingency Pricing

1. The Results of Your Work Are Hard to Measure and Define

If you cannot find KPI’s or metrics that are linked to financials, hard to define, or agree on, consider it a huge red flag. Abort if possible. If you cannot find common ground about this, chances are this performance-based partnership won’t make it out the door.

2. You Need Money Right Now, Not Later

If you’re strapped for cash, betting your time and efforts on a risky performance scheme isn’t a great idea. “But I don’t have anyone knocking on my door anyway” you might object. That doesn’t matter. Your time, energy, and resources are your own.

Everything comes with an alternative cost. The time and sweat spent on pleasing this client for a possible paycheck down the road can be used right now to find clients and market your services.

3. You Fear that Performance Pricing and Terms Can Result in Disagreements and Disputes

Another red flag is if you fear that the performance terms might lead to resentment, dispute, or conflict down the road. After all, not all clients are honest enough to cough up the cash, even with the results in clear sight.

4. Your Fear the Client Might Suffer From One-upmanship

I’m sad to know that some have a zero-sum-game approach to business and to them “your gain is my loss.” Sharing the result of something created together is a form of defeat for those who think this way. To them, business is a competition and one-upmanship is part of it. If they can cheat or otherwise screw you, they will, and then brag about it.

5. You Cannot See This Client in Your Future

Engagements that are tied to long-term goals are long-term by necessity. At the same time, we live in a time of rapid changes. Companies pivot, people change interests, and trends come and go. Those things will affect you and your client too. You need to factor those aspects into the decision to go ahead with a performance-priced project together.

Conclusion: Performance Pricing Works If There’s Mutual Trust and Win-Win Mindset

In summary, performance pricing can be a great option assuming you and the client are on great terms, and trust and rapport have been established already.

At the outset, there needs to be mutual respect for the position of either party for performance pricing to work. Your client shouldn’t get cold feet when you ask for something as reasonable as the terms of the equity promised.

What’s fundamentally important is that you and the client are aligned for a long engagement. It must make sense for both of you to depend on the other, for potentially months or sometimes years to come.

Want to Learn More About Performance Pricing?

Here’s a great summary of one agency’s experiences working with revenue-sharing and performance pricing contracts. If you’re considering performance pricing, make sure you read their recommendations first.

What Are Your Experiences of Performance Pricing and Performance Contracts?

What worked well? Were there things that didn’t work as you expected? What would you have done differently? Please post a comment and share your experiences. I read all the comments.

Coming Up Next: Value-Based Pricing

Our favorite way of pricing. If you assumed we’d already written everything possible on the topic, you thought wrong! 🙂

The post Performance Pricing: Betting on How Good You Actually Are appeared first on The Bondsai Blog.

When you use hourly pricing or price for effort, your pricing reflects the time, effort, and work that went into producing the service or product. But what does that mean and what are the consequences of billing for effort?

Effort-based pricing as an idea is far from new. In economics, it’s known as the “labor theory of value” (LTV). Adam Smith (the father of classic economic liberalism) was a strong proponent of this idea. But the idea also found support across the political aisle with Karl Marx being another supporter of LTV.

Smith defined LTV this way:

“The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people.” – Wealth of Nations Book 1, chapter V, Adam Smith

That LTV gained traction among early theoretical economists is no surprise. The idea makes intuitive sense. As we make and refine products, the total number of hours adds up.

The idea explains why a carriage costs more than the tree, iron, and leather used to make it. The LTV can also be used to explain the hourly pricing rates of corporate lawyers with law degrees that they spent years earning and the decades of experience they’ve spent to perfect their craft.

The Problem of Water and Diamonds

However, LTV doesn’t explain how prices change depending on contextual factors. According to LTV, the “marginal utility” – the benefits that a service or product gives you – is always the same. As a consequence, an ice cream cone should always cost the same since its marginal utility is constant. Still, ice cream trucks park next to beach promenades on sunny summer days and charge three times what you’d normally pay, and people happily cough up the funds. Clearly, an ice cream cone is worth more when it’s sunny outside.

An even more striking problem is the one concerning water and diamonds:

“The “paradox of water and diamonds”, usually most commonly associated with Adam Smith, though recognized by earlier thinkers, is the apparent contradiction that water possesses a value far lower than diamonds, even though water is far more vital to a human being.” – Wikipedia

In other words, LTV doesn’t explain “value” well enough.

How Effort-Based and Hourly Pricing Work in Practice

Since effort-based prices reflect “toil and trouble” (as Smith puts it), there needs to be a way to measure that. When it comes to services, it’s usually time. The time spent creating something is seen as reflecting its worth.

But there are other ways to measure effort. In the construction industry, “piece rates” were long common. A mason was simply compensated for the number feet or meters of the wall he was able to complete in a day.

Clueless managers have tried to apply the same “piece rate” concept to incentivize developers by either counting lines of code or numbers of bugs squashed.

Effort-based pricing can also take the form of fixed prices calculated based on effort. Many make the mistake of offering clients fixed prices which they arrive at by simply estimating hours and multiplying by their “standard rate” without adding a premium for the insurance this gives the client. With “insurance” I mean the client is protected from paying more if the work takes more effort than estimated.

Professions and Services That Price by Effort or Use Hourly Pricing

Some of the professions and types of companies that use effort-based pricing include:

Lawyers and Law Firms Usually Bill By the Hour

Most legal professionals charge a starting fee and an hourly fee. Clients can often get a preferred rate if they buy a large number of hours and sign up for a retainer. What few law firms tell you is that much of the work you’re paying $500 per hour for is done by an underpaid intern under the “supervision” of an actual lawyer.

Accountants and CPAs Are Billing by the Hour, But It’s Changing

Those who do people’s books and accounts usually bill by the hour. Much of this work has become a commodity as the work is often routine. Transactions in a business are added to the books in a consistent manner according to regulations or established practices.

This has created incentives for accounting firms to automate the work. In other words, more and more accounting firms are letting a piece of software perform the work that an accountant used to do while the firm is climbing the food-chain by providing “value-added” financial strategic advice to clients.

Freelance Web Designers and Developers Are Often Stuck with Hourly Pricing

Charging by the hour has sadly become the norm among freelance web designers simply because so few actively think about how they price. Many are sending clients timesheets, as if that would somehow tell buyers anything useful except how much it “costs” to hire this person to do the work.

Most Jobs Are Renumeration for Time

People in the vast vast majority of professions receive a salary based on hours worked Even those who are salaried monthly “owe” their employer a certain number of hours. Firms with highly-skilled and educated employees are regularly requesting timesheets as if the bean-counting mattered more than the results (which, unlike hours and beans, can be hard to measure and define). This view of labor is also limiting companies’ ability to use anything but hourly pricing.

The Tools and Technology You Need to Price Effort

One of the few benefits of effort-based pricing is that it’s usually easy to measure. Common metrics for effort-based prices are hours or units. In many cases, a regular spreadsheet application (Microsoft Excel or Apple Numbers) and a watch will do. For larger organizations that need to keep multiple timesheets, there are thousands of dedicated time-tracking applications.

The Benefits of Using Effort-Based Pricing

Effort-based pricing and billing are clearly popular. There’s got to be a reason for it. Yes, it has some things going for it.

Hours and Pieces are Easy to Track

Counting hours and bricks isn’t hard. And as the old adage goes, “what gets measured gets done.”

It’s Easy to Grok

If you pardon the Heinleinian slang, everyone “groks” hourly pricing. The labor theory of value seems to make intuitive sense. There’s no need to explain it.

It Just Seems Fair to Compensate for Time or Effort

Paying everyone for their time appeals to our egalitarian sense that no one’s time is worth more than anyone else’s. It’s “equal pay for equal work” in practice.

It’s Financially Safe for a Company to Bill for Time

The way many implement this type of pricing is cost-plus. That means that they calculate their average monthly costs, salaries, vacation pay, pensions and insurance and then divide it all by the number of hours they bill every month, plus a markup. In other words, there’s no way to fail to cover expenses in a business that bills this way, as long as you bill enough hours per month.

The True Drawbacks of Effort-Based Billing

As you’ve probably realized by now, I am not a fan of effort-based pricing and remuneration. The problems associated with this type of pricing topic deserve their own blog post and one is forthcoming. In the meantime, let me give you an overview of the failings of effort-based pricing.

It Puts a Cap on Profits

When using hourly pricing, you voluntarily accept that the number of hours per month you can work limits how much you can earn. I’m sorry but that’s just insane. You might counter with “but I can charge a higher price per hour.” Well, that’s true. But why tie down the price to such an arbitrary and limiting factor as hours when you can set any price you want?

It Links Profits to Costs

The way hourly pricing is often used is as a form of cost-plus pricing (as I explained earlier). A company that operates this way will never go bankrupt as long as it manages to bring in work. But it will never have the funds to expand or take risks either, except by asking for a loan. You can call it “success by mediocrity” if you are mean.

It Pretends That All Apples and Pears Are Oranges

Your price is one of the most important ways you can differentiate and stand out on the market. By adopting an easily comparable price, you immediately shift the discussion with clients to be about your easily comparable price or rate, rather than what you, and uniquely you, bring to the table.

Marketplaces like Upwork and Fiverr encourage this form of pricing since it helps commoditize services. In fact, the commoditization of skilled labor is part of the business model of freelance marketplaces.

Their growth and profit potential isn’t in brokering premium services work but to create as big a market as possible with buyers with varying price-sensitivity. They want to do this while being the spider in the center of the web controlling and earning a share of all transactions. To do this, they need to make the services they broker fungible – one marketer is as good as the next.

For freelancers and small businesses, this is a catastrophic development. Commoditization drives prices down and makes it even harder to stand out and offer specialized types of value.

It Encourages You to Maximize Billable Effort (Time), Not Producing What the Client Needs and Wants

Companies that apply hourly pricing at scale will be looking for metrics and performance measures. The utilization rate (“billability percentage”) of a unit, team, or division is an easily measurable metric. Middle managers will feel compelled, if not coerced, to increase the numbers of billable hours per person rather than the value created. Clients will eventually call it quits once they find a firm that doesn’t just look out for “numero uno.”

It Puts Agency and Client at Odds With Conflicting Interests

Effort-based billing is a zero-sum way of thinking: one’s gain is another one’s loss. I recall a phone call with a prospective client years ago who said something along these lines: “there’s no need for me to ask for an estimate since you’ll simply inflate it to maximize profit and I will not be entirely forthcoming about project details to keep the price down”.

I liked the honesty, but yikes! These are the ethics we have to deal with since we’ve made it in our interest as consultants to use as much time as possible to solve the simplest of problems. That’s just downright wrong.

It Makes Projects Focus on Deliverables and Features, Not Impact

When the only currency that counts is price-per-hour and hours-per-feature, the business impact perspective gets lost. More and more people are starting to realize that we need to talk impacts and outcomes with clients, not how many features with can deliver at what hourly price tag.

It Makes Agile Practices and “Story Points” Nothing But a Charade

If you’re a developer, have you ever been asked to estimate a feature in “story points” but have mentally translated those points to hours? Well, there you go. Rest assured you are not alone.

I hold the view that we cannot work truly agile as long as we bill by the hour. The link between user stories, epics, and hours is just too strong. The only solution is to sell sprints according to the value they create, not the size of the team or the collective number of hours… err story points, they can crunch. Only then can story points work the way they were intended.

Companies Bill Based on Effort Won’t Have Access to the Best Talent

An increasing number of businesses are adopting a results-based workplace culture. That means that it doesn’t matter how many hours you sit in front of the computer, what matters is what you achieve.

One way of doing this is to meet with your manager every two weeks to set goals. Once you have achieved or delivered on those goals, your time is yours. If you complete those goals in a week, take the second week off to build a treehouse with your daughter.

Hourly pricing makes this kind of workplace impossible and that’s a much bigger issue than many realize. Millennials are demanding more independence and to be trusted by their employers. They will actively seek employers that embrace this way of working and avoid (and badmouth) those that don’t.

We Are Just Brushing the Surface

This is only a small selection of the things that are bad with effort-based pricing and billing. The list above is based on a blog post I wrote five years ago and based my experiences as an agency owner.

Five years have gone by since then but not much seems to have changed. Some are still stuck working this way for now. For those, it’s all about lemonade – making the most of a bad situation.

Those Stuck With Effort-Based or Hourly Pricing and Billing: You Can Turn Lemons into Lemonade

What if you’re stuck billing by the hour for now, what can you do? There are ways to turn the proverbial lemons into lemonade:

Shift to Fixed Prices If Possible

To counter commoditization, find a way to make your prices harder to compare with your competitors. I recommend shifting to fixed prices and use them, always. Your fixed price isn’t someone’s else fixed price. That makes it hard to compare. That is also obvious as long as you have a secret ingredient.

Find or Create Your Secret Ingredient

Create a secret ingredient such as a unique way of working that you market and have former clients speak well of it in testimonials. Create a sense of mystery and make it clear that this is something your clients cannot get anywhere else and it’s vital to their success.

Build a Brand and Identity

Invest in your brand and identity by having a severely impressive website with lots of resources that cement you as an authority. Start blogging or producing videos with valuable content for your clients, if you aren’t already. Speak at conferences and attend podcasts as a guest.

Side With Your Clients

Be totally honest about what you think the client needs. Be on their side. Clients will appreciate this and return, appreciating you looking out for them.

Guide Conversation to Be About Value

Lead your sales and discovery conversations to be about value and then use what you learn to price accordingly, setting out on your journey towards value-based prices.

Know When to Say No

If the client demands an hourly rate, ask why. Usually, clients haven’t reflected on pricing and simply do what they think is the norm. They might be honest and say they want to compare. If so, suggest you make a proposal with a fixed price and they can consider that. If you have to accept the work on an hourly basis, set an hourly rate that you think is fair but also design your quote in such a way that it’s hard to compare. Give the client the sensation that there’s more to working with you than what meets the eye.

Don’t Accept Dishonest Negotiation

Do not engage in a “race to the bottom” negotiation. You don’t want such a buyer. They’re dishonest and parasitic and will try to strong-arm you at every point and take your money, your time, and the light out of your professional life. I believe that life is too short to be wasted in dealing with certain people.

Coming Up Next: Performance and Equity Pricing

Many seem to assume that value-based pricing is another word for performance pricing. It’s not – it’s something else. We will dig into the idea of being paid for performance, or in some cases being paid in equity, in the next post in this series.

If you want to be notified when it’s published, please subscribe to our newsletter.

The post Effort/Hourly Pricing: A Not-Great but Surprisingly Popular Way to Get Paid appeared first on The Bondsai Blog.

I admit it! We love value-based pricing and for many good reasons. But value-based pricing isn’t the only way to price your services. Choosing a pricing strategy can feel daunting. In this series, we’ll take a look at some common pricing strategies used by agencies, consultants, and freelancers. We will list their pros and cons to help you choose the best strategy for you.

Pricing is perhaps the most under-appreciated skill when it comes to selling services. Generally speaking, agencies and freelancers don’t think enough about pricing strategies. Most simply don’t question how they price or why and just do what everyone else does.

Thing is, spending just an hour thinking actively about pricing will help you earn more without working more.

Now, as you may know, many posts on this blog cover various aspects of value-based pricing (also called value-pricing). I understand that the sheer number of words I’ve written about value-based pricing can seem intimidating. Don’t let that stop you from at least actively consider your pricing practices – whatever they may be. Even if you decide to stick with hourly pricing, there are always ways to improve your pricing.

There are tons of ways to be creative when it comes to how you price and use pricing strategies. Let’s check them out!

Four Kinds of Pricing Strategies: Effort, Performance, Value, and Subscription

I’ve divided this series into four parts, each covering a different pricing strategy:

1. Effort-Based and Hourly Pricing

The first part covers so-called effort-based pricing. This is what most people do without even thinking about it. It usually takes the form of being compensated for the time spent doing something.

Effort/Hourly Pricing: A Not-Great but Surprisingly Popular Way to Be Paid

2. Performance, Contingency and Equity Pricing

The second part covers performance pricing. This is the kind of pricing that hinges on showing a measurable improvement for the customer and being paid a share of that. This also includes work-for-equity terms when the client gives you a share of a company in return for your services.

Performance Pricing: Betting on How Good You Actually Are

3. Value-Based Pricing

The third part covers value-based pricing. This is our holy grail of pricing as it captures the actual value you create for clients.

The Value-Based Price: How to Profit By Solving Real Client Problems

4. Subscriptions and Retainers

Finally, we’ll cover subscriptions and retainers. These are forms of recurring pricing and are a fantastic way to create a dependable income stream for your business.

Retainers: Useful But Never “Easy Money” Recurring Revenue (MRR)

Now there are more ways to price than these four. But to build a successful freelance or consulting career, or run a profitable agency, these are the ones you need to know to begin with.

The post Not Sure How to Price? 4 Pricing Strategies Reviewed appeared first on The Bondsai Blog.

2019 is drawing to a close and it’s time for our annual look back. These are the articles from the past 12 months that got your attention, plus a bonus.

The past year was a productive year for this blog. We published 38 articles full of practical and actionable methods and ideas. Not surprisingly, value-based pricing was among the topics our readers liked the most.

To find the best articles, I’ve selected the top ten of the ones that readers spent the most time reading. I believe that reading time is a much more interesting measure than page views since the latter only measures the quality of the headline. The number of page views says nothing about how well the article kept the reader’s attention.

In case you just found this blog, this is a chance to browse the best of our previously published content from the past year. We made a similar summary last year.

Let’s dig in!

10. How to Use After-Action Reviews to Improve Your Pricing

Pricing – So-called “after-action reviews” are an organized way to learn from past experiences, whether mistakes or successes. While having originated in the armed forces, they work equally well for civilian use. Here are nine questions to guide such a review to improve your pricing and determine whether you charged enough and for the right things.

9. 7 Things to Remember When You (Re)design Your Agency Website

Marketing – Your website is your storefront. It’s what almost every client sees before deciding to work with you. That’s why it has to be remarkable. Here are seven simple tips for improving your website, including the brilliant idea (not mine) that your website should be about “problems we solve” rather than “services offered.”

8. The Real Reasons Why You Need to Create Productized Services

Business Development – Being a freelancer or a small agency is both exciting and frightening. After all, you’re depending on yourself or a handful few other people for your livelihood. If you bill for time, it’s even worse – being absent means no revenue and potentially bankruptcy. Productized services let you earn money while you sleep. They could be a way for you to achieve that freedom you’ve always dreamed of.

7. 12 Ways You Can Use Value Contexts to Boost Pricing Power

Pricing – It’s not about what you do, but rather how you do it. When clients determine whether your price seems fair, they will unconsciously consider a multitude of factors. By becoming aware of how these “value contexts” influence your buyers’ perception of value, you can change them to your advantage and charge more. This is the fourth and final part of our series about setting value-based prices.

6. Why Every Project Needs a Definition of Success

Customer Experience (CX) – Do you regularly ask buyers what their idea of project success is? If not, start doing it. This simple question helps reveal many assumptions that buyers bring with them. It also gives you a fighting chance to meet their unspoken expectations by talking about outcomes. This article is a short guide to writing a definition of success that your client can sign off on.

5. Our Gargantuan FAQ on Value-Based Pricing

Pricing – I realized there were so many questions about value-based pricing that went unanswered so I decided to compile them into one single article. This is it: 25 frequently asked questions about value-based pricing and answers to all the “why?”, “how?” and “if?”’s you have.

4. Leading the Sales Conversation to a YES

Sales – The road to closing a sales conversation is lined with good questions, not answers. Great salespeople know what questions to ask a buyer to help them draw the conclusion you want: that they need to buy what you’re offering. This article is a short guide to leading these conversations to a successful sale by asking and listening, not talking. This is the second part of our series on value-based selling.

3. Not Sure What to Say When Buyers Ask ‘How Much?’ Try a Ballpark Price

Pricing – If a buyer ever asked about the price when you least expected it and got your tongue, then don’t worry. You’re not the first. Luckily, it doesn’t have to be that way. You can come prepared for these early meetings with an idea of what a price could be. Read this article to learn how.

2. 4 Emotional Reasons Why You Need More Client Workshops

Innovation – If you want to inspire your clients and build trust – and eventually sell more – then organize workshops whenever you can. Workshops aren’t only about working out ideas and creating alignment, they also play an emotional role. Workshops help people feel good and associate those positive feelings to you. Make it a habit in 2020 to facilitate more client workshops.

1. 7 Things Luxury Resorts Do to Create a Great Customer Experience (Agencies and Freelancers, Take Note)

Customer Experience (CX) – The truth is that there’s no easy to way start charging for value unless your clients see you as different. You can’t be “yet another <insert your industry>” and use value-based prices. That differentiation often starts with customer experience, and no industry does this better than the resort industry. If you want to stand out, I recommend picking some of their ideas to try out in 2020.

BONUS! New tool: Positionize.me Positioning Statement Generator

We built a new tool this year!

If you’re struggling to write a good positioning statement, our generator could help. Type in your information and it will suggest ways you can write a strong and punchy positioning statement.

Thank You All For Reading!

To our loyal readers and newsletter subscribers, thank you for your support. 2020 is rolling in soon. In just two days, the 2010s are over and we’re entering not just a new year, but a new decade. We wish you all much success in the year to come and promise to keep writing and publishing more of the same.

As always, your feedback is more than welcome. Feel free to write to us or write a comment here.

Happy New Year!

The post The Top 10 Articles That You Loved in 2019 appeared first on The Bondsai Blog.

All agencies and freelancers want to charge more and be paid for the value they provide. But what many don’t realize is that much of that value is in how they make their clients feel. They should learn from luxury resorts – a type of organization that has figured out how to create superior customer experiences repeatedly.

If you’ve ever taken a vacation at a resort you might have noticed how some just seem to be in tune with you and foresee your every need. Other resorts appear to see you like one out of many anonymous money bags passing through their buildings and processes.

This is how clients perceive your company and your competitors too. The question is, which category are you in?

If you’re in the services business, you have a vested interest in being in the first category. The good news is that it doesn’t take much to stand above the rest when it comes to creating these memorable experiences. Whether you create marketing campaigns or run coconut island retreats, the principles of great customer experience are similar. In fact, it’s surprisingly cheap to create the kind of experiences that put you firmly in category one.

Let’s look at some of the ways top resorts create great customer experiences, and how you as an agency or freelancer can emulate them.

1. They Meet and Exceed Customer Experience Expectations From the Very Start

Imagine you’ve traveled for hours to the far ends of the earth. Your flight was delayed and then uncomfortable due to a late seat reassignment. You’ve also had to drive for several hours, a rather taxing endeavor since this is one of the countries where they drive on the “wrong” side of the road.

You finally arrive at the resort. Being well aware of the details of your trip, the staff greets you with smiles exuding friendliness and serenity. Fresh warm towels, for your hands and face, and cold drinks have been prepared, awaiting your arrival. The staff let you take in the surroundings at your own pace. As you relax they walk through all the activities they offer.

This kind of welcome isn’t uncommon in the resort industry. Luxury travelers expect to be treated this way. And as agencies and consulting professionals, we can actually adopt it to our niche with a few simple changes.

When meeting clients for the first time, simply adjusting your mindset can help set the right tone. If you have an office, you can stock up on things like towels to hand out if clients arrive drenching wet after heavy rainfall. Hot beverages, mulled wine or cider are a treat on cold winter days. You can find more ideas like these using our client happiness idea generator.

This might all sound tacky and pointless. After all, what do towels after a deluge have to do with how well you do marketing? It’s not a bad question. The answer is that clients don’t expect this treatment and will value you for it.

2. They Don’t Think That “It’s Not My Job” Is an Acceptable Attitude for a Great Customer Experience

Let’s continue the story about the resort guests from the previous example. You have gone diving on a reef and returned back to the resort. The restaurant is serving afternoon tea (it’s a truly fancy place). As it happens there are no waiters around and you try to pour a cup. The diving instructor, who normally doesn’t wait on customers, sees it and approaches to help. Finding the coffee pot empty, the scuba professional heads to the kitchen to refill. You’re delighted to get such a prompt service.

For someone who normally makes sure you don’t do anything life-threatening underwater, serving a customer isn’t an odd idea for this instructor. After all, the resort owner has made it clear that it’s everyone’s responsibility to ensure great customer experience, regardless of role.

The problem is, most companies don’t work like that.

A common scenario involves a client calling an agency’s office to inquire about a file. The project manager isn’t available to help so a colleague answers. Chances are slim the colleague will try to find the information on his own. Instead, he may even ask the client to call back again later. In essence, shirking responsibility for customer experience. You’ve probably been on the receiving end of this idea of “service” and know what it feels like.

How to Make Client Experience Everyone’s Responsibility

As an agency you can easily address this by creating a culture of “client experience is everyone’s responsibility.” One way of reinforcing it is by regularly sharing stories in your team of how a team member solved client problems by stepping outside their formal role and how it made the client feel. If you’re a freelancer, you can be helpful even when the client asks about something that isn’t totally related to the work you’re doing for them.

3. They Sell “Fully Inclusive” Whenever They Can to Be Able to Always Deliver a Great Customer Experience

The more of an experience that you control, the better it can be. That’s why you have so much to gain by copying the idea of “fully inclusive” that many resorts offer.

You may, for example, think that paying your client’s web hosting bills isn’t your “core competency.” That’s beside the point. It’s about the entire experience you can offer by bundling all this with one single price. That positive experience will be attributed to you which makes your services even more valuable.

How to Include Complimentary Services to Augment Your Offering

Similarly, just like resorts offer complimentary mini-bar drinks to guests, you can also include services in your retainers. Buyers will appreciate the simplicity that comes with not having to make more decisions. When pricing your services, always do it in such a way that you can deliver beyond what they expect. Helping out with small tasks without “running the meter” is a simple way to offer a “fully inclusive” experience.

At a certain price point, customers will start expecting more inclusive experiences. Many companies fail to realize this. I was reminded of it a while ago after enjoying a traditional Christmas buffet at a rather steep price, only to be charged for the tea that I ordered after the meal. In pricing terms, they had unbundled the hot drink offered after the meal. I don’t think it was a particularly good idea. In these cases, the restaurant should charge more so they can offer an inclusive experience. Their guests would be happier.

4. They Design Their Services Around and for the Customer

A key aspect of great customer experiences is thoughtfulness. Smart companies look at what they offer from the perspective of the clients. Clients pay attention to these signs of customer-orientation.

In hotels, the mint on the pillow is a classic way to positively surprise customers. In higher-quality resorts, the giveaways are free slippers and drinks. Couples celebrating their anniversary may be met with a flower arrangement and champagne.

The concept goes beyond gifts. Informing customers of your “rules” is a habit of cheap self-oriented businesses. If you aim higher, don’t stipulate rules unless you must and ideally, do so only in conversation. Never through signs. It should be noticed however that customers that spend more are often less rowdy than those with a smaller budget, hence less need for “do not steal our towels” signs.

How to Design Agency and Freelance Services for Clients

While as a freelancer or agency, you often don’t have any physical gifts to offer, you can often achieve the same effect using services:

• You can partner with other agencies and companies to offer discounts on each other’s services to your clients. A copywriting agency can partner with a photographer, for example.
• Word your communication in such a way that it communicates collaboration rather than conditions. Do not write “rules for providing files”. Instead, write “these are the easiest way to send us your files” linking the client to forms that are pre-filled or easy to complete.
• If you must provide legal terms, keep them understandable. Legalese isn’t sexy, regardless of what your ambitious lawyer might claim.
• Start your engagements by showing your intent to understand their needs. Then instead of dragging them through a long presentation of “how we do things,” have a conversation about the best way of doing things, according to your “considerable experience.” Having processes is key, but it doesn’t mean you have to be “square” about it.

5. They Do Not Underestimate the Importance of Beauty in Great Customer Experience

It’s no wonder people pay premium prices for well-designed furniture and glassware. Beautiful items make us feel good. That’s why resorts spend money on quality furniture and hire globally recognized architects to design their buildings. Being in a beautiful place is part of the appeal of going on vacation.

As a service provider, you too can use beauty (and its psychological cousin fluency) to heighten and deliver a great customer experience. By making beauty a foundational part of how you do things, you can ensure you never hand over something that wasn’t designed with thought or intention.

How to Include Beauty as Part of a Great Customer Experience

• Review how you design your proposals. Are they memorable for their beauty? Did you choose words with care?
• Do your website and market communication convey a sense of beauty? Does the design convey balance and harmony? If not, is that intentional? Some brands want to communicate imbalance and chaos.
• When you meet with clients, do you try to ensure there’s beauty in the room? Beauty can take many forms. Just consider the Japanese traditional “bento” meal and the simple beauty of how the dishes are presented and arranged. Consider its principles when preparing a meeting room.

6. They’re Crazy About Asking for Client Feedback, to the Point of Being Creepy

We can’t read minds. That’s why those who are eager to improve customer experience are so intent on asking for feedback. The feedback collection doesn’t only come in the shape of a form to be filled in. Resort managers who truly value customer experience will seek you out and be genuinely interested in how you perceive your stay. Being listened to so well can feel rather awkward at first. We’re not used to companies caring about how we feel.

You might think that it’s easy to emulate. You just need to ask your clients for feedback more often. Perhaps send a Google form they can fill in.

Wrong.

How to Get Honest and Actionable Client Feedback

It turns out it’s not that simple. A while ago, I interviewed three agency owners about how they collect feedback. According to them, sincerity and trust influence the quality of the feedback you receive. If clients think you may respond poorly to what they think, or will simply ignore it, they’ll likely keep it to themselves.

That’s why I recommend you collect feedback in conversations and do it face-to-face if possible. Ask open, sincere and genuine questions and practice active listening. Do this well and you’ll have access to a treasure trove of insights into creating a great customer experience.

7. They Make Empathy a Core Value and Competence of the Entire Company by Hiring the Right People

One of the resorts that I researched for this article says that what makes its staff and culture unique is empathy. Staff having empathy with colleagues, guests and also the wild animals around the lodge. Empathy may be the most important form of intelligence but it’s often ignored in favor of analytical thinking.

Many of the things I mentioned above are obvious if you approach what you do with empathy for those involved. It also means that you cannot create a truly great customer experience without first hiring empathetic people.

If you want your company to be fully responsive to client needs, a rulebook or playbook won’t take you all the way. In the end, it’s about ensuring your staff takes independent and unguided decisions from a point of empathy and without being told to do so. That requires the right culture and the right people.

The post 7 Things Luxury Resorts Do to Create a Great Customer Experience (Agencies and Freelancers, Take Note) appeared first on The Bondsai Blog.

Brooks Digital, a virtual agency, has found a way to generate recurring revenue by avoiding large projects. By delivering constant results using retainers, they have won the trust and hearts of risk-averse non-profits. I talked to its principal and founder, Spencer Brooks to learn how they convince clients that less is in fact more.

Spencer is talking to me from his office, slash studio, in his home on Portland, Oregon, U.S. The far end of the room is dominated by his drum set. It’s not exactly what most people would imagine that an agency looks like. But that’s if you’re thinking conventionally. His agency, Brooks Digital, works with several freelancers globally to serve non-profits of varying sizes.

“I’ve Only Had Three Actual Jobs With a Company”

I ask Spencer how he ended up being a freelance software developer and eventually, an agency owner.

“In my life, I’ve only had three actual jobs with a company,” Spencer tells me. He says they ranged from delivering pizza to working in his home state of Idaho as an intern. The cubicle culture of government IT wasn’t what Spencer saw himself doing so at the age of 21 he became a freelancer.

At the same time, he attended college and took classes in computer science. “I dropped out of college after a few years. I was like, ‘okay, I think I’ve learned what I need to learn’ and joined a band.”

After a year on the road playing drums, he got tired of the tour life and living out of a van. He decided to get serious about freelancing and put the knowledge he gained in college to use. It went well. The drummer started doing more and more work with Drupal (a popular and powerful open-source content management system, or CMS).

Being a freelancer provided an excellent income stream, but the stream was quickly turning into a river. Spencer had to make a choice. He incorporated Brooks Digital as a company in 2015.

Spencer Found His Agency’s Niche, Clientele and Purpose By Looking Into Himself

“I spent a number of years trying to hone in on what types of clients I like to work with and what my vision was for the company, what was of value to me personally. And I really started to focus on the non-profit market,” Spencer says.

Reading the classic “The 7 Habits of Highly Effective People” by Stephen Covey (paid link) influenced his idea of the ideal customer, he says. It contributed towards the decision of starting his agency and scaling up. One of the pieces of advice given in the book is to picture your own funeral and what your friends and family will say about you then.

“It’s knowing that when I’m done, I want to have helped the do-gooders of the world do more good. That’s very much the phrase that echoes through my mind.”

Spencer also noticed that there was a good overlap between Drupal and the open-source world. They seemed to have a similar way of addressing problems.

“It’s like they all started because they just had to figure something out, which is why I think there’s just such a natural fit between like the open-source community and Drupal and those non-profits.”

They Are a Professional Alternative to the Accidental Techie

As the newly minted agency owner learned more about the world of non-profits, he discovered the phenomenon of the “accidental techie,” as he calls it.

“That’s the person who got hired and they showed some technical aptitude and being good with computers. So they got stuck with the web site and they really had no idea what they were doing or it’s not part of their job description.”

Very few non-profits, except the largest ones, can hire someone full time to build and run their website. The funds they have been given cannot be used for something that’s considered an expense.

Hiring a freelancer or agency is sometimes easier since that money comes out of another bag. It’s also easier to contract out limited work related to a one-time grant. Freelancers also have the benefit of often being cheaper than taking on talent full-time.

They Use Retainers to Generate Recurring Revenue and Help Non-profits Improve Their Websites Continuously

As Spencer worked more and more with non-profits he also starting recognizing recurring problems. One such challenge was communication. Many non-profits just didn’t know the right terminology and felt that agencies didn’t speak the same language as them. These non-profits had the impression that large projects were daunting and full of risks.

To address this, Spencer started focusing on delivering packaged monthly recurring service retainers, rather than doing big projects. These ongoing design, development and digital strategy projects, which helped his agency earn revenue on a regular basis also presented less risk to the buyer.

They Want to Work With Clients That View Their Website as a Product

To Spencer, the clients that Brooks Digital could work with this way also turned out to be a lot more manageable than those asking for big projects. The clients that needed ongoing help were also the ones he liked working with the most.

“They treated their website as a product, whether they called it that or not. They had a vision for it.”

In other words, these non-profits considered their website instrumental in providing online services to their constituents.

This also meant he spent less time on sales and marketing just to bring in new business. The retainer agreements he’s established create recurring results for his clients and generate monthly recurring revenue for Brooks Digital.

“This is on autopilot now. I made the sale once and every year, just every month, there’s money coming in because of it.”

This is where Spencer and his agency found their niche, position, and offer: helping non-profits improve their websites continuously over time.

They Often Deal With Funding With Strings Attached

One major difference between non-profits and companies, which we’ve touched on, is funding with strings attached.

“You raise a million dollars, but that’s not like a million dollars of business revenue,” Spencer explains.

In non-profits, funding isn’t like money in your average businesses. Funding comes with constraints. Spencer says that donors can be highly specific regarding how funds may be used.

“We want all of this money to go exactly to funding the programs that you’re doing. But we don’t want this to go for your rent or your staff salaries. We don’t want this to go to your electric bill. We just want all of this to go to you helping people.”

The people and organizations that provide funding make those decisions based on the financials of non-profits. An overhead is considered a bad thing since it’s “wasted money.”

This extends to the website and whether it’s an overhead cost or part of delivering the services of the non-profit. If it’s a cost and not part of the service, it gets minimized to manage that cost in the financial statements, which are all public.

They’re Bold in Their Messages: “The Non-Profit Website Redesign Is Dead”

Spencer tells me about one of his clients, the leader of a non-profit. She had been considering building a new website for over a year. But when she got proposals they were apples and oranges; all bidders recommended doing different things.

But all of the bids proposed massive projects. She wasn’t sure what was the right thing to do. The executive just wasn’t comfortable making bets that size.

All those proposals sat on her desk for a year. Until she read an article by Spencer titled “The Non-Profit Website Redesign Is Dead.” In this article, Spencer put forward the idea of doing growth-driven website redesigns. It’s an idea he’s picked up from marketing platform provider Hubspot.

“You don’t have to do it all at once. Let’s just take and launch your must-have features by tearing this down to the smallest thing we can possibly do.”

Then by building the website a bit at a time, you can learn as you go using analytics and other types of research. That way you can pour your resources into what generates results.

They Brought Growth-hacking, MVPs and Recurring Results to Non-profit Websites

To us in the world of startups, it sounds like a combination of MVPs and the concept of growth-hacking. Spencer agrees. He’s just had to relabel it to make the idea applicable to his non-profit niche.

“I honestly I really believe that once someone experiences the process of recurring monthly results – this trickle of like improvement, improvement, improvement – they’ll start to see momentum build. After a few months of doing that it’s a lot easier to say ‘yes, let’s keep doing it’ than it is at the end of a big project when you have to pitch hard on a follow-up retainer because it’s a whole different mental space.”

They’re Digging a Deep Crocodile Moat Through Recurring Results

Another benefit is that showing recurring and consistent results gives you a massive advantage over the competition. Clients will simply be unwilling to replace you (what startups refer to as “digging a deep moat”).

I ask Spencer what would motivate his clients to replace him and his team. The only scenarios he can think of would be if he and his team didn’t have the bandwidth to deliver what the client needed. Or, if they needed many different forms of expertise across multiple domains.

But even so, Spencer says Brooks Digital can handle that. It’s one of the benefits of the contractor model he’s chosen to use.

They Find the Right Clients By Being Opinionated

I ask Spencer about the challenges of finding clients that are willing to think like this. After all, what he proposes means breaking with tradition and challenging many of their assumptions about their website. He says that daring to be controversial helps.

“The more I’ve been writing, the more I end up having a strong viewpoint. I intentionally titled articles like ‘The Non-Profit Website Redesign Is Dead.’ It’s a controversial idea and it will attract attention that way. And so having a very strong viewpoint definitely helps with content.”

They Explore Their Clients’ Networks to Find Leads and Collaborators

Spence tells me they ask their clients about who else they know that share this idea of building websites.

“What vendors are working with you? Who did you go to for strategy? Who is doing like branding work for you or things like that?”

It’s not a complex strategy: “I just think about who is our ideal client and then start writing to them and then networking with people who serve them.”

Spencer says that working this way means he needs to be a bit picky about who he works with. He doesn’t add revenue for its own sake. As a result, Brooks Digital grows slower than it could. But it’s a choice Spencer happily makes. It helps him achieve a good work-life balance and makes his agency difficult to replace.

They Are a Small Global Team of Freelancers Operating As One Brand and Agency

Unlike most agencies, Brooks Digital doesn’t have any employees. Spencer says he’s tried both working with a traditional team of employees and freelancers. He’s found that working with freelancers is the best solution for him. It gives his agency more flexibility.

“I tend to focus on a small number of high-value retainers. And so with that, I like to have a more specialized team. I work with four or five freelancers in various capacities.”

I ask Spencer about his team and how it’s structured.

“The team structure that I’ve used has a seriously talented Drupal lead who can do a lot of architecture that can just own the hosting and the deployment workflows and reviewing work. And then another developer just to do a lot of pushing tickets through and things like that. And then, of course, a UI and UX designer as well. I tend to do a lot of account management and some project management as well.”

They’re a Scalable Agency and Therefore Better at Meeting Changing Client Needs

The contractor model is also more flexible. Spencer says he can scale the team depending on what a client needs.

“I’ve tried to accommodate that [specific client needs] by using a contractor model instead of full-time staff now because if they [the client] need horizontal expertise, then I can just pull in contractors to help with that. And then if they want to scale up, then I either send contractors more work or I add more contractors.”

He says he spends between 5 and 10 hours per week doing account management and project management. Spencer typically manages four to five retainer projects at a time. The reason why it’s so manageable is that he’s actively avoiding the elephant size projects and instead relies on multiple retainer-based recurring revenue streams.

They Achieve Better Work-Life Balance Thanks to Being Virtual

Just like Beatrice, whom I interviewed a month ago, Spencer’s virtual agency enables him to work from home and spend more time with his family. He says he tried working in a co-working space but it was too distracting.

Spencer says that working from home helps him turn off notifications and ignore email when he wants to. That means that when he’s not working, he can be much more present than many with regular jobs.

This Is the Next Generation of Digital Agencies

From my perspective as a former agency founder, Spencer’s way of working is exciting. I believe it foretells the future of our industry. By working this way, Spencer’s agency has solved several major problems that plague traditional agencies.

Getting Rid of the Looming Deadline Drama By Delivering Results Incrementally

By reducing complexity and focusing on the minimum requirements, Spencer and his team make launches a lot less risky and complex. Changes aren’t a big issue anymore and can be rolled out on a regular basis.

Avoiding Cash Flow Crisis Through Recurring Revenue

By delivering results quickly, Spencer and his team show results early and prove the value of their work. That builds trust with the client and extending a six-month retainer-based project to run for a year or even longer is a much less risky decision than making another huge website upgrade. A retainer means recurring revenue which makes financial planning much easier and takes away much of the worry and stress.

Sidestepping the Talent Tug-of-War By Contracting With Freelancers

Agencies have two assets: talent and clients. To grow as an agency, you need to build both and you need it to happen in sync. That is rarely the case. Finding the right talent when you need it is a constant headache.

When you’ve built your agency on freelance talent, you suddenly have access to brilliant creative individuals from all over the world. You will have many more options for recruiting the right team. A contract model such as this gives you the freedom to adapt contract terms and durations based on the needs of talent and clients.

Conclusion: The Agency of the Future is Virtual, Results-Oriented and Opinionated

I am convinced that Brooks Digital’s business model is something we’ll see more agencies adopt, very soon.

It’s simply superior compared to how agencies have operated traditionally.

• Using this model with retainers, owners see monthly recurring revenue which helps recruiting, growth, forecasting, and planning.
• Team members, regardless of whether they’re employees or freelancers, see income consistency and predictability and also enjoy the freedom to work from where they’re the most productive.
• At the same time, clients see the kind of results that justify their investment.

Getting in Touch With Spencer Brooks

You can find out more about Spencer and his agency, Brooks Digital, on their website.

The post Want Monthly Recurring Revenue (MRR)? Do What This Agency Did appeared first on The Bondsai Blog.

It’s here again – that ‘most wonderful time of the year.’ Many agencies and consultants take the opportunity to thank their clients at this time of the year. Sadly, many gifts are either too conventional or boring to be noticed. Here are some ideas for acts of appreciation that clients do pay attention to and help you differentiate and stand out.

To many, the holiday season is viewed with ambivalence. For a time that should be about reflection, in many, it triggers a bizarre amount of stress. Buying gifts is often a big part of that seasonal rat race.

When Gifts Lose Their Relevance

As if gifts for family and friends weren’t enough, many feel compelled to buy gifts for customers and business associates too. Sadly, many business signs of appreciation and gratitude are often a wasted effort. As companies get buried in too many all too similar gifts for the seasons, these tokens of appreciation get devalued and lose their impact.

I’m not saying that gift-giving is a bad idea in itself. What I do say is that it doesn’t work or show true appreciation if there’s no clear intention behind the gift. Also, consuming more resources for something that risks going to a landfill seems incredibly short-sighted, given the state of our planet.

Building Client Loyalty Through Appreciation

Giving gifts can be an incredibly powerful way to connect with customers and build loyalty. A well-chosen gift or act of appreciation, makes you stand out. As we’ve covered in previous articles, standing out is necessary in order to differentiate and position yourself well. Businesses that differentiate successfully are in a better position to charge for what makes them unique. In other words, get paid for the unique value only they can give their clients.

As an independent consultant who often works on client premises, I’m used to seeing the enormous boxes or baskets of seasonal candy in time for the holidays, gifted by IT consulting companies to their clients. These boxes aren’t noticed anymore, just taken for granted. As such, I consider them to be a massive waste of money.

3 Simple Ideas for Showing Appreciation You Can Try Today

Gifting candy isn’t a bad idea. It’s just that everyone does it which means you’ll be “yet another.” There are better ways to get noticed and showing that your customer is important to you. Ways that don’t strain the planet and which people will remember you for.

1. Send Hand-Written Cards or Letters

In this digital era of cheap and simple digital content duplication, the mere act of grabbing a pen and writing some words on paper stands out. Writing and sending a simple greeting card as a way to show appreciation is an attention-grabber.

I’ve been writing and sending cards to my clients for years now, and I know it’s noticed. Clients often thank me for the cards. I also see these tokens of appreciation being displayed prominently on my clients’ desks.

Just sending a written note is great. But if you want to step it up a bit and show your customer some real appreciation, here are some things you can try:

Be Personal

Write a personalized message of appreciation to your client that relates to what you’ve worked on together. I usually cheat and type something on the computer before I write it out by hand, just to make sure it turns out right.

Improve Your Hand

Practice your handwriting. My handwriting isn’t the best so I usually write out the message of appreciation a few times on paper to make sure it’s readable.

Make It Look Interesting

Simply use an interesting pen instead of the old blue ball-point. You can try different colors or use calligraphic pens for extra effect. Stickers and stamps are other ways to augment the card-reading experience.

Give Some Thought to the Packaging

If you send your card in an envelope, seal the envelope using wax. This is, in fact, easier than it sounds. A wax seal stamp doesn’t cost much and they can even be customized with your company’s logo. There are also wax guns that melt the wax using electricity, making application easy and non-messy.

Use Cards That Communicate Your Values

Instead of a plain card, send a card that gives back. I’ve sent UNICEF cards, for which a share of the price goes to helping children displaced by conflict and war.

2. Send Useful High-Quality Gifts in Lumpy Envelopes

Direct marketing research has shown that people are more likely to open lumpy envelopes compared to flat ones. That’s why many direct marketers include pens and simple gifts. It increases the open rate.

The same principle works for mail you send to your customers. You can try something similar by buying useful branded gifts and mailing them in a gift-wrapped padded envelope. Gift-wrapping a plain brown padded bag will make it stand out.

The key thing is to gift something useful and of quality. The better the gift, the more positive the association with you and your brand. Gifts also serve to trigger reciprocation. The reason why car salesmen offer you coffee isn’t only kindness, but to create a feeling of having to return the favor.

The same psychological principle works for other types of gifts. Just make sure you give something sustainable, or at least substantial. For your client, and for the planet. Cheap items break easily and just add to our growing landfills.

USB Memory Sticks or Pen Drives Are Always Appreciated

Many people still use memory sticks. If you choose to buy one for a customer, make sure it has at least a few gigs of storage. You can choose to have your logo printed on it.

You can give this idea some extra boost by loading a video of your personal greeting to your customer on the pen drive.

The drawback of this idea is that many large companies block USB pen drives. Check before to make sure your client can in fact use the drive and view any content on it.

Phone-Powered Mini Fans Are Fun and Practical

These are one of my favorite giveaways. Highly practical and appreciated by everyone. Clients that live in hot climates will definitely appreciate this gift. My mini fan came in very handy while attending a wedding in a church in Italy in 42 degrees C!

Power Banks Always Come in Handy

The more connected we become, the more we rely on batteries. As we all know, running out of battery is a daily nuisance. Many of us have come to rely on power banks to give our phones extra juice when needed.

A branded power bank with your logo on it can be a good gift. Just buy one with enough capacity to be useful. I’d say at least 5,000 mAh.

3. Simply Tell Your Clients What They Mean to You

The act of appreciation that comes with the least negative impact on our planet is to simply to send a video message digitally. It doesn’t have to be complicated to be appreciated.

To do this, grab the people who have worked with the client during the last year and gather in a conference room. Prop up a laptop on the table and record a video in which you all tell the client how much you’ve enjoyed working with them.

If you’re a distributed team, ask each member to record a message. Then combine all the clips into one movie using iMovie or your preferred video editing software. Keep it short and sweet, under a minute if possible.

I promise you your clients will like what you’ve done. It will not go unnoticed.

Visit Client.Love For More Ways to Show Appreciation and Saying Thanks

Our client happiness generator client.love offers even more ideas for ways to express appreciation to customers and clients.

The post 3 Unusual Gifts of Appreciation That Your Clients Actually Want appeared first on The Bondsai Blog.

A year and a half ago, Beatrice and her family decided to change country. A move that was made possible thanks to her freelance career and the work-life balance it provides. I sat down with Beatrice to learn how she built her career and combined online community of 2,377 followers and finds new clients.

The digital nomad is by no means a new concept to us who are independent. I would even assume that the nomad life is one of the reasons you are or are working to become, a freelancer. But while many yearn to lead this lifestyle, few do it successfully. Beatrice has found a way to provide exceptional value for her clients while leading a life that lets her prioritize her family and achieve great work-life balance.

In 2018, Beatrice and her husband decided to move from Milan, Italy to Stockholm, Sweden. Throughout the journey of building a new home in their new country, Beatrice has kept working as a freelancing branding expert. Even after relocating to a new country, she’s stayed in touch with her Italian clients. This while building a new network in Sweden and the wider world as well as seeing her business grow.

A Personal Branding and Marketing Consultant for Those Who Help Others

Beatrice helps freelancers and small businesses grow and develop. She specializes in working with therapists, coaches, and mentors to help them improve their branding and marketing. These people are often driven by a desire to help others but find it hard to market, sell and price their services.

Much of Beatrice’s work happens through video conversations. She often acts as a sounding board, offering advice and support over many recurring sessions. Most of her client engagements take place over a period of 3 months or more with a 90-minute consultation every week.

A Pan-European Freelancer

I asked Beatrice how her freelancing career affected their move from one end of Europe to another. She says that her being freelancer, with the freedom and influence over work-life balance it brought, made the decision to move so much easier: “Since I already had a freelance business I could do consultations with Skype or Zoom, wherever I was in the world” Beatrice explained. Moving out of Italy also meant that she now had a reason to go international.

Beatrice was a freelancer long before she and her husband decided to move north. Her career is the result of inheriting her father’s photo studio and a lifetime behind the lens. An interest in photography led her to graphic design which in turn taught her what she relies on every day to market her services and support her own clients.

Since moving to Sweden, Beatrice has started providing her services in English, in addition to her native Italian. Her offering has widened from photography and brand development to include helping her clients do business planning and entrepreneurship within the therapy industry.

Getting Clients Through References and Social Media Groups

Seeing as finding clients is a challenge for many freelancers, I asked Beatrice what her client-finding secrets are.

She gets most of her leads through her existing clients who refer people they know to her. But that isn’t the only source of leads. Beatrice is also active in several social media groups focused on her niche.

Her group-based marketing began some years ago with a simple Google search: “I researched the groups that were oriented to the niche that I am serving. So in this case, entrepreneurs that are into the therapeutic need, like coaching groups or entrepreneurial groups on Facebook and LinkedIn.”

She then started taking an active part in these groups by commenting and posting. Beatrice explained: “I am active there so that people can see that I position myself as an expert and I can support them.”

Only 30 Hours Per Month

What surprised me is how the little time all this takes. Beatrice estimated she spends only about half an hour to an hour per day staying active in these groups. The groups often have thematic days which makes planning easier. What this means is that each day of the week has its own theme or function. In some groups, Monday is the “shameless plug” day. Tuesday could be the “ask a question” day and Friday the day to share something funny. This makes it easy to plan and prepare content and activities in advance.

She emphasized that even though her group posts and comment don’t take a lot of time, they’re all genuine. She warned against being spammy or automating this work to the point that you stop responding to people, and just push a message. The purpose, she said, is to build real relationships with other people.

Joining Other People’s Groups Also Works, But Only If You Have a Plan

If creating your own group isn’t something you’re interested in, there are plenty of groups you can join. Beatrice told me of one such group with over 30,000 followers. This group has themed days of the week and plenty of activities to keep members engaged.

The important thing is to choose a group where your audience hangs out. You won’t see traction if you just keep socializing with fellow freelancers. Instead, you need a plan and tactics for engaging with the group. You also need to be genuinely interested in building authentic interactions.

Beatrice said that the key to gaining visibility traction in these groups is consistency: “If you comment every day and if you post something every day, people see you. You position yourself as an authority by commenting and helping other people.” By showing what you’re good at and making Facebook “live” events, people will start to take notice and pay attention to you.

But It All Began With Offline, Real-Life Networking

Beatrice tells me that her freelancing career got its big boost back in Italy. For a while, she was the graphic designer for the most popular coaching magazine in Italy. Being able to refer to that role and connection was a huge help when she positioned and pitched herself to coaches as a brand advisor.

Why You Need to Find Your Blue Ocean

Another benefit of working for the magazine was that Beatrice could attend the fairs and conferences they organized. She had exclusive access to her market as the only graphic designer and market communication specialist in the room. That’s not metaphorically speaking.

“That was amazing,” she said. “I gave out cards like crazy, and I converted so much that way. So I think that the point is really finding your blue ocean. Finding your expertise and what really differentiates you from everyone else and going into the places where your specific niche is, which are not full of other people that are like you.”

About the Importance of Real Life Meetings

While much of Beatrice’s marketing work takes place online today, it has some rather analog roots. She told me she started her career as a graphic designer for an alternative bookstore in Milan. In the beginning, it was just to help out her friends from her martial arts class. “They had books from all kinds of alternative medicine but also all sorts of really ancient books about alchemy,” she said.

In addition to a selection of titles that would make Samwell Tarly envious, this book store organized a myriad of popular events. From the weekly book clubs with speakers on specific themes to large conferences. Big-name authors came from all over the world to do book readings and signings. Beatrice was part of the team doing the marketing for all these events.

This business eventually grew to include marketing services. Therapists could turn to Beatrice and her colleagues to get help with things like banner design or buying ready-made marketing packages. Beatrice said that this is where she learned about packaging services and events. These are skills she has brought with her until today and now apply in a different, more digital, context. Skills she uses to build audiences and selling to them.

Beatrice’s Tips on Starting a Social Media Group to Build Audiences

I asked Beatrice for advice to freelancers who wish to use social media groups to win new clients. According to Beatrice, educational content is the foundation of a successful group.

She creates such content for her groups on a weekly basis. Then she promotes it on her personal profile and her business’s page. Worth noting is that unlike most people, Beatrice has repurposed her Facebook profile to be completely business-oriented. She doesn’t share anything personal there and uses it only to communicate with her followers.

She decided to do this since her audience is on Facebook and she wanted to maximize impact: “Facebook is pushing groups and you don’t see much organic conversion from business pages anymore, but you see it from your personal profile.“

Beatrice makes extensive use of the Facebook Live feature. A “live” is a live video stream in which you can interact with others to answer questions or comments.

During the past summer, she went online every day to give a 20-minute Facebook “live” Q&A on a specific topic. Her members could then ask questions which she’d answer. It worked like when a radio show hosts a guest and listeners can call in and ask questions.

These strategies have helped Beatrice build a 1,450 people strong followership on Facebook. Her followers on LinkedIn number almost one thousand.

How Beatrice Uses Facebook Live to Market Her Services

Beatrice has successfully used Live to offer training in business fundamentals for therapists, coaches, and healers and packaged it to fit her audience. For her program during the past summer, she broke down down her training into 12 modules.

She then packaged these in a way that resonated with her audience: “Each module had a color associated. So basically what I did was like the red that is and I put it onto the Hindu chakra system. The red was the foundation. So all the money stuff. The fact that you need to have a good structure, the funding and so on.”

Every day, she went “live” in her group for 20 minutes and presented each module. The whole course was designed to help her audience with their main problem which Beatrice described as: “I have beautiful gifts but I do not know how to explain it in a way that normal people get.”

Work-Life Balance as a Freelancer

I initially wanted to talk to Beatrice about the challenges of achieving work-life balance as a parent and a freelancer. It turns out that the desire to show her kids that you can have a healthy relationship with work was what inspired her to become a freelancer in the first place.

“It is possible to have a sustainable work-life balance, that you can work, you can earn, you can do something for what you are passionate about and you can stay also with them. You can see them grow and you can see them bloom,” Beatrice said.

When she began, being a freelancer is what allowed her to stay home with her young son. Her freelance career gave her a work-life balance not easy to come by with a regular job. She could then combine her knowledge of therapy and events marketing with her skills as a graphic designer and photographer. This made it possible for her to create a unique targeted offer, delivered in a way few others could.

“I like to integrate all the things I can do. I think that’s the thing that differentiates me,” Beatrice concluded.

Beatrice’s Advice to Freelancers Seeking Balance

To those wishing to achieve a sustainable freelance career and balance, Beatrice recommends:

• Be very, very clear about your target market and offering.
• Talk to people in your target market to understand what keeps them up at night.
• Interact with your target market to support them. Beatrice says that the 12-module “color program” was an idea she got after being a recurring contributor to a Facebook group about color therapy.
• Approach social media the same way you would a real-life networking event: bring the same kind of professionality. Don’t hide behind the screen.
• Be attentive to what people want to learn more about and explore those topics.
• Go out and meet people. Find places where your audience hangs out and learning from them there about their problems and challenges that you can help solve.
• If you’re a woman, consider joining women’s networks. Beatrice has had both fantastic and so-so experiences from these and said your mileage may vary, but she said it’s always worth a shot.

Conclusion: Great Relationship Marketing Is Based on Knowing Your Niche Better Than They Know Themselves

• After hearing about how Beatrice achieves balance and finds clients, it’s clear to me that there are as many ways to succeed as a freelancer as there are freelancers.
• The key to balance and success is to find what works for you and combining your experience and what you like doing into a formula that creates value for other people.
• By finding your unique angle and way to create value for others, you can price your services in such a way that your freelancer work won’t overtake your life. This helps you achieve sustainable work-life balance.
• A borderline fanatic interest in your target market is necessary today as we buy with our hearts from people we trust. Because of that, it helps if you are part of your niche. Few things build trust as well as knowing someone belongs to the same “tribe” as you.
• As humans, we love consistency, why a consistent sender will be remembered. For that, you need a plan. You need to stick to that plan, even when you feel you aren’t seeing much traction. But you also need to know when it’s time to give up. The challenge we all face is combining that emotional passion that drives you to engage with others with a rational approach to determine which strategy is yielding the results you need.

How to Get in Touch With Beatrice

If you want to learn more about Beatrice Lugano, the services she offers or just drop her a line, you can find her here:

• Send an email to Beatrice
• Beatrice’s profile page on Facebook
• Beatrice’s profile page on LinkedIn

Beatrice Will Answer Your Questions About Relationship Marketing and Work-Life Balance

Beatrice has generously offered to answer your questions. So go ahead and post your questions in the comment section below.

The post Freelance, Family and Followers: Beatrice Lugano on Creating a Successful Balance appeared first on The Bondsai Blog.

More and more people make the decision to be freelancers. The allure to be your own boss and set your own hours is strong. But to succeed in this game and get clients you need to stand out. It all starts with figuring out your position and writing a positioning statement that piques a buyer’s interest and makes them want to learn more.

Throughout my conversations with freelancers, there’s one thing I keep hearing. It is that many obsess about their craft without thinking about the person to whom they’re marketing their services. In other words, they don’t know who their ideal client is.

Without an interesting positioning statement with a hook (more on that later), you will appear to be just another <insert your role here>.

As most will eventually realize, being passionate about what you do isn’t enough to survive, or even succeed, as a freelancer. To make it as a freelancer (or an agency for that matter), you need to think beyond that. You need to be fanatic about your work and your clients. That starts with defining your position and writing a positioning statement.

What Is Positioning in the Context of Marketing?

Positioning is quite an old idea that has gained more and more attention since it was popularized in 1981. A common definition of “positioning” in marketing is:

“Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors.”

That said, there’s no real standard definition of the term. Most marketers understand “position” and “positioning” to mean what buyers associate with you and your brand.

Advertising legend David Ogilvy noted that some products are positioned for what they’re used for and said: “I could have positioned Dove as a detergent bar for men with dirty hands, but chose instead to position it as a toilet bar for women with dry skin. This is still working 25 years later.”

Positioning Is About What People Associate With You

But positioning is about more than what your products or services are used for. I think it’s better thought of as how buyers view you in relation to your competitors and what the buyer needs.

So-called perceptual maps are sometimes used to identify suitable positions for company or brand positioning strategies. To draw these maps, researchers interview buyers and may also use statistical methods to calculate the results. Perceptual maps are effective but not necessary for a freelancer or small agency trying to find their niche to stand out.

Make a Conscious Decision to Position Yourself by Writing a Positioning Statement

Merely making a conscious decision about your position will put you ahead of most other small companies.

The easiest way to define your position is to write a positioning statement. It explains what you’re doing, for whom, how and why it’s relevant. It answers:

• Who is your target market?
• What problems do you solve for them?
• What makes you different from everyone else who offers the same services?

Your positioning statement is a natural answer to “So what do you do?”. You can think of it as a one-sentence elevator pitch.

The Misleading Attraction of Vagueness in Marketing

When I talk to freelancers and small business owners, many of them have no well-defined ideas regarding customers, market or the problems they solve. Being just somewhat specific or selective seems scary to many. It appears that they fear that being specific will result in turning down a lot of potential work.

But that’s an unfounded fear. You can easily verify that vagueness is not beneficial to your chances of winning clients. Just imagine you’re taking your car in for repairs. Will you go to the brand-specialized repair shop or the generic “garage?” Unless you know the garage’s mechanics well, chances are you go to the Ford, Volvo or Citroën dealer that knows your exact brand of car. Generally speaking, choosing the brand specialist seems like the less risky option.

Your clients think just like this! A client will look for a freelancer that will most likely do a good job. In other words, the person who presents the lowest risk. A freelancer that seems to specialize on the buyer’s industry or set of problems will have an immediate head start compared to the “generalist.”

The Best Positioning Statement Is About Who You Are

As a freelancer or small agency, the best positions are based on your unique competence, background, skills, and interests. They’re based on who you genuinely are. These are the positions that are easiest to maintain and stay competitive in since they’re essentially you.

Choosing a niche and understanding how to serve the needs of its buyers aren’t easily done. For large companies, poor positioning can have dire consequences. Luckily, as a small company or sole proprietor, you have more freedom to choose. It’s also easier for you to change your position later. That’s why I don’t see any good reason not to choose a position.

Make a SWOT Analysis to Find Your Position

One way to start thinking about your position is to perform a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. These four are usually visualized as quadrants.

In our series on agency blogging, we used SWOT analysis to create a blogging plan as a way to remind ourselves of why we blog. Here’s a suggestion on how you can use a SWOT chart to write a positioning statement:

Using Positionize.me to Write Your Own Positioning Statement

There are multiple ways to write a positioning statement. In fact, they’re so many that I decided to create a free tool for writing a positioning statement. You can find it at positionize.me:

Using positionize.me is easy. All you need to do is to type in your customer, product/service, benefits, etc on the left side. The app will generate positioning statements on the right-hand side based on what you write. It generates statements based on six different templates. The tool cannot conjugate words or add conjunctions so you will need to edit the text yourself to make it work.

If you have suggestions on how to improve the tool, don’t hesitate to let me know.

Positionize.me is intended as a starting point. You will have to massage and work these statements a bit more before they’re ready to be delivered smoothly by you to a prospective client. Even so, I hope it will make positioning statement writing a little bit less daunting.

Examples of Positioning Statements by Freelancers and Consultants

Let’s make it concrete by looking at some fictional examples of positioning statements.

If you’re a conversion specialist with skills in UX and a deep interested in behavioral economics and “nudging:”

“I help owners of e-commerce stores increase sales by providing expertise in nudging, behavior design and interaction design.”

If you specialize in digital marketing and have a talent for photography and video:

“I help small business find new clients by improving their digital marketing with emotionally engaging photos, videos and graphics.”

It’s Important That Your Positioning Statement Has a Hook

To stand out and not being bland, it’s important that your statement has an interesting hook. The hook should either relate to your background or what you do differently. Good hooks are the things that make people say “Hey wait, what you said there sounded interesting! Tell me more.”

Hooks work because most people are inherently curious about new things. In the examples above, chances are that the people you talk with will latch on to “behavior design” or “videos” for an opportunity to learn more.

Using Your Positioning Statement to Create a Marketing Strategy by Making Better Decisions

Once you’ve written a statement you’re happy with it, you can use it as the foundation of your marketing. Your statement will answer questions regarding whom you’re marketing to, and what you’re selling to them. This, in turn, will help you answer questions such as:

• Should I spend time on LinkedIn or Facebook? Where are the buyers in your target market most likely to spend their time and where do they find the kind of content that influences them? LinkedIn works differently than Facebook.
• Videos or blog posts for content marketing? What do buyers in your target market prefer when it comes to learning? Now that you know who they are, you can research their preferences by talking to them, reading the same news they do and follow them on social media.
• What should my next blog post be about? You can write about the kinds of problems you help solve for your target buyers if you haven’t already.
• How do I sell my services? Once again, by knowing whom you’re selling to you can adapt your sales strategy based on how they prefer to buy.

Conclusion: Positioning Is Relevant to All Businesses, Whether They’re One Man/Woman Shop or a Full-Service Agency

I hope that, after reading this, positioning seems a lot less abstract and more relevant to you and your company. Perhaps you’ve already written your positioning statement. If so, why not share it in the comments below?

If you’re curious to learn more there are many books. Positioning is a big topic and for a full introduction I recommend starting with the classic book “Positioning: The Battle for Your Mind” (paid link).

The post How to Spur Client Curiosity With a Unique Positioning Statement appeared first on The Bondsai Blog.

If you’re looking for ways to scale your business without hiring people, service productization is the way to go. Productized services hold the key to working less and earning more.

Productization, the act of turning ideas and services into products is a great way for freelancers and agencies to sell more while working less. Productized services work because some of the buyers knocking on your door do not need bespoke services. They can be helped by something that is less “made to order” and more “off the shelf.”

Many times, an off-the-shelf product can be sold at the same price as a completely custom-made, bespoke, service. The product having the benefit of requiring a fraction of the work each time it’s delivered. Productized services could be what lets you spend less time working while earning as much as, if not more than, you do today.

If you see a certain service being asked for over and over again, there’s an opportunity to productize it. Let’s look at some ways you can create your own productized service.

Productized Services Can Be Many Different Things

Examples of productized services include:

• Knowledge and education: Courses in the form of slides, text or videos. These can have optional premium add-ons in the form of one-on-one calls.
• Mentoring and coaching: Personal remote training or coaching that is done according to a pre-written plan or format, which saves you on time spent preparing.
• Standardized services: Things that you can do according to script or create shortcuts for. Producing standardized reports is a type of service that you can automate and sell as a productized service.
• Tools: Simple applications or tools, such as scripts or spreadsheets, that solve specific problems that you know a certain group has.

There’s a lot of freedom in how you design your productized service offering. You may choose to keep it closed-ended, such as a course, or open-ended as in the case of a retainer. You may also choose to sell your service in tiers or at a single fixed price, or having no public price at all.

Productized Services Are Like Blueberry Pies Made From a Recipe

If productized services seem a bit confusing, it’s no wonder. Productized services can be many things. What they have in common is that each copy sold is essentially the same and the result of the same process.

You can think of a productized service like the result of cooking or baking using a recipe as compared to making a whole new dish every time. Every blueberry pie you make has the same ingredients and require the same steps.

If You’re Deeply Familiar With a Set of Tasks, Consider Productizing Them

The best way to start with productized services is, to begin with, productizing something you know well. A product works best if the steps involved can be codified or standardized.

For example, productizing a logo design service doesn’t make sense unless you limit what’s included by offering a number of standard templates and a limited number of revisions. But productizing an SEO course you’ve held for a few companies could be quite a success once you’ve made the initial investment of time and effort to produce the teaching materials.

How to Create Your First Productized Service

Nick Disabato, whom I had the pleasure to meet a few years ago, gives the following advice to consultants aiming to productize their offering:

Have a Great Idea for Your Product

According to Disabato, you should spend at least five hours per week doing business development, which includes coming up with ideas for new offerings and products. He also recommends attending mastermind groups where you have the chance to bounce your ideas off others.

Your Product Should Solve a Real Business Problem

Good ideas come from understanding the business problems people have. Business problems aren’t like most problems since they have a clear cost. They’re not just painful or frustrating, they’re measurably so. For example, poor website rankings on search engine result pages will result in less traffic and revenue.

To find business problems you need to do a bit of research. It can consist of listening to people in your industry or reading Internet forums, which could yield valuable insights and ideas.

Identify Technologies That Can Help You

Before you decide what your product should do, look into new technologies and tools.

If you’re planning to use video, finding ways to automate the production of video could be a massive time-saver. Another example is email automation which could make it possible for you to provide an email-based course with little effort.

Technologies, combined with things you already know well and have done before, are the foundation of a great product offering.

Your Product Should Be a Solution to a Business Problem

Once you find an interesting business problem, decide what your product should be. Some products take a lot of work up-front. Others can be delivered in installments.

I recommend not investing too much initially, instead, try out the waters and seeing what the demand is. If you’re offering a course, just make the first part and see how prospects respond and what buyers say.

Estimate Your Cost for Producing and Delivering the Product

Once you’ve decided on your solution, estimate how much time it takes to perform. Consider the initial investment as well as the work needed per order. Remember, this is your cost, not your price.

Price the Product Based on the Buyers’ Alternatives

Products are priced based on value. To arrive at a price, try to estimate how much the product is worth to the buyer. In other words, how much labor you are saving them by solving this problem for them.

One way of doing this is to estimate how long time it would take a salaried employee to produce the same results they can achieve by using your product. Don’t forget to include expenses such as perks, office space and vacation time.

Evaluate Whether It’s Worth Doing

Before you can determine whether a product idea is worth your attention, decide whether it’s worth doing. Disabato advises dividing the estimated labor amount you calculated earlier by 10 (due to the fact that an employee’s output is on average 10 times their salary cost). If the quotient (the result of the division by 10) is less than how much it would cost you to deliver the product (as you estimated earlier), discard it. The reason is that no one will buy your product unless it costs less than solving the problem on their own.

Market It Using a Landing Page With Great Easy-to-Read Content

Finally, let the world know about your product. The easiest way is to create a selling landing page you can share or link to from your main website. Here are some pointers for effective and selling landing pages:

Write Winning Headlines

Lead with an attention-grabbing headline that speaks to the intended customer and their needs. Talk about the problem you’re solving in their own words. If you’re selling an SEO report product you could write: “Learn why your website isn’t getting the traffic you were promised.”

Tell Buyers What It’s About

Describe what your product does without getting technical or using jargon. Explain the value it provides to the customer. In a business context, value usually translates to time saved, money earned, money saved or risks reduced.

Provide Social Proof, If You Have It

Once you’ve sold a few copies of the product, you can ask happy customers for testimonials. Social proof is extremely strong. The more relevant it is, the better. For example, a CEO will want to read testimonials by other CEOs and executives. So choose testimonials based on your target audience. If you can using marketing automation to show different testimonials depending on who the reader is, even better.

Answer Buyers’ Questions Before They Ask Them

If they’ve read this far you can assume they’re interested. They will be thinking “sounds too good to be true” or “I don’t know if I can trust this person.” Now it’s time to counter such objections or questions. You can make this section of the page like a small FAQ listing questions they might have and answering them.

The More Detail, the More Value

At this point, you’ve probably got them. It’s time to reinforce the value. Describe the product in more detail to prove that it’s real. If you’re offering a course, provide a high-level curriculum and list everything that’s included. Details add substance to your offering which translates to value provided.

Provide a Price, Anchored Against a More Expensive Alternative (Optional)

Finally, present the price. Disabato advises anchoring the price against an alternative. For example, the buyer can either choose your product for the fantastic price of €499 or hire a developer at €1,200 or more. The alternative is the one you considered earlier. If you give a cost for the alternative, provide a source such as the average Upwork price for a similar service.

Some types of products don’t need a price. They’re tailor-made and buyers are fine with that. They often involve a consultation process after which a price is provided.

Add a Call-to-Action Button That Demands Action

Make sure the call-to-action (CTA) button is large and clear. Action-oriented CTA buttons seem to perform better. Instead of saying “click here to pay,” use wording like “Buy It Now”.

Using Form Skip Logic to Qualify Buyers

If you want to further qualify the buyer, use a CTA wording like “Apply Here” or “Request a Quote.” Just make sure it’s clear what happens when the buyer clicks the button and what they can expect.

You can use a form to ask qualifying questions such as industry or budget in case you want to limit your product offering and redirect buyers who are not a good fit. Google Forms now support skip logic so that you can redirect the respondent based on their answers.

Work Out the Kinks by Offering a Test Pilot Customer a Price-Reduced “Test Flight”

Before you launch your product, do a trial run, Disabato advises. These early “test pilot” customers get to pay less by offering feedback in return.

A trial run has several benefits. First of all, it’s a source of raw and honest feedback and a chance to fix those glaring errors that will upset those paying the full price. Also, should your test pilot like your productized service, you can ask them for a fantastic testimonial you can use when marketing your product.

Conclusion: Productized Services Could Be Your Solution to Working Less and Earning More

If your freelancing career, or your agency, has resulted in your working more than you thought possible, productizing some of your services could help. By turning your bespoke services into productized services, you can start making money while you sleep and still enjoy all the benefits of being independent.

This article was inspired by Nick Disabato’s chapter on making a productized consulting offering in the Independent Consulting Manual.

The post The Real Reasons Why You Need to Create Productized Services appeared first on The Bondsai Blog.

Smart pricing is based on insights from looking in the rearview mirror and reflecting over past work. Here are 9 questions to steer your after-action reviews to focus on the value you’ve created and using that to improve your pricing.

Effective pricing is about capturing and maximizing the value that changes hands when you work with a client. But how do you get better at that?

A great way to improve your pricing is through after-action reviews.

Wikipedia defines an after-action review as:

“…a structured review or de-brief (debriefing) process for analyzing what happened, why it happened, and how it can be done better by the participants and those responsible for the project or event.”

The after-action review is military in origin, but that doesn’t make it any less useful for civilian use

The fundamental reason for any look-back meeting, being an after-action review or retrospective, is that we can learn from everything we do. That learning can be made more effective if given a bit of structure. By systematically capturing insights, recording them and repeating them using after-action reviews, you increase the likelihood you and your team will, in fact, remember and learn from them.

Look-back discussions and after-action reviews tend to focus on the technicalities and practicalities of the work. Those discussions are worthwhile. But to use after-action reviews to improve your pricing, you need to steer the discussion towards the client’s perspective and their idea of value.

Here are 9 questions that make your after-action reviews sources of insight for improving your pricing.

Improving Pricing and Value Delivered

Did We Create or Add Value for This Client and Could We Have Added More?

This question focuses the after-action review discussion on the value the client gained from working with you. When considering that value, be aware of the impact of your work. Services are generally bought as a means to an end. Success is usually judged by how well those services help achieve those ends. By being aware of those ends and goals, you can increase how much value you create.

Did Our Pricing Capture a Fair Share of the Value We Created?

A way to look at prices is as a way to capture some of the value you create for your client. How large that share should be is a result of many factors. If your pricing power is high, a client may be happy to give away a considerable share as long as the whole engagement was positive.

If it seems the price was too low, as in the client paid a too small share of the value in price, use the after-action review to consider ways to recover the value. Reversely, if the price was too high, consider whether it’s necessary to make concessions that may strengthen your relationship with this client.

Looking at all this in retrospect during an after-action review, it may be clearer what the client gained from your work. Understanding what factors were important might help you make a better value analysis for future engagements.

What Were Our Costs for This Engagement and Why?

Calculating salary and other costs for an engagement won’t tell you what the price should be. But it will tell you about your margins. A cost analysis will also reveal where time and materials were spent. It will help you figure out what parts of the work that can be done more efficiently or perhaps even differently.

Lessons Learned and Knowledge Earned

If We Were Doing This Again, What Would We Have Done Differently?

There are always things to improve, as we all know. When you ask a team about it, the discussion tends to revolve around internal issues. My advice is, be careful not to get too focused on technical improvements regarding how your team does things. Instead, try to view this question from the eyes of the client.

Using an after-action review to discuss and understand what the client learned from working with you can open up new ideas for business development. The information and know-how that you shared with them can be used as a sales argument and listed as a benefit in your proposals. You can also repackage the information and turn it into its own product or service.

Did This Engagement Teach Us Anything We Can Use to Improve Our Services Generally?

Some engagements teach us things that others may find useful too. You can use the after-action review to make a list of those insights and discuss ways to share them.

Should We Share What We Have Learned From This Engagement? And If So, How?

Even the most useful learnings need to be packaged and communicated with clarity or they might go ignored. A great way to do this is for teams to regularly meet and share key insights at “super after-action reviews”.

If you’re a freelancer working on your own, you can organize your own after-action reviews by meeting with peers. I run a freelancer meetup group in Stockholm, Sweden for this exact purpose.

Learnings can also be shared using technology. For example, at my former agency, at the suggestion of a member of the staff, we built a system for sharing notes about third-party code modules. This enabled all developers working with us to take part of what others had learned without leaving their computer.

The Engagement’s Influence on the Client Relationship

Are There Any Needs the Client Has That Have Gone Unaddressed or Unmet by Us?

Unmet needs are a common blind spot for agencies and freelancers. It’s something we often don’t even ask about. So make it a habit to ask. It’s worth it. These unmet needs provide opportunities for new services or products you can develop and sell, creating new revenue streams for your business.

Did This Engagement Strengthen Our Relationship With This Client?

Even engagements that didn’t go according to plan can still make you come out as a winner. In service design, there’s a concept called service recovery.

Companies that are good at service recovery turn disappointed customers into raving fans. This simply by taking responsibility and fixing the mess they’ve caused.

If your answer to this question is “no,” consider whether this is a client you want to keep. If you do, decide how to make things right with them. This is something you can discuss at an after-action review.

Ways to Show Gratitude

How Can We Thank the Client for Their Business and for Entrusting Us With This?

Different people value different tokens of gratitude. For some, it could be a service, for others a gift.

A pastor named Gary Chapman wrote a whole book about this idea (paid link). While Chapman uses these ideas for marriage counseling, they can be applied to any kind of relationship. An after-action review could be the right place to discuss how you want to thank your client for the trust they’ve placed in you.

Some ways to thank your client could be:

• Coming and speaking to them about a topic they’re interested in.
• Providing a full-day robot-building workshop.
• Inviting them all to attend a sports game with you.
• Inviting them to a dinner paid for by you.

For more ideas, check out our client happiness idea generator at client.love.

Conclusion: After-Action Reviews Close the Learning Loop to Create the Insights Needed to Improve Your Pricing

As you can see, by focusing your after-action reviews on the value produced for your client, the discussion can be a source of insights for improving your pricing. In other words, you can produce more value and thereby capture even more of it.

These conversations can even produce ideas for new services and products to complement what you already do well.

The post How to Use After-Action Reviews to Improve Your Pricing appeared first on The Bondsai Blog.

You’re talking to a prospect. The work seems like fun and it’s something you know you’re good at. The buyer then says “So how much?” or “What’s your rate?” The dreaded ballpark price question can cause the most experienced freelancer or agency owner to feel anxiety. Luckily, there’s a way to answer it.

If this is a situation that makes you sweat, don’t worry. You’re not alone. Almost all freelancers and agencies struggle with “pricing at gunpoint,” as I like to call it.

Figuring out what price to give in a situation like the one described above might seem like a near-impossible task. However, once you know what factors are at play, setting a ballpark price will seem less like guesswork and luck.

The Unfairness of Demanding a Ballpark Price in a Standing Meeting

First of all, asking for a ballpark price prematurely isn’t always fair. Buyers know this. They also know how this seemingly innocuous question will rattle many sellers. They use it as a power play knowing full and well that whatever you say can and will be used against you.

Regardless of how many loopholes you attach, a stated ballpark price can be seen as a promise. At the same time, a ballpark price is impossible to give unless you understand what the client values and have been able to communicate what the client is getting in return. As any seasoned salesperson will tell you, it’s imperative to demonstrate value before stating a price.

It’s not a great situation to find yourself in. Even so, this does happen. There are two things you can do:

• Ask to get back with a ballpark price.
• Come prepared.

I favor coming prepared for these meetings. Even so, sometimes it’s not possible. Let’s look briefly at these two options.

How to Ask to Get Back With a Price

It could be that the meeting request came out of the blue. Or that you were not informed in advance that the buyer would be looking for a price. In those cases, it’s entirely reasonable to ask to get back with a price.

Some buyers will try and play hardball and pretend to be offended for having to wait. Such behaviors are significant and I’d consider them a red flag. Think twice before going ahead with clients that show manipulative behavior even if they claim “it’s just business.”

When you ask to get back with a ballpark price, always promise when and keep it. “I’ll get back to you with a price within 24 hours” is fine. However, “Let me get back to you on that…” doesn’t send the right signals. It’s your job to manage expectations and the sooner you get started, the better.

When you do get back with a ballpark price, it’s important that you provide context. Don’t just send an email with a number. Ideally, meet in person or over video call to present it. That way you will be able to read the situation and address questions on the spot.

The ballpark price should be accompanied by a description of the work to be done in a way that emphasizes the benefits the buyer will enjoy. A full proposal might not be necessary, however. Depending on the situation, a tiered price could be suitable.

6 Questions to Help You Come Prepared to Buyer Meetings

It’s not always possible to come prepared. But a little bit of preparedness goes a long way. If you experience that you often face questions from buyers that you cannot answer on the spot, preparing more could help.

Preparing for a buyer meeting can be relatively simple. Simply answering the following questions before the meeting could make a big difference:

• Who is this person I am meeting?
• What is this person expecting from the meeting?
• Which questions might they have?
• What information will I need to answer those questions?
• If prices will be mentioned, what price should I give and why?
• What actions will I have to make as a result of this meeting?

Googling the company and finding the person whom you’re meeting on LinkedIn will help you find answers to many of the questions above. Jot down some notes to bring to the meeting. Also, write down some questions. Having insightful questions will likely make the buyer look at you even more favorably.

What About the Ballpark Price?

Returning readers of this blog know that we’ve written extensively about value-based prices and price-setting. All that applies to ballpark prices too.

In case you’re curious, I recommend our most recent series on setting value-based prices. These should be read in order: bundling work before pricing it, how to influence a buyer’s price-sensitivity, calculating value-based prices and finally how to use value contexts to be able to charge more.

Now, arriving at a value-based ballpark price at gunpoint is a tall order for most people. That’s why thinking about it ahead of the meeting of time helps. You won’t have to juggle the numbers on the spot.

Even if you have to come up with a ballpark price at gunpoint, there are ways to estimate faster. COCOPAVA is one I’ve used myself.

Making Ballpark Price Estimates Using the COCOPAVA Method

If you’re short on time, ballpark estimates can be made quickly by considering some known factors. I’ve decided to call these four factors COCOPAVA (for lack of a better acronym):

• Competence
• Confidence
• Pain
• Value

Let’s have a sip of Cocopava.

Co: Consultant’s Level of Competence or Expertise

How competent you are at what the client is looking for.

Competence means you deliver more, faster and at a higher quality. You’re also less likely to screw up and cause damage. As a competent consultant will also be able to answer the client’s questions, hence boosting their knowledge too in the process. Competence can be proven by references and testimonials.

Co: Your Confidence and How You Carry Yourself

How confidently you can ask for the price.

You have to believe in yourself as well as the price. Lack of confidence is what keeps most freelancers back from asking for more. A nervous demeanor doesn’t convey the competent confidence that helps clients relax. Your manners will indirectly affect how the client feels. The more composed you are, the less nervous they will be and the better they will feel about what you’re saying.

Pa: The Severity of the Pain Being Removed or Problem Solved

How annoying, painful and expensive the problem you are solving is.

Small companies’ problems aren’t very expensive. That’s why they can’t pay you much regardless of how much it hurts. But as organizations grow, many problems grow exponentially so the same problem can be worth a lot more to another client. This is why we say “price the customer.” A bigger pain brings a higher price.

Va: Perceived Value of Your Offering

How the client perceives the value of what you’re offering.

This is the gut feeling the client has after meeting you and looking at what you do. There’s actually a lot you can do to boost your perceived value, including becoming conscious of how you speak, write and even what clothes you wear. Needless to say, make sure you have a fantastic website too. All of these things send signals that are more important than most people believe.

Strive to develop exceptional customer relationships skills. Be professional, empathetic and polite and as helpful as you possibly can. If you can help the client right now – do it, don’t postpone.

Combining COCOPAVA Ballpark Price Factors to Arrive at an Estimate

By rating these factors and combining them, we have a rough formula for thinking about value-based ballpark estimates.

1. How high is your competence?

What is your competence when it comes to solving this problem? Remember the old adage “if you think hiring a professional is expensive, try hiring an amateur.” Unskilled people can cause more damage than good. You could be that unskilled. Make a sober judgment of your own abilities.

2. How confident are you that you can deliver?

How sure are you that you will succeed? Recall that confidence also dictates whether you can look the buyer in the eye and deliver your price without any hesitation. A low score here means being totally unsure, while a high means an absolute, Harvey Specter level of confidence.

3. What is the severity of the buyer’s pain?

How severe is this problem that the buyer needs see solved? How much of a headache does it seem to be? If in doubt, guess. A low score means it’s actually not a problem at all, not even a nuisance. A high score means it’s their house on fire.

4. How much value can you deliver?

How much value are you providing? Are you delivering more or less than the other options the buyer has at her disposal? A low score means you’re delivering less. That could either be because you’re less experienced or cannot project a lot of value. A score on the higher end means you’re the hottest consultant or agency in town with buyers lining up to buy from you.

5. Finally, Estimate the Going Market Rate

End by determining a market rate for solving this kind of problem. Let’s say it’s a fixed price of $10,000 to make it easy. If you’re billing hours, consider an average hourly rate in your industry.

6. Calculate a Rough Rate Using Our Ballpark Price Spreadsheet

Finally, adjust the market rate using the factors above. I’ve prepared a spreadsheet with some factors and weighing. I suggest you edit it to your liking.

Click here to view the spreadsheet.

To use it:

1. Click the link to the sheet.
2. Log in with a Google account if you aren’t logged in already.
3. Make a copy of the sheet by clicking File - Make a copy…
4. In column F, enter a ranking: 1-5 for each of the factors. Columns C, D and E contain instructions.
5. See the result in F7.
6. You can tweak the weighing and factors in column G and H (hidden).

I want to stress that this isn’t a pricing model or even a tool to bring into the field. It’s not meant to be exact. It’s a way to think about ballpark prices and pricing that helps answer tricky questions about prices and rates by weighing factors that go into setting a price.

Not all factors are equally important, which the sheet takes into account. Buyer pain is the strongest driver of price, for example. However, the sheet is rather limited in that it doesn’t factor in weighing as a function of the factor value.

For example, competence isn’t wildly important (in my experience) unless you’re truly incompetent. For the sheet to be accurate, scores on competence should have more influence than average or high scores. It doesn’t work that way right now. Feel free to improve the sheet and share it with me.

Conclusion: Buyers Asking for a Ballpark Price Can Be Mean, But That Doesn’t Mean You Have to Stand Tongue-tied

Buyers throw all kinds of curveballs to steer the sales situation. Professional buyers are sometimes taught to unnerve sellers in order to get a better deal. Asking for a ballpark price early is a typical psychological tactic. By preparing, and being able to make some quick arithmetic, you will be able to give an answer which you can defend and won’t regret later.

The post Not Sure What to Say When Buyers Ask ‘How Much?’ Try a Ballpark Price appeared first on The Bondsai Blog.

We’ve written quite a bit here on the blog about value-based pricing. But a question that has gone unanswered so far is what ‘value’ is. Knowing what value is, and what it means to your clients, is critical for being able to charge for it.

First of all, what is your definition of value?

That’s not an easy question to answer. While we all know what it is, putting it in words is harder.

The Oxford Dictionary of English defines it as:

“The regard that something is held to deserve; the importance, worth, or usefulness of something.”

Regard, deserve, importance, worth and usefulness all have something in common – they’re subjective.

What’s valuable to me isn’t necessarily valuable to you. Consequently, your client’s idea of value is probably not the same as yours. The only way to learn what is specifically valuable to your client is through conversations and genuine listening. You simply have to ask them.

Misconceptions and Myths About Value

Value is hard to nail down. It can feel like trying to hold a jellyfish, something I have vivid memories of from my childhood (it wasn’t the burning variety). Or what I imagine it’s like trying to get a hold of a well-greased hog accelerating through a fence. That’s why many people carry misconceptions and hold onto myths about what value is. Here are three common myths and one science-based truth about what value is.

Myth: Value Is Money

No matter how much it may feel like it, money isn’t value. Money is what someone pays you in return for value. That’s why many people say their salary isn’t important in itself; it’s what their salary symbolizes that’s important.

You can view money as a substitute for value since it’s the most common form of value exchange. In our economy, money is an enabler that gives you access to some forms of value such as good eating, travel, and a comfortable home.

Myth: Value Is Goods

While products are often valuable in terms of money, that value isn’t intrinsic to the item itself. The value starts to exist the second the item is in the hands of the consumer.

That’s why you can argue that a hammer is more valuable to a carpenter who can sell services and earn money using it compared to a layman who uses it to repair the roof. The form of value provided by an item differs from person to person. It’s one reason why different people have different degrees of price-sensitivity.

Myth: Value Is Services

While services are valuable if provided to the right person, the services themselves have no value in themselves. It’s only if those services enable the buyer to create or unlock value that they can be said to be valuable.

For example, an agency building a website for a client hasn’t necessarily created any value unless that website helps the client earn or save money. Similarly, just managing a social media account isn’t necessarily valuable unless it leads to valuable results such as new customers.

Truth: Value Is Contextual and Co-Created

Value has no set universal definition. All we can say is that it’s desired and what can be seen as valuable can range enormously from person to person. Value appears to be context-bound and rooted in culture, expectations and brand promise. Research suggests that value is a social construct that is co-created by provider and buyer.

Common Types of Value in Client Relationships

While the idea of value differs between individuals, there are some forms and ideas of value that appear to be more common than others. Here some forms of value that are often mentioned as being important in an agency-client or freelancer-client relationship.

Safety Through Proven Competence and Risk Reduction

An agency or consultant that can prove or provide evidence that they bring lower risk than any other option the buyer considers provides a form of value. Such proof can be in the form of testimonials or certifications. Also, offering some form of guarantee or insurance will also reduce client risk.

Interest By Attention to Needs

It may sound obvious but companies blessed with fast success can grow arrogant. Just today I heard about an agency that, after having won an important account, started to try to shape the client’s product and strategy to be a better fit – for the agency. It was either an attempt to make the work fit the agency’s portfolio of cases, or to do something that agency was more comfortable with.

An agency or freelancer that is attentive wouldn’t even think of doing that. It goes against the basic idea of being consultative.

Validation By Showing Genuine Interest

Buyers are people and people yearn for validation. As a consultant, you provide a truckload of value by being attentive and interested. This is a truly easy win as all it takes is being human.

Likability Thanks to Warmth and Competence

In the book “The Human Brand” (paid link), the authors promote the idea that we perceive brands the way we view people. According to them, when we meet someone new, we immediately try to determine their warmth and competence.

People who are warm (which in this context means interested, helpful and caring), combined competence (an ability to act), are those we frequently like. Brands that give us the same feeling are treated much the same.

By being helpful without an expectation of return, and acting decisively, you can build tremendous relationship value.

Convenience Resulting From Reduced Work and Complexity

The more you can reduce the workload for your client, the better. Forcing clients to adapt to you isn’t the way to go. Agencies that lose track of this simple fact can easily be recognized by insisting that their clients have to use this amazing thing called JIRA that their lead dev just can’t stop raving about.

Instead of shoehorning clients into your world, try to build solutions and processes that are efficient for both of you.

Trustworthiness Due to Transparency, But to a Degree

Being perceived as transparent usually means being seen as trustworthy, which is good. However, transparency should be provided with a bit of caution. Providing too much information can sometimes overwhelm a client. The simplicity they sought after and hired you for will be lost if you force them to get involved in technical decisions. That doesn’t mean you should withhold information; instead, ask what the client wants and do not assume.

Consistency Thanks to No Surprises and Proactivity

Contrary to popular belief, people hate surprises. There’s nothing charming with something unexpected happening. In fact, there’s a very good reason why major fast-food chain burgers all taste the same: turns out it leads to higher customer satisfaction.

Consistency appears to beat quality, sadly. This principle is true across industries. In the case of a freelancer or agency, it could mean developing a culture of consistent proactivity. You would actively look for things that are out of the norm and then decide what an appropriate response would be. Similarly, take the initiative to dig into ideas you believe the client would find useful. A combination of consistency and proactivity will take a load off any overworked marketing manager.

Knowledge Through Education And the Consultant Sharing What They Know

Freelancers and agencies that educate and inform their clients often enjoy strong loyalty. In fact, one of the reasons companies bring in consultants is to learn what they know.

But it’s not uncommon that companies don’t have the people or processes in place to collect that knowledge and spread it internally. This offers the opportunity to beat them to it by actively sharing what you know, through seminars and workshops.

Conclusion: Value Is In the Eyes of the Client, But That Doesn’t Make It Meaningless

While value differs so much from person to person that there are few universal rules, it doesn’t mean that value is abstract or meaningless. It’s always worthwhile to find out what your buyer or client considers desirable, important and useful. Make value discovery an integrated part of your buyer qualification process.

The post Do You Understand Your Clients’ Idea of Value? appeared first on The Bondsai Blog.

Making mistakes is OK – after all, they are a great opportunity to learn. One way to do that faster is through project feedback meetings and retrospectives with teams and clients. Here are four simple yet powerful visual techniques that will make your next feedback meeting even more effective, plus some bonus tips.

We all know the value of feedback and why it’s important to collect it and actually do something with it. Even so, many feedback meetings and retrospectives involve a bunch of people in a room offering opinions without any resulting changes.

That won’t take you anywhere, at least not fast.

Having just a bit of structure at your feedback meeting can give a boost to the conversation. Contrary to what one might think, leading the meeting with a wee bit of predefined format, the conversation will flow better compared to doing it free form. The challenge is to provide just enough direction – scaffolding for the discussion – not a heavy-handed set of rules.

In my career serving in roles such as scrum master, project manager and consultant I’ve tried multiple feedback and retrospective meeting techniques. These are four of my favorites.

These techniques also work for virtual feedback meetings as long as you have some kind of shared space to put sticky notes.

Timeline: Create a Shared Understanding of Events and What Led Us Where

Using a feedback meeting for looking at a project from beginning to end can be a learning experience. The sequence of events will reveal causations. The team can then discuss the reasons why something turned out the way it did.

An easy way to center the discussion around the order of events is to draw a timeline. Before drawing the timeline, discuss in the group how far back it should go.

How to do it:

1. Once everyone is gathered, appoint a person to draw on the whiteboard.
2. Start by drawing a horizontal line, left to right.
3. Ask the team to come up with 4-5 milestones or key events during the time span and mark these on the timeline
4. Hand out sticky notes and ask the group to complete the timeline with events.
5. When everyone is finished, ask each person to go through the events they’ve added.
6. Facilitate a discussion in the group about that event and what other events led to it or were caused by it.

The 4 Ls: Channelling Feedback Into Actionable Improvements

One of the simplest formats for feedback meetings is the one called 4L which stands for:

• Liked
• Learned
• Lacked
• Longed for

Here’s how to do it:

1. Arrive in advance and prepare the whiteboard. Divide it into four rectangles, one for each L.
2. Ask the participants to write down, on sticky notes, everything they – you guessed it – liked, learned, lacked, and longed for. One idea per note.
3. Give them some time to think and then place the notes in each area.
4. Split the group into four groups, one for each L. Give the sub-groups time to go through the notes and group them.
5. Each sub-group reports their findings to the entire group.
6. The group then discusses actions to address the themes they found.

Speedboat or Sailboat: Discover the Things that Stop You From Accelerating or Could Give You a Boost

This is a popular metaphor-based exercise for feedback meetings and comes in two versions:

• Speedboat – answers the question: What’s holding us back? In this exercise, the group is tasked with putting sticky notes for things that anchor the boat and stop it from accelerating.
• Sailboat – answers the question: How can we go faster? The purpose here is for the group to come up with ideas that help the project go faster or flow better.

Many project managers prefer the sailboat version since it focuses on the positive.

Speedboat: A Feedback Meeting Focusing on the Things That Are Holding the Group Back

How you do it:

1. Be a bit early to the feedback meeting and draw a speedboat on the whiteboard. Underneath the boat, draw chains connected to anchors on the bottom of the sea. Draw the boat and the waterline rather high to leave room for sticky notes underneath the boat.
2. When the group arrives, explain the idea and goal of the exercise.
3. Hand out sticky notes and give your group time to write down ideas and suggestions and place them on the anchors. You can also let them team draw the anchors and the anchor lines. If you’re short on time you can limit the number of ideas per person.
4. Take down the sticky notes one by one and read it aloud. Ask the person to explain the idea. Discuss it in the group.

Sailboat: A Feedback Meeting Focusing on the Things That Could Make the Project Go Faster

How to do it:

1. Arrive early and draw a sailboat on the whiteboard. Make the sails disproportionately large to make space for sticky notes.
2. When the group arrives, explain the idea and purpose of the exercise.
3. Hand out sticky notes and give the group time to write down ideas and suggestions and place them on the sails of the ship. You can limit the number of ideas (and sticky notes per person) if you’re short on time.
4. Take down the sticky notes one by one and read it aloud. Ask the person to explain the idea. Discuss it in the group.

Always Take Down Actions

In the end, there should be a list of actions with clear due dates (think SMART). One of the best ways to do this is to appoint someone whose responsibility it is to document what the team agrees on.

Don’t Fear the Sausage Factory – Invite Your Client to the Feedback Meeting

When you do a retrospective, feedback meeting, after action-review – however, your nomenclature refers to it – consider inviting the client.

Perhaps you’re thinking “Are you nuts? Airing all that dirty laundry on an open stage???”

Naturally, a team with a lot of internal conflicts will not benefit from having an outsider being present at a feedback meeting. It can potentially prevent many from sharing and having much needed direct conversations. Involving the client requires a high degree of trust for all parties.

But isn’t being able to invite the client to these meetings a goal worth striving for?

Pre-Mortems: Plan For the Meeting Outcomes That You Do Not Want

In a recent article, I picked up the idea of doing a pre-mortem before each feedback meeting. That is, instead of writing an agenda, write down what the outcome should not be. For a feedback meeting, “no actionable ideas for improvements” could be a pre-mortem definition.

Final Tip: Make It a Standing Feedback Meeting

A finding by a study published in the Journal of Applied Psychology was that sit-down meetings last 35% longer than those when participants are standing up, with no improvements in effectiveness.

How Do You Organize Your Retrospectives and Feedback Meetings?

Please share your tips in the comments.

The post How to Make Your Next Project Feedback Meeting More Effective: 4 Powerful Tools appeared first on The Bondsai Blog.

The only true arbiter of value is the buyer. That’s why you need to think like your buyer when using value-based pricing. To succeed at that, you need to put your value-based prices in a context of value that boosts your pricing power.

In the first post in this series on setting value-based prices we dug into the importance of pricing your work in bundles) followed by covering some of the factors that motivate buyers and influence their price-sensitivity. The third part focused on how to calculate a value-based price, which included a spreadsheet template with formulas. In this fourth and final part, we’ll dig into how you present a value-based price in a way that convinces your buyer that you’re worth it.

If you’ve followed along you might have applied all of this to whip up some value-based prices for a project you’re producing a proposal for. As you’ve probably realized, just presenting these prices as they are isn’t enough. When proposing value-based prices, that are probably higher than the competition’s, the chances that your client will actually say yes to your proposal are slim.

There’s a very real risk that your pricing power simply isn’t high enough for the buyer to commit. Pricing power is a term that refers to your ability to name any price. Warren Buffet has famously said that it’s the primary factor he looks at when deciding to buy shares in a company.

To boost your pricing power you must create or provide contexts of value.

How I Sold a Smartphone at Over Market Price By Providing a Value Context

A few years ago I was a lucky winner.

The prize was a brand new smartphone which I’d won through a lottery. That gave me a serious first-world problem since I already had the exact same phone and saw no reason to change. I decided to sell it.

This happened after my interest in value-based pricing had begun. I figured I might as well apply what I’d learned. My goal was to get the market price for the phone. After all, it was brand new, warranty still valid. Just not sold at a retail store.

How can I, your average Joe, have the same pricing power as a company that oozes professionalism and has branded store decor?

By creating a sense of value.

My means were limited. All I had was access to an auction website, my computer and another smartphone to use as camera. But it was enough.

I first researched similar auctions that had done well. I read the text and looked at the photos. And it was as I thought: how you write your ad matters, a lot.

“Meaty” and Genuine Ads Boost Pricing Power

First I wrote a text about why I was selling the phone and its excellent mint condition. I wanted to make sure it was clear that this was a premium product without scratches or blemishes.

Then I copied the manufacturer’s description along with all technical specs. I included all the features to really drive the point home. This was an advanced product. I also mentioned where the data was from, to give credit, but also to show it was all true. I triple-checked spelling and grammar and wrote the best I could.

I then took pictures of the shrink-wrapped box on my desk. I wanted to show the product as is. The more genuine, the better. I also added professional photos of the exact same phone with colorful screens and perfect lighting.

A few days after posting, following a surprisingly intense bidding war, someone offered to pay even more than the current market price for the phone.

Creating a Sense of Value by Communicating Quality, Quantity and Trust

While my story is about selling a smartphone, it is relevant to agencies and freelancers as well. The psychological mechanisms I relied on to increase my pricing power are equally present in the minds of buyers of services as those looking for a new phone.

The Best Quality

What you’re offering is far superior to the alternatives. I emphasized this by writing a description that was clear and including pictures of the mint-condition phone, still in its shrink-wrapped box.

Substance and Quantity

When they buy from you, they simply get more. I stressed this by listing all the features that the phone had and used colorful photos that showed the apps it came with.

High Degree of Trust

They know you will deliver what you have promised. In my case, I communicated trust by carefully checking my grammar, explaining why I was selling the phone and using genuine photos of the actual product. I gave them my real name and I also included free insured shipping.

Using the Three Forms of Value to Boost Pricing Power When Selling Services

Let’s look at some ways you can use quality, quantity and trust to put your value-based price in the right context.

Things You Can Do to Influence the Buyer’s Impression of Quality

Client Testimonials Help Allay the Fears of Buyers Unfamiliar With Your Services

Of all the things you can do, providing social proof is among the strongest things that can support your case and up your pricing power.

A testimonial doesn’t have to be long or detailed. You don’t even need your client to write it. You can simply call past clients, ask if they can provide a testimonial and ask them verbally what was good about working with you. Then write a summary of what they said, email it to them and ask them if it sounds accurate and if you may publish it.

Proof of Competence Is More Important Than Many Freelancers and Agencies Think

In some fields, having certificates or diplomas matters. There’s a reason why doctors in many countries hang their diplomas on their wall. These pieces of paper are what prove that they will heal and not kill you.

In many fields, getting certifications to compensate for a lack of demonstrable experience is rather ridiculous. However, it’s not uncommon. A newly started dev shop that doesn’t have a strong portfolio might try to earn trust by gaining certifications. This can sometimes border on the bizarre. As a result, a whole industry of certificate-producing “institutions” has come into existence.

While having lots of certifications but not customers is rightfully frowned upon by many, the psychological impact of certifications shouldn’t be underestimated. Buyers who aren’t familiar with what they’re buying are likely impressed by a vendor that brings “paper proof.”

My advice is to not dismiss certifications outright. Instead, be selective when it comes to choosing the certifications in which you decide to invest time and money. A combination of institutional proof and social proof help support your case of being a value option and raise your pricing power.

Look and Feel Are Given Undue Importance, But Still Matter

“Don’t buy a book for its cover” is an old adage.

It’s true. But let’s be honest – everyone does it anyway.

The same applies to you and your presentation. When I say “presentation” I don’t refer to your Powerpoint or Keynote slide deck. Your presentation includes everything the client sees of you:

• The emails you send.
• Your Slack messages.
• Your texts and SMSs.
• Your website.
• Business cards and stationery (to the extent that is still relevant today).
• The logotype of your company.
• Your business name.
• Your social media accounts.
• The look and feel of your proposal or tender.

To learn how to give your website that touch that oozes trust and competence, read our article about agency and freelancer website design.

When it comes to proposals, I recommend checking out our interview with Harji Singh and his top 12 tips on writing killer proposals.

As for the design of your proposal, clear but beautiful usually wins. There’s also an abundance of stock art to use for presentations. Just be careful so you don’t end up looking laughably generic.

If you’re not a naturally talented graphic designer, my advice is to pay someone to design your proposal and slide decks for you. They can create templates for you, which you can then reuse and fill with content. Just make sure you send your final draft to your designer for final fixes each time to ensure top quality.

It’s Not What You Say, It’s How You Say It

We may not like it, but spelling and grammar matter. Buyers will judge you based on your ability to write clearly and correctly.

If spelling is challenging, don’t hesitate to ask for help. There are talented freelance editors available. Finding spelling challenging is more common than you think. Researchers estimate that up to 10% of the population has some form of dyslexia.

You can also sidestep writing altogether and go with a video proposal. That can help set you apart from the competition, turning an apple into an orange and make you hard to compare. That will definitely give a boost to your pricing power!

Ways to Impress the Substance and Quantity of Your Work

Make Your Offer Feel More Substantial by Communicating Effort

The reason why restaurants list ingredients on their menus isn’t just so that customers can avoid things they don’t like, it’s also to make the course seem more substantial. This is a very practical way for a restaurant to raise its pricing power and prices without changing the actual food served.

This is something you can put to use in your own menus – your proposals. In our guide to tiered pricing, we mentioned something called the “effort heuristic.” Heuristics are mental shortcuts humans use to make decisions. The effort heuristic means that we tend to value things more the more effort that seems to have gone into them. This is why restaurants write “hand-peeled shrimps” instead of just “shrimps.”

You can take advantage of the effort mental shortcut when writing your proposals by using certain trigger words and phrases:

• Custom-made
• Expert-designed
• Hand-…
• Tailor-made
• Customized…
• Adapted…
• Tuned…

Use Words that Communicate Expertise

If you like writing, let it show. Instill a sense of personality in your writing. It doesn’t mean you should go overboard at the risk of not seeming serious enough. Just add a sparkle of personal expression and voice to your proposals.

Write in a way that shows that you understand the buyer. You can learn how to do this by reading up enough on their business and industry to be able to use industry-specific terms. This gets easier as I grow familiar with a certain vertical. It’s one of the reason why some agencies choose to specialize. Marketing and selling becomes easier the better you know the territory.

Be Visual, Whenever Possible

“A picture is worth a thousand words” is an old saying that inspired the “Worth1000” community, famed for its Photoshop competitions.

When it comes to selling services, it’s less about Photoshop and more about getting a good grasp of information design. The field of information design has gained a renaissance with the advent of infographics in content marketing. These infographics are often scarily detailed and complete. Don’t let that deter you. When it comes to selling, the simpler, the better.

In essence, let your proposals be browsable. Instead of sheets of text, lay them out like a brochure. Let the content flow, allowing the reader to dip their toe whenever they see something interesting. Effective and understandable visuals work in your favor and further strengthen your pricing power.

How to Communicate and Establish Trust

Present Client References and Cases That Show That You Know Your Stuff

Social proof or testimonials will not only boost your credibility when it comes to quality, it can also help establish trust.

Writing up case studies might seem time-consuming but they’re incredibly powerful when to comes to winning over fence-sitting buyers. And again, a case study doesn’t have to be a written report with numerous graphs and attachments. In fact, I’d say it’s better if it isn’t.

Instead of turning trees into more paper, I suggest meeting with your most loyal and satisfied clients and use your phone to record them saying why they love working with you. That’s the real dynamite – directly convertible into pricing power. Cut and edit it to your liking and bang, you got a very effective piece of promotional content.

Do Discovery Work and Show That It Matters

A discovery meeting happens early. Its purpose is to determine what motivates the buyer:

• What are the pain points?
• What are their needs?
• What is the budget?

A discovery conversation is usually part of the process of qualifying a lead.

Discovery meetings can be more than mandated checkpoints along your sales pipeline. Done right, a discovery meeting can be an opportunity that you do in fact care about the outcome. It’s an opportunity for non-judgmental listening. What you learn during the discovery meeting can later be referred to in your proposal, building further trust and pricing power.

For Select Qualified Buyers: Offer a Money Back Guarantee

Buyer’s remorse is very real and we’ve all suffered it at some point in our lives. It’s especially frustrating if it happens in your line of work by choosing a bad agency or consultant. The fear of being fired is all too real.

One way to pre-empt the fear of buyer’s remorse is to offer a money back guarantee. This is a classic tactic that works. However, proceed with caution:

• Only offer money back guarantee to qualified leads. To the right clients, you could potentially offer “pay what it’s worth to you.” Some companies do, with success. Just make sure you weigh the risk of them choosing not to pay you at all.
• Be certain that it’s clear what is included in the guarantee. It could be wise to offer just the first milestone as part of the guarantee. That way they get a chance to work with you before they assume any financial risk.

Don’t Make Things Complicated Unless You Absolutely Must

I’ve come to believe that fees are the enemy of genuine customer care. Businesses that don’t really care about their customers are those that insist on fees. Opportunities to delight their customers are seen as troublesome burdens for which they collect fees, just to avoid having to do them.

My view is companies don’t exist for themselves, they exist for their customers and employees.

If you believe that, it suddenly seems bizarre to make life harder for your clients. One way agencies frustrate clients is by being dogmatic about change orders. As with everything, your policy regarding changes must depend on the specific circumstances.

Attaching an extensive “terms and conditions” sheet to your proposal outlining detailed change order rules sends the wrong signal. I understand why some agencies do this. Certain clients are definitely from hell. But “lawyering” too much at the proposals stage risks turning away clients that you’d very much love to have. Clients don’t have time for people who make things more, not less, complicated. Being a complication won’t positively affect your pricing power.

Appearances Matter So Dress to Impress

You only have one chance to make a great first impression, they say. It’s undoubtedly true.

I won’t tell you what to wear when you present something to the buyer. That’s entirely up to you. But I want to point out that buyers do judge you for how you dress and the behavior you exhibit, which directly influences your pricing power.

A professional demeanor goes a long way towards establishing trust.

Don’t Forget How the Buyer Benefits

In the end, don’t forget why the buyer is reading your proposal in the first place.

• What is the problem they’re trying to solve?
• What is their idea of “value?”
• How do they measure and quantify success?

All prices need to be weighed against that for the scale to be even and your proposal attractive.

Conclusion: Setting Value-Based Prices Isn’t Difficult But Require Doing Quite a Few Things Differently

So that’s that. This is the end of our four-part series on setting value-based prices. So what have we learned so far?

We started out by covering why it’s important to break down projects into chunks, or bundles. Bundling reduces risk and simplifies communication.

In the second part, we covered the things that influence a buyer’s price-sensitivity. These are important to be aware of as they will directly affect how much you can charge.

In the third part, we discussed ways to calculate value-based prices. We provided a spreadsheet and formulas to give you a bit of a flying start.

This final part has covered what to consider when presenting value-based prices and ways to boost your pricing power.

Where to Read More About Value-Based Pricing and Pricing Power

If you’d like to read more on this topic, you’re in luck, these are good starting points:

• Our Gargantuan FAQ on Value-Based Pricing for Agencies and Freelancers
• Want to Use Value-Based Pricing? Do These 3 Things
• How to Smoothly Bring Value-Based Pricing to Your Agency
• How to Win More Clients With Tiered Pricing (with Template)
• 12 Things You Can Do to Improve Your Agency Proposals

If you have any questions, don’t hesitate to use the comments section. I’m always happy to answer your questions.

The post 12 Ways You Can Use Value Contexts to Boost Pricing Power appeared first on The Bondsai Blog.

Value-based pricing means charging for the value you provide. It requires sizing and bundling work and also understanding the buyer’s motivations. But how do you go about actually setting value-based prices?

In the previous two posts in this series on setting value-based prices, we covered the importance of pricing your work in chunks (or bundles) and the factors that motivate buyers and influence their price-sensitivity.

So far so good. But how do you come up with a value-based price based on all that?

Figuring out what that number should be isn’t straight-forward. While setting value-based prices isn’t trivial, it’s not rocket science either. You can learn it.

In this article I’ll present two approaches for setting value-based prices:

• Setting value-based prices based on knowledge and insights about a buyer and their industry.
• Looking at what’s available and setting value-based prices by considering the second-best alternatives available to the buyer using a spreadsheet (provided below).

First, let’s talk a bit about the problem of self-diagnosis.

Handling Self-Diagnosed Buyers Through Consultative Conversations

We’ve all been there. A promising lead just showed up in the mailbox. A company needs an app, website or campaign. They also seem like a great fit. Reason to celebrate?

Perhaps not.

Leads such as these may appear promising. However, as long as the client hasn’t revealed the problem they need to be solved, you might as well put on your skeptic’s spectacles. As long as you do not know their goal, you cannot set a value-based price.

Why Self-Diagnosis Prevents Actual Problem-Solving

It’s vitally important it is that you have an understanding of your buyer’s goals before you start pricing based on value. Yet, most projects start at the other end: the buyer self-diagnoses themselves and approaches you believing they know exactly what they need.

Sometimes they’re right but most of the time their diagnosis is faulty and they need something else. To understand what, you need to focus on what they’re trying to achieve. By not discussing the desired outcome, you set up the project to fail by hedging all your bets on a specific solution. Consequently, the conversation will end up revolving around a specific set of tactics or implementation rather than the problem that needs to be solved. That’s why discussing a “definition of success” should be at the top of your agenda when meeting a new client.

A discussion about outcomes may lead you to draw the conclusion that their best option isn’t something you can provide. If you’re serious about being consultative, you tell them so.

The best way to gain this understanding is through a conversation with the buyer. Try to roll back the tape and ask them to walk you through the background of their request. Once you have a handle of the bigger picture, inquire about the goals.

Gaining a Glimpse of the Numbers

It’s near impossible for a buyer to discuss goals without revealing a thing or two about numbers. This information is critically important for when you calculate the value-based price you put in your quote or proposal (discussed later).

Building Trust By Acting in the Interest of Your Buyer

The benefits of consultative conversations are many. The buyer will reveal more information than they would answer a direct question. If it turns out there’s an off-the-shelf product that solves their need, you can point it out. By doing so you will have helped them which means you have already provided value.

Such acts might at glance seem to go counter to your own self-interest. In reality, they build trust and increase the chance that this buyer will turn to you again should the need arise.

Method 1: The Research, Gut and Instinct Approach to Setting Value-Based Prices

The most common way companies are setting value-based prices is by learning as much as possible about the buyer, their industry, situation and goals and then make educated guesses about budgets and spending in order to arrive at a price. This is what most agencies and consultants do. It’s effective but it can take years to get good at it.

In his book, Implementing Value-Pricing, author Ron Baker recommends looking for answers to pointed questions such as:

• What is the customer’s cost of not solving this problem in dollars?
• What is the economic benefit to the customer if they solve this problem?
• How do we help the customer grow their business and be more profitable?
• How do we help make their business more valuable?
• Can price-sensitivity be affected by payment terms?

Looking beyond the client, consider:

• What do companies in this industry usually spend on marketing or what you do?
• What is reasonable that they can spend?
• Marketing as a percentage of company turnover … what budget is this coming out of?

These questions help determine the price-sensitivity of the buyer which influences what price you can ask.

You then consider all these factors to arrive at an upper and lower bound for a price. Finally, you decide on a specific price within that range.

Baker’s book includes a full list of price-sensitivity diagnosis questions and I strongly recommend picking it up if you’re interested in value-based pricing.

This approach to setting value-based prices is research-based and requires a fair bit of analysis. The benefit is that it helps you create a framework for pricing that can be applied across buyer industries and for many different clients.

Value-Based Pricing Is a State of Mind

As I’ve stated many times, consistently successful value-based pricing is a state of mind, not a method, and is based on the buyer’s way of seeing the world. To be good at pricing and charging for value, you must know what “value” is and means to your buyer. Naturally, that always starts with understanding the buyer.

Once you fully embrace that, you will be able to quickly diagnose a client’s situation and drivers and then shape sales conversations and adapt your marketing for value-based pricing.

Method 2: Using the Buyer’s Second Best Option to Determine Your Own Worth

While research- and insight-driven pricing is effective and helps build a value-driven culture in an agency, there are cases when you don’t want to make such an investment of your own time.

For those situations, “second best option.” is a good alternative approach. This can also be a practical way to try out value-based pricing for a pilot project. Pricing expert Mark Stiving describes this method in his book Impact Pricing.

1. Identify Second-Best Options

Start by identifying your buyer’s second-best option to your product or service. Remember that such options include not doing anything at all. The buyer can indeed make the informed choice not to buy, from anyone.

Options also include things that are different from yours but offer a kind of value you cannot provide. These include things that may seem irrelevant at a glance, which includes out of kindness cheaply hiring the buyer’s cousin’s son who’s in dire need of work experience. There might also be products that can do some of what you’re providing but which exist in different categories.

Failing to understand what customers consider to be alternatives is common, even among those who work in marketing. I was reminded of that some years ago. We went to the movies and as we were waiting for the feature to start the commercials rolled. One of the longest ads included a commercial for a bowling and games venue which marketed itself as a “perfect Friday night.”

My conclusion was that the ads selling department at the movie chain was entrenched in thinking of themselves as being in the “movie business.” This bias stopped them from realizing that they were running commercials for a direct competitor right in front of their best-paying customers!

2. List Your Advantages and Disadvantages as Viewed By the Buyer

Consider the second-best options you’ve identified, then list the things they have that are superior or inferior to your offering. This needs to be done from the perspective of the buyer. A bit of method acting might help you get in the right frame of mind:

• If I were Buyer X what would my first priority be?
• What would I worry about?
• What would my manager expect of me?
• Which are the things I would have to do to look good to my superiors?
• What does my company want to achieve?

An easy way to compile this information is to bring out the trusty old spreadsheet. Make columns for the various alternatives and then rate each of them on a number of aspects or features. Simply list one feature per row and then rate how each alternative ranks for each feature in percent. Add new rows as needed.

I’ve attached a sample sheet at the end of this article, which you can use as a starting point.

The mistake many makes when performing this analysis is to undervalue what their competitors are doing and overvalue their own distinct features. For this to work, be critical and consider what your ideal buyer values. Value-based pricing is not about what you, the seller, think is important.

3. Put a Value in Dollars and Cents on Each Feature

The next step is to estimate the monetary value of each advantage or disadvantage for your buyer. This is where gut feeling and your knowledge of the buyer and their industry comes into play. Use the insights you have about their situation and what they consider important to arrive at a number. If in doubt, go lower than your initial estimate.

If coming up with numbers is hard, try using a fixed scale of 500; 1000; 2,000; 5,000; 10,000; 20,000; 50,000; 100,000 and so on. If in doubt, round up.

4. Finally Calculate Your Value-Based Price Using Our Spreadsheet With Ready Formulas

The formula for setting your value-based prices is simple:

(your calculated price) = + (value of your advantages) - (value of your disadvantages)

To make it easier, I’ve prepared a spreadsheet. Make a copy of the spreadsheet template below, replace “Buyer X” with your buyer’s name, then input the the data you have to get the number calculated for you.

Note that there’s no true formula for a value-based price. You can’t calculate yourself into the mind of the buyer. These formulas should be seen as a way to think about value-based prices in a structured way.

Open the Second-Best Advantage Analysis Spreadsheet

The price will pop out in the yellow cell at the bottom of the sheet.

I want to stress that this number isn’t a final, magical value-based price. It’s an estimate of what a price could be based on the reasoning I’ve written about above.

If it’s vastly different from the price of the second-best options you’ve considered, you should consider why.

Remember that the buyer needs to understand why your price is higher than those of their alternative options and not view that as a problem. Doing that requires you and the buyer arriving at a conceptual agreement. You will also need to have sound arguments and a good case. Also consciously making decisions regarding how you communicate, dress and act while remaining genuinely you helps – value is about buyer perceptions.

Erring on the Side of Caution

Depending on the accuracy of your calculations, it can be a good idea to divide whatever number you arrive at with a value between 5 and 10. Value-based pricing isn’t an exact science and that needs to be taken into account. Even after dividing, your value-based price will probably still be multiples of what an hour-based price would be.

Dividing your number in such a way could in some cases result in the value-based price being less than the estimated price if you’d billed per hour. In that case and if you really need the work, go with the higher price. Chances are your competitors are calculating their prices based on hours and you’ll underbid if you charge the lower price.

When comparing the cost to price, you’ll want to aim for a factor or at least 3. That is, your value-based price is at least 3 times your own costs for doing the work. Your costs include your own or your team’s salaries (monthly salary divided by effective working time) and costs such as accountant and rent.

Some Things Just Ain’t Worth It

Once you start considering the value of what you’re selling you’ll realize that some projects just aren’t worth undertaking. Your internal cost for providing the work doesn’t exceed the value generated. In those cases, it’s best to discuss with the client the idea of transforming the project into something with a better cost-benefit ratio. Such a project with more leverage would also benefit the client more. They’ll most likely appreciate your proactivity and value your honest counsel.

Projects that cannot be made to deliver more value might just not be a good fit. It’s probably best to just leave those to agencies that are willing to perform commoditized work for a low hourly rate.

How to Present Value-Based Prices

Once you have a price ready and feel confident about it, the next step is presenting it in a way that puts it in the right context. Whether something seems expensive or not depends to a massive degree on context.

To find out more, read the fourth and final part:

Conclusion: Setting Value-Based Prices Isn’t Necessarily Hard But Requires Asking the Right Questions

If you’ve been hesitant to try presenting value-based prices in a proposal, take one of the methods above for a spin. Chances are you will be pleasantly surprised at how natural this seems once you get the hang of it.

The post Setting Value-Based Prices Doesn’t Actually Have to Be Hard (Spreadsheet With Formulas) appeared first on The Bondsai Blog.

The basic idea of value-based pricing is that buyers pay for the value of what they receive. But how do you, as a seller, determine that value? What is the prospective client willing to pay? How price-sensitive are they?

This post is the second in our series on determining and setting value-based prices. I wrote this series to help more people overcome a major obstacle when adopting value-based pricing: price-setting.

In the previous post in this series, we discussed why it’s smart to break down projects into chunks. This post assumes you’ve already read that one so you’ll probably find this article useful if you read these posts in order.

This post is about factors that influence a buyer’s price sensitivity. Each of these factors influences the buyer’s sense of value. These factors taken together help you:

1. Determine the price sensitivity of a buyer,
2. Devise the best tactics to influence the buyer to see the value in your offering.

Understanding these factors and bringing this perspective to sales conversations doesn’t only help you shape buyer perceptions and price sensitivity. It’s also an effective antidote to other sellers that try to win through underbidding. By not engaging in that race to the bottom and instead influencing the factors that motivate or scare the buyer, you can walk out a winner without having to compromise with price.

Factor 1: The House on Fire Scenario – Effective but Rare

Imagine you’re in the department store and they have a sale on fire extinguishers. You’ve been thinking of buying one but you also doubt whether you’ll need it. After all, you consider yourself a careful and responsible person. Your fireplace is well-built, recently inspected and you’d never leave a fire or hot coals unattended. After a quick deliberation with yourself, you decide to skip it for now and reconsider in the future when you have a bit more money to spare.

Some weeks later you wake up in the middle of the night. There’s a smell of burning in the air. Your worst fears materialize as you rush into your kitchen to discover a fire. “Damn, if I only knew!” you think as you regret your decision not to buy a fire extinguisher when you had the chance. Your earlier decision, based on a split-second probability analysis and cheapness, seems so stupid. You’d have paid 3 times the asking price if you’d have known better. In other words, the urgency of the situation reduced your price sensitivity by 66%!

Chances are that some of your clients find themselves in similar situations but on a different scale. For example, by not investing in a security review of their website, they get hacked and have their innermost secrets made public.

The Power of Nuclear Events

As we discussed in a previous post about such “nuclear events,” using risk- and pain-based scenarios in your marketing or sales conversations can be highly profitable. Generally speaking, removing pain and helping your buyer avoid risk are the most persuasive arguments you can use to lower someone’s price sensitivity.

Some buyers who approach you are putting out fires as they happen. If you know this is the case, your best tactic is to emphasize the costs and risks they’re subject to as you speak.

Principle: The value of your offer is determined based on whether it helps avoid potential pain or remove (urgent) pain.

Factor 2: The Neighbor’s Emerald Lawn – The (Sometimes) Irrational Fear of Competitors

Businesses are surprisingly irrational. It’s natural, they’re run by people after all. The same people that compete with their neighbors for the reddest roses or having the latest model Mercedes.

Irrational fears manifest themselves in other ways too, for example in how companies view competitors. A fair share of marketing is done to intimidate and match competitors. It’s often done with the excuse of “positioning us in the minds of a key target market” or such business-like jargon.

In the past, that didn’t seem to matter. In the famous words of John Wanamaker “Half the money I spend on advertising is wasted; the trouble is I don’t know which half” (turns out it’s not that simple but that’s a story for a different time).

That idea fed many of the great “mad men” advertising agencies of the ‘40s, ‘50s, and ‘60s. As long as the business was growing, no one dared touch the enormous advertising budgets of which the agencies usually received a fixed 15% cut. The huge advertising accounts and the agency profits this resulted in made it possible for advertising legend David Ogilvy to buy a French castle to retire to.

The Fear of Missing Out

Today, with digital marketing and a whole set of tools for attribution, things are less mysterious. We know where people click, and scarily often even why. Even so, pointing out to your buyer what their arch-nemesis is doing can be highly motivating and help reduce price sensitivity. Chances are they’re watching their every move. Ready to match. After all, if their opponent is doing something it has to be a for a reason.

Before meeting with a new buyer or responding to a request, take a look at the market they operate in. Understand which the key players are what they’re currently doing. Don’t be arrogant and presume to know more than your buyer does. Simply come to the meeting prepared, informed and genuinely curious. Point out things their competitors are doing and which are similar to your idea or proposal.

Principle: Companies will often match their competitors’ moves, frequently without deeper analysis, driven by a fear of missing out.

Factor 3: A Better Future, Promises of Improvements and Profit – Energizing But Rarely a Priority

If avoiding pain is the strongest motivator, then winning gets the bronze. Many buyers are receptive to ideas for improving their business. They’re eager to hear your take on ways to improve. When falling on the right ears, great ideas eat price sensitivity.

These are the most rewarding clients to work with. Planning and idea sessions are often creative, optimistic and characterized by a desire to do great work.

Help Your Buyers Win the Fight for You

While ideas will energize them, what will help them loosen their purse strings and further reduce their price sensitivity are measurable results. The person sitting across from you could be the most visionary person at their company. But they will almost always answer to someone less inclined to flights of fancy. The better you can prepare them to win the cynics over, the higher your chances of winning work.

To get mindshare from a visionary buyer, prepare a folio of ideas backed up with concrete examples and numbers. These usually don’t have to be exact. You can use examples from other businesses and show the results these companies have achieved. Buyers are often more interested in seeing that you are aware of the bottom-line, rather than that you can make exact projections.

Principle: Buyers looking for someone who can help them take their business to the next level are looking for concrete suggestions backed up by evidence.

Factor 4: Strategic Investing and Long-Term Return – Not As Valuable As You May Think

Many agencies and freelancers refer to themselves as “strategic,” accompanied by the notion that it somehow makes them stand out. At a time, it did. That was back when it meant something.

Today, however, being “strategic” usually translates to a penchant for client workshops. That’s not a criticism of workshops per se. I love workshops. But a poorly executed workshop along with a project that focuses on deliverables taken off a backlog don’t make you a master strategist, wanted for your advice.

Furthermore, with an abundance of self-appointed “strategists,” the value of strategy is diminishing. Yes, clients want your input and ideas but if that’s all you provide, their price sensitivity won’t change.

My take on it: buyers almost never buy services for the sake of strategy. Do not lead with “strategy” or being “strategic.” Instead, discover the actual pains or problems that you can help fix and suggest well thought-out ways to solve them.

Instead of promising future returns, it’s almost always better to focus on the here and present. Quick and fast wins will help you gain trust and position you as someone whose advice is worth taking.

Principle: Strategic projects and advice are inherently more valuable as they increase the likelihood of higher return over time.

Factor 5: Window-Shopping – The Dangers of Promising Too Much, Too Early to Uncommitted Buyers

The reasons for starting a project or requesting a proposal are many. Some are the result of issues that need to be addressed immediately, while others are more speculative. As you’re probably aware, some buyers are in the latter category – they’re window-shopping.

These buyers test the waters to see what’s out there. Sometimes they’re at the cusp of committing to an in-house project and want an alternative to compare with. In other cases, it’s a straight-out attempt to get free ideas from you to augment whatever they have planned for themselves. This is in fact rather common and I’ve been on both sides, seeing it happen.

While it can be frustrating for a seller, it’s normal and not something to frown upon. Some of these early buyer probes can turn into real work in the future. Dismissing them outright comes with the risk of missing out on some fun and rewarding projects.

While these meetings aren’t necessarily a waste of time, many make the mistake of spending too much time on them. It’s important to determine what the buyer is looking for so you can adjust the conversation and your expectations. Some buyers have unrealistic expectations at this stage and a price sensitivity to match.

To Spec or Not to Spec

Inexperienced buyers, or those who feel entitled, might demand that you do work on spec. That is work that’s done without a promise of compensation. Whether you choose to is your choice. Spec work can lead to real work. However, I strongly advise that any investment of your time is done after you’ve made a level-headed analysis and qualified the client first.

This is usually not the right time to discuss price. Details are often scarce and the buyer is usually weighing their options. Whatever price you mention can be used against you in the future. Either for them to justify going with an alternative option or being presented to you as a promise you’ve made.

Prices discussed at this point do not have any context. Any price presented here will not match any expressed need, problem or pain. As such, it will be a number. Nothing less, nothing more. As I’ve discussed earlier, numbers without context are just asking to be driven into the ground. Pushed down until you bleed. Any price is too high. Price sensitivity is at max.

The reason I mention this factor is because many buyers are at this point while the seller assumes they’re much further ahead. Accurately determining the buyer’s progress helps you avoid the mistake of presenting a price before establishing a context and helping the buyer visualize a scenario.

Principle: Buyers at early stages are frequently window-shopping in an attempt to get a price for reference, reducing you to a “Column B.”

Using the 5 Factors to Lower Price Sensitivity Through Conversations With Buyers

The list of factors above isn’t complete. There are more. But these five are some of the most common and worth remembering. By bringing an awareness of these to a meeting with a buyer, you can shape the conversation to make your buyer see more value in what you’re offering, thereby lowering their price sensitivity.

Download Our Free Printable Infographic of Factors that Influence the Price Sensitivity of Buyers

I’ve made an infographic that sums the five factors and suitable tactics in a handy reference format:

Click it to view the full size version.

Feel free to print it or share it with colleagues or friends.

Bottom Line: It Doesn’t Matter How Hard You Work If It Doesn’t Benefit the Buyer

Some years ago I was consulting with a large company. I was helping them to improve a complex manual process that took considerable time to perform. One of the specialists in the project team said, with some exasperation, “if only our customers knew how long this [process] takes!”

Chances are they wouldn’t care one bit.

Value is subjective. It’s only the buyer who can decide what is valuable and what is not. That means that you need to frame what you’re selling in a way that makes it valuable to them, keeping in mind the factors that put them in that seat in front of you.

Read the Next Part

The post How to Smartly Influence Your Buyer’s Price Sensitivity appeared first on The Bondsai Blog.

To many, setting a value-based price seems daunting, even impossible. This three-part guide is intended to demystify the art of determining value-based prices and presenting them. Part one: Why you should price your work in chunks.

The basic idea of value-based pricing is that clients pay for the value, not the production cost, of what they receive. We’ve covered value-pricing from multiple angles already on this blog (scroll to the end of this article for a list). But we haven’t really dug into the issue of how you set a value-based price. That’s what this guide intends to answer.

This is the first post in a series about setting value-based prices. In this first article, I’ll discuss why you should break down large projects into installments and price them individually. We’ll also look at ways of doing that.

The next posts in this series will cover ways to price these installments based on what your client considers valuable. I’ll also discuss the factors that influence your buyer’s sense of value.

Finally, we’ll wrap it up by showing ways to present these prices to the client in a way reduces buying friction.

The Challenge of Setting Value-Based Prices: They Don’t Depend on Quantifiable Information

I decided to write this series since the challenge of setting a value-based price seems to be what holds many back from adopting value-based pricing in earnest. Especially those who have so far used hourly billing and its one winning feature: the ease of calculating a price.

This ease of counting hours is for many seen as a form of fairness. Hours are conveniently quantifiable. Not only that, but everyone can also agree on what an hour is, ergo everyone has the same idea of its value. The conclusion that many draw is that hourly billing is somehow inherently fair.

Problem is, it’s not true, which I’ve demonstrated in previous articles on this blog, such as this one on ways to implement value-based pricing.

Unlike hourly billing, value-based pricing is usually not easily quantifiable. There’s often no way to measure the “amount of value” and put a value-based price tag on it when it comes to professional services.

Value Points and Point Pricing as a Form of Value-Based Prices

But there are exceptions. Some agencies have in fact tried quantifying value by replacing hours by (value) “points.” Using this model, they offer clients a menu with items with value-based prices in points. It’s become known as “point pricing.” In a digital marketing context, it could be something like “short blog post: 7 points, interview: 9 points, Twitter update: 1 point” and so on.

The idea being that the value-based price should reflect the value provided, not the effort spent (hours). The neat thing about it is that the agency can price each point differently for different clients. In value-based pricing, this is called “pricing the client.” Agencies can also customize the menu for each client, further tweaking it to the client’s willingness to pay. It seems to have worked for some agencies.

For a large scalable business (such as a major content marketing agency) that delivers similar services to all of its clients, point pricing is an attractive option. It offers a nice degree of consistency. Point prices can be set by senior account managers and it’s easy to train even junior team members in applying the menu. They don’t need to understand or care about the intricacies of pricing to give a client a value-based price.

But agency and freelancer services are usually more bespoke. They’re not small standardized deliverables, but more often larger projects that can take months to complete. Value-based pricing for projects is far harder to quantify than assigning points to a services menu “à la carte.”

That’s why I argue that value points aren’t always an alternative to the billable hour.

A Case for Chunks and Fixed Value-Based Prices

One of the main issues with a point-priced services menu is that it works for well-defined items, such as deliverables as part of a digital marketing strategy, but not really for multiple-stage projects.

Imagine sitting down with the client and debating the point price of each sprint. Each feature built having a value in points assigned. I believe it can be done. I have entertained the idea of using points to price agile sprints. But I think it makes it more complicated than it has to be. It also requires that everyone who interacts with clients at your agency and does this kind of planning understands pricing.

There’s an easier way.

Break down large projects into manageable chunks which are then priced based on value. Each chunk is shippable and can stand on its own and deliver value.

I know this might sound impossible for some projects. And yes, it probably is for rare monolithic projects that require months of initial work. My counterargument to that is that agencies and freelancers shouldn’t do that kind of critical marathon work. At least not on a project basis.

If you must do that kind of work, I strongly recommend you try to partner with your client. A value-based partnership is certainly possible but falls outside the scope of this article. If this is something you’d like to hear more about, please write a comment below.

Breaking down large projects into shippable chunks doesn’t only make value-based pricing possible, it also brings a plethora of other benefits.

The Winding Road: Knowing What You Don’t Know and Accepting It

In software development, the horizon is close. In other words, we can’t see very far down the proverbial road before we have to start guessing. We can usually predict issues that might arise in the next few days. Beyond that, it’s challenging to predict and difficult to even speculate.

To illustrate, I made this animation. It shows how a major monolithic project that seems optimistically manageable at first turns out not to be that at all.

Complications are revealed as the team makes progress along the project’s meandering and winding road. The “fog of uncertainty” lifts gradually. The project progresses from the Optimist’s Horizon to the Self-Delusional Horizon onto the Eat-My-Hat Horizon to the final and terminal Here-Be-Dragons Horizon.

Does this seem familiar to you?

I know this problem well. Years ago I traveled to conferences across the world to talk about estimating web development projects. The spreadsheet-based method I proposed helps agencies and freelancers estimate the time it takes to build a website or an app. It’s accurate enough to be useful for planning provided the agency has some experience and knows the platform they use.

Side note: I stand by much of what I said almost a decade ago, except when it comes to pricing. I wrote an article about my reflections over the years since.

The Cone of Uncertainty Shows Why Estimation Is So Insanely Hard

What is clear to anyone who’s tried estimating large projects early is that the errors increase by multiples the earlier you attempt to make an estimate.

In software estimation and project management, we talk about “the cone of uncertainty.” The cone illustrates the fact that the further your from actually building the software, the higher the risk your estimate is dead wrong. Reversely, the closer you are to finishing the project, the narrower the cone becomes, and the more accurate your estimates are.

Here is an example based on data from thousands of software projects. This graph is based on an example in the book Agile Estimating and Planning (paid link) by Mike Cohn:

Lesson: To reduce estimation error, avoid making guesses about the remote future. Instead, focus on the here and now and work with what you, for a fact, know.

Loose Coupling Reduces Risky Dependencies and Enables Shipping of Chunks

Monolithic software presents many risks by virtue of being monoliths. That’s why software engineers strive for something called “loose coupling.” It roughly means making components as independent of each as possible. Loose coupling makes it possible to separate components and use and test them on their own.

Smart Businesses Actively Avoid Big Risky Bets

Beyond technical risks, big bets are dangerous in themselves. Businesses try to avoid big bets whenever possible. A big bet brings big risk and very few bets promise the return to make that risk worth it. Companies abhor risky bets, why you can insure almost anything today. It’s clear why: avoiding big bets just makes complete sense from a business perspective.

By Breaking Work Down into Shippable Chunks, You Help Your Client Think Like a Startup

It’s not just big companies that want to avoid risk, small vulnerable startups do too. Instead of hedging all their savings and raised capital on a moonshot idea and go for “build it and they will come,” startups use MVPs. So-called “minimum viable products” allow a business to test an assumption with as little risk exposure as possible. The assumption is usually that a certain group of people are willing to pay for a product to solve a problem for them.

The same thinking applies to your clients. As a consultant, part of your job is helping your clients avoid risk. If a project seems like a big bet, suggest alternative and less risky ways to achieve the same result.

Clients appreciate agencies and consultants that point out such problems. They will want to hear your feedback on their strategy. You know things they do not. There might be technologies, products or methods that they are not aware of. Using these, you might be able to build something cheap and simple that reduces a big bet to a small bet.

Chunks Make Apples

As a seller of services, the last thing you want is being grouped together with every other agency or freelancer that provides a service similar to yours. That’s exactly what happens when you sell hours. They’re commodities and create the illusion of being comparable. The only differentiating quality they do have is price, which results in a race to the bottom. That’s not in your interest.

What you do want is being hard to compare. By selling services in chunks, comparing you with another company becomes very difficult. To make a comparison, the buyer has to get a similar quote from another agency or freelancer and then compare them word-by-word. This means you’re in control of the message and can play on your strengths.

Suddenly, it’s clear to the buyer that one company sells apples and the other pears.

Discussing Results Early Positions You As Someone With Strategic Insights

Starting conversations about risks, bets and return will shape how the client views you. This is a form of early value creation and it positions you as a person or company with valuable advice. That makes your client less price-sensitive and you’ll be able to command higher value-based prices over time.

Not only do these conversations show skills the client may not have expected, but they also demonstrate a not so common attitude. Specifically, the drive to achieve results early. As long as you’re not skipping ahead and taking unnecessary risks to get there, result-focus is almost universally desired by clients.

The Challenge of Using Value-Based Prices for Year-Long Projects

You may object that this won’t work. Perhaps you’re saying that clients will want to know the total price of the project. That is often the case in an RFP (request for proposal) process. I’m not too keen on RFPs generally speaking and the advice I’ve given earlier about RFPs applies here as well.

I’ll let you in on a secret: Clients never could, and they never can get a true total price estimate no matter who does the estimation.

Even if you spent weeks using software estimation applications (yes they do exist) and compiled reams of data on team velocities and risk analyses, your answer would be a guess. A very well-founded guess, but still a guess. Estimation is a modern crystal ball and just as limited. You cannot predict the future. I think it’s better to accept that fact than to pretend you can and paint yourself into a corner.

If the client pressures you for an answer, there’s a way to handle that. It involves understanding the value of the project and I’ll return to it in later posts in this series. In the meantime, I recommend checking out the article about how to handle RFPs.

It’s Simply Agile

If none of this seems particularly controversial it’s because it isn’t. Much of this is an already established practice and goes under the title “agile.” My real contribution is the suggestion to take the ideas of agile software development and combine them with value-based pricing to create better and fairer software projects.

Using Value-Based Prices for the Foreseeable and Controllable Future

As we can see, delivering work in fixed value-based price installments or chunks reduces many of the challenges of pricing software projects. You can offer a fixed value-based price for the next installment since you know and can control many of the variables. Costs can also be estimated with decent accuracy since they’re happening now or soon, not in the remote future.

Conclusion: By Delivering Shippable and Workable Things Earlier You Can More Easily Set a Value-Based Price

By breaking down projects into shippable chunks which are only specified in detail until it’s absolutely necessary, risk can be radically reduced. That in itself is valuable.

Since chunks will be completed soon, rather than in the distant future, chunks can also be accurately estimated in terms of production cost. Value-based fixed prices can be set with confidence. Once a chunk is shipped, the next one can be similarly scoped and priced. Meanwhile, the customer sees immediate return which further motivates your value-based prices.

Read the Next Part

Want to Learn More About Value-Based Prices and Pricing?

These are some of our previous articles about value-based pricing:

• The basic ideas of value-based pricing and determining the valuable features of your offer by interviewing your existing clients.
• Good, and bad ways, to go about adopting and applying value-based pricing and potential pitfalls.
• How delivering urgently needed services can be a way to radically increase your rates.
• How to market and sell from a value-based starting point.
• A huge FAQ to value-based pricing which touched on determining price but didn’t really dig into it at depth.
• How to write and price proposals using value-based pricing.
• Introducing value-based pricing to an existing business or agency, without making your clients frown.
• All the things you do, as an agency or freelancer, that create intangible value and make your offer stand out.
• Fairness when using fixed (and perhaps value-based) pricing.
• How different buying types affect your ability to charge a value-based price.

The post Why You Should Ship Early and in Chunks appeared first on The Bondsai Blog.

Buyers come in all types. From the bargain-hunting first-time buyer who doesn’t consider the value your services bring over time to the strategic relationship buyer that values you for being you. Problem is, how do you tell buyer types apart?

Understanding your buyers is important at all stages of the client relationship. In the early phase, when you define your market, understanding your buyer helps you design your marketing efforts to be most effective. Later on, as leads turn to prospects, it’s important to understand which prospects you want to invest your time in or which ones you can simply write off.

Based on my conversations and interviews, many freelancers and agencies simply seem to attract the wrong crowd. The buyers that eventually approach them just aren’t a good fit for various reasons.

Let’s look at why that happens.

Some Buyers Are Purchasing Your Services for the Wrong Reasons

If a buyer’s decision to engage a consultant is based on faulty reasoning or the wrong information, their expectations will be unrealistic. But this is also to be expected. After all, you are, in the role of the consultant, the one with the know-how.

Our job is to teach, inform and educate. Buyers come to us to learn. Problems arise when buyers aren’t taking our advice.

Some Buyers Have an Unrealistic Idea of What the Outcome Will Be

Most engagements require giving and taking. You as the consultant bring specialist and expert knowledge and insights from other organizations you have consulted with. Your client is the expert regarding their company and its needs. You and your client need to combine your knowledge to get results.

Consultants need to bring humility and cannot assume they already know the solution, despite having worked for similar companies. Likewise, the client needs to be humble in return and pay attention to the expertise the consultant brings. If things go well, they engage in a mutually respectful conversation and collaboration.

Many Buyers Cannot or Fail to See any Reason to Value the Outcome

Most buyers have no idea what the financial value of a successful agency, client or freelancer engagement is. As a result, they will value tenders based on gut feeling alone.

You might think “So what? We aren’t rational beings anyway.” You’re right. We aren’t as rational as we think so decisions are usually based on feelings. But facts can influence those feelings.

In the absence of facts, emotions play a critical role. To the uninformed buyer, the smallest details will shape their decisions. From how coffee is served to how someone presented themselves.

The Four General Buyer Types

Depending on why a buyer has contacted you, their idea of desirable outcome and its perceived value, they can be divided into four buyer types.

• Price buyers
• Convenience buyers
• Value buyers
• Relationship buyers

Let’s have a peek at each of buyer types and what distinguishes them.

In the book Implementing Value-Pricing (paid link) by Ron Baker, you can find the following chart of the four buyer types. I’ve redrawn and modified it somewhat to better fit the audience of this blog.

Price Buyers are Bargain-Hunters Who Care For Nothing But Price

Just like people storm to the closeout sale at the department store, price buyers only care for one thing: price.

According to Baker, they make up 5-15 percent of the clients of a professional services firm. Since they only care price, they’re not very loyal and will abandon you as soon as someone offers a (in their view) better deal.

These clients should be offered a bare-bones version of your offering. You will find countless examples of how this can be done. Apple sold the iPod Shuffle, which didn’t let you choose which song to play, to its most price-sensitive buyers. Limiting services available is another way to reduce value. Taxi companies use “surge pricing” as a way to handle price elasticity and sell to the cheapest buyers. Self-service is another way to cost-effectively serve price buyers.

The only reason you want to keep these clients is that you have no better clients, you’re contractually bound or you hope to eventually turn them into one of the other types of clients.

Convenience Buyers Are Willing to Pay Extra to Get What They Need When They Need It

If money is the primary concern of value buyers, then for convenience buyers it’s time. As we discussed in the article about “nuclear events,” price sensitivity can be very low if matters are urgent. Since they’re mostly driven to find who can solve their problems the fastest, they’re not very loyal but highly profitable.

Focusing on convenience buyers isn’t a bad strategy but it has risks. Just like lightning strikes, there’s a degree of randomness as to when they happen. However, seen over a ten year period, the average number of strikes is pretty much the same.

Value Buyers Shop Around But Consider All the Value Offered When Comparing Prices

These are the buyers who diligently compare all the offers available and make an informed choice. Often to the chagrin of everyone around them who’s constantly consulted: “Buyer: Should I buy A or B? Friend: Buy B. Buyer: Why B? A has this new feature which I might need. Friend: Never mind…”

If someone has ever presented you with a spreadsheet of buying options and rated them using categories of value or features, then you know a value buyer. Thanks to their inquisitive buying style, they are fair buyers as they will consider all the benefits of working with you over another firm and strive to make an informed choice. If you’re the best option, they will pick you.

However, should your competitor start marketing themselves specifically to companies of their type and offering competitive value, there’s a real risk they take them up on the offer.

Relationship Buyers Will Stick With You Even in Stormy Waters

These buyers value working with you for who you are and how you do things. They appreciate your unique services and culture. They value feeling valued and they’re willing to pay extra to count themselves among your clients.

If you take care of your relationship buyers, they will take care of you and stay around even when things go bad. The downside is that it can be hard to keep these buyers are your business grows. You will need to rotate staff off projects and accounts and hire new people to manage client services.

I’ve talked to many agencies that have lost relationship clients as they have grown. The clients being used to the type of service that only a small shop can give or the personal service of a specific project manager or account person.

Using Buyer Types to Manage Clients Better

I’m sure you’ve already started thinking about your existing clients in terms of price, convenience, value and relationship buyers.

A useful exercise can be to compile that information in a spreadsheet or tag the clients in your CRM (customer relationship management) system.

This is important since what type of buyer they are influences how you manage the relationship. By considering their type, you can get better at meeting their expectations. You can even design specific programs, processes or actions based on buyer typing.

All that works for the clients you already know. But what about prospective clients?

6 Discerning Questions that Help You Determine What Type of Buyer Your Prospect Is

You may want to make buyer type identification a step in your prospect qualification process. The best way to determine a prospect’s type is to ask questions and listen carefully. Here are some example questions that reveal important clues regarding buyer type and behavior. It’s important you weave them into a conversation and don’t make it feel like an interrogation.

Remember that it’s rarely meaningful to ask someone to speculate. It’s better to ask about things they know and then draw your own conclusions.

• Why did you choose to contact us? This tells you whether the price was a determining factor.
• What other companies did you consider? Which ones did you contact? Which ones did you decide not to contact and why? This will reveal whether price or value matters. Also, it tells you what the client considers important.
• What are your options besides engaging us to work on this? This will tell you about the value of having the problem solved. It will also reveal something about whether this is a one-off engagement or whether they want to work with you over time.
• What is your timeframe for this? This gives a clue as to the urgency and will help you glean whether they’re a convenience buyer.

Finally, present a project you’ve done along with the price marked up 20%. Focus on their reaction. If they seem immediately taken back, follow up. If they ask questions pertaining to what the project involved and what was included, consider it a good sign.

Conclusion: Understanding Buyer Types Makes You a Better Marketer and Salesperson

While buyer types might feel somewhat generic and shoe-horned, they are a useful way to think about clients. It’s wise to consider buyer types as early as when you define your marketing strategy. Done right, considering buyer types can help reduce the risk that the people who approach you are of the type you want to work with, and not the ones you’d rather avoid.

Photo Credits

• Finan Akbar
• Artem Beliaikin
• Alexander Dummer
• Raquel Martínez
• rawpixel.com
• rawpixel.com

The post How to Use Buyer Types to Avoid Wasting Time and Money on Fruitless Prospects appeared first on The Bondsai Blog.

Many years ago when I was at the beginning of my career as a freelancer, I had a conversation. The reason I recall it so well is because it illustrates a common misconception about pricing: you can forget about being fair – you either cheat or get cheated.

In this particular case, a smaller business had approached me for a price to build a website. After having discussed the specifics, we turned to talk about the price. The prospect said:

“Well, you either give me an hourly price in which case you will try to extend the project as much as possible to maximize the time spent. Or you can give me a fixed price in which case I will try to squeeze in as much as possible. Am I right?”

I recall I was a bit taken by this so I mumbled something along the lines of “yeah, sure” and laughed.

In retrospect, I realized it was the biggest dump of elephant fecal matter I’ve heard in a long time and I’d foolishly confirmed it. Problem is, this is how people have been taught to think about price. You either cheat or get cheated. Whether a price is fair doesn’t matter.

Some Common Tactics of Price “Cheaters”

In the case of buyers, “cheating” behavior translates to:

• Not being willing to reveal how important something is to them.
• Being reluctant to discuss the long-term implications or use.
• Assuming malicious intent in the part of the other party; as in believing all information they share will be used against them.

In the case of sellers, “cheating” means:

• Actively minimizing effort but also quality under the assumption that the buyer cannot tell a Mercedes from a Lada.
• Up-sell the buyer with features and solutions they do not need.
• When using time-billing, taking liberties with how time is being reported and tracked.

I’d like to think I’ve gotten wiser in the 15 years since. These days, I try to avoid pricing through subterfuge and instead aim for transparency and mutual gain. Customers who refuse to engage in that, I avoid. I strive to determine early if a buyer is smart enough to talk openly about return on investment, urgency and gains, as well as risks.

While my favored trust-based approach is common in B2B (business-to-business). In B2C (business-to-consumer), the old ways live on.

I was reminded of that recently when dealing with a building contractor who didn’t seem to reflect over what it meant to be fair.

Pricing-By-Cheating Lives on in B2C Transactions

This contractor is someone I’ve trusted in the past. I’ve also felt that the price he has asked before has been fair and matched the quality of the work. We’ve been so satisfied and confident in his abilities that we’ve even recommended him to others. Those referrals have resulted in major restructuring work for him.

In this case, we asked him to do a job that would take about a week in calendar time. Probably much fewer hours. Still, as laymen, we cannot estimate this kind of work. Based on the track record, we assumed he’d give us a fair price and didn’t invite others to bid. Relying on trust alone, we accepted his proposal and price.

What Is a Fair Fixed-Price Markup?

Once the work was complete, I had a look at the price again and realized it was 2.5 times what it would have been if it was priced hourly. This 150% markup frustrated me, which made me feel ambivalent.

After all, I do preach fixed value-based pricing here on the blog. I advocate agencies and freelancers to use fixed prices with a fair markup that include risk and create clarity for the buyer. It’s a pricing method that rewards you, as an agency or freelancer, to earn more if you solve problems faster.

At first glance, that is exactly what the contractor gave us. According to my own principles, it should have been fine. Still, when I realized the discrepancy between a running rate I felt cheated.

I called him up and raised my concerns. His going hourly rate of approximately €50 (~$50) translated to €130 (~$130) when I summed up the hours.

Clients arguing over price isn’t unusual but I wasn’t doing it on the basis of being stingy but simply because I felt he’d taken advantage of our trust in him.

His counterarguments ranged from “well that’s the deal” to a series of excuses about “not keeping track of time” and “that took longer than you think.” He even stated that since his costs are so and so, he needs to charge between X and Y per week. My response: “I’m not paying you to watch grout dry no matter how much you need the money.”

In the Construction Business, It’s Often All About Money Per Hour

His most revealing argument was that the reason it had gone so fast was that when using a fixed price, he’s incentivized to work faster. If we’d paid per hour, he would not have bothered to be as effective or fast.

Say what?

The contractor continued and said that this is common in his business. That all his competitors operate this way. In other words, all they care about is money per hour throughput, regardless of consequences. With such a short-sighted approach to pricing, it’s no wonder foreign low-cost competitors are cutting the legs from under incumbent contractors in home repairs and renovations.

It was weirdly refreshing to hear that admitted to a customer. Yet at the same time, the ethics of it stank.

My next question was: “What about us paying you more than your usual hourly rate and you simply do a good job for us?”

Thing is, he’s good at what he does. I don’t mind paying him more but I want to do it in a way that feels fair.

Trust Is Worth More Than Money

In an attempt to make it concrete, I explained that I often work as a consultant and bill by the hour (hard to avoid when you deal with consultant brokers and their contracts). I told him how I never “maximize my time.” Instead, I frequently work shorter days simply because I leave the client’s premises when I’ve done what I need to do that day. It’s the fair thing to do.

This perplexed him. He didn’t think anyone did that.

To me, the trust I build is worth so much more than the short-term gain of a few extra hours of billing. For a home repair contractor, in which trust plays an ever greater role – after all they do enter your private home, it should matter even more. At least that’s how I see it.

Sharing the Benefits of Faster-Than-Expected Project Completion

In my view, the fair thing to do in this case would be to split the gains from the project since it took less time than planned and refund half of it. The result being him earning effectively €90 per hour (rather than the usual €50). Still, an 80% higher rate than usual.

That would result in fair compensation for the risk he assumed by offering a fixed price. It would also mean not taking advantage of the trust we foolishly placed in him to price fairly. It’d be a price that isn’t unreasonable for homeowners and buyers for whom the price is mostly a cost, not an investment that pays back as in B2B situations.

In the end, I decided to pay the fixed price. I honor an agreement out of principle. But I also made it clear to him that we’d be loath to hire him again after this experience. The final price and his behavior felt neither right nor fair and I don’t want to work with someone I don’t trust.

To his credit, realizing the true cost of his pricing practices, he eventually pleaded with me. He promised to do a day’s work for free since he couldn’t credit us since he needed the money to pay his bills.

Conclusion: If You’re Being Fair, You Will Be Trusted and Able to Do Stellar Work

This experience got me reflecting about fixed pricing and being fair. After all, in a way, I preach what this contractor practices.

Or do I?

When thinking about it, I realized that what has steered me towards value-based pricing since that phone call 15 years ago has more to do with being fair, and less with profit.

I’ve always felt depressed hearing the cheat-or-be-cheated approach. Not only that, but it’s also ineffective and undermines the chance to work together to achieve something fantastic.

In the case with the contractor, the price itself wasn’t the problem. His way of handling my concerns was. The contractor’s behavior wasn’t about being fair. He acted from a point of opportunity with no regard of how this would affect the customer relationship over time until I pointed it out very clearly.

As a seller, I consider this a healthy lesson in how it’d feel if the tables were turned. My key takeaways were that fixed prices aren’t so simple as some assume.

How Fair Pricing Leads to Having More Fun

For fixed prices to work, they need to be based on clarity and based on mutual interests, only then will they contribute towards building:

1. Fairness: Fair transactions are a matter of collaboration and trust. The goal becomes finding a way so that everyone’s needs are being met and both parties walks away feeling good about the transaction.
2. Trust: A feeling of mutual concern and trust builds the kind of client relationships that last. Clients who feel secure with you, trusting your sense of being fair and concern for their interests, will also pay for that privilege and stick with you.
3. Fun: Once trust is in place, customers won’t challenge every decision you make or require that you motivate everything you do. They already know you have their best at heart. This allows you to excel which makes your job more fulfilling and rewarding.

All of this translates to customer loyalty and higher pricing power. In other words, being fair is in fact often profitable.

Photo Credits

• Pixabay
• fotografierende
• rawpixel.com
• Rakicevic

The post Honestly, Are Your Prices Actually Fair? appeared first on The Bondsai Blog.

A method called Impact Mapping is gaining traction in software development. It helps teams make better decisions. But it can also be used to generate valuable ideas before anything is built – during the discovery phase. In a fierce market, being able to elicit such insights when selling can be critical for winning over a prospect. This is how it works.

If you haven’t heard about Impact Mapping before, don’t worry. After close to two decades, impact maps still aren’t mainstream. That’s a shame since they’re incredibly versatile and powerful. While they were invented by interaction designers and adopted by agile product managers, they can also be used for selling.

While I love how Impact Mapping helps us capture requirements and business goals in a single view, what’s even more relevant to sales are the discussions it fosters.

Even something as routine as a sales discovery conversation; intended to help you discover the client’s pain points, budget, and needs; can be far more rewarding. As a seller using Impact Mapping you will help your client arrive at new insights. That will in turn help position you in their mind as someone they want to work with.

Let’s see how it’s done.

A 6-Minute Crash Course in Impact Mapping

Impact Mapping is an activity that was invented to solve the problem of visualizing how business value is derived from products being used, thereby reducing the failure rate of IT projects.

The naive technical view holds that a feature automatically brings user, and eventually customer, value. As we all know, that’s not the case. A user might request being able to attach a file. After some discussion, the user story “As an editor, I’d like to be able to attach files so I can post files to the web site” will go into the backlog and be built.

But that in itself will in no way guarantee that the feature will actually be usable. It may comply with the requirement in technical terms but the user experience could be extremely poor.

Early IT projects suffered many such problems. Requirements were collected and managed without regard for user needs. As HCI (human-computer interaction) and usability gained ground, it became clearer to more and more people that this didn’t work. Projects done this way didn’t have the desired result. The creators of Impact Mapping argued that impact (or business value) is created when IT products are being used. Impact Mapping was created to visualize that link and to help build products that people wanted to use, hence generating value.

Delivering Value to Stakeholders and Users by Focusing on Goals

Impact Mapping has two premises:

• If you get to the bottom of a project or product there’s always a higher goal. This is usually referred to as “strategy” or “purpose.” The project is an investment made to achieve that goal. That sounds rather obvious. But you’d be surprised how many IT projects that are done without team members being aware of why they’re doing what they do.
• Secondly, for that goal to be delivered, someone needs to use the system. No users, no impact, no return on investment. This places UX at the absolute center of critical activities in software development and IT.

In practice, Impact Mapping can be summarized as:

1. Making the purpose absolutely clear and a point of agreement, not contention, to serve as a northern star.
2. Create total transparency regarding the metrics used to determine when that purpose is reached.
3. Clarify the role of usability and user experience when it comes to building impactful software, apps, and websites.

Impact Mapping is an activity performed before, during and after a project. We’ll focus on before in this article but the after part is perhaps the most important. This is when insights from the system being used are fed back to improve it further. It’s also the step that many skip.

Impact Maps Help Steer and Manage Projects Towards Impacts

Source: Drawing impact maps

Impact Mapping results in a document called an impact map which looks a bit like a mind map. In its simplest form, an impact map consists of:

• An overall goal, purpose or aim, answering “why are we doing this?”
• A set of metrics to determine when the aim has been achieved, answering “when do we know we have achieved our goal?”
• Defined groups of users (sometimes referred to as actors) with shared behavior, answering: “whom are we building and designing this for?”
• User goals (also called impacts) for those groups of users, answering: “why do our users want to use this website and what problems does it help them solve?”
• Capabilities (sometimes features or deliverables) that those users need the product to have so they can achieve those goals, answering: “how must we build this website so our users can achieve their goals?”

Example: Using Impact Mapping to Plan a Bus Booking Website

Let’s make this more concrete by considering a fictitious but realistic example. This is based on an example from interaction and service design agency InUse which I’ve simplified. This version is somewhat contrived and very basic.

Imagine that you work for a bus company and you’re about to join the 21st century – that means online booking. The competition is stiff so you strive to do this right. You start by doing enough research to define your aim. After discussing your brand and what your company wants to stand for you to arrive at “Zero-threshold bus journey bookings online.”

You argue that a large share of your customers isn’t familiar with computers and the process must be simple. Your metrics for determine success are the share of searches that lead to booking a trip and the average number of repeat purchases. You also want at least 80% of your users to report that the experience is pleasant and easy so you will use a survey for that.

Since you’re a diligent buyer of IT services, you hire an interaction design agency to do user research. You learn that most of your customers travel for social reasons: to spend time with friends and family. The second largest group do it spontaneously. In interviews, they talk about their goals for traveling. This is the gold you’ve been digging for. With some more user insight work, you learn what capabilities the website must have. With this in hand, your product manager, designers, and development team can start planning the work.

The resulting map could look something like this. Note that this one is intentionally incomplete to keep it simple (click for a larger version):

I’ve based this example on a map by InUse and I strongly recommend you take a peek at theirs. It’s full of explanations that I’ve left out for the sake of brevity.

When It Comes to Impact Mapping, the Process Matters More Than the Deliverables

It might seem like these maps require quite a bit of research about users to be effective. That’s not necessarily true. Impact Mapping isn’t so much about the map as the process to create it. Impact mapping involves senior business stakeholders, project managers, designers and developers working together. That’s why it’s so interesting even in an early sales stage.

This article is too short to cover the Impact Mapping process in detail. Instead, I strongly recommend picking up Gojko Adzic’s book “Impact Mapping” (paid link) to learn more about how it’s done. My thesis also has chapters on how to use impact mapping in practice. I wrote it partly to serve as a guide for product managers, developers, and interaction designers.

You Don’t Have to “Get Out of the Building” to Get Somewhere

Startups that embrace “customer development” chant “get out of the building.” That’s generally good advice. But it doesn’t mean there’s absolutely no knowledge internally.

In my experience as a consultant there’s usually plenty of knowledge in the building already. Especially at bigger customer-facing businesses. Problem is, it’s often stuck in silos. Those that design and make decisions about customer-facing systems don’t invite those with knowledge about users and clients to participate.

By inviting experienced customer service staff and those who interact with clients daily to the impact mapping process, user goals such as the ones in the example can be uncovered. I’d say just doing this together, even without user research, is way better than not doing at all. You won’t have the full picture but you’ll be making decisions from a much better vantage point than you would without it.

Impact Maps Aren’t Mind Maps

At a glance, the impact map above looks like a mind map. But unlike mind maps that are free-form and have few rules, these maps have a structure. Each level of nodes from the center (the purpose) is of a specific type and answers a specific question. This means the map can be used when making decisions throughout the project.

You can think of each level as being connected by why (right to left) and therefore (left to right) respectively. Imagine a developer asking “why do we need polls?”. To find out, they could consult the map. By tracing it from right to left see that it’s a proposed solution to helping users make group decisions.

The reverse also works since you can see “make decisions” and therefore “social travelers” will need “polls.” The beauty of this is that the developer can weigh alternative, perhaps more cost-effective, solutions to the problem that the polls feature was meant to solve: “group decision-making.”

The map can also be thought of as telling a story about the reasons for the project. By following these chains of reasoning, each feature can be explained and understood by anyone.

Impact Maps Bring Clarity and Help Teams Prioritize

I’ve interviewed many specialists about using Impact Mapping. More than one has told me how their colleagues have had epiphany-like experiences once they saw the impact map of the project they were working on. It showed them how everything fit together. In one case, the clarity that Impact Mapping brought helped them cut down their backlog by half. That turned an endless project into something they could finish in the next year.

How to Use Impact Mapping in Early Stage Sales Workshops

At the beginning of this article, I dangled the idea that these methods can be used for selling. The example above is a scenario that would take place after a decision to invest has been made. The decision would at least be to fund a pilot study. So how can you use impact mapping when you’re trying to win over a new client?

It’s important to remember that we use Impact Mapping at this stage to frame a conversation, not to make a complete analysis. We use the dimensions of the impact map (goals, actors and impacts) as agenda points. The questions asked during this discussion allows you to guide a conversation that establishes trust and rapport.

The outcome we’re interested in isn’t a complete impact map but a prospect that views you as a very interesting person or agency to work with.

1. Impact Mapping Works Best with Qualified Good Buyers

Effective selling is often about shifting the buyer’s idea of what a successful project looks like. That you have guided them to insights and new levels of clarity speaks strongly in your favor. The purpose of this sales activity is to give you a strong positive association. That will increase your chances of closing but also boost your pricing power.

Frequently, “bad” buyers will approach you with an immature or misinformed idea of what they need. They’re different from the buyers you do want. Great buyers know their area of expertise and where it ends. They often present their thoughts with humility. These buyers are grateful to hear your ideas and questions as they know you will only strive to make the result even better.

”Bad” buyers aren’t so modest. They think they have it all figured out and just need the right cog to fit in their perfectly designed machine of a project. We recently published an article about checking prospects for cultural fit. One of the questions was regarding whether they are willing to take your advice. “Bad” buyers don’t.

When dealing with a good buyer, Impact Mapping is a way to talk about their work and shape their vision and idea of success. It’s a way to “help them [buyers] think” (which is something clients value highly). Unlike an open conversation or “brainstorming workshop,” Impact Mapping is a structured way to discuss goals, assumptions, risks, and requirements.

2. Present Your Session as a Planning Workshop

I recommend marketing your sales stage impact mapping session as a two-hour planning workshop. I think it’s wise to go easy on the “strategy” part and instead talk about your workshop in other terms. Everyone wants to be a “strategic advisor” these days and it gets tired.

I recall discussing this with a client, a major company. They said they had plenty of strategists. Their impression was that knew what they needed so they didn’t want to talk strategy with agencies.

In their case, they were wrong. They just didn’t know what they didn’t know. In fact, they’d have a lot to gain from talking to someone who could help them visualize strategy and implementation in a single conversation. But convincing them of that would take quite some effort.

3. Effective Impact Mapping Requires the Right People Mix

It’s important the buyer brings the right people to the workshop. Similarly, bring those of your colleagues who know their area of expertise well.

This isn’t a cheap sales activity and requires an investment of time from the right people. As such, I recommend you reserve it for prospects that are truly valuable and with a high probability of closing. I recommend checking the prospect for cultural fit before investing in a workshop such as this.

4. Don’t Skimp on the Meeting Space

Get a good meeting space. Plan breaks and order water and snacks. Have a whiteboard ready and sticky notes to document what is being said. Build the impact map as you discuss and as suggested by Gojko Adzic (paid link). The impact map will branch out as in the example above. The eventual outcome is often a list of requirements. However, that can be a trap.

5. Convincing the Client That This Is Valuable to Them

There’s a strong chance the client already has a list of requirements. Sometimes this list has been arrived at through proper means: user research and insights. But that’s often not the case. Either case, they likely see no need to revisit something that is “done.”

While the outcome of the workshop can be requirements, it doesn’t have to be. It’s the conversation and the topics covered that we’re interested in at this stage. We’re using Impact Mapping as a way to frame a conversation that supports the sales process going forward.

I suggest trying to understand what the client is looking for. Then you can redesign the workshop for that to ensure those questions are addressed. That’s usually a much more savory prospect to them than you redoing their work in a standing session.

6. Make Sure You Deliver Client Value, Even if They’re Not Paying for It

Knowing what the client values serves another important purpose. Even if they choose not to buy, you will have delivered value and respected their time.

Make sure you prepare the workshop well in advance. Don’t wing this. This is true value and you at your finest. That they aren’t paying for it (yet) doesn’t mean it’s something to be sloppy about.

7. Discussing Goals Using Impact Mapping as a Framework

At the heart of the impact map is the goal. Some refer to it as “purpose” or “aim” or define multiple goals. I prefer one goal for clarity and focus. I’d rather do one thing well and then shift focus than trying to put out all fires at once and run out of water.

Talking about goals can be tricky. They often feel vague and insubstantial. One way to get around that is to discuss the desired outcomes for the intended users instead. Some call these “impacts” and they’re usually easy to recall. Write them down on a whiteboard and ask “why?”. Backtrack to the goal or aim.

Once you feel confident the goal is covered well enough, dig into the metrics. These can be tricky. ”What’s get measured gets done” is an old cliché that still holds true in some ways. As a digital agency or consultant, you will likely know a lot about digital metrics and what can be measured accurately. This is an opportunity to leverage your hard-earned experience.

When you’ve come to some kind of agreement or definition, move on to users, or actors as they’re sometimes called.

8. Actors Make It All Happen

One neat thing about Impact Mapping is that in many situations, you can use it to make decent decisions without doing all the research homework. In an article published a few years ago, some of the originators of the method discussed this aspect.

The gist of the article is that in some cases, you can afford to take a chance and make decisions based on assumptions about users. Many startups operate this way. They forego extensive user research and instead find critical assumptions about users and then build something that tests those assumptions. One person I interviewed referred to it as “throwing shit at the wall and see if it sticks.” Depending on your strategy, this can work.

Regardless, your users or actors take up a key place in your impact map. You should discuss them at length and focus on their behaviors. It’s how they act that matters here, not their choice of breakfast cereal.

Try to understand whose problems your client is trying to solve. This is a great opportunity for you to “think with your buyer” about who these are and ways to serve them. You likely know of technologies or methods the buyer isn’t aware of. Flex your brain muscles!

This discussion will inevitably lead to features.

9. Features Don’t Equate User Needs

People love talking about features. As Gojko Adzic notes in his book (paid link), there seems to be a tendency for humans to leap ahead to features. It’s no wonder. Features are fun. They’re easy to talk about without getting into the technical or practical details of making them work.

Impact maps make it abundantly clear how features connect to user goals and by extension, business goals. While discussing features it’s important to make this link clear and try to find the “low-hanging fruit” that brings impacts at a low cost. Similarly, you should question features that cannot be reasonably tied to impacts. They are probably unnecessary.

Many take the position that impact maps should list capabilities rather than features. The project team can then discuss the implementation of features that match those capabilities as the project nears that phase of the work.

The purpose here isn’t a complete analysis but to give the client a taste of what you can do once they’ve chosen to work with you.

10. Impact Mapping Isn’t About Creating the Perfect Strategy

I believe it’s a mistake to view an impact map as a perfect battle plan. Instead, it’s a visualization of assumptions. It tells a narrative and is a way to put the project in a context that everyone can understand. It lets you modify your approach as more information becomes available. To borrow a term from the military, an impact map provides commander’s intent for a project.

It also provides a strategic helicopter view that many projects are missing. I believe many clients experience a sense of comfort knowing that you actively track, manage and follow-up on the resources poured into a project.

Conclusion: Impact Mapping Is a Powerful Method to Guide Discovery Conversations That Establish Trust

I’ve used Impact Mapping in many early-stage client workshops over the years. It’s always been a rewarding exercise. You can also plan and prepare these workshops in advance. I have sets of presentation slides that I’ve used several times. Also, the workshop lends itself to a pre-defined format with planned breaks. As an early stage sales exercise, it’s terrific. As a way to discuss the business impact of IT projects, even better.

I hope I’ve piqued your interest in Impact Mapping. I recommend reading a bit more before getting started. Gojko Adzic’s book titled “Impact Mapping” is short and accessible (paid link) and a great start. Gojko has also freely published materials for Impact Mapping workshops he’s performed.

If you want to pick up some tips from the pros who have been doing this for a decade or more, check out my thesis on Impact Mapping and other ways to manage IT projects towards measurable impact. I interviewed some of the best impact mapping practitioners to learn their ways of working. You could call it a guide to the “secrets of Impact Mapping.”

Photo Credits

• nappy
• Martin Péchy
• Markus Spiske
• Annie Spratt
• Matthew Henry
• monicore
• Startup Stock Photos
• Austin Distel
• Aline de Nadai
• Alan Cabello

The post How to Use Impact Mapping to Elicit Insights and Create Value in Early Discovery Conversations appeared first on The Bondsai Blog.

Many freelancers and agencies make the mistake of assuming that their services are the only thing they bring to the table. That’s almost never true. They generally offer so much more intangible value than that. They just forget it. Here’s how capitalizing on your forgotten intangible value can help you increase your prices.

You’re worth more than you know.

Your ability to charge for your services and availability is often only limited by your sense of self. By viewing yourself in the eyes of your buyer, you can discover the intangible value you’re giving away.

By investing some time, you can make intangible value visible, marketable and priceable. This is possible since your pricing power is often determined by the clients’ total impression of your worth. In that calculation, your services and your other forms of value, contribute.

Here are nine common forms of intangible value that agencies and freelancers provide, often totally unaware. By capitalizing on it, you can put yourself a notch (or more) higher on the pay scale.

1. Bringing Specialist Knowledge or Expertise

By having the role you have, you naturally possess a unique set of skills. That makes you immediately valuable. You have knowledge that others miss. For someone in need of that knowledge, a conversation with you is inherently valuable.

Not all clients are aware of this. Some take your skills and feedback for granted and do not understand when you’re bringing intangible value. These are the clients you better avoid. Wise (and desirable) clients know good advice when they hear it. They will pay you for sharing your expertise.

How to Capitalize on It

• Be aware of the intangible value you bring and change the way you talk about your services. Present an opportunity to pick your brains as valuable and rewarding.
• One way of doing this is to add an offer to your website where you sell online consultations in bite-size chunks. Don’t write out the price, instead, add a form where you ask prospective clients for details. State that you’re busy (even if you’re not) and present possible time slots at least a few weeks ahead. With some programming, you can make these time slots automatically update without manual editing.

2. Possessing Unique Social Capital

You’re more than just yourself. Your company exists in an ecosystem in which everything is connected. Some connections are stronger and more valuable. If you invest in building those links they will become assets. Those are assets that your client get access to through your recommendations or events that you organize and invite them to.

How to Capitalize on It

• Be clear to prospective clients that working with you gives them access to invitation-only events.
• You can write about these events on your website. The more exclusive they appear, the more in demand they will be and further boost your pricing power.
• Organize network, breakfast or lunch events (featuring an interesting speaker) for handpicked clients on a regular basis.
• Design the invitation and the experience to feel exclusive and private.
• Personally introduce people who you think could help each other.

3. Having a Strong Brand and Reputation

People will fight to work with a strong brand, just like they will shun one in poor repute. Your reputation rubs off. A well-managed and built brand will increase the attractiveness of working with you. Clients may even brag about being one of the select few whom you’ve chosen to work with.

How to Capitalize on It

• Building a strong brand does indeed take much time. Still, you need to start somewhere.
• Infusing a personality in your business and giving it a unique character is at the core of having a brand.
• Finding a tone, theme, and set of principles which you can shape all your market communication to fit helps.
• Featuring your clients on your blog or in a podcast is a way to create visibility for you both. It positions you and your brand as an authority in the field.

4. Owning Rare or Desired Proprietary Methods, Software or Technology Not Available to Others

Every business, even the smallest, has a “magic sauce” of sorts. For some companies, it could be much-vaunted technology or exclusive IP (intellectual property). Yet even small companies possess unique abilities that they have developed. It may be as simple as a documented process or a way of working. Many companies are unaware that their capabilities are unique and miss out on capitalizing on them.

How to Capitalize on It

• Don’t assume everyone does what you do and that it’s not that rare.
• Spell out on your website how you work and what your unique tools and methods are. State that you use them. You don’t need to be specific and “spill the sauce” to create an aura of mystery and craftsmanship around your business.
• Share carefully selected parts of your “secret playbook” through your blog or conferences. Build a “myth” around your business.
• Talk and write about the unique results you can achieve using your secret method or technology.

5. Having a Business Model That Lowers Buyer Risk

By innovating around your business model, you may find new ways to reduce buyer risk. Things that cut buyer risk include:

• Offering guarantees related to price or quality.
• Fixed (and perhaps also tiered) prices.
• Well-designed payments terms that balance the risk for all parties.

Prospective clients will notice when a company doesn’t operate like the rest and pay attention.

How to Capitalize on It

• Communicate that you think about ways to reduce buyer risk.
• Constantly look for ways to improve.
• Share what you learn, ideally as a speaker at events frequented by your prospective buyers. Palatable headlines such as “5 Things We’ve Learned About Fixed Price Projects” tend to draw crowds, from other agencies as well as buyers.

6. Helping the Client Manage and Avoid Potential Future Risk

By helping clients think ahead, considerable trust can be earned. It may backfire if the client hasn’t been properly informed and educated. Still, I believe strongly in helping your clients make better decisions and reduce risk, even if it means referring them to someone else.

How to Capitalize on It

• Don’t focus too much on your specific role or task. Make sure to bring your entire experience to bear on the client’s problems.
• Show foresight in your advice and use strategic planning techniques.
• Help the client make decisions short-term and long-term.
• Write up and publish case stories where you show how you helped your clients plan and strategize.

7. Training and Educating the Buyer

This might sound counter-intuitive. Instinct tells us to hoard our knowledge and hand it out by the ounce to the highest bidder. That has been one of the reasons for guilds since time immemorial.

That might have worked for medieval stonemasons but the modern digital knowledge economy is different. In fact, training your client in some of the things you do may be a great step towards repositioning yourself and being able to provide even more valuable services than before.

How to Capitalize on It

• Start by giving knowledge away on your website or blog. A Youtube channel is free and can be an easy way to share tips and advice.
• Once you feel this is something you enjoy doing, organize workshops for clients in which you train them in some of the things you do. Customer journey map, for example, can be a lot of fun to do together. The client may also see another side of you and place a higher value on your advice.

8. Being Friendly, Helpful and Empathetic

Clients may claim they just switched supplier due to getting a lower price or needing new services. But in most cases, it’s a people problem. Suppliers, be it agencies or freelancers, that feel difficult won’t be around for long.

To avoid this, try putting yourself in your client’s shoes. Aim to reduce client time or effort. Work to boost client comfort, convenience, and peace of mind.

Figure out how you can make every interaction less taxing on the client. Some easy ones are:

• Answer fast (if it’s a valued client) if only to say you’re working on it.
• Be clear in your writing to avoid misunderstandings. Use short sentences. Present information in bullet points.
• When you ask for directions, dust off the old crystal ball and try to predict their answer and act. They’ll be delighted to know you took action on your own accord. This only applies to non-detrimental things of course.

All of these small things say “I care” which leads to peace of mind for the client.

If you’re already doing some of this, keep doing it. Know that most aren’t like you.

How to Capitalize on It

• Get client testimonials in which your client praises your can-do attitude and friendliness.
• Write and talk about your way of working with clients.
• Develop a manifesto or set of principles that you use internally and share publicly about your ideas about client interaction.

9. Help Your Client Become a Better Version of Themselves

There’s a time for listening and a time for talking. As a consultant, it’s important to be able to tell them apart. But when you do have a good idea, don’t keep it to yourself – at least not forever. Even if it may seem painfully obvious. What’s obvious to you isn’t necessarily so to the client.

It’s not about your role. Even if you’re hired as a freelance web designer, don’t let that limit you. Perhaps you see a way to improve their marketing if so share it. Not only will you be appreciated, but they will also see your value outside your (perhaps too narrow) role. That can be a starting point for repositioning yourself.

How to Capitalize on It

• Pay attention to what your client mentions and make a list of suggestions.
• Find the right time to present them.
• Introduce your client to individuals who can offer a valuable perspective on their situation.

Conclusion: Discovering Your Intangible Value Can Be Rather Profitable

These are just some common forms of intangible value. Perhaps you provide yet another form of value which your clients recognize and cherish.

Trying to understand your intangible value and making the most of it can be a great way to increase your pricing power. That will let you raise your prices without losing clients.

Start by calling some of your clients today. Try using the scripts in this article and hear what they say. You might be surprised!

The post How to Increase Your Prices by Capitalizing on Forgotten Intangible Value appeared first on The Bondsai Blog.

I open my consulting engagements with a simple question: what does success look like? It’s a simple question that helps ensure that the client and I share the idea of where we want to go. This short question is the first step towards a shared definition of success.

It’s happened more than once in my career. Projects have been technically completed without being “done.” In those cases, our team had done a tremendous job and could be rightfully proud of their accomplishment. Still, in the eyes of the client, it wasn’t finished. It simply wasn’t the result they had envisioned when the project began. The team and the client just didn’t have the same informal definition of success.

The severity of such a situation ranges from a temporary nuisance to causing a client to sever the relationship altogether. That’s especially likely if this is just one in a series of similar experiences the client has had with the freelancer or firm.

But it can be prevented.

Definition of Success: A Sorely Needed Term

Just like how “definition of done” has become a staple term in agile software development for acceptance criteria, I propose we also start talking about a definition of success. Having a shared definition of and criteria for success helps avoid scenarios like the one I described.

“But why, this is what we have requirements for…” you might say – yes if it only were that well. Requirements should function that way. Unfortunately, they’re often technical and focus on features, not on the intended results or the desired impact of the work. You could check all the boxes and the client still leaves unhappy.

Success is about expectations. After having talked to many agencies and freelancers over the years, it’s clear to me that intentionally managing expectations is a key factor for client satisfaction. A definition of success starts with effective expectation definition and management.

A process for creating a definition of success can consist of:

1. Determining and define expectations on your and the buyer’s end.
2. Compiling the results of your work, and determining where you’re of a similar mind and where you stand far apart, using the worksheet (see below).
3. Organizing a workshop in which, together with the client, you define a shared definition of success.
4. Communicating the definition of success to everyone involved in the project.

Step 1: Success Is Built on Effective Expectation Definitions

As common as the advice to “manage expectations” is, the answers to the question “how?” aren’t as easy to come by. In my experience, expectation management begins with asking the right questions from a foundation of empathy and doing so from the beginning.

Before we dig into those questions, lets first consider what “empathy” means in this context. In this case, empathy refers to viewing the project and its circumstances from the eyes of your influential (and sometimes economic) buyer.

The influential buyer isn’t always the client since the client may have more than one representative. They may not even be attending your meeting. The influential buyer is usually the one holding the purse strings. This is the person who can cancel the project if something feels wrong. They’re the final judge and arbiter of success.

Here’s the clincher: Whether this person considers your project a success can appear totally arbitrary to you. It may even be arbitrary. As humans, we are generally ruled by emotions which we justify using logic. Understanding the influential buyer’s decision-making requires decoding their “logic.”

Who the influential buyer is isn’t always obvious. It may not be the formally more senior person you’re meeting. It could be an experienced member of the team that the formal manager or lead refers to. It’s important to understand who the influential buyer is. This is so you can adapt your communication style and manage their expectations first and foremost.

Putting Yourself In the Shoes of the Influential Buyer

Having a sense of who the influential buyer is will help when trying to establish common ground. That’s why it’s a good idea to meet with a prospective client informally over lunch or coffee before tackling the work. Use the informal setting to identify who the influential buyer is.

Through conversation, learn about them and what they’ve done in the past. Get an impression of their personality and preferences. Are they creative and innovative? Or are they looking for a safe and proven option? Are they pedantic or more relaxed knowing they’re dealing with the right people?

The goal is to be able to accurately answer the following questions:

What Are the Major Risks in This Project Given What We Now Know About Our Client and Their Influential Buyer?

What you consider to be potentially problematic doesn’t necessarily match what the client views as risky. Many risks are also the result of mismatching ideas or expectations between agency or freelancer, and client. Even if you have done a risk analysis, it’s wise to revise it after you have a better idea of where your client is coming from.

What Is This Influential Buyer’s Idea of Success?

This is my favorite question. It clears the waters immediately and takes away a lot of potential miscommunication. It’s not rare that two people in the same room talk about two completely different things using the same words.

This was made strikingly obvious to me while attending a course in scrum and agile software development. The teacher on the course set up a role-playing exercise which (if I recall correctly) consisted of trading with other groups. Unbeknownst to the participants, each group had been given different sets of rules. As a result, many drew the conclusion that the other party tried to cheat them once trading began. The exercise was intended to simulate cultural misunderstandings. But I think it applies to how we talk about desired outcomes too.

What Is Our Idea of Success?

In contrast to the client’s, what’s your idea of success? It’s absolutely fine to say that a “happy team” and “no overtime” are success criteria. In my experience, teams that tend to overwork have rarely made those goals explicit.

Just like how the client will likely define success on their terms, you should define it on yours. A happy client is naturally highly desired. But is it an attractive outcome if it means your people are suffering for it? Probably not.

What Is Important to This Client and How Do We Deliver It?

While success is important, there is often more than one checkbox to fill. Success can be achieved by many different means and some ways involve cutting corners. It’s a good idea to early learn what tradeoffs you can make.

If you build applications, a startup might trade maintainable code for an MVP (minimum viable product) release for speed. But if their CTO sends you detailed instructions about how to format comments in the source code, it’d be wise to find out if that’s a symptom of an unspoken requirement.

How Do We Best Communicate With This Client to Manage Expectations?

We’ve all heard the old adage, “the client is always right.” In reality, it’s rarely the case. In a collaboration, as between a consultant and their client, everyone’s needs to be considered. We all have different habits and needs. Especially so when it comes to communication. I’ve talked to many agencies complaining about “needy” clients. In some such cases, I think the frustration is caused by a mismatch.

Communication is an important aspect of culture. Perhaps you’re not comfortable or willing to communicate in a way that the client expects or demands. That’s fine. People work at your company because of what that company is and stands for. If you compromise too much, people might start looking for work elsewhere. Adapting to a client’s cultural assumptions is a potential risk to you, whether you’re a freelancer or a company.

What Does This Client Need to See to Feel at Ease?

While communication is indeed a key aspect of keeping a client informed and comfortable, there’s usually more to it. It’s often not as much about what you say, as what you ask and how you do it. The right questions, delivered the right way, can put your client at ease.

Learning about the influential buyer’s learning style also helps. Your client may prefer visual explanations over text. Perhaps they abhor emails. If so, try to call them instead and use email to make phone call appointments.

What Mistakes Did Previous Agencies Make That We Don’t Want to Repeat?

There are incompetent agencies and freelancers, as well as clients “from hell.” That’s the state of the world. It’s good to find out early if this particular client matches that description.

One way of doing that is learning of previous projects and why they were successes or not. Listen extra carefully to how the client talks about accountability and whether what they express sounds reasonable or fair.

Step 2: Use the Worksheet to Write Your Definition of Success

You now have a starting point for a definition of success. You can use the attached worksheet to compile the answers to the questions above. It’s important that you consider both your and the buyer’s perspective.

The worksheet helps you identify areas where you may both need to compromise. Once the worksheet is complete, organize a workshop with the client.

Step 3: Workshop With the Client to Define a Shared Definition of Success

I recommend using a workshop format to collaborate around a definition of success. Try to involve as many as possible from both companies.

Given that you do it together with the client, some might say it’s unnecessary to write out answers to these questions beforehand. The reason for doing it beforehand is to come prepared. The better you know your needs and position, the better you’ll be at explaining them. The more you show you’ve considered and understood the client’s position, the more they’ll trust you.

Keep the definition of success as short and effective as possible. Ideally no more than a few bullets. If possible, use numbers as quantifiers to avoid ambiguity. It’s better to write “increase conversions by 27%” than just “significantly increase conversions.”

Step 4: Make Sure Everyone on the Project Knows What Success Means

Last, but not least, ensure that the definition is well known. I prefer visualizing information. If it’s particularly important I like printing it out on a large sheet of paper and sticking it to a wall. In sight – in mind.

If you’re working remotely, there are no walls you can plaster with printouts. Instead, you can refer to the definition of success at every standup. Done right, the definition helps everyone make decisions and prioritize features and solutions. A good definition of success is especially valuable to a product or project manager as it helps them make better decisions on their feet.

Grab the Definition of Success Worksheet

I’ve created a Google spreadsheet you can copy and use as a worksheet. You can use this worksheet in the second step of the process to arrive at your own definition of success: Definition of Success Worksheet

Conclusion: Writing a Shared Definition of Success Prevents Many Issues to Arise and Defines Mutual Goalposts

There are many factors that influence the often subjective idea of project success. By knowing your culture and that of the client, you can handle issues preemptively by writing a shared definition of success.

To do so, it’s important to enter meetings with an open mind. Try to check your own assumptions at the door. It’s only by being receptive to the needs of others that we stand a chance to meet those needs.

It’s through dialog you can arrive a working definition of success. A definition that establishes the goals and ambitions of your specific project and collaboration.

Photo Credits

• Tookapic
• rawpixel.com
• Stokpic
• Gerd Altmann

The post Why Every Project Needs a Definition of Success appeared first on The Bondsai Blog.

I talk to agency founder Fredric Örup. He shares how documented agency processes have helped his companies make smarter decisions. It’s all about understanding what information you need to make better calls, he says.

Before we dive into the topic of agency processes, I ask Fredric about his background. He’s done and does many different things. I’ve known him for 8 years or so and much has happened since we first met.

He’s currently the co-owner of two companies. Stormfors, an agency specializing in building e-commerce sites on the Salesforce Commerce Cloud Platform for B2B businesses. He’s also a co-founder of Leadfront, a consultancy that supports its clients in digitalizing marketing and sales.

Fredric tells me his interest in the “world wide web” (as it was still called back then) began in 1994 or 1995. He recalls printing out HTML page source code and marking it up using a highlighter to learn the syntax. That’s how he learned to build web pages. He says he loved how the web made it possible to post things that others could access and view.

Prototyping a Smartphone in the Year 2000

His interest in the web and digital technology influenced his higher studies too. Fredric wrote his thesis (for an engineering degree in multimedia technology) based on a project at mobile communications company Ericsson. It looked into ways of using 3G mobile communication technology. 3G back then was exciting, but the real potential wasn’t really clear to most people.

Fredric describes how he and his fellow thesis students developed a device concept similar to today’s smartphones. They envisioned AI assistants and high-resolution touchscreens. Unfortunately, Ericsson didn’t take it further. Perhaps it was just too ahead of its time.

After earning his degree he went on to work for IKEA. He was on their multimedia team developing customer-facing applications for their stores. After another stint at Ericsson, he returned to his native Stockholm, Sweden, and joined an agency. His time at the agency didn’t last long. But Fredric made some important friends and connections during those years. People that have been part of his professional life ever since.

Chasing the Housing Market Crash in Warm and Sunny Spain

The agency life and the 2001 dot-com crash had Fredric reconsider his career choices. Drawn by the climate, the food and the pace of life, he chose to move to Spain to work as a real-estate agent. That’s where he discovered his passion for relationship-based selling. It was something vastly different from the ABC hustling that many associate with the word. Fredric’s real-estate seller colleagues jokingly referred to it as “wine, dine and sign.”

Fredric stayed in Spain until the housing market crash of 2008 before returning to Sweden. He eventually co-founded Stormfors. The agency originally focused on Drupal (an open source CMS) and saw B2B companies as their primary clients.

It was in the following years that I got to know Fredric and his co-founders. My agency used the same CMS and technologies. We were competitors, technically speaking. But we all knew that the smartest thing to do was to grow the pond, not fight over it. We co-organized events and conferences together to help our technologies gain more ground.

Over the following years, Stormfors’s B2B focus sharpened. A few years ago, they split off their marketing automation team as its own company: Leadfront.

This long and broad background made me interested in hearing about Fredric’s experiences with building scalable processes.

When Did You Start Being Interested in Processes?

I get the sense that a part of Fredric always knew how important agency processes are but he hasn’t always followed that inner voice.

“In the beginning when you start an agency, you very much want to work according to processes. Problem is, you usually don’t. You take on work and then do the job, simply because it’s easier than following a process. But you eventually realize that everything gets extremely difficult without following a process.”

Fredric says that while he’s a fan of processes now, that wasn’t always the case: “It took me way too long… I mean waaaaay too long to learn that the key to everything is having a process. Now that process may not be perfect but at least it’s something you can develop. If everything is done ad hoc, then you have nothing to develop since you will not know afterward what it was you actually did.”

Not a “Process Person” But Loves to Hire Them

Fredric describes himself as someone who is not a “process person.” He says he thinks that’s why he works so hard to find talented project managers. In his view, being able to design and work according to established procedures is a hallmark of a great project manager.

During a moment of introspection, he says his “FOMO personality” (fear of missing out) is probably one of the reasons why he’s come to embrace processes. He finds it difficult to say “no” to things. Processes are a support and provide a framework for him. They help him prioritize and be more effective.

What Are the Greatest Challenges When it Comes to Agency Processes?

“Finding the process and the way of working that fit you and your company best, “ Fredric answers. Perfect is the enemy of good when it comes to agency processes. “You might think that you can come up with a perfect process. You never will. But you will iterate to find ways to act when the outcome isn’t what you expected.” The important thing is that you start defining processes, even if it’s to a limited extent. Many never even do that.

Why You Can’t Force Agency Processes on Your Teams and Why You Should Co-Create Them Instead

Many people associate agency processes with management. They view them as something that someone dictates. Fredric says that rarely works: “You can force the processes you like on a team and try to get buy-in from them… but that is rarely the best way to implement a process. My advice is that you’re more agile and involve the team in creating the processes. That will work so much better than just inviting the team to a presentation titled ‘This is how we will work’”

Fredric recommends running workshops during which the team discusses possible scenarios: “What happens if the customer calls and something doesn’t work? Whose responsibility is that? If you’re not at work, who takes care of it?”

He says these kinds of exercises build a sense of ownership and creates buy-in by the team. More importantly, it fosters a sense of client-ownership and accountability to the clients. One thing he has discovered is that bringing developers to client meetings contributes much to achieve this. When the client trusts your developers, “the circle is complete.”

Process Ownership Helps Attract Great Team Members

Big companies have pre-defined ways of working. They can only hire people that buy the existing processes and commit to them a 100%. A small company, on the other hand, has the advantage of being more flexible. It can give team members real influence over how they work. Teams can shape agency processes, creating a stronger sense of ownership.

Still, even so, Fredric says that having agency processes in place is something that prospective employees value. Showing that you have defined and documented methods and processes is a key part of successfully recruiting new team members. It’s also a way to check the cultural fit to ensure they’ll feel at home in your company.

Having Agency Processes Impresses Prospective Clients

Prospective employees aren’t the only ones who find agency processes appealing. Fredric says that even in selling, showing that you have established processes does matter. Prospective clients are impressed to see even a small business, such as an agency, operating in a pre-defined manner. It reduces the sense of risk and the fear buyers feel when considering working with a smaller agency.

Are Processes the Enemy of True Creativity?

At this point during our conversation, we approach a common dilemma of growing creative companies: the desire to bring order while staying creative.

In my view, this is often a false dichotomy. Agency processes don’t oppose creativity. On the contrary, great work is often done when there are constraints in place.

I ask Fredric if lack of order creates freedom.

“Knowing the current status of things creates the freedom to think about anything else other than what’s right in front of you,” Fredric answers.

“There’s no freedom in having to think about everything at once. As an employee, not having processes can be perceived as being able to do a little of everything. But in reality, all it does is causing conflict. People get disappointed. The client gets disappointed. You get annoyed with colleagues when things aren’t done right. It creates a bad mood,” he explains.

In other words, lack of order doesn’t create freedom, it only causes dissent.

“I believe agency processes are important for creating stability within an agency and building culture,” Fredric adds.

Defining Agency Processes for Creative Work Is a Major Challenge

Processes can, in fact, help you be more creative. Even so, Fredric says that when it comes to agencies, defining processes for creative work is extra challenging.

“In my experience creative people such as designers, copywriters and illustrators have a clear idea and they want to work with it until it’s done and ‘out there’,” Fredric says.

He says it can be hard to fit that kind of work mode into agile sprints and iterative improvements. According to Fredric, you need to create space for creative individuals to come up with ideas since creativity comes in bursts and rarely on command.

Once you have something to show the client, you need an iterative process for revisions, Fredric says. But you never know when the new revision will be ready. In his experience, it doesn’t run like a clock, such as when writing code in sprints.

The Myth of the Flat and Process-Free Organization

The “flat organization” is often mentioned in the same sentence as the term “creative organization.” Fredric tells me during our interview about someone who approached him with an idea in this vein: the prospect of the organization without hierarchies.

In theory, it sounds wonderful. I think we both agree on that. But in practice, there will always be informal leaders – people others refer to for judgment and decisions. Similarly, all organizations have processes, but in small ones, they remain informal.

Fredric gives an example: “If you’re a small company then you’re like a guerrilla team, you have informal communication, everyone knows what they’re supposed to. Everyone talks to everyone to solve complex problems… You can liken it to a small military unit that operates on its own and solves problems together. And that works, when you’re that few.”

“But when you grow to 50 or 100 you need to re-organize, to a platoon or company. Structures work differently. You can’t make 5,000 make the right decision at the right time… all this requires formal structures and processes.”

Many Companies Put the Cart Before the Horse When It Comes to Processes

It’s surprisingly common that companies start thinking about processes when they look into process-supporting software, Fredric says. But that’s putting the cart before the horse.

Fredric has seen several examples of this. He says that at Leadfront, they often see clients look into buying systems to fix their processes without knowing what their processes are: “But it’s the total opposite!,” he exclaims, and continues:” First you document your processes: How do you work? How did you work? How do you want to work? Try it out manually first before buying a system that automates or facilitates that way of working.”

He says one way to find systems that fit is to simply try lots of them and see what sticks. That’s how his two companies have come to use Google’s G Suite of email and office applications. Similarly, it’s also how their developers found a tool for documenting code that worked for them.

Fredric says the number one challenge of those that build and sell process-supporting tools and systems is on-boarding: helping the customer start using the system. It’s easy to buy a system, hard to start using it.

How an Improved Sales Process Helped Fredric’s Consultancy Make Vastly Better Marketing Decisions

I ask Fredric about his favorite example of when adopting a process has made a huge difference. He tells me about when one of his companies, Leadfront, decided to adopt a defined sales process. He says that what’s made it such a success is that it’s been a team effort. “Everyone provided input,” Fredric explains. He says that it has resulted in buy-in from everyone at the company.

They started with one of the established ways of building a sales process. One of those you find in books and articles on sales pipelines and processes. Then they adopted it to their specific circumstances and size of their company.

Working together, they put a lot of focus on how they wanted to measure their success. “How do we want to measure that we’re making progress in our process?” was the question they asked.

What Information Do We Need to Make Better Decisions?

Their starting point was the metrics or KPIs (key performance indicators) they needed. The next step was to design the process based on those metrics. That enabled Leadfront to measure all stages of the process.

The team asked questions such as: “What in this sales pipeline do we want to measure? What are the necessary steps? What progressions between steps do we want to measure?”

It was the need for information to make better decisions in all parts of the company that informed the design of the process. By starting with the information they needed, they could design a process that served operations as well as strategy.

Having a Process Everyone Knows Creates a Sense of Comfort

I ask Fredric what the result is, he says “a sense of comfort.” Everyone knows the state of things. They have a common language to talk about leads conversions from marketing to sales. There’s an agreed-on way in the company how to define and measure it. This makes ROI (return on investment) so much clearer to them.

As a company with B2B clients, they’re used to long sales cycles. Being able to break down these multiple year-long cycles into smaller steps means they can measure progress at a much more granular level. They get earlier and more frequent feedback. That helps them make better sales and marketing decisions.

All thanks to a better process.

Fredric’s Top Tips to Agencies Looking to Improve Their Agency Processes

1. Get Started Documenting How You Do Things, Whether You Want to Or Not

“Even if you don’t think you have a process, start documenting how you do things,” Fredric advises. He says all projects have things in common and it’s only by documenting your work that you will discover what those are. That will provide a foundation and a starting pointing. You can always develop and improve your process later.

2. Don’t Start By Getting Too Theoretical and Adopting Someone Else’s Agency Process

Fredric says he made this mistake early. The error was assuming that adopting documented processes required passing certifications and understanding complex project planning models. “You start drawing this huge process on your conference room whiteboard and then you try to follow it by adopting reality to it. No. It’s the other way round: Start by looking at how you actually work and develop that, the rest will follow naturally… don’t go top-down, instead go bottom-up,” he advises.

3. Think About Scenarios Together With the Entire Team

Bring your entire team together in a workshop and discuss why you need agency processes and what you want to achieve. Make a list of common scenarios that you’ve either experienced or consider likely and design the process to handle them.

Try asking questions such as:

• What happens if a client calls and something doesn’t work?
• Whose responsibility is that?
• If you’re not at work, who takes care of it?

4. Start Where You Are and Create the Habit of Process-Building

Adopting an agency process is an evolution, not a revolution. Create the habit of always looking into sustainable and repeatable ways to improve your ways of working. Do what fits your culture and goals. Just because something worked for another company doesn’t mean it’s right for you, Fredric cautions.

About Fredric Örup, Leadfront and Stormfors

Fredric is the co-owner of two companies. Leadfront, a consultancy specializing in supporting B2B companies in digitalizing marketing and sales. Stormfors is an agency that builds e-commerce websites for B2B clients on the Salesforce Commerce Cloud Platform. You can read more about Fredric on his Linkedin profile and reach him at fredric@leadfront.se.

The post How to Build Agency Processes for Smarter Decisions: First Understand What You Need to Know appeared first on The Bondsai Blog.

Workshops aren’t just a great way to plan, design or create together with clients. The true benefits of workshopping together are emotional. Client workshops help establish the bonds required for successful collaboration over time. If you want to keep your clients, then workshop with them.

Many agencies I talk to have made it a habit to start every client collaboration with a workshop. That’s a fantastic idea.

While the purpose of such a client workshop is often to create alignment or discover project goals, the full benefits aren’t always obvious. Many do know that workshops are beneficial, but perhaps not why.

I’ve planned, organized and facilitated workshops with companies employing just a handful to tens of thousands. This is what I’ve learned about what makes well-planned and facilitated workshops so valuable, regardless of client size.

If you are among those not doing workshops, you should start now. The benefits are just too good to be missed. And no, this isn’t one of those “eat your vegetables” guilt trips your mom put your through. I won’t judge you for not doing client workshops. Just make sure you know the facts.

Impress: In a Client Workshop Setting, You Can Show Off Your Best

Unlike many meetings, workshops can be planned in detail. You can arrive there dressed in your Superman costume. Yes, technically you can since it’s your show. I wouldn’t recommend it though unless it’s a sold-out session at Comic-Con.

Workshops allow you to plan the activities and the schedule, almost like choreography at the ballet. And, unlike the monthly or weekly progress report meetings, the client will defer to you. You own this event. They’ll expect you to deliver the workshop experience and look great in tights.

That can feel like a lot of responsibility. It’s enough to give many account managers and client services professionals weak knees.

Don’t fret about it. You will be nervous at first but coming prepared helps a lot. You can plan much of the workshop to avoid surprises. Many activities can be thought out in advance. As you organize more workshops, your confidence will grow and you can improvise more.

Inspire: You Can Lead Clients to New Insights and Be Remembered For It

A workshop provides an unparalleled opportunity to listen and respond to a group. It boils down to effective listening to guide people to solutions. Ask, don’t tell.

In addition, in a workshop setting, you have more time and communication bandwidth available. When you meet someone in-person, face to face, there’s a lot more capacity to convey ideas and emotions. Compare a full tête-à-tête conversation with a fragmented exchange over SMS or iMessage.

The communication bandwidth available in a workshop makes it easier to guide clients to new ideas and insights. We all know the eureka-like joy of figuring things out. Chances are your clients will associate you with that empowering feeling.

This doesn’t mean that workshops have to happen in person. They can be done over video-conferencing too. You won’t have the same emotional bandwidth at your disposal. Still, done right, they will beat any run-of-the-mill meeting.

Trust: You Get to Know the People on the Client Side and Build Lasting Bonds

There’s rarely a time in a collaboration or project to get to know each other. Schedules are highly focused on center around the work. This despite the strong evidence that collaboration requires the establishment of rapport and mutual trust.

A workshop doesn’t suffer from the same constraints as a regular meeting. You can plan activities that focus on letting people get to know each other beyond their professional role. The connections your workshop group will form will very likely outlast the project itself. From a professional perspective, this means your chances to get to do more work with the client increases. From a personal perspective, it means a growing network of people.

Also, knowing the real person behind a name or a face as captured by a digital camera will improve communication and help avoid conflicts.

Excite: They’ll Remember How You Made Them Feel

With everything you’ve read so far you might assume that workshops should be long. Quite the opposite!

The best workshops are well-rehearsed and efficient. They cover just enough ground to deliver what the participants expect. When workshops are short, people leave energized, a mood further influencing how they will remember the experience.

The contents of the workshop should also have a positive tone. Participants should feel inspired and enthusiastic afterward. You might have heard the adage “they won’t remember what you said but how you made them feel.”

For this reason, it’s important you bring the right people. Some team members might just not like workshops. Don’t force them to attend. Bring those from your company who have a strong positive vibe and exude your company’s culture.

8 Ideas for Delivering a Memorable and Productive Client Workshop

I plan on writing up an article on just workshops since they’re such an important part of agency and freelance services. But until I do, here are some suggestions in case you’re new to workshopping.

1. Make a Realistic Workshop Schedule

Create a realistic schedule with well-defined activities that are time-boxed. As a rule of thumb, things take longer than you expect. Test run it with colleagues if possible (see beta-test below). Preparing well in advance will help you feel more relaxed once there.

2. Set the Ground Rules Early

The term “house rules” (or “ground rules”) refers to the activity of making explicit many of the conventions we all bring to meetings but never mention. This is in order to create a better climate for collaboration. Many professional workshop organizers dedicate a part of the day to work out these rules. They can be whatever the group decides. Just having this discussion will help the people who are attending to gain a better understanding of each other’s expectations. That will strengthen collaboration.

3. Prepare Materials Explaining Why, What and How

Don’t cheap out when it comes to your information assets. Make sure you create supporting materials to explain why you’re here today and what you intend to accomplish. Make sure these materials look great. Your clients may not be paying money to attend but they do have an alternative cost: they chose to come to your workshop over doing something else. Respect that and deliver accordingly.

4. Create a Client Workshop Outcome Vision, Build a Logical Flow and Provide a Supporting Narrative

A well-done workshop will have a natural, seamless and logical flow. Each activity will dove-tail into the next. The results of one exercise will form the foundation and starting point of the subsequent one. Your job is to create and deliver the narrative that holds this together. A good way to do this is to set a vision for the outcome of the workshop. Such an activity should be the first or second thing you do.

5. Beta-Test Everything and Get Feedback

Prepare and test print-outs well ahead to catch issues and spelling errors. Make several versions and ask friends and colleagues for feedback.

6. Don’t Overwhelm Your Audience

As presenters, we often overestimate how much information our audience can absorb. Make a realistic assessment of the knowledge level and learning ability of your attendees. Ask your client if unsure. Adapt the materials and ask for feedback.

7. Predict Participant Questions

Given what you know about your audience, try to foresee what they will ask. Think through each exercise and predict questions that might arise. I sometimes use audience personas for this as a way to better relate to participant needs.

8. Keep a Tidy Workshop Room – Make Time for Housekeeping

It’s far too common for workshop organizers to fail to plan for the time it takes to prepare the space and cleaning up afterward. Be realistic and plan for this.

Conclusion: Client Workshops Are Worth the Work, Just Make Sure to Document Them

Organizing a client workshop might seem like a daunting task. It doesn’t have to be. With experience, it will become easier. Over time you will build a set of workshop materials to reuse which will cut preparation time. The return on your work will increase by several factors. This is simply because you will need less time to prepare while the impact will multiply as your abilities grow.

I recommend documenting your client workshops and the processes involved. Perhaps the first time you do a workshop. But once you facilitate a workshop for the third time, start taking notes. Your documented processes will be invaluable when you introduce new, just hired, into the dark art of workshop planning and facilitation.

Photo Credits

• Maria Tyutina
• Min An
• Christina Morillo
• Startup Stock Photos
• Rawpixel
• Rawpixel

The post 4 Emotional Reasons Why You Need More Client Workshops appeared first on The Bondsai Blog.

Many clients think it’s important that the freelancers and agencies they work with are proactive. That can be a tall order. Staying at the forefront of your client’s thinking can be demanding at times. Google Alerts, a free keyword monitoring tool, can help you stay ahead.

Proactivity requires constantly updating yourself on your client’s situation. That can be tough with many clients to track and follow. There’s nothing wrong with using a bit of automation to make it easier to pay proper attention to the clients you consider especially valuable and important.

This tip won’t come as a complete surprise to many of you. I’m sure you’ve heard of Google Alerts. But you may not have used it exactly this way.

Using Google Alerts to Boost Your Proactivity By Staying Informed About What’s Happening to Your Clients

Using Google Alerts, you can specify keywords which Google will monitor for you and alert you as soon as someone mentions them in the content on the web. Wikipedia defines it as:

“Google Alerts is a content change detection and notification service, offered by the search engine company Google. The service sends emails to the user when it finds new results—such as web pages, newspaper articles, blogs, or scientific research—that match the user’s search term(s).”

Many of us have set up alerts for our own businesses and brand names. But how many have used it to track client companies and brands and even broken links?

It’s all possible thanks to the fact that you can use search modifiers when creating your alerts. Let’s see how.

Setting Up Google Alerts for Your Client’s Company and Brand Names

Start by going to google.com/alerts:

If you’re not tracking anything, Google Alerts will suggest trending keywords to track. In the example above, I’m not logged in so Google Alerts is being helpful and suggests things I might be interested in.

Type in a keyword to start. I suggest simply writing the name of a client. Let’s call them “acme” just to be original 🙂

If you haven’t logged in to a Google account, Google Alerts will ask for an email address where to send the alerts. If you are logged in you will see a button that says “Create alert”. Next to it is an inconspicuous link that says “Show more options.” Let’s click it for the fun of it.

As you can see, there are multiple ways to customize the alert. You can choose to have your alerts delivered as a proactivity digest once per week, for example. For more information about these options, please see the Google Alert help pages.

Let’s look at some ways you can use alerts to become more proactive.

Get an Alert When the Press Mentions Your Clients

By just creating an alert for clientname, you will be alerted any time the client is mentioned. This is a major proactivity improvement. But you might want to be a bit more specific. By choosing “News” as source you can filter all sources save news and media. This can come in handy if there’s an interview in the press, or if the company gets other forms of media exposure.

The Gift of Proactivity: Buy Your Client a New Book Mentioning Them

If you have a look at the sources menu, you’ll notice there are more options. One of them is “Books.” Chances are you will know about the mention before the client’s representative does. You might even be able to snag a copy and present it as a gift to them before they find out. Quite a way to boost client happiness!

Track News in Your Client’s Business Vertical

To seem especially well-informed and be known for your proactivity, create alerts for content related to your client’s vertical. Let’s assume your client produces powered gardening equipment and tools. You can track news in that particular business vertical by following relevant keywords such as product categories names (“mower” and “weed whacker” come to mind).

Keep an Eye on Your Client’s Competitors

Just like how you can track keywords, you can also track your client’s competitors’ names. This will help you stay ahead of what’s going on in their competitive space. It might also help you develop new ideas and strategies based on what their competition is doing.

Monitor Your Client’s Press Releases

You can find press released by visiting your client’s websites. But it’s way more convenient to get it all in the same proactivity alert feed. By using the intitle search operator you can limit your alert match to keywords found in the titles of pages.

• By writing clientname intitle:press or clientname intitle:release you can get alerts with press releases specifically.
• The intitle operator has a sibling name allintitle that takes more than one keyword which we can use: clientname allintitle:press release. You can also use quotation marks to search for the phrase "press release".

Here is a list of all Google search operators you can use.

Learn What Your Client’s Competitors Are Blogging About

You can even create an alert that tracks your client’s competitors blogs. This way you will always know what your client’s competitors are writing about. Just create this alert: site:clientscompetitor.com/blog (assume that’s the URL of their blog).

• If you want to track multiple blogs, just use the OR operator: site:clientsfirstcompetitor.com/blog OR site:blog.clients2ndcompetitor.io.
• If you want to track specific keywords in blog titles, that’s possible too: intitle:mower + site:clientsfirstcompetitor.com/blog (for a company that manufactures gardening equipment).

Find Missing Pages Before the Client Does

Broken links and “not found” pages are no fun. These should be redirected, but that requires knowing about them. You can keep an eye out for these by creating an alert: site:clientname.com intitle:"not found”. Now you’ll be alerted as soon as Google indexes a page with the words “not found” in its title.

Google Alerts Finds Many Mentions But Not All of Them, Still Many Enough to Raise Your Proactivity Rating 

As you can see, Google Alerts is incredibly powerful and useful when it comes to achieving proactivity. But it doesn’t alert you of all mentions. Still, what it does detect and alert you about should be a big help in staying more informed about your client and their world.

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• rawpixel.com

The post How to Sharply Improve Your Proactivity Using Free Google Alerts appeared first on The Bondsai Blog.

Do you know how your most important clients make money? What they need to grow? What could kill their business? Knowing the answers to those questions (and 3 more that I reveal in this article) could turn you into a trusted advisor – someone your clients will fight to keep.

As an account manager at an agency or a freelancer, it’s easy to forget to pay attention to the reality your clients are facing.

Such myopia comes at a price. Understanding your client’s business is critically important if you want to boost client loyalty and avoid becoming replaceable. Or as an economist would say: falling into the trap of commoditization. You could even risk becoming irrelevant and losing the client altogether.

The questions above might seem strange. They clearly have more to do with your clients’ business plans than what you are specifically doing for them as a hired gun. You’re probably a web designer or marketer, not a management consultant, after all.

Make no mistake, these questions are important even to you.

It’s the answers to these questions that pay your salary and fees.

That’s why it’s vitally important to understand how your clients make money. Such knowledge helps you understand what drives your clients’ needs and wants. It also helps you become more proactive in providing services, advice, and recommendations which makes them more loyal to you.

Having that understanding translates to you becoming a highly valued advisor. As a trusted advisor and confidant, you’ll be able to command higher prices. Your role in the eyes of the client also creates a deep trench, full of leeches and crocodiles, to cross for anyone trying to take your job.

The simple habit of staying up-to-date with your most important clients’ business situation takes you a long way toward building trust and client loyalty that lasts.

A Bi-Annual Client Business Review Lets You Stay on Top and Ahead

You don’t need to know everything about your clients to be a valued advisor who enjoys client loyalty. The more you know, the better, of course. Still, knowing certain key information goes a long way.

What’s more important is that you renew your information and update your knowledge on a regular basis.

An effective way of doing this is to perform a client business review twice per year. The review involves looking into how your most important clients’ businesses operate, what factors affect them and how you can contribute and help to boost client loyalty.

The review consists of:

1. Planning the client review process.
2. Rating your clients in order of importance.
3. Answering 6 questions about each client and writing down the answers.
4. Decide on the actions you will take based on the answers.

Step 1: Planning the Client Business Review Process and Holding Yourself to It

If you cannot do the review right now, at least read this guide and then plan a time for when to do it. Then return here to refresh your memory about the process.

Start by opening your calendar and find an available morning or afternoon so you will have plenty of time. Create a 3-4 hour long event. Label it “Client business review” and set it to repeat every six months. As a note, put the short-link to this article (https://bsai.cc/cbr).

Step 2: Rate and Prioritize Your Clients

You can make a business review for all your clients if you wish. But since answering some of these questions might be quite time-consuming, I recommend focusing on the most important clients first. These are the ones that make up most of your revenue and whose client loyalty is critically important.

If you’re diligent you might already have a file with clients ranked and rated by a number of factors. You know which ones that are important and which you keep to pay the rent. In that case, you can skip ahead to step 3.

If you don’t know which your most valuable clients are, here’s a quick exercise.

Create a Client Rating Sheet to Get a Birdseye View of Your Clients and Accounts

Start by copying this Google spreadsheet. To copy it, you need a Google or Gmail account.

Click the link then when in Google Sheets, click “File – Make a copy…” to create your own editable copy:

Client Rating Sheet

If you prefer starting from scratch, these are the steps:

1. Create a new spreadsheet.
2. Name the columns A: “client name”, B: “client contact person”.
3. Title the following columns:
   • C: How much are they buying?
   • D: How fast do they pay?
   • E: How profitable is the work?
   • F: What is the potential of this account to grow?
   • G: How much do I/we like working with them?
4. Add another column (H) in which you calculate a sum or average. In the sample sheet below, I have weighted the columns. View the cell’s formula to see how. You can use my formula or come up with your own. You can also add more questions and customize this as you like.
5. The final column (I) is used to translate the numeric score in H to a letter. Just like the grading system in school. You can adjust the formula here to fit your needs.

Adding the Client Information

Now it’s time to add the data. Type the names of your clients in column A, and the name of the contact in B. For each client (row), answer the questions (columns C, D, E, F, and G) with a number. 0 for abysmal and 100 for excellent.

In the end, you should be looking at something similar to this:

You can now sort the sheet by column H to list the clients in order of rating. I suggest having a look at the formulas and tweak them as needed. You may also disagree with the questions I’ve chosen. Feel free to change them.

Either way, the sheet should give you enough of an overview to be able to tell which clients that are the most important and valuable.

Step 3: Perform a Business Review of Your Top Clients to See How You Can Build Client Loyalty

With the ranked client list in hand, it’s time to perform a business review of the most important clients.

The client business review is similar to the questions you’d answer when writing a business plan for your own company. That’s intentional. The point of the review is to understand how your clients’ companies operate and how you can create even more value for them. Being proactive, helping your clients “think” and formulate strategies all build client loyalty but require an understanding of their business.

To save time, I’ve created a spreadsheet you can copy. To copy it, you need a Google or Gmail account. You’ll find the spreadsheet here:

Client Business Review Sheet

Click “File – Make a copy…” to get your own copy to edit and work on.

This spreadsheet is similar to the previous one but its columns are different. We won’t be using a numbered rating. Instead, we will use this sheet as a way to compile the results of our research.

I’ve included a fictitious client to give you an idea of the kind of information that could go in the sheet. You may have some of the information already. In either case, I recommend starting with doing a web search for your client and see what pops up. That will tell you something about recent events and news affecting the client.

The first columns (A and B) are for the client and client representative names. You can use the other columns as follows:

C: What Need Does This Company Satisfy and for Whom?

These are the customers of your client whose needs your client addresses. Essentially, this is the reason your client exists. For an insurance company, it would be to help people make risks financially manageable so that a fire won’t ruin their lives. This is what you and your services help your client achieve or deliver.

D: How Does This Company Satisfy That Need?

Companies deliver their products and services by different means. Some find a niche by only using digital channels. Others invest in classic brick and mortar. Fill in what you know about how your client delivers its services.

E: How Does This Company Differentiate Itself?

What makes this company uniquely positioned or able to address the needs in column C? Entrepreneurs love talking about “unfair advantage.” All businesses have it, but not all of them have discovered it. If you know your clients’ unique and unfair advantage, you can help your client make use of it.

F: Which Are Their Competitors?

List names of competing businesses, a rough number of employees and turnover and what makes them unique. Do some research into their product lines to understand if they’re different and if so, how.

G: How Does This Company Make Money?

Where is your client’s revenue coming from? Subscriptions, products, services? What are their major costs? What is their average margin? This information helps when you’re pricing your services. Key financial numbers are public in many countries. Chances are you can find them in databases. How you find the information depends on your client’s country or state.

H: Where Does This Company Need to Go and How Do I Contribute?

Based on the above, make a recommendation. What avenues for growth and expansion do you see? Think about how the company would go about achieving it. Describe the role you could play in taking this client to the next level.

Step 3: Decide on Actions that Strengthen Client Loyalty

Finally, analyze all the information you have gathered. Write down your conclusions in the form of actions and put them in column I as bullet points. Each action point should be something concrete that you can do that results in higher client loyalty.

Such an action could be pitching a workshop to the client. It could also be creating a short 10 slide presentation about where their competition is going. You might realize you don’t know enough so you could also commit to learning about their specific market niche. The important thing is that it’s something you can plan to do.

How to Find Information About Businesses

Some of the information above may be hard to come by, especially key financial figures. As I noted, in some countries there are public registries and databases of business with financial numbers.

Quarterly and annual reports are also useful. Even companies that aren’t publicly traded sometimes provide these on their websites. If they’re not, chances are you can ask your client for it. You can explain and motivate your request by stating that you want to understand their business better. They’ll probably happily oblige.

If you have problems finding the information you need, post a comment and I’ll see if I can help.

Conclusion: To Build Client Loyalty, Think About Your Clients’ Business Situation on a Regular Basis and Take Action

Keeping your clients happy, and loyal to you, isn’t a black art. But it requires wanting to actively understand why they hire you to do what you do. The more you understand about the conditions their business operate under, the better decisions you can make. Your advice and recommendations will improve, and so will their trust in you, and by extensions their loyalty.

The method I’ve described here is just one way of doing it. It might not work for you and you may want to tweak it or use a CRM system. If so, do it. Just remember to consider the questions in this article on a regular basis. Constantly strive to learn more about your clients. It will help you do a better job and your future cash flow will look so much better.

Photo Credits

• rawpixel.com
• pixabay

The post Boost Client Loyalty With These 6 Simple Questions That Make You Hard to Replace appeared first on The Bondsai Blog.

You shouldn’t just qualify your prospective buyers’ ability to buy, but their cultural fit too. It will help you avoid much pain and frustration down the road. Consider these 15 questions when reviewing a prospective buyer for cultural fit.

When you’re new to the world of consulting and professional services, every client seems like a good client. Yet, all of us learn, at some point or another, that clients come in all forms. Not all of them are a good fit or have reasonable expectations.

In many cases, bad client relationships are due to different ideas and norms. These are part of your company’s culture and it doesn’t always jam with your client’s idea of “normal” and “obvious.” In recruiting, this is referred to as a cultural fit. It applies to agency-client relationships too.

Watch a Video Summary of This Article

Identify Cultural Fit Early to Save Your Energy for the Clients You Enjoy Working With

You may have heard that you should qualify buyers early to make sure they have the means, budget and power to buy. But that only takes you so far.

Of equal importance is determining the cultural fit of your prospective clients as soon as possible. That way, you can spend your time and energy where it counts: on the positive and appreciative clients who you can truly help. Clients that are a bad fit can be a drain, financially and morally. It’s best to phase them out as soon as possible.

Experienced agencies and freelancers know the telltale signs of a bad client. They have tailored their marketing and sales material to filter out the clients they’d rather not have. They then evaluate the leads that pass that filter for cultural fit as part of the lead and prospect review process.

You can review for cultural fit through interviewing or by talking to other companies that have worked with this client. Those at your agency who have interacted with the client then weigh in to arrive at a final verdict whether to go ahead or not.

If you’re a one-person shop (in other words a freelancer) you rarely have the time to put all leads through a carefully designed review process. You simply have to rely on your own personal judgment and intuition to tell the diamonds from the glass. Having a checklist can be a great help when determining cultural fit.

Below are 15 things you will want to look for when reviewing a prospective client for cultural fit.

Is This Buyer Willing to Invest Enough in the Services You Provide?

• What are their annual revenue and profit margin?
• How much do they spend on services like the ones you provide?
• Do they see the value your services can unlock and what benefits their investment can potentially bring?

It’s always better to invest your time in clients that see the value you provide and understand what it’s worth to them. Clients will smaller vision can be lifesavers when you absolutely need a temporary cash flow fix. There’s nothing wrong with that. But they are not the foundation you build a great freelancer and agency career on. Be conscious of where you spend your efforts and whom you invest in.

Is This Buyer Growing and Does It Plan on Growing?

• Does this company want to grow?
• If so, how will that growth affect their buying services from us?
• Do they have a strategic plan where you play a role?

Working with growing businesses can be exciting, especially if you develop a strong relationship and can grow with them and scale your services. In many cases, agencies and freelancers cannot keep up and growing clients eventually replace them.

Are Their Products or Services in High Demand?

You will want to work with a client that produces popular products and services and which has a strong standing. Not only does it feel great to be able to include them in your portfolio, but chances are also their needs are changing. Developing needs make your collaboration fun and exciting.

Does This Buyer Express a Genuine Desire to Improve?

It’s always more rewarding to work with a company that has a vision and drive. That will translate into how they interact with you too. They will spur you to do even better work by recognizing when you deliver something stellar.

Are the Payment Terms Acceptable and Does This Buyer Have a History of Paying Promptly and Within Reasonable Time?

Many large corporations insist on 60-90 days payment after delivery (known as “net 60” or “net 90”). This is unfair to small businesses as they essentially use you for cheap credit. I recommend you get this information as soon as possible to be fully aware of the financial consequence of working with this client.

There are businesses that have a less than stellar record of paying on time. This is another way larger corporations prey on smaller businesses. Research your prospect well. If you’re taking a chance on a company, discuss payment terms early and plan your cash flow to mitigate the impact of the payment arriving late.

Is This Buyer Haggling Before You Even Get to Talking About Results?

This is a classic red flag. Many buyers use negotiation as a power play and expect every rate they hear to be a starting bid. Don’t fall for it. If you want to be flexible when it comes to your rate, make sure you can negotiate on your terms.

If you do choose to negotiate, don’t give in unless they give something back. Reasons for a lower price are better payment terms or fewer design revisions. If you fail to do quid pro quo, your price will appear arbitrary and you will lose moral higher ground.

Is This a Buyer That Can Give You Future Referrals?

• Does this company give referrals?
• Have they done so?
• Will they?
• Is this a company you will want referrals from?

Given the importance of referrals for growing an agency or freelance business, it pays to think about this early. A client with a large network and strong standing can be a fantastic way to find more clients in the future.

Could Having This Company as a Client Be a Risk to You?

Certain businesses bring a reputation and you need to make a conscious decision about the potential risks involved and whether it will “rub off.” Not every agency wants to associate itself with adult entertainment, weapon manufacturers or controversial political organizations (to give some examples).

If you have problems coming up with a consistent rule when to say yes, you might want to develop agency-wide guidelines for deciding whom to work with. For me personally, democratic principles have always been where I draw the line. Our agency saw political parties as clients. That was never a problem for me as long as the organization in question was a solid democratic organization. That meant they believed in everyone’s equal worth, were strongly opposed to all forms of racism and never appealed to gaining influence through violence.

When and During What Time of the Year Are They Buying?

During the same time of the year as anyone else or will they buy when you usually have downtime?

Many agencies I’ve talked to find it difficult to balance their workload over the course of the year. In a typical “feast or famish” pattern, they see plenty of work followed by dry spells.

You can avoid this to some extent by planning the work with clients in advance. Instead of waiting for the client to call, work proactively with them to develop project plans. That discussion can happen as early as the lead and prospect phases.

It’s wise to handle this discussion early as you’ll be able to turn down a client gracefully should you lack the resources to serve them.

Does This Buyer Have Reasonable Expectations About What You Can Do for Them?

Not everyone understands what you do and what you can accomplish. Ensuring they do is your job. It is as much about providing a reality check as turning the conversation to be about results (value) instead of the means (technology and tools).

It’s important to establish these expectations early and be able to phase out leads that insist on maintaining unrealistic expectations.

Does This Buyer Appear Willing to Take Your Advice and Trust Your Judgment?

• Do they view you as a partner and advisor with important insights or are they seeing you as someone they need to direct and manage?
• Do you seem to need to always tell them exactly what you did and motivate every action?

This is especially frustrating if you’re a freelancer. The last thing you want is another client that acts like an incompetent employer. Focus the discussion on the intended results and pay attention to how the buyer listens to your ideas. Take note of what questions they ask. Be observant of whether they interrupt you frequently or do it in a disrespectful way. These can be signs of a difficult future collaboration.

Has This Buyer Been in Business Long Enough?

In business, track record matters. The longer a company has been around, the safer a bet it is. Well, most of the time anyway…

When you decide to work with a client, you always assume a risk. There will be a point when you have invested time and effort and expect them to pay. So just like the way you scrutinize the business plan of a company you plan on investing in, you should apply the same fine-toothed comb to your clients.

Is This Buyer Pleasant and Positive to Deal With?

• How do this client and their representatives make you feel?
• Happy, positive and excited?
• Do you like them for some unexplainable reasons?
• Do you dislike them but cannot articulate why?

Listen to your gut and heart. I’ve regretted it every time I’ve acted against my intuition.

Working with the wrong people isn’t just frustrating and annoying, it will also be costly. Time and energy are some of your most important assets. You’re losing valuable resources when you let a client drain you of your excitement and drive. Don’t give it away willingly.

Are They Competent Buyers or at Least Willing to Listen and Learn?

Just like the way many buyers don’t understand the full value of what you provide, quite a few of them don’t understand the details either. While it’s your job to help them understand, there’s not much you can do if they refuse to listen.

In your interactions with buyers, you’ll be able to tell pretty soon if they’re in category “A. Ignorant” or “B. Ignorant and proudly so .” Working with category B is usually more hassle than it’s worth.

Do They Understand That It’s a Team Effort?

Many things must click in order for a project to be brought to successful completion. Both the client and the agency must do their part. Yet, surprisingly often clients fail in their commitments to deliver materials or make critical decisions. These delays often derail projects and clients often blame the agency or the freelancer for it.

One way to check for this early is to ask about previous projects and agency interactions. Dig into situations in which things didn’t go according to plan. Is there a hint that they can see their own role in it?

Conclusion: Trusting Your Instincts Early Will Save You Much Pain Later

Evaluating client fit isn’t as much about questioning as listening and heeding the warning signs early. There are no perfect questions to ask that will reveal your buyers’ dirty laundry. Instead, you must focus as much on what they say as what they don’t say. Read between the lines and use your own experience and judgment to make a call. Trust your gut.

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• freestocks.org from Pexels

The post Cultural Fit: 15 Questions to Ask Every New Prospect appeared first on The Bondsai Blog.

LinkedIn isn’t Instagram – it doesn’t reward flamboyancy. Instead, it encourages its users to build relationships and helping each other. I talked to Frida Smedberg, a marketing advisor, about concrete ways for freelancers to generate engagement and find clients on LinkedIn.

I open up our conversation by asking how Frida came to like LinkedIn so much. She tells me it began two years ago as she embarked on her freelance journey. Frida had decided to quit her 9-to-5 job and intended to start an export business. For that, she needed to build an e-commerce store. She realized rather quickly that such a store needed marketing.

The export idea didn’t really take off but Frida had discovered that she loved doing digital marketing: “I realized the fun involved in marketing, and writing text and copy, and creating strategies for social media. I decided to continue with that and helping small business owners with that.”

It was after this business idea pivot that Frida discovered LinkedIn. Like many others, she’d used it in the past passively. It served as a repository for her digital CV and résumé. Its potential as a marketing tool hadn’t been obvious to her until then.

The more she learned about the platform, the more she liked what she saw. Now she advises small businesses in social media marketing on LinkedIn and other social networks.

This Article at a Glance

• 6 ways in which LinkedIn differs from other social networks.
• 2 common mistakes freelancers make on LinkedIn.
• 7 ideas on ways freelancers and small business owners can make the most of their LinkedIn account.
• 6 actions you can take right now to improve your LinkedIn presence.

6 Ways in Which LinkedIn Differs From Other Social Networks

To the uninitiated, most social platforms seem rather alike. They have similar features such as comments and likes and encourage repeat use. LinkedIn can easily appear to be yet another social network to waste time on. I ask Frida what, according to her, makes LinkedIn unique and why she likes it so much.

It’s Your Personal Landing Page

One of the reasons that LinkedIn is so important for your personal brand is that your LinkedIn profile will rank highly when someone does a web search for your name. It might even rank higher than your personal website, Frida says.

It’s Relatively Easy to Connect With Others

Another aspect that not many realize at first is that it’s easy to connect with people through LinkedIn: “It was easy to start a discussion by posting content and creating engagement and network with new people. People were, and still are, open to network on LinkedIn… I liked the whole social atmosphere and culture.”

Its Users are High-Income Earners

Frida quotes a study that says that LinkedIn users earn more on average than users on other social networks. This makes LinkedIn extra interesting to freelancers hoping to get the attention of prospects who are less price-sensitive.

I do some more research after our interview and dig up a 2018 Pew Internet Research Study that states:

“LinkedIn remains especially popular among college graduates and those in high-income households. Some 50% of Americans with a college degree use LinkedIn, compared with just 9% of those with a high school diploma or less.”

High earners and highly educated. That’s a pretty nice market for your high-value consulting services.

You Can Network Without Pants

For Frida, LinkedIn was perfect during a phase in her career when she wanted to network but wasn’t able to attend events several times per week. It was a way for her to create conversations with lots of people. These online exchanges could result in having coffee or lunch.

She says that using LinkedIn to network that way is generally accepted. There’s no creepiness to worry about, such as on Facebook where people sometimes view friending strangers as weird. The general understanding is that people are on LinkedIn for professional reasons. As a result, they take each other more seriously.

It Encourages Conversations, Not Just Pushing Your Message

Frida says that compared with other social networks, interactions on LinkedIn consist of thoughtful feedback. Instagram, for example, is more like a broadcast platform. Engagements happen in the form of likes and the platform rewards such non-personal interaction.

Well-Written Posts Get as Much Attention as Fancy Graphics

LinkedIn isn’t as visual as some platforms, Frida says. As a result, text content performs relatively well and content tends to flows in the order it was created: “People’s posts appeared pretty much in chronological order which makes it easy to interact with your contacts. The need for the content to stand out visually isn’t as important as on Instagram or Facebook. A simple text could get a good reach as long as it was engaging and relevant for your network.”

2 Common Mistakes that Freelancers and Small Businesses Make on LinkedIn

It’s clear that treating LinkedIn like “Facebook for work” isn’t a viable strategy. This platform does indeed have some peculiarities that make it interesting.

I ask Frida what mistakes freelancers generally make when it comes to using LinkedIn for prospecting.

They Underestimate the Potential of the Platform

Many freelancers underestimate the possibilities of the platform, Frida says: “Many business owners I know dismiss LinkedIn because ‘it’s so damn boring!’.” She says it’s understandable: “It’s not an aesthetic and pretty platform… it’s not Instagram, it’s not visually appealing.”

They Assume All Content Needs to Be Boring Corporate

Since LinkedIn has such a corporate image in the minds of many, that affects how they use it: “So when they write something, they’re scared to make a mistake and ruin their career… they put on a corporate straightjacket which results in people not using their account. They just leave it there.”

7 Ideas on How to Put LinkedIn to Use as a Freelancer or Small Business Owner

Having covered the don’ts, I ask Frida about the dos.

View Your LinkedIn Profile As Your Personal Landing Page With a Clear Conversion Goal

“When writing your LinkedIn profile, you need to think like when you’re designing your website, but in a much shorter format,” she says.

For busy bees, Frida advises: “If you’re short on time, make sure at least your profile is up-to-date. It should briefly explain who you are, what you’re offering, for whom, what you can do or how you solve problems. That’s all you need.” Frida emphasizes that it’s important that it’s clear how to contact you, for example, phone number, email or website.

Frida says it can be a good idea to offer a freebie of sorts. It can be free content that you offer those who read your LinkedIn profile. “View it as a sales funnel,” she says: “Include a call-to-action to contact you.”

Reach Out to People You Don’t Already Know, Just Don’t Spam

“It’s OK to reach out to people without a prior introduction. The platform is built for networking. It is also the only platform where many users are business owners and CEOs whom you can reach with a click,” Frida says.

However…

“Never start a conversation with a sales pitch. It’s about building relationships, first and foremost,” Frida explains.

Networking on LinkedIn can be as simple as starting with “hello my name is…”, Frida says. In that way, it’s like attending any networking event. But unlike mingle events, LinkedIn lets you view the person’s profile. This helps you find things you have in common.

Frida says a way to start a conversation is to write something along the lines of: “I can see you’ve worked with this, I’ve done similar things.” or “I’m also deeply interested in this topic/interest/hobby.” Even having lived in the same town can be something to bond around.

Your networking attempts will be successful if you remember why you’re there and act accordingly. So when you send a contact request, always include a message. Express and interest and a desire to help. Frida advises to view LinkedIn networking more like in-real-life networking and less like the anonymous following people do on Instagram.

Focus on Selecting and Knowing Your Contacts, Don’t Hoard Them

The one with most contacts isn’t the winner,” Frida says. She continues: ”More contacts aren’t better.”

Instead, Frida recommends understanding who’s in your network and carefully curating it. ”Start by thinking about what you want to get out of your time on LinkedIn.”

If you are a freelancer, that could be more sales, building your personal brand and connecting with key people in your industry or field. Unlike Facebook, you don’t have to accept your grandpa’s old classmate, neighbor or former boss’s contact requests, unless they are part of your target group.

“Don’t be afraid to trim your network and keep it to the point. Find out why your target group is on LinkedIn and what they’re hoping to accomplish. If you are consistent with this, the more engagement you will see when you post content. That makes it more fun and rewarding to use LinkedIn,” she says.

To Get Engagement, Read and Interact with Other People’s Content on a Regular Basis

At the core, LinkedIn is a social network. As such, it rewards users that regularly log on and spend a few minutes. It will also reward users that interact with others’ content, such as liking and commenting.

Always Be to the Point and Helpful

When posting on LinkedIn, “Be to the point, don’t pour yourself out,” Frida advises.

Being a little bit personal is fine, it’s better than being stiff. The difference with platforms such as Facebook and Instagram though, is that oversharing information about your personal life, unless it is relevant to your target audience, isn’t necessary.

Focus on giving concrete actionable advice within your area of expertise, especially in a way that is useful to your target audience.

Whenever You Can, Tell It Like a Story

“Storytelling always works,” Frida adds. “Whenever you’re telling something, tell it like a story. Create suspense. Make it a bit more personal.” You can wrap up what you want to say in a story. If you want to mention an award you’ve received, and which you’re proud of, you can tell it like a story. That will create more interest than just announcing it as a fact, Frida suggests.

Don’t Expect a Quick Return on Engagement

“You can never think of LinkedIn as a quick fix. It won’t bring you a quick buck nor any fast leads. It’s about long-term relationship-building,” Frida says. Instead of viewing it as a sales channel, Frida advises freelancers to see it as a way to build authority in specific topics over a year, which in turn leads to relationships and sales.

Frida’s Top Tips: 6 Things You Can Do Today to Improve Your LinkedIn Profile

If this article has spurred you to get your LinkedIn act together, here are 6 things you can do right now.

1. Inventory Your LinkedIn Presence

• First of all, are you on LinkedIn?
  • If yes, why are you there?
  • If no, do you need or want to be on LinkedIn?
• What do you intend to accomplish with your LinkedIn presence?

Frida says that LinkedIn is more focused on people and businesses selling services than on those selling physical goods.

2. Define Your Target Audience

• Who’s in your target audience?
• Is your target audience present on LinkedIn? (no point in spending time on LinkedIn if your market isn’t there)

3. Optimize Your Profile

• Design your profile as a landing page for your target audience.
• The idea is, if you do things right on LinkedIn, people will view your profile.
• When they view it, then you will want your profile to send the right message.
• Who are you?
• What can you do?
• Who are you helping?
• How do you help them?
• Always include a call-to-action.

4. Determine What Content You Need to Post to Engage With Your Audience

• What kind of content do you need to send to this audience?
• What will they engage with?
• Which topics interest them?
• What media will work, text, video or photos? (LinkedIn promotes video heavily. Just remember to subtitle it!)
• How can you help them?
• Can you provide information and training?
• What is their language and how do you write to them in a voice they’ll relate to?

5. Create a Daily LinkedIn Checklist

• Set aside time every day to check your Linkedin feed, 5-10 minutes.
• Write comments.
• Like posts.
• Respond to contact requests.

6. Start a Group On a Topic You Know a Lot About

• Create groups around topics you know.
• Use your group to share and post content on topics you know.
• Organize webinars to inform, entertain and educate.

About Frida Smedberg

Frida is a freelance marketing consultant who works with organizations globally to help them make a bigger impact online. Read more about Frida on LinkedIn or visit her website.

Photo Credits

• Aneta Wolf
• Tracy Le Blanc from Pexels
• Tim Gouw from Pexels
• rawpixel.com from Pexels
• Natalie B from Pexels

The post How to Get Engagement on LinkedIn as a Freelancer: Be Genuinely Helpful appeared first on The Bondsai Blog.

Many are eager to switch to value-based pricing but have no idea where to begin. This is a 3-step guide on how to gradually implement value-based pricing in your agency or freelance business.

This isn’t our first article on value-based pricing, nor our last. We’ve previously published a comprehensive guide to value-based pricing. If you want to get more details about the how of value-based pricing, and not its implementation, I recommend you read it first (as well as our huge FAQ). That article has many concrete tips and ideas on how to gain insight into client needs. But I think it falls short on explaining how to implement value-based pricing in an existing business. That’s why I decided to write this.

Gradually Implementing Value-Based Pricing in an Agency or Freelance Business

The best way to make a big change is in small steps. A well-known truth in agile software development is how small changes can, if happening over and over (iteratively), make huge a difference. Just like the way a river wears down a ridge over the millennia forming a canyon, small changes to how you operate your business will have an impact. Needless to say, it happens much faster than endless water molecules and sand grinding against rock. This is thanks to effects that are compounding and reinforcing each other.

Step 1: Don’t Fix What Ain’t Broken, Start Using Value-Based Pricing on a Small Scale

First of all, you are where you are for a reason. Much of what you do is clearly right so there’s no need to throw out the baby with the bathwater, so to speak. Stick with what you do for now and bring change to well-chosen part of your business.

Introduce Value-Based Pricing to One Warm Lead

I recommend trying value-based pricing with one new potential buyer who has, on their own accord, chosen to approach you. Buyers who take the initiative have realized what you can do for them and are acting on that conviction. They are very warm leads will likely trust your judgment and be happy to do whatever you propose.

When pricing based on value, it’s important to understand the buyer’s sense of value. In other words, how much they’re willing to pay. The easiest way to understand how much a buyer is willing to pay is through conversations. These conversations take place during the “diagnostic” stage of the sales process. To reinforce the client’s sense of value, it’s important to act consultative and ask questions, rather than making statements.

Reducing Information Asymmetry Through Conversations

These conversations simplify value-based pricing by reducing what economists refer to as “asymmetrical information:”

“Customers will try to conceal from you how much they value your services and what they are willing to pay for them. This is especially true of professional buyers, such as procurement. Economists refer to asymmetrical information as information concerning a transaction that is unequally shared between the parties to the transaction.” – Ron Baker in Implementing Value-Pricing

While many buyers will not tell you outright how much they value your services, there are other ways to glean this information. Arriving at a number requires a bit of detective work. Here are some questions you can ask that help reduce asymmetrical information:

• What do you expect from us?
• What is your business model? How do you make a profit?
• How will the services we provide add value to your customers?
• Which of our offerings is of the highest value to you?
• Who is the next best alternative (competitor) to us/me?
• What characteristics do they have that we do not, and vice versa?
• What keeps you awake at night?
• How do you see us helping you address these challenges and opportunities?
• If price were not an issue, what role would you want us to play in your business?
• What will the success of this project look like?
• What is your budget for this type of service?

I recommend picking up Implementing Value-Pricing for the full list of questions and lots of other great ideas regarding value-based pricing.

Steps to On-Board Clients in a Value-Based Manner

By now you should have a pretty good idea of the kind of value you’re providing this buyer. Now you need to act the part and reinforce the sense of value through your actions:

Expediency and Helpfulness

Redouble your efforts when it comes to expediency, professionalism, and helpfulness throughout the buyer’s experience (the buying journey).

Frame Your Offering

As soon as you have qualified them and ensure they’re a good fit, budget, and vision-wise, work to establish a sense of value. This shapes the mental frame that the client will use to compare your offering and price. It’s important that you position yourself here so the client makes the right comparisons. The wrong position will result in the client viewing your offering as unrealistic.

Identify the Pain Points

Strive to understand the pain points you address with your offering. This will give you clues as to what value you’re providing.

Use Tiers and Options

Price your services in tiers with options based on what you’ve learned about the buyer’s needs.

Deliver a Fantastic Proposal

Deliver a stunning proposal that reinforces the sense of value and follow up.

With some luck, the client is a good fit for value-based pricing and you succeed in convincing them about the potential value of what you can accomplish together.

By applying what you’ve learned, you can use your version of this method for all new clients you bring in. All new business you generate will use value-based pricing.

Congratulations, you’ve (probably) doubled your future profits!

Step 2: Review Your Client Portfolio and Decide Who Is Worth Keeping

Once the value-based on-boarding flow is in place and you feel confident presenting your services this way, it’s time to have a look at the existing client list. This part of the process is frequently the most challenging and often calls for some hard decisions.

Sometimes It Feels Like Losing a Battle But Winning a War

You acquired your existing clients back when you were doing cost-plus pricing. They’re used to the way you’ve been working with you and many of them probably like it. Your decision to switch to value-based pricing could mean some serious, but necessary, boat-rocking. Chances are some clients will not still be with you when it’s all over.

But that’s a good thing.

Not all clients are easily convinced of the benefits of working this way. Either because they find it hard to accept the idea or because you do not communicate well with them. As a general rule, it’s smart to work with people who we gel with. Switching to value-based pricing could be a much-needed spring cleaning for your business.

This assumes you have enough clients to handle a potential shortfall. In some cases, it’s wise to wait a bit before you roll out value-based pricing to all existing clients. Make sure you are certain your business can survive the results of many clients deciding to stop working with you.

Make “Lovability” a Requirement for Client Retention

To prepare for that outcome, I recommend taking inventory of all your clients. Wise agencies grade their clients on a regular basis. The traditional way of doing this is by classifying clients into A, B, and C tiers. The factors that go into such a classification are usually annual revenue for the client, prompt payment history and profitability. I think there’s a better way.

Instead, I recommend considering softer factors. Specifically, how do you and your team feel working with this client? Do you love it, enjoy or tolerate it? Or do you even hate it?

As Ron Baker states in his book, “bad customers drive out good ones.”

It’s when we do what we love that we achieve wonders. Working value-based is all about making fantastic work together and sharing in the results.

If you’re a one-person operation, ranking clients on “lovability” is easy. If you’re more than one, create an anonymous Google Form and send out to your team. Tabulate the results and compile a client list with a lovability column. Combine this information with other factors such as the client’s importance to your firm, their size/budget, growth potential and your estimation of their willingness to pay for value to create a master client list.

You can probably, even now, determine which clients will stick with you and which won’t. To reduce the impact on your revenue, phase out clients over time. By introducing the change in such a staggered manner, switching to value-based pricing won’t be a shock.

Bring the Change in Small Steps, One Client and Project at a Time

For the clients you judge being receptive to value-based pricing, approach them as they order new work and introduce your new tier-, options- and value-based pricing. Explain that hourly billing is no more and that all work will have a fixed price instead.

Consider the impact on your clients when you decide what information to share. Every client may not have to be aware of this change immediately. But different companies operate with different principles. Your company might prefer absolute transparency in everything you do. If so, share the information with everyone at the same time. Just make sure you predict most questions your actions give rise to. In addition, reach out to each client to ensure they understand what it means for them. Not doing that can have some rather adverse consequences. Something recent events reminded me of.

Some weeks ago, a consultancy I’ve worked with informed me about a price change. They didn’t reach out to me in person, instead, they sent a digital contract with a letter attached. They expected me to just accept the change and sign, even though it meant a 600% increase in fees. The letter was brief and raised more questions than it offered answers. I wrote back to them and complained, disappointed by how this negatively affected me. But I was also annoyed by the manner in which they’d informed me of the change. The owner called me back the next day with an apology and an explanation.

Make sure you don’t have to do a mea culpa as a result of your price change.

Respond to Client Concerns in a Calm and Constructive Manner

Use the spreadsheet classification you made earlier to try to predict which of your clients that will object. For each of these clients, plan your action: keep them on under existing terms, work to convince them or try to phase them out. In these conversations, strive to be calm and strategic. Try to respond, rather than react to what they’re saying.

Emotions can run high when it comes to pricing. We often associate price to our sense of worth. As a consequence, we tend to take price personally. Such a reaction is not constructive and often misguided. A client that’s hesitant to pay you more doesn’t necessarily undervalue you, but rather cannot see the cost of problem you are solving. That is a problem of communication which you can help address and solve.

“He who has learned to disagree without being disagreeable has discovered the most valuable secret of negotiation.” – Quote in Never Split the Difference by Chris Voss

Being cool and composed in the face of criticism builds trust. If your client and you cannot find a solution and decide part ways, they will remember you for your professionalism. Chances are they will speak well of you even though you disagreed.

The Risks of Retaining “Troublesome” Clients

It might seem strategically smart to keep on a client no one likes due to the revenue generated. But be aware that all such clients create a debt in the form of low morale in the team.

Another factor to consider is that the work they order may be plentiful but it’s probably not extremely valuable. Clearing out work you hate to do will make space for the kind of highly valuable work that you love doing. That will raise revenue and morale.

Step 3: Review Your Pricing Policy and Model on a Regular Basis

You’ve probably raised your prices before by adjusting your “standard hourly rate.” With value-based pricing, there are no “standard rates.” Instead, you price the client.

As your clients grow and change, their needs will too. Your capabilities and brand value will also grow, making clients willing to pay more. You need to take this into account when you set prices.

While your value-based pricing isn’t based on a standard rate, nothing stops you from developing a pricing model you use within your business. It can weigh-in many factors. It’s only natural that client profitability and revenue influence your pricing. If you like being mathematical about it, you can create a standard spreadsheet for your company and then adapt it to each client by changing the weight of each factor.

Make it a habit to review and update this model by appointing someone responsible for it. If you’re an agency, I recommend taking Ron Baker’s advice and creating a value-pricing council. This group updates pricing models and sets prices for clients. By taking pricing out of the hands of account managers and salespeople, you avoid unnecessary discounting and can maintain a consistent way of pricing your services.

Conclusion

Taking the leap to value-based pricing isn’t as hard as you might think but it does require determination and a plan. You need to be firm in your conviction of the merits of value-based pricing and not back down when clients are pressuring you.

The best way to ensure a successful transition is to be prepared. Work to improve your understanding of your clients’ willingness to pay and the problems you solve for them. List all the questions they will likely have and write down answers. Respond to their concerns with empathy.

Take the lead. Convince your client there’s a clear path forward and that it will benefit you and them.

Photo Credits

• Photo by Matthew Henry on Burst
• Paul IJsendoorn
• Mikito Tateisi on Unsplash
• rawpixel.com from Pexels
• Matthew Henry on Burst
• Sarah Pflug on Burst
• michael ledford on Reshot

The post How to Smoothly Bring Value-Based Pricing to Your Agency appeared first on The Bondsai Blog.

Your proposal matters and weighs heavy in your client’s eyes when you’re bidding for work. I talked to Harji Singh, owner of New York-based agency Azai Studios about their process of creating tantalizingly beautiful agency proposals that wow buyers and win work.

Singh is walking down a street when I reach him over a video call to his smartphone. I get a glimpse of a blue sky and tall New York skyscrapers behind him before we switch to audio. In the gap between two meetings, he tells the story of how he came to be an agency founder and what he’s learned in those years about crafting the kind of agency proposals that wow buyers.

From Real-Estate to Creative Services

Singh’s agency, Azai Studios, describes itself as “An independent creative agency with footprints in New York, Dubai, and Riga. We are curiosity-led, goal-focused and inspired by our desire to tell stories and create brands for a wide range of businesses that matter. We do this by solving problems through strategy, design, technology, and content production.”

Being an agency owner wasn’t Singh’s first career choice: “My background is actually in real estate finance which is totally on the other side of the spectrum of you know, actual creative work and stuff like that.” He got into the agency business through a vendor he worked with. The vendor saw the potential in working with someone with Singh’s skills and contacts.

Two days later, Singh was working for that agency. It was a small shop of about 10 people which meant everyone had to be something of a generalist. Singh eventually managed all the real estate clients for the real estate arm of the agency.

After a year or so, he got tired of only dealing with real estate clients. Singh wanted to work with clients in other verticals such as fashion, automotive, and technology. He also had ideas for how the agency could improve their work. He figured he might as well start his own agency. After all, he did have the network. He founded Azai Studios soon after. That was four years ago.

“The Cool Department”

When I ask about what makes them unique, Singh describes his studio as “the cool department.” Clients love hanging out with them, even after work. Being a small shop helps. Especially when working with larger companies, thanks to the contrast between their studio office and corporate work landscapes.

Singh says their motto is to give 110% and that means they have to be selective about whom they work with. For that to be possible, they only work with companies and brands they care about.

1. Always Pre-Qualify to Vouch the Buyer’s Willingness to Pay

Fantastic agency proposals take time to create. Singh and his team are careful to spend it on the right buyers: “Before we even do any proposals we vouch them [the buyer] on the phone to see if they’re meeting our minimum engagement [fee].”

“We vouch that they could afford us before we even send in the proposal… We’ll suggest ‘hey our minimum engagements are so-and-so, if that’s something you guys can meet in terms of financial requirements we’d be happy to send your proposal right there’ … so it’s not like a surprise to them so to speak.”

“I think pre-qualifying the actual client is the most important step along the entire way because what we’ve noticed you could charge $5,000 or you can charge $500,000 for the same type of work. At the end of the day it’s the same process and same work.”

2. Use Value-Based Pricing and Price the Client

With hourly pricing, whether to charge 5,000 or half a million wouldn’t be an issue. Those projects would be entirely different since the second project would involve 100 times more time. But Azai Studios uses value-based pricing with a fixed price for the entire process. That means pricing the client, not the time spent.

I ask if they have tried tiered pricing, and they haven’t. Instead they give one price but break it down into a series of deliverables and activities.

Singh likens it to a restaurant menu that gives just enough away:“After we have sent into them we always have a follow up call because they always have questions: ‘what exactly is the strategy workshop you guys do?’”

The idea is to give a high level overview so the buyer will have questions about the specifics giving the agency another opportunity to sell.

3. “If It Doesn’t Look Amazing Clients Automatically Think ‘Hey These Guys Aren’t for Us’”

“I learned that perception is so big when it comes to proposals… the sad part is these people [other agencies] are sending such boring dry proposals that look liked copy and pasted templates and it’s just unattractive,” Singh says.

“You have 5 seconds to grab their attention with a proposal and if it’s not attractive-looking and if it doesn’t look amazing then they’re like ‘Hmm! These guys aren’t for us’… you have to make your proposal seen as if it is phenomenal!”

4. Individualize the Agency Proposal Experience for Each Client

To win the client in those 5 seconds, Singh and his team customize each and every agency proposal. They go so far as to create a beautiful dashboard for the client where they can log in to view it.

“It’s a password-protected screen and it has a background video.” The video is specific to the client’s industry: “If it’s like a fashion client we’ll have like photo shoots in the background or if it’s a real estate plan we will have development in the background.”

5. Avoid Templates at All Costs

Singh explains that the idea is to sell the client on the idea from the very beginning. After this initial wow, with industry-specific details, the client can view the proposal itself. Singh explains that they work hard to keep each proposal unique and not basing it off a generic template.

6. Use Only Industry-Specific Reference Cases

They cherry-pick the reference cases listed to keep them industry-specific: “I’ve seen in the past where some agencies are dumping everything that they’ve done in one deck, it becomes cumbersome, and at the end of the day the client doesn’t really care because it has nothing to do with them right now.”

7. If You Don’t Have Enough Reference Cases You Can Always Invent Them

In the beginning they didn’t have much work to show: “We’ve even gone to those extents where we actually create a whole new brand just to put it in our proposal to show that this is what we could do for this type of industry.”

The solution was simple: “Let’s brainstorm and come up with a brand and put it in our deck and show this is what we could do. And if they ever ask if that’s a brand we can all say ‘it was a brand for our internal use, we were thinking of starting a company a fashion line!’”

8. Make It Concrete by Showing Real Examples (With the Client’s Permission of Course)

Singh says they sometimes show buyers things they are working on, assuming the client in question agrees. That makes the information in the proposal more concrete and prices seem better motivated: “They’re spending a lot of money with you. So you have to really help them understand why they’re spending that.”

9. Put the Price at the Very Top

“When someone’s getting a proposal they’re really only interested in how much you guys are going to cost and what the timeline is,” Singh says and argues that it makes no sense to put it at the very end.

I was surprised to hear this as in sales we always recommend sellers to establish a sense of value before you tell the price. Singh had an alternative take on it: “If they see the price it’s already registered in their head: ‘Ok. These guys cost this much.’ Then they’re just interested to look at the rest of the work. They start going through everything they’ll see and it they’ll see a deal.”

The idea is that buyers aren’t ignorant about why the price and the timelines are at the end of agency proposals. They’ll scroll there anyway if they want and most of them just do. Singh argues it’s better to be upfront about the price and then justify it. But it only works if you vet the client in advance and make sure they’re in the right ballpark when it comes to the expected price.

10. “We Do Everything in Keynote”

Since they’re a web design shop (among other things) I ask if they have built their own tool for this based off a framework like Bootstrap or Foundation. They haven’t.

“We keep it old school. We’ll do it either in [Apple] Keynote, [Adobe] InDesign or Illustrator and export as images. We post those images as a slideshow like a vertical gallery that you can scroll through on the web site.”

Addendum (2020-01-22): Since I wrote this article, Azai Studios has changed the way they produce proposals. Harji explained in an email to me:

10. “We Do Everything on Our Own Backend CMS, and Send a Link With a Full Digital Proposal”

“We create beautiful, custom website proposals for our clients. On there, they will see it completely tailored to their company and scope requirements. We have interactive deliverables, where clients can click through and see the full process for each, animations, and auto-playing video content. We also have interactive timelines so they can see how long things take, when they start, and when they’re delivered. The web-proposal is fully responsive so our buyers can access it from anywhere. We also track these pages so we internally can see when they open it, and how they go through it. This data gives us some solid feedback that allows us to keep improving our proposals.”

11. Crafting an Agency Proposal Takes a Day and a Half on Average

“On average I would say we spend about a day and a half on proposals. This is where our team will dig deep to see what the client is all about, We come up with what we want to say in the proposal and we come up with what we want to do for them.”

Sometimes they put in more effort and even pitch new brand concepts: “You want to wow these people off the first get-go. And it’s all about perception when it comes to these proposals. If you can wow them within the first 5 minutes they’re going to be like ‘Oh, OK we’ll consider working with these guys!’”.

12. Send It as a Link So You Can Quickly Fix Any Errors You Discover

Singh tells that one of their most embarrassing agency proposal errors was arithmetic. The numbers in a proposal they’d sent just didn’t add up. Back then, they sent their proposals as PDFs. Once they’d sent the email there was nothing they could do.

These days their agency proposals are links which means they can fix errors: “We are sending this via a link – it’s a digital proposal. So that if there ever is a screw up and we catch it we can quickly fix it.”

He adds: “Always spellcheck and grammar check.”

Conclusion: Pre-Qualify, Wow, and Reinforce

If I were to summarize Harji Singh’s insights, it’d be to pre-qualify the buyer, then wow them and reinforce it by doing consistently great work.

Another way of looking at it is numbers: If given the choice, it’s better to do a few fantastic agency proposals rather than sending out tons of mediocre template-based ones.

Singh left me with some final pieces of advice when it comes to communicating with buyers:

• “When you’re drafting your e-mails and responding to clients your verbiage should be in a way that you’re an industry thought leader. Clients can tell when there’s a newbie emailing them.
• “Your tone in your emails sets the ground for the personality of the company. Never use negative words, always be positive.”
• “Always follow up and stay on top of it.”

Many thanks to Harji Singh who took time out of a busy day to share these valuable insights with us and you, our readers.

About Harji Singh and Azai Studios

Harji Singh’s agency is called Azai Studios. He describes the agency’s value proposition as “We are curiosity-led, goal-focused and inspired by our desire to tell stories and create brands for a wide range of businesses that matter. We do this by solving problems through strategy, design, technology, and content production.”

Check out their website to learn more about them and the services they offer.

Photo Credits

All photos courtesy of Harji Singh and Azai Studios.

The post 12 Things You Can Do to Improve Your Agency Proposals appeared first on The Bondsai Blog.

The second part in our series on the unexpected upside of downtime. Having less to do can create space for the significant ideas that shy away when we’re just too busy. Here are some techniques for bringing out those ideas and giving them the attention they deserve.

You can find the first part in this series on the surprising uses of downtime here:

4 Ideas on How to Put Your Downtime to Smart Use

1. Strengthen Client Relationships: Reach Out to Existing Clients to See If You Can Help Them in Any Way

Downtime is often part of the regular ebb and flow of agency and freelance life; a dry spell that will pass. But sometimes it’s a symptom of a serious issue with no clear end in sight. In such a case you have to act.

One of the best ways to bridge undesired gaps in work load is to reach out to existing clients and see what ideas you can come up with together. Perhaps you have some long dormant ideas for them that you never really had time for in the past.

Great client relationships are about forming ideas together and the ability to act on those ideas. As a consultant-client team, you have the ability to do both.

Reaching out doesn’t take much. Having lunch, or as we wrote about earlier “taking a fika” (as we say in Sweden for having coffee), can be surprisingly effective. The worst that could happen is a strengthened client relationship.

Collect and Value Client Insights During Your Downtime

Make a habit to keep a list of your clients, how much they spend and what they tell you about their goals and plans. Value these insights. It’s your crystal ball and window into the future. Keep your list of clients and what they’ve shared up-to-date. Create a habit of contacting your clients regularly. Don’t wait until you’ve fallen on bad times.

2. Create More Future Clients: Write Blog Posts for the Next Month or Two

If you’re following this blog you might recall that we published a three-part series on blogging for agencies and freelancers. One of the key points was the importance of blogging regularly: Consistency beats quality when it comes to blogging.

That doesn’t mean that you have to write like a clock. Only that you publish on a regular basis.

Many professional bloggers see their motivation and creativity come and go. One way they handle it is by leveraging their writing highs by creating repositories of content. You can do the same.

A couple of slow days provide a perfect opportunity to let the ideas come to you. You know the truly inspirational ones that tap you on the shoulder while you’re taking your shower at 7 AM, and despite your efforts to recall them fade away like last night’s dreams.

Get away from your usually writing spot and bring a notebook. Write down whatever comes to mind. Using your new ideas, look at your existing file of ideas or list of blog topics and combine them to develop outlines for brand new content. If you don’t feel like writing, try repurposing an old post as an infographic. You can then queue the content you want to publish over the coming weeks.

3. Business Development and Strategy: Workshop With Your Team About the Future

Every agency calls itself “strategic” today. Similarly, many freelancers are a “strategists” in this or that. With all this strategic thinking floating around, you might think agencies and freelancers would be more strategic about their own business. In my experience, they aren’t.

Just like the forgotten blogs and down-prioritized websites of agencies and freelancers, strategic planning is often skipped in favor of client work. A period of downtime can be an excellent opportunity to do some strategic planning together. It’s also an opportunity to get a “brain dump” from every member of the team. You aren’t the only one who suppress ideas due to lack of time.

For this to be a meaningful event, set time aside and prepare the kind of workshop you usually offer your clients. Book a place outside the office to stimulate new thinking. Prepare it and plan it well it to make sure you put the time to best use. Even without client work, there’s always an alternative cost for the time used.

Set the Mood and Expectations Using Energizers

To create the right mood, you can use an energizer activity. I’ve successfully used exercises such as Hello Kitty and Remember Mexico when priming teams for collaborative workshops.

Here are some suggestions for other exercises and tools to use:

Develop Your Own Offer Using Customer Journey Mapping

In groups, draw the customer journeys for recent projects. Involve the entire team when reviewing these and trace the steps this client went through. Mark pain points and areas of improvement. This will likely result in many useful ideas for things you can get better at.

Identify Things to Improve Using Speedboat or Sailboat

Do a speedboat or sailboat exercise to identify what works well and what could work better. This is a fantastic way to get a list of improvements your agency could make to work even better as a company, and as a team.

Imagine the Future and the Way There By Creating a Cover Story

To imagine the future, try doing a cover story exercise. This is a way to collectively imagine a future for your company and team and builds excitement for where you’re going together.

4. Personal Growth: Invest in Learning and Self-Improvement

In our modern society, and especially in the world of entrepreneurs and the self-made, productivity is holy. The naive idea seems to be that productivity means to always be working on something. But if we look back, we realize that some of the greatest leaps in human history didn’t arrive through “busyness” but through reflection and introspection.

To come to meaningful insight, it’s important to let the mind wind down now and then. As for me, I reach this state by being out in nature. When hiking or on the ski slopes, my mind can think freely. It’s just me and the trail, or the slope. Diving is an even more meditative activity due to the importance of controlled breathing for optimal buoyancy.

You don’t have to jump into a wetsuit to get in the “zone.” Simply taking a walk in the park or visiting a museum can put you in a different frame of mind. Just make sure you allow yourself this psychological space. Don’t let guilt or any idea of “wasting time” interfere with your introspective reflection. This is your time and you’re putting it to damn good use!

“Time you enjoy wasting is not wasted time.” – Bertrand Russell

Who knows, perhaps your stroll will lead to an insight that will revolutionize how you work and market your services. Time well spent indeed!

Photo Credits

• Frans Van Heerden
• Matan Segev
• Frans Van Heerden
• Una Laurencic
• Pixabay

The post 4 More Ideas on How to Put Your Slow Downtime to Smart Use appeared first on The Bondsai Blog.

Downtime happens to everyone. Here are some ideas on how you can make smart use of these handy, but often unwelcome, hours.

Having downtime can be frustrating but it can sometimes also be a blessing in disguise. There are plenty of things that are perfect to do when you don’t have to focus on clients but can pay attention to your business and yourself.

1. Document Your Workflows: Is There Something You Do More Than Once? Write It Down

Whether you’re a freelancer or working for an agency, there are activities you do more than once. Figuring out how to do something for the first time usually takes some time. Writing down your workflows and processes is one way to avoid having to rediscover a method again and again. It’s also a smart way to use your downtime.

Processes are Necessary for Effective On-Boarding

For a team, documenting processes doesn’t just save time, it also helps with quality assurance and growth. Defined processes make on-boarding new team members, and clients, so much easier.

I know that writing down these processes these probably sounds mindlessly boring compared to doing creative work. Even so, your future self will thank you. The better documented the boring work is, the less time it takes. That means more time for the fun stuff. I do believe that well-documented processes and systems are the stuff with which you build great companies.

A Simple Process for Sending Invoices

A process is essentially a series of actions. As such, it can be as simple as a numbered list. As an example, here’s a process I’ve used to send invoices to a consultant broker I’ve worked with. The reason I needed a process was that the broker had special requirements. They required invoices to be back-dated and to refer to the invoice they’d send the client in turn. By creating a process, I avoided making mistakes which would cost me time.

Use the Software You Already Have

As you can see, processes can look trivial. Since they’re so simple, you don’t need special software to create them. You can keep them as Word files in a shared Dropbox folder or as a bookmarkable Google document folder.

The important thing is to keep them up-to-date. The easiest way to do that is to create a recurring event in your calendar for when to review these procedures.

4 Rules of Effective Process Documents

It’s important that your process documents are:

• Up-to-date and relevant.
• Easy to access.
• Simple to update and edit.
• Clearly written with enough details so that even new employees understand them.

When deciding which process to write first, I recommend starting with the frequent, frustrating or time-consuming activities.

2. Get More Future Customers: Create or Revise Your Marketing Plan

In my experience, way too many small companies operate without a marketing plan. That’s kind of insane when you think about it. We have plans, and even contingency plans, for everything else. Yet marketing is something many just assume will magically work by itself, forever and ever.

Want to know a secret?

It doesn’t.

Marketing is what will feed you in the future and you’re doing it whether you know it or not. But there’s a huge difference between letting marketing happen to you and directing it yourself.

Pick the Clients That Pay What It’s Worth

Businesses that direct their marketing efforts can influence who their customers are by positioning themselves and ensure they can ask the price their services are worth.

Seeing companies go out of business due to failing at marketing is heart-wrenching to see. It’s so preventable!

A Marketing Plan That Fits on One Page

Small business marketing starts by answering some very basic questions. In the brilliant book The 1 Page Marketing Plan, author Alan Dibb introduced a super compact marketing plan template for small businesses. Using the template, you can reduce a marketing plan to the following:

You can download the template from Dibb’s website. To learn more about filling our your 1-page marketing the plan, I recommend reading the book. It’s a short read, full of actionable ideas.

3. Find Future Team Members: Meet with People You’d Like to Hire at Some Point

We’ve done a lot of market research as part of building Bondsai. One of the pains many agencies told us about related to finding the right people when you need them. Agencies see a constant change in workload which makes hiring and managing growth costs a permanent headache.

Reality being that, you might think many would plan for their future talent needs.

Yeah, you wish.

If you ask small businesses about their candidate selection process, it appears most of them publish job ads only when they need staff. It’s no wonder they get stressed out not being able to find the right people when they need them the most.

Effective Recruiting is a Long-Term Strategy

Recruiting is a long-term process that requires growing relationships over time. Great potential team members aren’t served on silver platters at just the right time.

If a company appears to find the right talent when they need it, that was usually not just happenstance. It was the result of a strategy to connect with candidates.

Using your downtime to identify and connect with future candidates will serve you well once the work arrives.

Using Personas to Target the Right Candidates

A good starting point is to think over your competency needs for the next 6, 12 and 24 months and what talent you need to meet it. Draft candidate profiles that include personality, skills and past experiences. You can condense them into candidate personas to create an even more effective search filter.

Use personas or profiles to find interesting people. Reach out to them and book lunches or coffee. Be candid about your intentions and say that you like their profile and would like to learn more about them. Then stay in touch with the promising ones.

4. Automate to Deliver More Value: Build Tools That Save Time

Some of my time spent on this blog goes to technical maintenance. It runs on WordPress and uses a custom theme I’ve created specifically for Bondsai. I’ve also tried to reduce the number of plugins but there are some and they need updating now and then. This used to take more time than I liked. That was until I wrote some scripts.

After having invested 2-3 hours in writing these scripts, I can now clone the entire website to my local development environment to safely install and test updates. All done using only one command. Getting the changes back up live is equally easy. This means I can spend more time on the blog itself, and less on the technology behind.

Automation Doesn’t Always Mean Writing Code

Doing something like this requires writing scripts. That may not be your cup of tea. Regardless of your level of programming skills, there are always ways to automate your work that doesn’t involve code. Services like IFTTT (if this then that), Zapier and Automate.io let you connect various other services using “recipes” or workflows.

Workflows consist of a trigger event and actions. When the trigger event happens the system performs the actions. Workflows can be connected to a wide range of services and social platforms. One use of this is could be to save to Google Drive all the Facebook pictures your friends tag you in

Services like IFTTT, Zapier, and Automate.io often have helper apps for your smartphone. Some of these apps let you tap into your phone’s location services. This can be very useful. Imagine you’re a consultant who works on client premises and wants to log your visits. You can use IFTTT and its app to create a workflow that triggers when “entering client premises” or “exiting client premises” and which then logs the time and date to a spreadsheet.

Setting up workflows like these is rather fun and a good way to spend half a day of downtime that you cannot use for client work.

Conclusion: Downtime Can be an Asset in Building Your Business

There are many ways to put your downtime to good use. Being out of client work now and then can, in fact, be good to your business as it lets you do important tasks you’d normally overlook. The kind of activities that build a strong and lasting business.

We’ve only scratched the surface in this article. We’ll return with more ideas on using your downtime in future posts.

Photo Credits

• Rawpixel
• Burst

The post 4 Ideas on How to Put Your Downtime to Smart Use appeared first on The Bondsai Blog.

As an agency or freelancer, your website is your digital storefront. It’s where you show off the goods. Here are 7 things to keep in mind for when you design, or redesign your agency’s website.

That so many freelancers and agency websites are terrible is ironic. After all, the very same agencies and freelancers are offering their clients excellent advice but fail to heed the same. The expression “cobbler’s children” comes to mind. It doesn’t have to be that way if you do the following seven things.

1. Write About the Problems You Are Solving for Your Clients Instead of Your “Services”

Why: By not writing about services you provide,  instead focusing on problems you are solving for your clients, you walk in their shoes and also get better buyers.

In an interview with us last year, consultant to agencies Karl Sakas made a very compelling argument about why agencies should stop talking about services. Instead, Karl argues, they should talk about the problems they solve for their clients. This in order to put clients, and the problems they experience, first.

In our interview, Karl said:

“From 2013-2017, my website primarily featured the services I provide—consulting and coaching for agencies. In 2017, I redesigned the site to focus on the problems I solved: agency business strategy, managing clients, managing teams, and attracting your ideal clients. This radically changed the sales inquiries I received—including less self-diagnosis from prospective clients.”

Karl said it’s not about eliminating the services section from your site but to realize that “services” attract prospects who have self-diagnosed their problem. These buyers tend to be implementation-oriented and not interested in strategic advice. Implementation services are seen as commodities, for which one agency is just like any other.

This sounds so obvious you’d think everyone was doing it by now.

Nope.

The Bizarre Popularity of Services Pages

I did a quick Google search for “web agency” and visited the websites of six of the agencies that showed up in the search results on the first two pages. This is what their navigation menus look like:

Strategic insight clearly isn’t a strength of many self-described strategic digital agencies…

The challenge of making this change is that you need to decide what problems you are solving for your clients. You can’t help everyone. If you are serving everyone, you don’t actually have a strategy.

To decide who your clients are, you need a clear idea about positioning and a value proposition, which is next on the list.

2. Present a Compelling and Differentiating Value Proposition on Your Agency Website

Why: Without a strong value proposition, prospective buyers see you as one among many. They will not get hooked or become interested in learning more about you.

Wikipedia defines a value proposition as:

“A value proposition is a promise of value to be delivered, communicated, and acknowledged. It is also a belief from the customer about how value (benefit) will be delivered, experienced and acquired.” – Wikipedia

In other words, a value proposition convincingly explains:

How Your Services Solve Your Clients’ Problems and Improve Their Situation

What does your service actually do for those that buy it? Many agencies I talk to have never reflected much over that! We have covered ways and methods to discover the value you create in our 3-step article to value-based pricing.

How You Deliver Value to the Client in the Form of Benefits

The benefits are the improvements your clients see as a result of hiring you. This is what we often call value. If you’re used to thinking in terms of features (what you deliver) to how that benefits the client, making a feature-advantage-benefit table for your services might help:

How Your Services are Different the Competition and Why They Should Buy From You

This is called differentiation and it’s about discovering what makes you uniquely positioned or capable of delivering value. Our differentiation comes from our personal unique skills and experiences, or access to tools no one else has. Ideally, your differentiation is hard to copy, giving you an enduring edge over the competition.

A Value Proposition Is Not a Tagline

A value proposition isn’t a slogan or tagline and it’s ideally written the way your clients talk. The short the better, but it doesn’t have to be a single sentence.

Writing a Value Proposition for Your Agency Website

To begin with, does your company even have a defined value proposition?

If it doesn’t, it’s time to write one. A clearly written value proposition will simplify everything, from how you do your work to whom you market and sell to.

An article by website ConversionXL recommends checking your value-proposition against this list of questions:

• What service is your company selling?
• What is the client’s end-benefit of using it?
• Who is your target client for this product or service?
• What makes your offering unique and different?

You cannot lead with a big chunk of text so most settle with a sentence that creates curiosity in the reader to draw them in. The rest of the page is used to communicate the rest of the value proposition using, preferably using easily understood graphics.

Two Examples of Websites Leading With a Value Proposition

Stripe, which offers payment solutions, has quite a bold statement at the top of their front page. The rest of the page is used to justify the claim.

French agency Belle Epoque makes a more interesting statement, using the word “persuasive” in the English language version of their agency website. However, they fail to back it up as you scroll down.

3. Provide Easily Accessible Contact Information and Don’t Force Prospects to Use Contact Forms

Why: If it’s one thing that has to be easy, it’s buying from you. It’s all about reducing unnecessary friction.

In an attempt to keep websites “clean,” many agencies keep footers clean and free of contact information. This is self-defeating.

You need to let prospective buyers contact you the way they prefer. Some would like to call, others email while others will want to meet in person. Don’t make them jump through hoops just to have a word with you.

7 Rules of Contact Forms that Don’t Annoy Visitors

Some people cannot email you so a contact form is great. Just make sure it’s optional and there’s an email address just in case.

Keep the form itself usable and non-annoying, meaning:

• The fields are the appropriate size for the intended content.
• Labels aren’t placeholders (disappear when you start typing).
• You don’t ask for more information than you absolutely need.
• There’s no idiotic validation that requires visitors to type in their details using a format they do not know (hint: don’t require a format).
• The message field allows the visitor to write as much as they like.
• There’s no time-consuming CAPTCHA requiring the visitor to click the pictures with cars in them.
• There’s a super clear “We got your message” confirmation.

In addition to the contact form, be generous with other ways to contact you. Put your phone number in your email footer while you’re at it.

4. Clearly Showing Company Address, Incorporated Name, and Location on Your Agency Website

Why: Lack of clarity regarding the company behind your agency website looks fishy and undermines trust.

If there’s something screaming bogus at me, it’s agency websites that don’t have a clear owner or sender. In Germany, Austria, and Switzerland, all websites are required to have an “Impressum.”

You don’t have to speak German to be clear about who operates your agency website. Just make the simple change of putting your company’s full name, the city and the country where your main office is in the footer. More detailed address information can be provided on a “contact us” page.

5. Provide Genuine and Trust-Building Information About the Members of Your Team

Why: Buying is about relationships and we want to know who we’re dealing with. By withholding that information, your company comes off as not trustworthy.

Imagine you were looking for an agency or freelancer to solve a problem. You’ve tried to fix it yourself but have given up. It’s simply too hard or takes you away from the things where you can really make a difference. So you decide to find some candidate agencies or freelancers to hire.

They all make bold claims. So how can you tell which ones are actually the real deal and which are just bragging and bluster? Easy! You read their bios. Just like when you hired your new office manager, you carefully read their resume and checked their references to ensure they were what they claimed.

When you as an agency don’t list information about your team, your prospective buyers cannot do due diligence and grow suspicious.

You Can’t Fake Having a Great Team

Some agencies, in an attempt to look bigger than they are, use fake profiles. The owner of one such agency applied to join a meetup group for agencies that I run. I make sure to vet anyone who joins and naturally, I checked out their agency website (it has since been changed).

Their agency website didn’t have much information. Which isn’t strange in itself, many agencies are busy and don’t keep their websites up-to-date. However, since they claimed to be an agency (not a freelancer, for which there’s a different meetup group), I was curious about the team. I got suspicious when the photos looked like taken from a stock photo website and the descriptions sounded generic.

I confronted the owner and he admitted, no, they weren’t real staff. He didn’t have employees so he worked with freelancers and couldn’t use their real names. But he didn’t like having an empty team page so he made up profiles!

Ugh!

What About Other Agencies “Poaching” My Team After Seeing Our Agency Website?

I hear that some agencies are hesitant to be open about who’s on their team out of fear for key members being “poached” (aggressive and hostile recruiting) by competing agencies. To me, this behavior sounds controlling. If your staff wants to leave, they’ll leave regardless of what’s on your agency website. Dogged recruiters will find your staff anyway. Have you heard of Linkedin?

Being featured on your agency website can, in fact, have the opposite effect for members of your team. Knowing that your employer values you and recognizes your unique competencies will instill loyalty, not undermine it. It will make them want to stay with you.

You Don’t Need to Provide Much Information to Be Convincing

You don’t need to write lengthy descriptions about each person, 50-100 words are more than enough. Focus on what skills the team member has that benefit your clients. Mention what they have studied and where they have previously worked.

Add awards and achievements if relevant to the job. Include some personal details for flavor. Make them seem like a person, less like a cardboard cutout.

Contact details such as phone and email aren’t necessary. This isn’t to avoid “poaching,” but to keep your work manageable. You don’t want clients to write to the staff directly, instead, you want them to use the right channels such as sales team, project and account managers.

A Photo Brings Out the Person Behind the Words

Make sure you get a good picture that captures some of their personality. If you can, find a way to standardize your team photos so they’re shot in the same format (portrait or landscape), puts the subject at the same distance from the length and use the same background.

You can set up a small “studio” in your offices cheaply by buying a large sheet of colored paper and using professional lighting (which is relatively cheap now).

Avoid group photos. People come and go. It’s frustrating to have to constantly re-take these photos. Editing people out of them isn’t a nice practice either. It has some unfortunate historical precedents.

6. Present Strong Case Studies and Testimonials on Your Agency Website Using Video

Why: As humans, when in doubt we follow the herd. Among all the other options your buyer is considering, you can stand out by showing how you solved similar problems for other companies.

Many years ago I was planning a redesign of my then agency’s website. We knew the website wasn’t performing as well as we’d like. We were doing fine thanks to referral leads and a strong presence in the open source space we were active in. But we wanted to grow and make the agency website a more effective marketing tool.

I decided to call up our clients to ask what they looked for on an agency site. Their answers were the same: we want to see case studies and testimonials on how you solved similar problems for companies like us!

Specific Social Proof is Incredibly Powerful

Testimonials and other forms of social proof are extremely convincing. There’s a reason why companies proudly list the logos of their customers. When you’re weighing several unknowns, the one option that most seem to gravitate towards is the one you pick. Herd mentality runs deep in us humans. It’s a way to minimize perceived risk.

If you have no social proof on your agency website right now, you are losing business.

The best social proof is specific. Our clients said that they wanted social proof by businesses similar to them. That means that you need to decide on a positioning strategy. You can’t be everything to everyone all the time. The more specific you get, the more believable you are.

Write a Case Study Today

Producing a simple case study doesn’t take long if you have a happy customer to talk to. All it takes is a phone call, some writing and editing and ta-da! You have a blog post with an interview with someone who speaks well of you. It can be done in less than a day.

If you wish to use pictures, take them yourself. Stock photos (particularly of people) risk ruining a perfectly fine case study. Any trust you’ve built up through your genuine interview is damaged by the generic nature of a stock picture.

If you cannot take a photo, use a screenshot of the website or app you made. Ask if you may use the Linkedin profile photo of the person on the client side you’ve been working with alongside it.

Graphics Are the Core of a Compelling Case Study

The best case studies use graphics to explain what you’ve accomplished together and are a joy to behold. They’re well written and full of interesting details. They’re the stuff people share just because they like it. Such case studies take time to produce and aren’t something I recommend an agency or freelancer to start with before they master the basics. It’s better to produce short and clear case studies consistently than making huge, and beautiful ones rarely.

Testimonials Are Strong Quotes Taken Out of Context

A testimonial can be as simple as a strong quote from the very same interview you did for the case study. If they agree to you using their picture alongside it, even better.

I sometimes see anonymous testimonials in advertising in the metro. I find that idea ridiculous, but I assume they work since they’re used so much. There’s clearly nothing rational about what statements from other people we choose to believe.

Video Adds Emotional Impact to Your Client’s Words

The most compelling form of testimonial or case study you can create is done with video. If you do, make sure it looks professional. A hand-held shot using a smartphone outside is better than a tripod-mounted camera in a poorly lit space.

Keep it short. The purpose of the video is to communicate emotion and make the viewer curious. Try to keep the whole video under a minute. Then use supporting content such as graphics and headlines to tell the entire story.

7. Keep Agency Website Content Scannable with Plenty of Pictures

Why: Most people don’t read, they scan. Your message must be conveyed in headlines and in illustrations. Only the most interested will actually stop and read your body text.

It’s easy to get carried away with words. You are rightfully excited about your work and there’s so much to tell. But for your agency website’s content to be effective at generating leads, you need to read your text with the eyes of your buyers. Write several drafts of the text you use and ask for help to critique and proof-read.

Get Better at Writing for Your Visitors Using Buyer Personas

To get an idea of what your buyer is looking for, make a simple buyer persona. It only needs to answer:

• What is this person looking for?
• Which specific problems are they trying to solve?
• Which are their goals?
• What questions do they have?
• How much time do they have at their disposal?

As always when writing personas, make them about behavior. Avoid demographic details such as age, gender or hobbies. Such specifics will only make your personas less effective as they’ll make your draw unwarranted conclusions based on prejudgments.

Now read your copy again from the viewpoint of the persona. Cut out anything that doesn’t help the buyer accomplish what they’re trying to do. Try to get to the point as early in the text as possible and be specific. This takes time but it’s worth it and has many benefits. It will  help you become better at communicating your value proposition, even verbally.

Mobile First Is Not Optional Anymore

Assume visitors are using a mobile device and design your agency website mobile first. That is design with the lowest common denominator in mind. Mobile screens are the new default. Desktop and laptop size screens are icing and opportunities to take advantage of to provide rich, detailed graphics, when available.

Conclusion: Your Storefront, or Agency Website, Needs More Attention

Skimping on your agency website in order to prioritize your clients might sound noble. Some people do in fact reason that great services don’t need any marketing.

That’s complete nonsense!

By not paying attention to your own agency’s website, all you do is creating a marketing debt which might, over time, result in leads drying up. When you’re out of business you cannot serve clients at all.

Be kind to your website and give it time and attention, every week. In return, it will keep your business afloat with a steady stream of new leads.

Photo Credits:

• kaboompics.com
• rawpixel.com
• Daria Shevtsova
• rawpixel.com
• freestocks.org
• khairul nizam
• energepic.com

The post 7 Things to Remember When You (Re)design Your Agency Website appeared first on The Bondsai Blog.

Value-based pricing is one of my favorite topics and I get lots of questions about it. I decided to compile all of them into this enormous FAQ.

This FAQ is huge, but not complete. Is your question not in the list? Ask in the comments section below and I’ll answer and probably add it to the FAQ.

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Questions Answered in this FAQ

25 answers and counting:

• What is value-based pricing?
• Is value-based pricing difficult?
• Is value-based pricing the best way to price?
• When should I avoid value-based pricing?
• Why should I use value-based pricing?
• Is value-based pricing better than traditional hourly billing?
• Can anyone do value-based pricing?
• What do I need to use value-based pricing?
• Is there a method for value-based pricing?
• What are “price bundles” and “options” and how do I use them?
• How do I combine tiered pricing and value-based pricing?
• How do value-based pricing and marketing fit together?
• How do I use value-based pricing for short assignments and tasks?
• How do I price retainers using value-based pricing?
• How do I compete with firms that aggressively underbid me?
• Do I need to do something different to use value-based pricing?
• What are the risks of using value-based pricing?
• Isn’t value-based pricing just another term for charging the client a percentage of their revenue?
• Isn’t value-based pricing opportunistic?
• How do I explain value-based pricing to my client?
• Is a value-based price always higher than an hourly rate-based price?
• How do I know what my clients value?
• Why do so many recommend value-based pricing?
• Will I make more money by using value-based pricing?
• I don’t feel confident asking for this much money, what should I do?

What Is Value-Based Pricing?

“Value-based price (also value optimized pricing) is a pricing strategy which sets prices primarily, but not exclusively, according to the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices. Where it is successfully used, it will improve profitability through generating higher prices without impacting greatly on sales volumes.” – Wikipedia

Value-Based Prices Are Set According to the Buyer’s Perceived Value

The keyword here is “perceived.” Value is simply what the client perceives to be valuable or important. It doesn’t even have to be rational.

This means that your ability to influence the buyer’s idea of value is considerable, sometimes even extreme. It’s also one of the reasons why value-based pricing is such an interesting topic. The factors that dictate a price are often intangible and have more to do with feelings, rather than facts.

Value-Based Prices Are Not Set According to Cost, Historical or Average Price

Many freelancers and agencies price based on cost, historical or average price. This is usually easy and can be a smart move in some circumstances. While cost shouldn’t influence a value-based price, it’s an important figure to estimate and calculate (but not communicate or share) since your price needs to cover your costs.

Is Value-Based Pricing Difficult?

Not necessarily. Value-based pricing isn’t technically difficult but it requires more work than many other forms of pricing.

The challenge is that in order to effectively price on value you must understand what is valuable to your clients. That, in turn, requires more work than the most common pricing methods: cost-based and neutral pricing.

When pricing neutrally, you look at the competition and you set a similar price. When pricing on cost, you calculate the costs involved in producing the service and add a margin.

The easiest way to price is to charge as much as you can and what the market can bear for your segment. This is usually what you can do when charging by the hour and aren’t actively trying to differentiate yourself. For this, all you need to find out is what your competitors are charging on average.

It ‘s About More Than Just Price

For your prices to be believable, they must be justified by everything you say and do. The real challenge when using value-based pricing is reinforcing your worth. That includes your marketing, communication and even how you dress and act.

Is Value-Based Pricing the Best Way to Price?

Yes, if what you sell is unique, potentially highly valuable and custom-made.

When using value-based pricing you maximize value both for you and the buyer. This might sound strange at first but makes sense if you consider that value-based pricing is about capturing value. Applying value-based pricing will result in you creating even more value for your client in order to keep more for yourself, as explained by the following two charts.

This stands in contrast to cost-based pricing. When using cost-based pricing, there’s no direct incentive to create more value for the client since you won’t be getting any of it. Not directly anyway. You might think that the client might be more loyal to you when they realize how much value they’re getting at a bargain price. But not even that is certain.

“Price is likely to serve as an indicator of quality when buyers are uncertain about a product’s underlying quality. This happens when they are confronted with a product that is entirely new to them or one which they rarely buy. Consumers are also prone to make such price-based judgments when the absolute price of the product is not very high, when they have little transparency on prices for alternatives, or when they are under time pressure.” – Hermann Simon in Confessions of the Pricing Man: How Price Affects Everything

When using cost-based pricing, there’s no direct incentive to create more value for the client since you won’t be getting any of it. Not directly anyway. You might think that the client might be more loyal to you when they realize how much value they’re getting at a bargain price. But not even that is certain.

Research into pricing psychology has shown that price is a strong psychological indicator of value. So the higher the price, the more valuable your work seems to the client.

When Should I Avoid Value-Based Pricing?

Almost never.

The only time I can think of when value-based pricing is inadvisable is if what you sell is a fungible commodity. Such a good is something is so common that individual units can be easily used interchangeably.

If your product is truly fungible and your strategy is to make a profit by selling volume, then value-based pricing won’t be of any use. You’d rather try to produce it at the lowest possible cost. Pursuing a low-cost structure is almost always a terrible way to run a business as it forces you to always consider cost over any other factor when making decisions.

Fungibility and going after a low-cost structure are almost never desirable when selling advanced services such as project management, branding, marketing, communication, development or design. These services can potentially create enormous value and savings for clients. You’d be daft not to want a cut of that.

Smart agencies and freelancers make it their mission to stand out from the crowd and be as incomparable as possible. Pricing is part of that, and why I strongly recommend freelancers and agencies to invest their time in learning value-based pricing.

Why Should I Use Value-Based Pricing?

Your Revenue and Profit Will Increase

Your earnings will rise as you’re getting a share of the whole value you produce, not a fixed hourly price based on an arbitrarily arrived-at market rate.

You Create More Value for Your Clients

Your value output will increase since you’re focusing on what your clients consider valuable and your unique abilities.

Your Clients Will Be More Loyal and Refer Work to You

Once your clients realize the value you produce and your commitment to solving their problems, your clients will be loyal and speak well of which further strengthens your pricing power (ability to raise prices without losing customers).

You Will Run a Better Business

Once you get out of the trap of hourly billing, you will suddenly have much more freedom in designing your business and your life. For example, your employees will be able to work result-based, not being required to log at least 40 hours per week. That makes you a very attractive employer or a happier freelancer.

Is Value-Based Pricing Better Than Traditional Hourly Billing?

Yes, I believe that value-based pricing is better than hourly billing.

However, that is only true if:

• You create more value this way by developing your services in a client-focused manner.
• You don’t overcomplicate pricing and take care not to make your value-based price more complex than your hourly rate.
• Your motives are honorable and you aim to increase the value received for all parties involved.

Can Anyone Do Value-Based Pricing?

Yes, all it takes is learning a bit about pricing theory and psychology.

Certain services and products are a better fit for value-based pricing. Any kind of advanced advisory service that is sold to other businesses (B2B) works well with value-based pricing.

The rule of thumb is, if your service or product helps other businesses make more money, then you can capture some of that value through value-based pricing.

What Do I Need to Use Value-Based Pricing?

Understanding

An honest estimation of the worth you bring your customers. This requires research into client gains, pains, and jobs-to-be-done. Build your marketing around these insights.

Trust

Have the communication skills to explain your pricing and services in a way that conveys trust.

Confidence

From how you talk to how you discuss the world around you, exude competent confidence. Show poise, conviction, and assertiveness to ask the price you’re worth.

Is There a Method for Value-Based Pricing?

Yes, there is.

In his book Impact Pricing: Your Blueprint for Driving Profits, author Mark Stiving outlines this method to arrive at a value-based price:

“Here are the steps to value-based pricing:

1. Identify your customer’s second-best option to your product.
2. Determine the price of the second-best option.
3. List your advantages and disadvantages relative to the second-best option.
4. Estimate in dollars and cents the value of each advantage and disadvantage.
5. Calculate your price.

Price of your product vs. the second-best option: + Value of advantages – Value of disadvantages Your calculated price”

As Stiving points out later in his text, this might sound easy in theory but rarely is in practice. Stiving’s method is also a better fit for products than services. For services, I recommend first understanding the differentiating qualities your services have and how these help solve your clients’ problems. The prices you arrive at should be displayed as bundles in tiers with options.

What Are “Price Bundles” and “Options” and How Do I Use Them?

“When a seller packages several products together and charges a total price less than the sum of the individual product prices, it is called price bundling .” – Hermann Simon in Confessions of the Pricing Man: How Price Affects Everything

Take Advantage of Different Willingness to Pay

Bundles offer an ingenious way to take advantage of that fact that different buyers have different willingness to pay. By breaking down your services into smaller parts, you can re-group them into bundles. Bundling works best if you understand the various segments of price sensitivity among your buyers.

Package Bundles Into Options

Bundles can further be packaged into options which can be used as tiers for tiered pricing. Options make it easier for buyers to choose and reduce buying friction. We’ve published an in-depth article on tiered pricing.

A word of caution: When bundling and tiered pricing are pursued too aggressively buyers might be turned away. Bundled pricing works because bundles are less transparent than individually priced items. Don’t use tiers as an excuse to be unreasonable and inflexible or acting immoral. In my view, the beauty of value-based pricing is that it helps to make a bigger pie for everyone to get a share of.

How Do I Combine Tiered Pricing and Value-Based Pricing?

Tiered pricing and value-based pricing are like coffee and chocolate: a match made in heaven. If you don’t know what I’m talking about, try pouring hot espresso over stracciatella ice cream. That’s the taste of tiered and value-based pricing working in unison!

In most cases, you simply price your tiers based on how the features or bundles in included those tiers provide value to your client. This can vary greatly, why there are no standard prices nor standard tiers. Customize each proposal to the specific buyer.

To learn more about this, read our article about tiered pricing.

How Do Value-Based Pricing and Marketing Fit Together?

Value-based pricing is based on your knowledge about your customers. Those are the same insights that drive your marketing strategy. When I say marketing, I don’t refer to advertising. I am talking about the marketing that is tightly coupled to your business module and identifies who your primary buyers are and what value you provide to them.

The business model canvas is a great tool to analyze your business model and your value propositions. Your value propositions are your main differentiators and the reasons why customers are choosing you over others. In other words, having a unique value proposition is one of the ways to avoid becoming fungible and commoditized (easily replaceable by any other agency or freelancer in your niche).

Effective value-based pricing for professional services is dependent on marketing insights to be effective.

How Do I Use Value-Based Pricing for Short Assignments and Tasks?

Easy! You scope the work and put a fixed price on it.

Small Projects and Short Assignments

These are just like larger projects: scope them and set a fixed price. This might seem cumbersome but it will get easier over time as you develop templates and processes.

Changes and Extensions to Existing Projects

Even though you have agreed on a fixed value-based price with a client for a well-defined project or service, a need for add-on work may appear.

In his book Implementing Value Pricing (paid link) author Ron Baker gives the advice to use change orders when performing add-on work. A change order can be a letter or email that is signed digitally.

Baker advises consultants to ask the client “What is my budget for this?” to get an indication of an appropriate price for the change. He also notes that change orders usually have to do with wants, and buyers are typically less price sensitive when it comes to those.

How Do I Price Retainers Using Value-Based Pricing?

Pricing retainers work very similar to how you’d price a proposal: in tiers, with prices based on the value the customer receives. Instead of each tier corresponding to a set of deliverables, it will correspond to a package that includes a set of services.

You can vary the billing period and a number of other factors in your retainer tiers such as:

• The specific services included in each tier.
• Your response time.
• What times you are available for phone calls.
• The channels that are available for contacting you.
• How many support issues that are included (with a “reasonable use” clause you get around the problem with unreasonably complex requests).
• Order-to-service turnaround time – pay more for express treatment.
• The amount of work included. In the example below, an arbitrary unit called points is used to avoid hours. You’d typically estimate the work in advance so the client knows how many points are left.
• Discounts on spin-off projects that aren’t part of the retainer but are ordered while the client has an active retainer.

I’m not going to dig further into the details here since this is an FAQ on value-based pricing. If this is something that interests you, I recommend signing up for our newsletter as I will write more about retainers in the future.

How Do I Compete With Firms That Aggressively Underbid Me?

If your buyers aren’t willing to pay what it’s worth it’s because they don’t believe the promised value is real.

Pricing is about belief. If the buyers think your price is too high, it’s because they don’t see their potential gain. In such a scenario, a considerably lower bid, will seem like an attractive option.

To succeed with value-based pricing you must build a shared vision with the client of the value the project will create. If the client despite your best efforts fails to see the potential, consider letting this one go. Not all buyers are good clients.

The Cost of Competing With Price

Smart businesses know the cost of competing with price. It means remorseless cutting of all costs and emulating the cost structure of the underbidder. Since many underbidding agencies use offshore professionals, competing on price will mean relocating. For many, not a fun direction to go.

Other business owners choose a different strategy to deal with those that undercut their prices. They understand that they do offer value to their clients. That’s why they have been able to build a business in the first place. They focus their energy on understanding what their unique differentiator is and find ways to make it very hard to emulate. Lacking a differentiator, they create one.

Prices Are Not As Important As You Think

Truth is sellers care more about price than buyers do. If you lose a deal, it’s usually not because of the price. We buy with our guts and then justify it logically. Value-based pricing coupled with a value-confirming culture and brand will be your best weapons against those that compete on price alone.

Why Value-Based Pricing Is Better for Everyone

A company that understands the value it helps create is a better choice than one that competes on price alone, this despite the higher price tag. Such a company will generate more value down the road for the clients than one that is blind to the potential return.

Do I Need to Do Something Different to Use Value-Based Pricing?

In a nutshell, and as per Stiving’s method above, value-based pricing is about figuring out what value the client sees in the things that make you unique.

In practice, value-based pricing requires looking at your business from the outside. Looking at it with the buyer’s eyes, you must determine what things you do that communicate value, and which deter from it. Anything that undermines a sense of value or trust must be removed or modified. This means that may have to redesign your website and start sending flowers and thank you notes. The things that are involved may seem small and insignificant. But humans aren’t known for being rational.

Whether you manage to come off as inherently more valuable than the competition is for the buyer to decide. Influencing those decisions don’t necessarily cost a lot of money, but it requires commitment and consistency over time.

What Are the Risks of Using Value-Based Pricing?

In his book Impact Pricing: Your Blueprint for Driving Profits, author Mark Stiving retells the following story:

“Fair is in the mind of the beholder. Put yourself in your customers’ shoes and ask how you would feel facing the prices that your company uses. If you would feel cheated, so would they. I was working with a couple of consultants who had the right idea but the wrong implementation. Before I ever talked with them, they knew they wanted to price their projects based on how much value their customers would receive. Every customer, every project could have a different price. Bravo! Then they described their implementation. ‘When a potential customer asks how much we charge, we tell them we have to determine how much value we can provide before quoting a price.’ Put yourself in their customer’s shoes. They just told you that they are going to do their best to charge you as much as possible.”

Stiving’s conclusion is that a better pricing policy would be:

“We charge $500 as an hourly rate. For large projects we are willing to make a fixed bid proposal by estimating the amount of time required and multiplying that times a lower hourly rate of $400. However, if in the bidding process we find we cannot add as much value to you as we normally do, we may use an even lower rate. We want to make sure you receive far more value than your costs.”

This solution will feel fair to the customer.

Why Profit-Sharing Models Are a Bad Idea

The same applies to all profit-sharing pricing models that involve divvying up the benefits resulting from for example consulting work. These usually involve analyzing the client’s accounting to determine the turnover resulting from your work and extracting a percentage of it. Such ideas might look good on paper. After all, the model is sound, you both get a share of the value created. But they don’t work so well in practice and can lead to much resentment. The only way I could see them work would be if you can pool the profits in a jointly owned corporation or similar.

Consultant Alan Weiss also recommends against using such methods and urges consultants to charge a fixed price that is contingent on goals that are defined together with the client. The idea is that once you’ve achieved such results, the client won’t regret paying you the promised contingent price. You can then decide to break it down to a default price and a performance-contingent part that pays out when certain goals are reached.

Isn’t Value-Based Pricing Just Another Term for Charging the Client a Percentage of Their Revenue?

No, not necessarily. There are several ways to use value-based pricing. See the previous question.

Isn’t Value-Based Pricing Opportunistic?

Even so, some say they’re earning a good salary from a charging a fixed hourly rate. In their view, charging for value means taking advantage of a perceived position of power. Pricing from a sheer position of power is almost always exploitative and unethical. It’s called price-gouging for a reason. But that’s not what value-based pricing is about.

I believe this argument is due to a misunderstanding of what value-based pricing is. Done right, value-based pricing will benefit the buyer and seller alike. It’s a way to split the value created or to avoid wasting time on activities that do not yield any value for the client.

Those who raise these arguments also often fail to remember that hourly pricing is in many cases deeply unfair to the buyer. How many times hasn’t a web developer charged a client for setting up a deployment script that doesn’t benefit this specific client very much? How many times have clients paid for an agency’s employees to learn on billable time?

With value-based pricing, activities are paid for based on the value they create, which in the end is fairer to both seller and buyer.

How Do I Explain Value-Based Pricing to My Client?

You present them as fixed prices with set scopes.

To buyers who have been taught to expect the billable hour, value-based pricing may indeed seem strange. But recall that it was us, consultants and agencies, that trained our clients to pay for our time. A lawyer led the way:

“The first person to introduce the idea of the billable hour and recording time was Reginald Heber Smith, a lawyer and author of Law Office Organization, published in 1943. This book was actually a series of four articles published in the ABA Journal from May to August 1940 (written by Smith during his Christmas vacation in 1939). They were so popular they were reprinted in pamphlet form in 1943, with continued printings up to 1983 by the Economics of Law Practice Section (ELPS) of the American Bar Association.” – Source: Implementing Value Pricing by Ron Baker

Now it’s time to reverse what Reginal Heber Smith began in 1943.

Value-Based Pricing Is Easier to Understand than Hourly Rates

Value-based prices are in fact easier to understand than those based on hourly rates. When you use hourly rates, the buyer is expected to be able to comprehend the duration of the work needed. Everything is an estimate. You may provide a plan with work items but the final price is dependent on the time it takes to build these features. That is usually not something the buyer can estimate or exercise much control over.

You See What You Get

With value-based prices, it’s all much less obscure. The buyer sees what they get and the price. It’s just like walking into a store and buying a pair of jeans. You see the clothes and the price is right there on the price tag. There’s no uncertainty as to how much this will cost in the end. What they get is clearly described and so is the price. You will already have included a risk factor for overruns when setting your price so the buyer doesn’t need to worry about it. This is an immense reduction in uncertainty for the buyer.

As for the explanation, you simply don’t mention value-based prices at all! What I usually say is “I use fixed pricing for all my work with well-specified deliverables. Any changes and additions are priced individually and in addition to this.”

Is a Value-Based Price Always Higher Than an Hourly Rate-Based Price?

No, since the price depends on the value created.

This is is the beauty of value-based pricing. It forces you to only do work that benefits the client and creates value. Many agencies have very foggy ideas about the client-value of much of the work they do. Value-based pricing shines a much-needed light in the proverbial fog and exposes activities that aren’t value-creating.

Helping Clients Make Better Decisions

Since each piece of work is priced individually, the client can’t take it apart to try and get a “discount by dissection.” This also means that you’re in a position to help them make better decisions.

Imagine your client asks for a button in the checkout flow of the e-commerce store. You do the math and realize that the value of that button is probably around $800 but you can’t do it for less than $1,200. If you’re an honest practitioner of value-based pricing you inform the client. You then use the opportunity to suggest something else they can do instead that will yield the desired result.

How Do I Know What My Clients Value?

That’s the million dollar question.

In one sentence, the answer is “ask them!” (to quote pricing consultant David Winch). One way to do that is by collecting feedback from your existing clients. For a small business, interviewing clients is the easiest way to understand their idea of value.

For larger companies, there are pricing consultants who can, usually for a hefty fee, perform anonymous surveys to map the so-called “price elasticity” (see the following charts). A business can use this information to judge the price-sensitivity of its market and to determine the ideal price, or a create price segmentation strategy

Interview Your Clients to Understand What’s Important to Them

By doing some research you will start to form an impression of your clients’ problems and what they value. If you’re lucky this will lead to some very concrete suggestions such as higher availability, faster turnaround time and access to more services that you can look into offering as well.

We’ve created a free client interview guide that you can download from our website.

It may also turn out that your existing clients belong to the price-sensitive market segment. If so, they will not respond to value-creating activities since they will only chase low prices.

These are quite difficult clients to keep. Many freelancers start with clients such as these and “grow out of them.” These clients are often hard to develop and don’t respond to sales conversations that build a vision and focus on potential. However, in order to reach different clients that are less price-sensitive, you need to change how you market and sell your services.

Price Elasticity and Price Segmentation

In pricing, there’s a concept called “elasticity.” A product with high price elasticity is one where a small change in price has a high impact on demand. Elasticity is said to be low when the opposite is true.

Price elasticity is usually illustrated as a demand curve with the price on one axis and quantity sold on the other. The curve visualizes the idea that if I sell something a higher pricer, I sell fewer units but earn more per unit. If I sell something at a lower price I sell more units but earn less per unit.

As long as you only sell your product or service at one price, you need to figure out where on this curve to put your price to maximize profit. In some cases, it’s easy – such as when the elasticity is unitary.

But in many cases, it’s not. To address this, many companies try to sell to customers who aren’t very price-sensitive as well as to those who are. Luxury clothes brands can do this by setting up a chain of outlet stores. Many do this as a way to access a wider market than the highly profitable, yet small, luxury consumer market.

Price Elasticity and Value-Based Pricing

This might sound rather theoretical but it applies to agencies and freelancers too. When you are using hourly rates you cannot take advantage of the price elasticity of your service. You need to put your standard hourly rate (that everyone pays) price where the volume is the highest (the blue box the biggest).

Value-based pricing solves this problem. Every pricer’s dream is to give each person a unique price, tailored to their price-sensitivity. With value-based pricing, you can do exactly that!

But in many cases, it’s not. To address this, many companies try to sell to customers who aren’t very price-sensitive as well as to those who are. Luxury clothes brands can do this by setting up a chain of outlet stores. Many do this as a way to access a wider market than the highly profitable, yet small, luxury consumer market.

Here’s a longer explanation of PED, or price elasticity of demand as economists refer to it as.

I will dig more into this in the future and discuss pricing at depth. If that sounds interesting, sign up for our newsletter.

Price Elasticity and Value-Based Pricing

Returning to your situation as a freelancer or agency owner, when using hourly rates you cannot take advantage of the price elasticity of your service. You need to put your standard hourly rate (that everyone pays) price where the volume is the highest (the blue box the biggest).

With value-based pricing, you circumvent this problem entirely. Every pricer’s dream is to give each person a unique price, tailored to their price-sensitivity. With value-based pricing, you can do exactly that!

By doing some research you will start to form an impression of your clients’ problems and what they value. If you’re lucky this will lead to some very concrete suggestions such as higher availability, faster turnaround time and access to more services that you can look into offering as well.

It may also turn out that your existing clients belong to the price-sensitive market segment. If so, they will not respond to value-creating activities since they will only chase low prices. These are quite ungrateful clients to keep. Many freelancers start with clients such as these and “grow out of them.” They are often hard to develop and don’t respond to sales conversations that build visions and discuss potential. However, in order to reach the clients that are less price-sensitive, you need to change how you market and sell your services.

Why Do So Many Recommend Value-Based Pricing?

There are three main reasons why value-based pricing is gaining traction.

It’s an Antidote to Price Undercutting

Value-based pricing is by many seen as an antidote to offshore agencies that undercut hourly rates. This is thanks to how value-based fixed prices are much harder to compare than just matching one hourly rate with another.

It Helps Agencies and Freelancers Play on Their Strengths

Value-based pricing gives an agency or freelancer a chance to emphasize their differentiating skills or competencies. Those are the things that make them uniquely great and which are very hard to emulate. It also allows agencies to brand themselves for even more effective marketing.

It Encourages Agencies and Freelancers to Make Great Work

Value-based pricing encourages sellers to create even more value for the buyer as they will gain a share of it. Once this becomes a part of an agency’s culture, the impact is massive. Every client encounter will center around how the agency can create even more value for them. This is an upward spiral and positive feedback loop as these interactions further strengthen client loyalty.

Will I Make More Money by Using Value-Based Pricing?

That depends on whether you manage to create more client value. Speaking generally, if you keep doing what you do now, you’ll likely earn a bit more. To increase earnings by 50% or more, you probably need to change how you work and market yourself and try to understand your clients’ situation better.

I Don’t Feel Confident Asking for This Much Money, What Should I Do?

You cannot be confident without feeling convinced. Focus on convincing yourself of the worth of your services before you present them to the client.

Lacking confidence is a common challenge for those adopting value-based pricing. There’s no simple solution. Confidence isn’t built overnight. However, knowing rationally that the price you’re asking is in fact fair helps a lot.

Try to keep this in mind:

• “I know that I can create this value for the client.”
• “I know that this is fairer than an hourly price.”
• “I know that this will shift focus to creating things that will help the client, rather than just help me bill more.”

Don’t forget that value-based pricing is as much in the client’s interest as it is in yours.

Want to Read Future Answers?

I’m continuously updating this FAQ. Subscribe to our newsletter to learn when new answers are added!

Is Your Question Still Unanswered?

You’re welcome to post your questions in the comments. I read all the comments.

Photo Credits

• Suzy Hazelwood from Pexels
• Lukas from Pexels

The post Our Gargantuan FAQ on Value-Based Pricing for Agencies and Freelancers appeared first on The Bondsai Blog.

Requests for proposal are a pain. Many agencies and freelancers are rightfully tired of jumping through hoops just to do great work. But the real problem with RFPs is that they’re often dishonest and set up from the start for a specific company to win. Here’s how you can tell if an RFP is worth pursuing and what to do should you decide to go after one.

A request for proposal (RFP) offers a convenient way for a buyer to compare a wide range of offers to find the most suited supplier or seller – in theory. In reality, many RFPs serve an insidious function in many companies.

Not all RFPs, however. Being able to tell them apart will help you avoid wasting time on RFPs that never lead anywhere.

The Dirty Secret of RFPs

The reality is that RFPs are usually staged and set up with a specific preferred vendor in mind. Like loaded dice at a not so well-reputed casino. The game isn’t fair.

The requirements found in most RFPs (the endless spreadsheet rows with stuff you have to check off on) have in fact often rolled right off the specification sheets of one of your competitor’s offering. To understand how it could be so, it’s important to consider how selling is often done.

As we covered in the final part in our series on value-based selling, an important step when selling to large organizations is to win over a champion. The champion is usually employed by your prospective buyer and believes in what you’re offering. He or she is, simply put, your best friend when it comes to convincing your prospective client of the merits and value of your offering.

In the case of the RFP, chances are that one of your competitors has established a good relationship with someone influential at the company issuing the RFP. This person is usually your competitor’s champion. This champion believes so much in your competitor’s offering that they have staged an RFP to increase the chances for your competitor to win.

Don’t Be the Loser in Column B

Your role in this farce is to make a credible play as an “inferior alternative,” or so-called “column B” as salespeople say. This means that a fair comparison isn’t even in the cards, to begin with. The “comparison” that your competitor’s champion has designed this futile exercise for isn’t honest. It will be unfairly biased in favor of your competitor’s offering.

The consequence is that the chances of winning an RFP (beating this crooked game) by conventional means are close to microscopic:

“…what should you do in active opportunities that come to you as an RFP? The simple answer – don’t waste your time on them unless you wrote them. If you did not define or contribute to all or part of an RFP’s buying requirements, your chances of winning are much less than 10 percent – most customers tell me less than 2 percent.” – Excerpt from The New Solution Selling by Keith M. Eades (paid link)

“Ok, 2 percent, not bad” you might think and argue that the work is probably worth so much that it will pay back. Let’s have a closer look at that argument.

The Grim Numbers of the Chances of Winning an RFP

Assuming a 5% chance of winning (way more than the 2% mentioned above), you need to recover 20 times the time spent on the average RFP for every RFP you win to break even.

If we assume you spend 60 hours per RFP on average, then there are 1,200 (60 * 20) hours of sales work to recover for each won RFP. That’s almost 8 months of work.

If you pay your salespeople on average €8,000 per month (total salary cost, not considering bonuses), that’s an additional €64,000 in profit each RFP-born project must generate to bear its own sales cost.

If we go with the more realistic 2%, the number is 60 * 50, or 3,000 hours. That’s more than a year and a half of sales work or €152,000 in actual sales staff salary cost per won RFP!

13 Questions You Need to Ask Before Pursuing an RFP

The New Solution Selling (paid link) provides a list of questions to consider when assessing an opportunity such as an RFP. The answers to these questions can help you decide whether to pursue, but also how much time and resources you should spend on an RFP opportunity. Some of those questions are:

• What is the estimated potential revenue?
• Is there a key driving force causing the buyer to take action?
• Can the customer get money for the project?
• Have you established the buyer’s needs?
• Does the customer have a vision for a solution?
• Is our offering matching the customer’s needs?
• Does our offering include unique differentiators?
• Can we demonstrate our unique business value?
• Does the person who sponsors this project have a highly prioritized pain (i.e. is losing a lot of money or is subject to extreme risk)?
• Is there access to this person?
• Can we prove the value of our offering?
• Is there any risk related to this opportunity?
• What is the tactical and strategic value of winning this?

This is an abbreviated and simplified version. I strongly recommend you buy the book (paid link) for the full list and the entire chapter on assessing RFP opportunities in a clear-headed fashion. It’s a fantastic handbook if you’re serious about improving your sales effectiveness.

When to Engage and When to Pass

Pursuing RFPs, as you can see, is frequently a fool’s errand. But not always. I can recall many times in my career where winning an RFP bid was the starting point of a profitable and fun client relationship.

The trick is to tell different RFPs apart and determine when you have a fighting chance and when you’re just a column in a spreadsheet.

And when you do engage, do it with a plan.

How to Win RFPs by Re-Engineering the Vision to Bias the Requirements in Your Favor

If you, despite all these grim mathematical facts, decide to pursue RFPs there are some things you can do to influence the odds of winning in your favor.

The book The New Solution Selling (paid link) advises sellers to re-engineer the vision in the RFP and bias the requirements in favor of your differentiated capabilities. The competitor’s champion has biased the RFP’s requirements in favor of their favorite offering. You need to bias them in favor of your offering. You can do that by replacing the RFP’s idea of what the product should be with an idea that takes advantage of the features that only your product has – your offering’s differentiators

As you recall from our series on value-based selling, sales conversations are used to create a vision. The requirements are consequences of the vision and the capabilities it calls for. The requirements you find in RFPs were, thanks to the champion’s efforts, designed based on a vision you weren’t part of creating. That vision is based on a product with capabilities other than yours. To get a fair chance when responding to an RFP, you need to build an alternative competitive vision.

4 Steps for Building an Alternative Competitive Vision When Pursuing an RFP

The New Solution Selling (paid link) proposes a series of steps that sellers do when responding to an RFP. I have summarized them here:

1. Insist on 3 One-Hour Interviews

Call the sender of the RFP and book 3 one-hour interviews. This is the quid pro quo. Whether these conversations amount to 2 or 3 hours of time doesn’t matter. What’s important is that you get a chance to meet with the key players affected by the project. If the sender agrees, go to step 4. If the sender refuses, do the following:

2. State That It Will Be Impossible to Respond to the RFP Without Interviewing

Send a letter to the sender. In the letter, state that it will be impossible to respond to the RFP without the 3 one-hour interviews. The interviews should be with named individuals, persons you have identified based on the RFP. Attach marketing and sales material equal in length to the RFP. The purpose of the material is to show the depth of what you have to offer. You want to emphasize the difficulty to respond without knowing more.

3. Be Adamant: Refuse to Respond to the RFP Unless Interviews Are Granted

When the prospect (sender) calls or gets in touch, restate the quid pro quo offer. If they seriously want you to offer, or just fill a column (be an alternative to the incumbent), they’ll find a way to grant your request. You need to maintain the position that you will only respond to the RFP if and when the interviews are granted.

4. Ask Key Players About the Two Primary Issues That Are Behind the Project and the RFP

When the interviews are granted, make sure you ask each line executive you talk to: What are the two primary issues behind the project? This is so you can determine pains to re-engineer their buying vision (for an example see the CRM selling example in our post about sales conversations).

Finally: Prepare the Proposal and Send It

You then prepare your proposal as agreed. Instead of just submitting it, write a cover letter to the person controlling the RFP. Refer to the executive summary and how it documents the buying vision and addresses pain points expressed in the interviews. In the executive summary, highlight your key capabilities. This is so you can point to the differentiating capabilities that your product possesses. These are the differentiating qualities which you confirmed during the interviews.

It’s important to emphasize how important your differentiators are for the buyer in solving their business problems. If you can quantify a negative impact of not choosing your product, that’s even better. Finally, copy the cover letter and RFP and send them to the line executive that you interviewed and with whom you had the best rapport.

Conclusion: Most RFPs Are a Waste of Time, But Not All of Them

I hope you’re not promising to swear off RFPs after reading this. Not all RFPs are inherently bad. But it’s important to tell when an RFP is honest and when it’s just intended to generate column fodder.

I recommend using your gut feel to tell when a project seems worthwhile and fun. Chemistry and shared sense of purpose often go a long way. Couple it with the technique above (for best effect, buy the book (paid link)) and you’ll be vastly better at determining which category an opportunity falls into.

Photo Credits

• energepic.com
• My presentation on value-based selling
• Jonathan Petersson
• Shamia Casiano
• Startup Stock Photos
• rawpixel.com
• JESHOOTS.com

The post How to Stop Wasting Your Valuable Time on Dishonest RFPs appeared first on The Bondsai Blog.

You have it. The buyer wants it. The meeting is over. You part ways. What happens now? Many deals cannot be signed immediately and require buy-in and approval from others on the buyer’s end before closing. Here are some ways to make that happen.

Done deal!

Or so you thought.

After having made your way through the many steps of the value-based sales process, starting with qualifying the buyer and then guiding them to purchasing, you assumed it was over. Time to bring the deal to closing. Whew! A load off your shoulders.

Nope, the sales process took a while. During that time, Acme Inc has just hired a new VP who insists on having a final say on every purchasing decision.

This might feel like starting from scratch. Luckily, it rarely is that bad. The rapport you have built with the person you assumed was the economic buyer will be an asset in the future sales work that will bring the deal to closing. He or she might even turn out to be a champion.

Move Towards Closing by Writing a Summary Letter to Confirm Intent and Show That Your Understand Their Needs

Once you have concluded a sales conversation, writing a summary, or “debriefing” letter, serves many purposes. One of them is that you have something to refer to in your follow-up conversations as you work towards closing the deal. The summary letter doesn’t have to be very different from your other marketing material, but it must be unique since it’s been tailored to this specific buyer. A market the size of one.

A well-written summary provides:

A Sanity Check: “Yes, She Really Gets It!”

The letter helps confirm that you’ve understood the buyer’s goals, their current situation and the value your offer presents. Furthermore, it shows that you paid attention and shows professionalism in how you documented it. You may even express their needs better than they can. The letter may accurately capture their goals, present challenges and what they need to move forward in a way that provides direct value to them.

As I mentioned in the previous post in this series, how you sell can be a differentiator. This is an opportunity to win mindshare over those who simply write “Fantastic meeting! I’ll get back to you regarding a demo” or something equally forgettable.

A Cognitive and Mnemonic Anchor: “Ah Yes, They Were the Ones With That Feature.”

A letter of the right length and with the right wording will help the buyer remember you. It helps avoid any confusion when they’re comparing what you’re offering with what your competitors are pitching. They can print it out and refer to it when discussing alternatives.

Facilitation of Internal Selling: “I Think Acme Is a Great Option, Just Look at These Cases”

If they like what they’re hearing (reading), they’ll want to convince their colleagues. Your summary letter can be an effective internal sales tool. The prospect can simply forward it to others at their company to illustrate a point or share their excitement.

The 5 Key Components of an Effective Sales Summary Letter

In the book CustomerCentric Selling, the authors list the following five items or points as essential for a summary or debriefing letter. The examples below come from that book and its fictional example of the selling of a CRM system:

Goals that the prospect has expressed or described. Example: “improving revenue projections with a more accurate sales forecast.”

Current situation as the client has described (use their own words if you can). Example: “Today’s forecasting metrics vary by office, many unqualified or stalled opportunities are in the pipeline, close rates vary widely by salesperson, and earnings have been impacted when major opportunities don’t close when forecasted.”

A vision of what the situation could be if they had what you’re offering them. Example: “You said missing earnings could affect valuation by as much as 20 percent… You believe you could improve forecasting accuracy if you had…”

The value in the form of the capabilities that your offer would give them. Example: “After every sales call, your salespeople would be prompted to report progress against standard companywide milestones… (and it lists another 3 capabilities).”

Access to persons capable of taking this conversation further. In the book, they use a wording along the lines of: “You indicated you’re interested in further investigating ABC. Based on my experience, the next logical steps are 1. Confirm you’re in agreement with my summary. 2. Arrange telephone or in-person interviews with (list of roles) involved in the implementation of ABC. 3. Summarize our findings to the group (evaluating different alternatives) and determine if further evaluation is appropriate.”

A specific time to follow up to review the letter and discuss next steps. This reduces decision fatigue.

What a Summary Letter that Takes You to Closing Can Look Like

Dear Sandra,

Thank you for your interest in ABC. This is a summary of what we discussed. I understand that your primary goal is increase the value of donations received through web and social media.

<paraphrase of how the buyer described the cause of the problem and how much it’s worth to them>

<list what the buyer said would help increase the amount of donations>

<list of usage scenarios with your product or service>

<suggest next steps>

I will call you on Thursday, Nov 22 at 09.00 to review this summary and discuss next steps. If that is not convenient, please let me know.

I look forward to working with you,

John Doe

Sales

ABC

Following-Up the Letter to Get Access to the Key People Needed for Closing

Follow up the letter and make sure you got it right. Once the letter has been sent, you need to follow up in order to:

• Ensure the buyer agrees that the letter accurately summarizes the conversation you’ve had.
• Confirm that the buyer is willing and capable of providing access to the key persons or roles you have requested.
• After you’ve talked to all the key roles, you will have an opportunity to gain consensus that your offer warrants further evaluation.

In some sales organizations, this is considered a sales pipe milestone and considered reached when the buyer agrees to all of the above.

When the Prospect Disputes Your Letter or Version of Events

It does happen that the buyer doesn’t agree with the description given in the summary letter and disputes it. In such a case, the letter needs to be edited or amended. However, if they do accept it, you can now consider them a champion – after all, they are now championing your offer in their organization.

Another reaction is that the buyer denies access to the key roles listed. The reasons could be many. In the aforementioned book CustomerCentric Selling, the authors list some possible causes:

The Buyer Indicates He or She Wants to Sell It Internally

The case might be that the buyer has been instructed to get information and pricing from you but not give you any further access. Some buyers just want all the credit. Either way, this isn’t a great situation to be in. A way to counter it is to encourage the buyer to accompany you to any meetings you make with the key roles in their company. You can also argue that you together haven’t spent much time so far and it wouldn’t be fair that the buyer has to do all the work that remains to sell it internally.

The Buyer Argues That There’s No Need to Involve These Key Roles

In these cases, it helps to point to implementation challenges that require executive support or sponsoring to ensure everyone is onboard from the get-go. You could also make the case that the work you two are doing is wasted time unless these key people are informed and kept in the loop.

The Buyer Is Skeptical and Unwilling to Involve Other People

The buyer could be absolutely right. You might have moved too fast. Perhaps the buyer needs to see something reaffirming first to feel comfortable taking this step. This could be a good opportunity to book a demonstration in return for a meeting. If the demo is a success, the buyer gets you access to these key people.

The Fine Art of Polite Insistency

This is perhaps the only step where a bit of classic hustling might help. You need to stay insistent but without being impolite. If you see no progress in getting to talk to people in key roles, you should ask your buyer to refer you to someone who can give you access. If that doesn’t help, consider writing off this opportunity.

Finding Out If You’re Talking to the King, the Queen or the Jester of Closing

Once you get your foot in the door, the real work begins. You now have access to the people with their hands on the purse strings. It’s best to lay out the strategy for this work together with your champion. Your champion knows the landscape and can also prepare people in key roles for meetings which will increase the chances of there being a successful outcome – a step towards closing.

The champion can also accompany you to certain meetings or phone calls to further affect the chances of a positive result. He or she can help lay the groundwork for these meetings by copying (CC) the key role participants when emailing you to help establish you in the minds of these individuals.

Selling From a Platform of Trust

These conversations are likely not as challenging as the first ones you made. By winning over the champion, you’ve already proven to be more trustworthy and competent than the average salesperson. The calls or meetings usually constitute of you introducing yourself and your organization, summarizing of previous conversations and asking the buyer to share their goals. Then go ahead to diagnose each goal, create visions and establish value, just like you did when winning over the champion.

As always, it helps to come prepared. In this context, using traditional sales tactics risks leading to a quick “thank you and goodbye” routine. You’re now considered trustworthy so you have to act accordingly. In addition, bring summaries of the conversations you’ve had to date. Success cases are also useful conversation fuel. You can use the time leading up to the meeting to collect success stories from businesses similar to this one.

Leading Your Key Role Conversations Towards Closing the Deal

You may have to meet with several so-called key players. The purpose of these meetings is to prove the worth of what you’re offering to more people, which can result in a bigger order. Meetings such as these will also earn you more contact points in the organization. It’s during these conversations you will eventually build momentum toward closing. As I wrote in the previous post, this isn’t some monumental event but will happen gradually. If you have qualified your buyers correctly, the sale will happen.

These meetings also offer valuable information. Who you meet and how these meetings go will tell you your chances of winning. They offer clues as to whether you’re considered a real option or just mock-challenger to the incumbent. Many companies do this as a tactic to put thumbscrews on their existing supplies to force them into concessions. Sometimes they do it just to keep them “in line.”

The Dispassionate Process Leading Away From the Rabbit Hole

There you are. Value-based selling, from lead to closing. I hope you enjoyed this series and feel inspired to sell more and try out all these techniques and ideas. Change won’t come overnight. Putting this in practice will take time and effort. But it will also result in happier clients who have no doubts that you do understand them and their true challenges.

But even when you’ve become a master salesperson, there’s something you will always have to watch out for.

Salespeople are urged to call high and to get meetings to as close as possible to the person who makes the final purchase call. It makes sense. As a rule, it’s better to start high. But even if you start lower, the momentum you build is well-invested time. The techniques used to qualify buyers, creating buying visions and establishing value apply. That doesn’t help when some opportunities are fool’s errands and we grow attached to them, like a person suffering from the gambler’s fallacy.

Being effective at selling requires a personality that leans towards unsupported optimism. It’s the same kind of personality that undertakes the task of climbing the world’s tallest mountains. Both types tend to make the same mistake: failing to recognize when to give up. The consequences are vastly different. In selling, the consequence is time wasted. On Hillary Step, it’s death. But the mechanisms are the same.

Your best protection against barking up the wrong tree, or jumping down the rabbit hole, is to define a process and following it with a cool disposition. An adage of solution selling is: “Control the process, not the buyer”. Similarly, trust the process over your own judgment. Know when to call it quits. Live to sell, or climb, another day.

Recommended Reading

Many of the ideas that inspired this post aren’t mine. They’re borrowed from some brilliant sales leaders and their books. If this article inspired you and you want to learn more, I recommend you go to their writing to get the whole story.

Photo Credits

• rawpixel.com
• My presentation on value-based selling
• rawpixel.com
• rawpixel.com
• David Bartus

The post The Secrets to Closing Deals appeared first on The Bondsai Blog.

Successful salespeople generally listen way more than they talk. They have a way to make prospects feel listened to and heard. They create an environment in which the buyer feels that the seller is collaborating with them to achieve a mutual goal. Their superpower? Sales conversations!

In the first post in this series, we focused on qualifying leads or determining if we wanted to pursue the lead and invest time and money in trying to sell to them.

As you recall, qualifying a lead involves:

• determining that the lead belongs to one of the market segments you’ve decided to target,
• verifying that she has the ability to buy,
• ensuring that the lead sees your offer as a solution to their problem or need,
• and knowing that you can deliver what is expected.

Once you have put a neat checkmark next to all the bullets above, you have qualified your lead as a prospect. To take the sales process further, you need to start a series of sales conversations. These conversations should center on how your service or product can be used by the buyer. Your role is similar to that of a coach. Just like a coach, your job is to ask questions, not provide answers.

ABC Stands For “Absolute Baloney Counsel”

Sellers that subscribe to the ABC of selling (“Always Be Closing”) believe they can talk buyers into anything. This view of selling is at the core of what’s so wrong with traditional selling. We’re naturally curious as humans and buying is an experience we enjoy. But only as long as we do it for us. Traditional ABC style selling is something that is often done to us.

Diagnose Before You Prescribe

Your job as a salesperson isn’t to deliver answers. So don’t show up with a Powerpoint presentation and a set of canned answers. Instead of focusing on what you have to tell, focus on what you want to learn so you understand what the buyer needs need.

A salesperson is a buying facilitator leading the buyer with questions that are biased towards the seller’s offering.

‘ ‘‘It’s about leading with my ears instead of my mouth,” Ferlazzo says. ‘‘It means trying to elicit from people what their goals are for themselves and having the flexibility to frame what we do in that context.” ‘ – Excerpt from To Sell is Human, by Daniel Pink

Why You Should Never Hedge All Bets on One Prospect

In the process of guiding your prospect towards a decision to buy, you will need patience and lots of it. In many areas of business, sales cycles can range from hours to weeks. There are countless examples of stressed salespeople, anxious to meet targets, having ruined a potential deal by stressing out the prospect.

Just so you know, buyers aren’t clueless either. Many companies calculate performance scores monthly or quarterly. Savvy buyers know this and use it to their advantage, in business-to-business and business-to-consumer deals, to pressure salespeople into concessions and discounts. The radio show and podcast This American Life covered this in a 2013 episode titled “Cars”, which I highly recommend.

Even if you aren’t a full-time sales representative at a big company with targets and quotas, it’s smart not to pull all eggs in one basket. Expect your sales processes to vary in duration. Plan for it and make sure you have several sales conversations running in parallel.

A way to think about this is to compare a salesperson to a farmer. By sowing seeds and spreading fertilizer (marketing), sprouts (leads) poke out of the soil which you then water (nurture) over time until they’re viable (prospects) and you can harvest them (closing a deal).

Great Sellers Empower Buyers and Make Them Feel They’re in Control Through Sales Conversations

I don’t know about you but in my experience, many salespeople who subscribe to “Always Be Closing” would love to own a mind-control device. To them, winning the deal is all that counts. Many of them have been trained in a number of psychological tricks to win over hesitant buyers. In many cases, this results in buyers thinking “oh, how did we end up here?”. That is not a good thing.

Buyers want to feel in control. Just like everyone else. One of the most disrespectful things you can do is to take away someone’s autonomy. But it won’t do you much good. Just like the crafty snake oil sellers of the wild west, who thanks to charms and winning personalities succeeded with trickery, eventually ran out of towns that welcomed them. So will you, if you do not empower your buyers.

In my opinion, this means accepting the word “no.” When someone objects, you have to respect it. In fact, chances are that you invited that objection through your own actions. Usually due to making unfounded assumptions and prescribing before diagnosing.

Demonstrate Value Before You Discuss Price

One of the hardest questions to answer early is “so how much would X cost us?”. This is a question that you’d like to get as late as possible, and for a simple reason: the opportunity to shape the prospect’s perception of value. This is why salespeople are trained not to lead with the product. Talk about a product and its features will automatically trigger either objections (“I don’t need that!”) or the question of price (“That must be expensive!”).

It’s not about what your offer can do for them. You will want the buyer to see what they can do with what you’re offering. Once they’re aware of that – the benefits of the offer – the price will be considered within the right frame of reference.

“…premature price discussion distracts a buyer from determining if the seller’s offer is one that should be considered. Without establishing value, almost any figure will seem high to the buyer. The longer a seller can defer pricing and establish value by helping them through a thorough diagnostic process, the less price-sensitive the buyer will be.” – Customercentric Selling (Bosworth, Holland and Visgatis) (paid link)

Write a Plan for Your Sales Conversation

To manage this well, it’s important to lead the sales conversation. I recommend writing a plan if just to mentally prepare yourself. The plan can be as simple as a list of bullet points of topics you want to discuss and in what order.

Also, write down questions that you expect the buyer to ask. This question should be one of those you practice for. I suggest considering a price range as part of your preparations. If it’s a high profile meeting, it might be wise to practice your sales conversation plan with a colleague or friend.

Though sometimes, and in spite of planning, you do get the question about price early. This question is indeed tricky and buyers know it. However, it can also be a blessing in disguise and help you determine if the client has enough budget. If someone cannot buy, then you will want to know that early to avoid wasting more time.

How to Handle Premature Questions About Price

Below are some ways to handle this question. Regardless of what approach you choose, it’s important to be confident when you do it.

Answer With a Range

Range prices are normal when it comes to professional services and the buyer will probably not mind. You can put the lower end well within a safe zone which you know the buyer won’t object to. You can also add the qualifier that the final price depends on many different factors and that you look forward to meeting their needs. This is also a great way to weed out the “tire kickers.”

Say That It Depends

This answer works better than you might expect and won’t necessarily be seen as simple stalling. Many buyers of services are happy to accept a justification such as “it would be unprofessional of me to give a price before I understand your needs better.”

Present the Price Along With Possible Returns

If you have reference cases that are similar, you can present a rough price along with the results you’ve demonstrably created: “the price depends but for something like this it’s generally around €30,000 to €50,000, such as in Case A in which we helped increase revenue by 20%…”

Another approach is to ask the client how much they spend on solving this problem now, or what kind of return they expect. It doesn’t matter if they don’t know the answer. The important thing is to help them view your offer in relation to a known cost. In other words, as an investment.

Throw the Ball Back

Ask “what do you expect the price to be for something like this?” Just don’t use the word cost if you can avoid it. This is a rather bold move but it will help you determine if the buyer is indeed serious and can afford what you’re offering (not just “kicking tires”).

Help the Buyer See What They Can Do With What You’re Offering Using Scenarios in Your Sales Conversations

The sales conversations you have with potential buyers should be guided through questions. “Telling is selling, asking is consulting.”

Using questions, you shape the sales conversation so that the buyer sees the potential of your product or service. A great way to do that is by helping them visualize a reality in which the product or service is being used. Such a reality will form a buying vision – a better version of reality which they can achieve with your help.

In the book, CustomerCentric Selling, a fictional scenario involving the selling of a CRM system is described. The buyer isn’t very tech-savvy and the seller knows it so he chooses a different angle than to talk about technical features.

He focuses on something he knows is a major pain point for the buyer. It starts with the simple question: “What if you heard through a reliable source that one of your top salespeople was leaving to go work for a competitor?” If the buyer appears interested, he follows up with “Would it be useful to you to be able to go into your CRM system and suspend that person’s access to your prospect and buyer data, even if you were away from the office?”

Only the Buyer Can Call a Solution

This is an example of turning a feature – detailed access control from any web browser – into a realistic and specific scenario. Scenarios like these help buyers visualize how they can save money, earn money or reduce risks using the product or service.

Scenarios can often be expressed as single questions in the form of “When you are…<situation>” or “When you do…<action>” followed by, “would it be useful to… <feature>.” These need to be based on real-life situations the buyer often experiences to effectively connect features to the real needs of the buyer.

The only person who can call something a “solution” is the buyer. A salesperson can lead a buyer to draw that conclusion by helping them connect the dots. But a salesperson can never judge something to be a solution for a buyer. Yet many salespeople do. Isn’t that presumptuous?

If Your Product or Service is Perceived as a Commodity, Your Sales Conversations Matter Even More

“They may forget what you said, but they will never forget how you made them feel.” – Carl W. Buechner

Not all of us have the good fortune to sell exciting products. I mean those services and gadgets that work like magnets on the minds of prospects of considerable means. The Apple equivalents of design and marketing services.

If your service seems like a commodity to the buyer, your salesmanship is even more important. This is your second chance to win the minds of buyers. If your marketing efforts have failed to differentiate you from the competition, you can rectify that now. A sales conversation that is markedly and positively different from what the buyer expected will be noted and remembered.

How You Dress and What You Say Determines Who You’ll Get to Talk to and See

Sellers are eager to shorten decision paths and vie to talk to decision makers. Yet once there, many are woefully unprepared. What often happens is that they run the same sales pitch as they did to a tech lead at another company the previous week. An executive has other priorities and different problems to solve than someone who implements ideas. If you run the same script with them, they’ll refer you to their tech lead. That’s only logical seeing as the two of you seem to speak the same language. To get mindshare, you need to adapt your message.

The same principle applies to your manners and how you dress. By reading up on the person you’re about to meet (using LinkedIn, for example) and then learning about the company where they work, you can avoid making a mistake that risks tarnishing your company permanently. People remember bad sales experiences and the stories get retold. I know, because I hear them every week.

The Three Ingredients of a Sales Conversation: Asking, Waiting, Listening

To succeed in creating rapport, diagnosing needs, creating a vision and helping the buyer visualize your offer as part of it, there are three basic ingredients that you need:

1. Ask questions that are open-ended, framing or confirming.
2. Be patient.
3. Listen actively (and take notes if needed).

The sales conversation with the buyer is the means by which you can diagnose the problem and build a vision. For that to work, you need to lead it through the questions you ask of the buyer. You can do that by using three types of questions, in the following order.

Open-Ended Questions Communicate Empathy and Help Establish Rapport

At an early stage in your sales conversation, when you are trying to establish rapport and a sense of affinity, so-called open-ended questions are useful. They start with “why,” “how,” and “what,” and invite the buyer to share. If you ask these from a point of genuine interest and empathy, most people will open up. The drawback is that they can go anywhere.

Framing Questions Guide the Sales Conversation and Help Develop the Buyer’s Vision

In order to guide the sales conversation, you can use control or framing questions. These often come in a form like “Is it because…? If so, then how much and often?” This kind of question seeks specific information in well-defined areas and help develop the buyer’s vision.

You need to tread carefully though since this kind of question can make buyers feel uncomfortable. Pay attention and tune in to the buyer’s responses and body language. If they appear reticent or tense up, return to open-ended questions to re-establish rapport. Once rapport is back, you can try framing questions again.

Confirming Questions Help Verify That You and the Buyer Are in Sync

One way to phrase a confirming question is by paraphrasing what the buyer has said: “So if I understand you correctly… is that right?” This type of question summarizes your understanding of the buyer’s responses. By using these questions, you demonstrate your ability to listen and show your empathy. They prove that you understand the buyer’s situation. They can also help identify misunderstandings.

But What About Closing?

A successful value-based sales conversation will lead to a transaction or deal, carried there by its own momentum. There likely won’t be a dramatic and nail biting-inducing scene along the lines of “So what do you say? The opportunity if a lifetime, I tell you! You’d be mad to say no to this!”.

If done right, the final step will happen naturally. There won’t be any final opposition or resistance. All the critical questions have been asked, the information provided and no “buts” and “ifs” left unresolved.

Conclusion: Analyze, Diagnose, Confirm and Prescribe

Value-based sales conversations can be summed up in four steps:

1. Start by analyzing the buyer’s challenges and problems using open-ended questions.
2. Continue with diagnosing the buyer’s problems using framing questions
3. Proceed to confirm what you’ve understood using confirming and closed questions.
4. Finally, and once a shared vision has been created, prescribe your offer by discussing price, schedule, and deployment.

Wait, But What About Large Companies?

I got you!

In the next and final post, we dig into the selling situations in which the buyer cannot commit on the spot.

Recommended Reading

Many of the ideas that inspired this post aren’t mine. They’re borrowed from some brilliant sales leaders and their books. I cannot do these ideas true justice in this format. It’d turn into a book of its own. If this article inspired you and you want to learn more, I recommend you go to their writing to get the whole story.

Photo Credits

• Jonas Mohamadi from Pexels
• Pixabay
• My presentation on value-based selling

The post Leading the Sales Conversation to a YES appeared first on The Bondsai Blog.

Not everyone can or needs to buy your product or service. By qualifying your leads, you determine whether you can and want to sell to someone. Qualifying lets you save time and effort by focusing on those most likely to buy.

Qualifying in sales is vital, for a simple reason:

When You Qualify Your Leads, You Ensure That You Spend Your Efforts Where They’ll Most Likely Yield Results

Sadly, many in sales seem to be unaware of proper qualifying or they skip it entirely. Instead, they consider selling to be a “numbers game.” In their view, approaching someone who cannot, or will not buy is “part of the game.” The idea is that just like 19th century Alaska gold miners, they’ll eventually wash enough rocks to find a nugget.

Consequently, the belief is that personal skills like grit and perseverance matter most when it comes success at sales. The resulting behavior has led sellers to be known as a nuisance. In popular opinion often viewed as takers who steal your time and energy. And, when they have eventually worn you down, even your money.

Non-Existing or Poor Qualifying of Leads Is the Main Reason Why People Dislike Sellers

This infamous selling behavior affects even you, the well-intentioned seller. As soon as someone meets you and realizes that your goal is to sell something to them, they see you as of “one of them.” Their walls go up. Their eyes narrow. From now on, they will filter everything you say with extreme skepticism.

You can avoid being treated like a pariah by only approaching the right people and not behaving like the stereotypical salesperson. In this post, we’ll focus on how to only approach presumptive buyers who can, need and want to buy. In other words:

Your job is to help the buyer achieve goals, solve problems or satisfy needs. If you can’t, step away.

This is the essence of value-based selling.

A Simplified Sales Funnel

Before we dig into the practical aspects of qualifying leads, let us take a look at the sales process as a whole to see where it fits in. A classic (but simplified) sales funnel looks like this:

This process is referred to as a “funnel” since it, theoretically speaking, narrows. If you get 100 leads, on average 10 of them will qualify as prospects, then perhaps 1 will become a paying customer.

Like I said, this example is simplified. Many sales funnels include stages between these three with people assigned to work each stage, using various checklists, programs or other sales activities.

A Lead Is a Person that Has Expressed an Interest In What You Have to Offer

Leads are generally the result of your marketing efforts. One way to generate leads is to write a blog about topics that interest your target market. A share of those readers will then contact you to learn if you can solve a problem they have or help them implement something you’ve written about on your blog.

But leads can also be more organic. Generally speaking, not all leads are as likely to become buyers. How they became leads matters. A person making the decision to step into your office from the street is a strong lead. Someone who was referred to you by a mutual friend is even stronger since you come recommended.

A Prospect Is a Qualified Lead, Who Can, Wants, and Would Benefit from Buying

Once you have qualified a lead they become a prospect. These are the potential buyers you will want to focus your efforts on. How you do this work will be covered in the next two posts in this series.

A Deal is a Goal and a Transaction, But It Doesn’t Mean The Work Is Over

Once you’ve come to an agreement and signed it, you have a deal. This generally constitutes a transaction. You have now earned a client or customer.

However, unlike when you sell widgets, in the services business, a transaction is usually the start of a client relationship. The sales work will continue but it will take a different shape. Competencies such as account management, creating an excellent customer experience and providing client services become crucial for keeping a client and selling more to them over time.

The Questions That Make You a Better Salesperson

”Why am I selling this, to begin with?”

I am convinced that if more people that sell asked that, selling wouldn’t be so universally disliked. It’s a question that forces you, the seller, to take a good look at your own motivations and values.

Once you start unraveling the answers to this question, new questions will emerge:

Should I Even Be Doing This in the First Place?

Are you convinced of the importance and significance of what you’re doing? Do you believe you’re making a meaningful difference? Being able to answer “yes” to these questions is wonderful, but not necessary nor always the case. Many salespeople do effective selling without having their heart in what they sell. You don’t have to either. But you’ll be so much better at selling if you believe in it.

Is the Buyer I Am Approaching in a Position to Buy This From Me?

This is the clincher. Many fail at selling because they approach the wrong person, someone who cannot buy. You may have heard of the term “economic buyer.” Yes, that’s what I am referring to. But furthermore, the person may be in a position to decide but may lack the budget or there might be something else preventing them from committing.

How Does What I Am Selling Benefit the Buyer?

For your offer or proposal to reach the buyer, it needs to be about something that is important to them. It needs to provide value to them. By that, I mean that it needs to make or save money. This can be in the form of creating ways a business can grow or become more valuable, or as a means to solve a problem. Generally speaking, showing that you can address and resolve challenges and pain points is a more effective sales argument than proving gain.

Do I Believe in the Value of What I Am Proposing or Selling?

Many salespeople are trained with standard arguments about the benefits of what they’re peddling. Unfortunately, many just repeat these and don’t care if these benefits are real. Nor does it matter to them whether the buyer will see these benefits materialize or not. They just assume they do. That doesn’t work over time. As people gain experience as buyers, they also tend to be less forgiving.

In the book “Insight Selling,” the authors make a solid case for why sellers need to provide value from the very beginning. Throwing standard sales arguments in the buyer’s face doesn’t work. Sellers who want to win need to analyze the buyer’s situation and convincingly show how their offer fits in and collaborate with the buyers.

“The value used to be in the products and services. With products and services commoditized, the seller becomes the value. This is a massive shift.” – Insight Selling (Schultz, Doerr)

The Consequence of Selling Without Care or Conviction

When the answer to one of these is negative or weak, you’ll end up trying to convince someone to buy something they cannot afford, don’t want or need. You might not even believe in what you’re selling, further undermining your ability to reach them.

This often results in a situation that in traditional sales parlance is referred to as the buyer “raising objections.”

The Ills of “Objection Management”

Many sales coaches teach “objection management” – (in my opinion) a fundamentally flawed concept. The idea is that salespeople can learn common objections, then practice arguments and ways to counter them.

This doesn’t work. Even if you “win,” such persuasion often leads to buyers feeling tricked or cheated. The buyers then associate those feelings to the selling profession, and the brand they felt they were tricked into buying. It’s a not a good way to start a lasting bond with someone who you’d like to come back and buy from you again in five years.

Effective Selling Is Not About Persuasion, It’s About Helping Others Fix Problems They Didn’t Know They Had

What it all boils down to is the traditional view that sellers are persuaders. That the salesperson’s job is to move others, even if the result goes counter to the buyer’s self-interest.

The idea of sellers as persuaders is, in my experience, deeply wrong and the root cause of why sellers have a bad reputation and people resent the act selling.

If you, instead of trying to persuade at all costs, strive to understand the pain points of presumptive buyers, your job will be about helping buyers by moving them.

One of the most effective ways to move others is to help them uncover challenges they are not aware of. Tommy Lindström, a seasoned sales coach whom I interviewed about nudging last year, once shared a story about what a client said to him: “The first time we met I didn’t have any problems. Now I can’t sleep at night”.

The solution to talking to the right people, about the right things with genuine conviction is to qualify your leads.

The 3 Steps to Qualifying a Lead

1. Confirm That the Person Is Capable of Buying and Works in the Right Industry

Is this person in a position to buy, being able to make such a decision or having the means?

There’s no point in trying to sell to someone who doesn’t have the means to buy, whether financial or political. That’s why it’s crucially important to your qualifying effort that you early on confirm that you’re speaking to someone who is able to buy.

Who that person is differs from industry to industry, but also between types of services and products, and their price point. For example, if your product or service costs less than say, €10,000, you might be able to sell it to people at lower tiers of an organization.

A former colleague of mine once told me how they circumvented such a problem by changing the pricing for their product, hence sidestepping buyers having to involve higher up managers. By shifting to subscription pricing, they could lower the initial price to fit within the limit of discretionary spending.

Such insights require understanding the buyer’s organization. You need to figure out what the obstacles are to them saying yes and removing those roadblocks.

It also helps to be creative and inventive and having detective skills. Chances are your lead has only provided an email address. To determine their ability to buy, you need to be able to use their email address to determine their role, for example by finding them on LinkedIn. Using that information, you can make an educated guess about their role and responsibilities. That will help you decide how to follow up.

Furthermore, it’s wise to implement a sales strategy that defines target market segments and limits what industries you primarily sell to and how. That will make your sales work more effective. By checking your leads against your target industries, you can further qualify leads and focus on those you’re best prepared to sell to. Target segmentation is important and a big topic in itself, far beyond the scope of this article.

2. Verify that the Person Has Expressed a Goal or Problem

If the person you’re selling to agrees to buy, will his or her life improve?

You’ve confirmed that the lead is someone who can buy, now the question is whether they need to.

The simple rule of thumb here is: Do not spend time on proposals or quotes to presumptive buyers who have not admitted to having a problem.

If the person hasn’t already explained why they’re contacting you, the easiest way to verify this is to arrange a meeting. Ideally face to face, though today many companies also find it acceptable to use Skype or other video-conferencing apps. Such a meeting is an opportunity for you to show the capabilities of your firm (or yourself, if you’re a freelancer) and gain key knowledge:

• What’s the problem?
• Why did they contact you?
• What are the competing solutions?
• How many agencies are they talking to?
• What are the process and the timeframe?
• Are there legal constraints?
• And, if possible: What is the budget?

This meeting is the first opportunity you have to employ consultative selling (which we’ll cover in the next post). Ask open questions and listen. Do not diagnose unless the person asks for it directly. This conversation is an opportunity for you to shape the direction the buyer is taking.

Something that you will want to glean from this conversation is urgency. Timing is an important aspect of selling and has a strong influence over the price you can ask. The more urgent it is, the more you can charge. We covered this dimension of selling and pricing in our article about nuclear events.

Why RFP’s Are a Total Waste of Time

Determining the buyer’s need to buy is critical and it’s not something you can do without asking questions. This is why responding to RFPs (request for proposal) is often a fool’s errand. At least in IT, many RFPs list requirements in some vain hope that it will lead to receiving a set of comparable proposals. But many RFPs leave out the problem the project is meant to solve.

There are industries where RFPs work as a way to win work, but they aren’t many. To succeed using RFPs, you need a laser-like focus and strictly qualify what RFP’s you respond to. You also need to budget your time and make sober estimates of your chances at winning.

We will return to RFPs in later posts in this series so I won’t go into it any deeper. But just in case you aren’t convinced about the problems with RFP’s, here’s some math to show you their true cost:

Do you honestly remember to factor this sales work into your bids?

3. Be Convinced That You Can Solve Their Problem

When your interaction is over, will the world be a better place than when you began?

The client can buy and has told you of a problem they’d like solved. Now the question is whether you can solve it with your product or service.

This isn’t a good time to lie to yourself. Just like at a first date, this is your opportunity to determine compatibility. Pursuing buyers you do not believe you can serve well is foolish. That said, you should always aim higher or your business won’t grow and develop. But that’s about being realistic and taking calculated risks, not about being dishonest with yourself and others.

This step usually takes places at the same time as the previous one, during a conversation with a presumptive buyer. A conversation about a client’s problem will often naturally dovetail into discussing your capabilities and fit.

Why Some Meetings That Don’t Lead to Work Are Also Successes

One outcome of this conversation could be that the buyer decides not to buy, from anyone. It’s happened to me more than once.

I recall one such time when I met with a presumptive client about a consulting engagement. It was a company I’d done consulting work for before and while some people at the company had changed jobs since then, my name carried weight and chances were good I’d win the work.

I asked many questions to better learn why my services were needed. The reason for this was that I wanted to make sure I could indeed help them. My direct, open, and probing questions, made the client realize that hiring a consultant was not a smart move at this time. They had work to do on their end first to take full advantage of my services.

This wasn’t a loss in my book. I had come out stronger in the eyes of this company. It was a successful meeting. I had provided value to them by helping them avoid making a mistake.

Using the Feature-Advantage-Benefit Framework to Better Understand How Your Services Help Clients Achieve Their Goals

Products can be seen as having features that give the buyers advantages which in turn lead to benefits. The same thinking can be applied to services or the deliverables that are the results of those services.

You can use this framework to think about the value you create for your buyers by connecting those benefits to the goals the client has stated. Another way to use it is to include it in your proposals to explain the value of your offer. Or you use it as a way to mentally list the benefits as a way to prepare for an early stage sales meeting.

Conclusion: Can You Help the Buyer Achieve Their Goals, Solve Their Problems or Satisfy Their Needs?

If you can’t, walk.

That’s what qualifying is about in a nutshell. It’s the foundation of all successful sales work and the starting point of every lasting client relationship.

Read on For the Next Step: The Sales Conversation

In the next part, we cover the sales conversation and how to create a buying vision by asking the right kind of questions.

Photo Credits

• Lukas
• My presentation on value-based selling
• Pixabay
• fotografierende
• rawpixel.com

The post 3 Steps to Qualifying a Lead appeared first on The Bondsai Blog.

A majority of people resent selling as well as the feeling that they’re being sold something. It doesn’t have to be like that. In this three-part series, I will reveal a method for selling that builds trust, focuses on the buyer’s needs and enables you to establish a value-based price.

You probably dislike selling. You’re not alone. Most people do. We hate being perceived as hustlers, peddlers, and sources of unwanted attention. But selling doesn’t have to be that way.

The Mystery of the Undeserved Bad Reputation of Selling

That selling leaves a bad taste in people’s mouths is strange when you consider that a large part of human interaction involves selling. You’ve probably engaged in selling recently. Perhaps even today.

You don’t believe me?

Well, let’s see:

1. Has it happened that you have persuaded your colleagues into going to lunch at that new restaurant?
2. At some point, has your son or daughter talked you into letting them buy a new app or game for the phone or tablet?
3. Have you ever convinced your partner, wife or husband to take the car to have it fixed since you had an important meeting and it was going to end late?

If you answered yes to any of the situations above, you’ve either sold (1 and 3) or been sold to (2).

This is the point that Daniel Pink makes in his insightful and entertaining book, To Sell Is Human.

Only 1 Out of 9 Work in Sales or Marketing, but 47% of All People Move Others, Whether They Know It or Not

“The ability to move others to exchange what they have for what we have is crucial to our survival and our happiness. It has helped our species evolve, lifted our living standards, and enhanced our daily lives.” – Daniel Pink, To Sell Is Human

Here are slides from a presentation on value-based selling that I held some years ago at a meet-up about value-based pricing hosted by my consultancy brand, Leancept:

That we do sell in our daily lives is clear when we consider all the words for activities related to selling, moving or convincing others:

• Convert
• Hook
• Entice
• Urge
• Persuade
• Cajole
• Convince
• Coax
• Assure
• Induce
• Sway
• Influence

Note that this list doesn’t include all the imaginative slang used for selling to or moving others…

To sell is, as Pink puts it, human.

An Insight Born From Tanning Pills

My dislike for selling began when I, as a student short on funds, tried working in telemarketing. Sitting at a desk in a former warehouse, my work usually consisted of trying to convince (mostly) members of the older strata of the population about the (poorly documented) benefits of certain dietary supplements and tanning (“brown without sunshine”) pills.

My career as phone-based huckster didn’t last long. It took me half a day to realize I’d rather be cleaning bathroom stalls than putting my energy into talking lonely elderly people into buying products that were the modern equivalent of snake oil and lucky charms (and probably harmful too). As a restroom cleaner, at least I’d know that I was doing something that made the world better. Not only that, but I’d also have a good, honest reason to feel dirty.

As my freelancing career took off, selling became part of my work. I came to realize that it wasn’t selling itself that I felt dirty doing. What I resented was selling something I didn’t believe in. That made me cringe inside. Pitching my own services was easy since I honestly knew that I was helping the buyer. I was fortunate enough to be able to vow to never sell something I felt would not help the buyer. Many others aren’t so lucky, they sell what they have to sell to get by.

The Selling Power of Enthusiastic Conviction

My conviction of the worth of what I was arguing for when selling grew, and so did the number of deals. My genuine belief in what I was selling coupled with my enthusiasm made an enormous difference to my success at selling.

Even so, I had yet to think more structurally about selling and the sales process itself. My sales technique was born out of intuition and worked. But it was not the most effective. I still didn’t truly enjoy selling. Being on the salesforce was required of me as one of the owners of a digital agency. The truth was, I had colleagues who were much better than me at it. They enjoyed doing it and that made them highly effective in convincing prospects about the value of our services.

That said, you don’t have to love the act of selling to do a decent job as a salesperson to get by as a freelancer or owner of a small design shop. With the right method, value-based selling won’t be “selling” anymore.

The 3 Steps of Effective Human Value-Based Selling

“The key is to be strategic and human—to be strategic by being human.” – Daniel Pink, To Sell Is Human

The best value-based selling takes place when we view each other as humans, first and foremost. I was recently reminded of this when visiting Italy. The manager of an establishment we visited spoke at great length and with moving conviction about the importance of seeing each other as human first, even in business. He showed it by hugging each member of his staff and then us, his customers.

You don’t have to hug your prospects and buyers to do value-based selling. In fact, I advise against it, unless you know them well. But I strongly recommend that you meet your buyer as a fellow human, empathize with them and tune in to their needs. And, using a word from Pink, upserve them:

“Upserving means doing more for the other person than he expects or you initially intended, taking the extra steps that transform a mundane interaction into a memorable experience.” – Daniel Pink, To Sell Is Human

Step 1: Qualifying Your Leads

Not everyone is a buyer, has a need your product or service can meet, and the ability to buy it. Determining whether you can and want to sell to someone is called “qualifying the prospect.” It’s one of the most important activities of effective selling and something many beginning sellers skip. As a result, their hit ratio is low which undermines their confidence.

Step 2: Leading the Sales Conversation to a YES

Great value-based selling is about listening. The salespeople who are liked and appreciated are conversationalists that generally listen way more than they talk. They have a way to make prospects feel listened to and create a shared vision using open, framing and confirming questions. Finally, they create an environment in which the buyer feels that the seller is collaborating with them to achieve a mutual goal.

Step 3: Secrets of Closing Deals

You have it. The buyer wants it. The meeting is over. You part ways. What happens now? Many deals cannot be signed immediately and require buy-in and approval from others on the buyer’s end. Under these circumstances, it’s important to stay in touch and do whatever you can to ensure the sales process doesn’t die. You will want to finish the conversation, and buying journey, you started.

Photo Credits

• Francesco Paggiaro from Pexels

The post How to Create True and Genuine Trust Using Value-Based Selling appeared first on The Bondsai Blog.

In your dealings with clients, one thing is constant: you. Who you are as a person and your interpersonal skills shape interactions and outcomes. This is what I’ve learned about the importance of humility, confidence, and empathy in the world of freelancing, agencies and consulting.

I have to admit, the thoughts shared in this article weren’t always so obvious to me. In fact, in my early days as an agency owner, I didn’t think too hard on how my and my colleagues’ personalities and interpersonal skills influenced the results of our work.

While I’ve learned a thing or two since I consider this an ongoing journey. I’ve got a long way to go. But I hope sharing some of my experiences so far will be of value to others.

Face It, You Are Your Business

In our line of work, we are our businesses. A freelance professional is themselves the product they market. Similarly, an agency owner’s personality infuses the culture of the company. It’s something larger corporations would die for, struggling to build a cohesive and attractive culture. This implicit personality is an asset that smaller businesses should take more advantage of.

A way to leverage your interpersonal skills and infuse personality in your work is by how you write proposals. As we all know, proposals are frequently what determines whether there will be any work for the agency or freelancer at all.

Back in my early agency days, the proposals we sent screamed “anonymous corporate.” They all had serial numbers and ran at least 30 pages, even for the smallest projects. Structurally, they looked more like academic dissertations than something meant to create excitement and interest. These documents were technical, legal and precise. Hardly something people would look forward to reading.

In other words, they were everything that a proposal shouldn’t be according to Robert Solomon, a long-time account executive and author of The Art of Client Service:

“Write the way you speak. You are not trying to replicate ‘party of the first part’ legal language. Write conversationally.”

Using Your Interpersonal Skills to Be a Better Communicator and Writer

In hindsight, I can now recognize that a pinch more empathy with the client would in many cases have led us to produce something different. Something written with the recipient in mind. Less formulaic and stiff. A document that would build excitement and show possibilities.

I believe that many of our proposals were missed opportunities to stand out, make an emotional imprint and be memorable.

Interpersonal skills, such as empathy, affect everything, from the format of your proposals to how you design your meetings.

By building your interpersonal skills, you increase your chances of winning work, and raising your prices and retaining clients.

What I’ve Learned From Putting Humility, Confidence, and Empathy in Practice

Building interpersonal skills isn’t something you do overnight. It requires reflection, introspection and an initial measure of humility. I’ve made my share of mistakes over the years but also learned a lot in my interactions with buyers and clients. These are some of my experiences as well as my thoughts regarding the roles the interpersonal skills humility, confidence, and empathy played in each case.

The Interpersonal Skill of Humility: Being Honest About Your Abilities and the True Value You Provide

Learning: Be aware of your strengths and weaknesses. Don’t hesitate to be honest and transparent. Admit it when your service isn’t a good fit or that you do not have experience with a particular product. But be smart about it.

I’ve tried to practice humility, and its cousin honesty, in as many sales situations as possible. But it didn’t always work out the way I hoped.

I recall a client interaction many years ago when I, in an attempt to be honest, talked about the limitations of our platform. They were limitations the client wouldn’t face for many years given the current plan. The client needed a proof-of-concept (or MVP in Lean Startup lingo). We had the capabilities to build one quickly and at good value-for-money.

Wishing to be fully transparent, I told the client that such a proof-of-concept solution wouldn’t scale over time. I said what we learned now from deploying this system needed to translate to a new system later on. This is normal in systems development and integration. What’s important isn’t to do things right from the very beginning but to learn and turning that knowledge into changes fast.

The client wasn’t aware of this iterative and lean approach. They seemingly overestimated their technology insights and assumed the classic “waterfall” method. After hearing this, the client then made a long argument to us about scalability and questioned whether we understood the concept of scalability at all. We eventually managed to bring the person back and confirm that we did indeed understand technical and business scalability. But it took a good half an hour as I recall.

Recognize What Your Client Knows, Educate and Coach When Necessary

One of my takeaways from this conversation was the importance of being tactical about what information I reveal. Not in the purpose of deceit but to ensure the buyer can benefit from it. If you decide to go the humble-and-honest path, temper your honesty with empathy to make sure you’re helping the client with your transparency. Ensure that they have the knowledge to fully understand what you’re saying to avoid misunderstandings. Otherwise, your well-intentioned helping, driven by your interpersonal skills and humility, might have the opposite effect.

The Interpersonal Skill of Confidence: Recognizing the Potential Impact and Value of Your Work and Contributions

Learning: Be confident in the value you provide and the standards you hold yourself to. This is especially important when buyers are using negotiating tactics that attempt to undermine your worth and make unfair comparisons.

Having a strong sense of confidence influences a variety of situations. It ranges from having a solid handshake to what words you use to describe your successes. But few situations are as influenced by confidence as pricing. Your price is a measure of your self-confidence.

Indeed, what is holding many back from adopting value-based pricing is a lack of confidence. They just cannot convince themselves that they produce the kind of value that pricing consultants encourage them to charge for. Confidence is an interpersonal skill that drives revenue.

Conversely, others totally inflate their prices without commensurate efforts to communicate and establish a sense of value. On our paths to become better pricers, many of us have been guilty of doing both.

If confidence is one of the interpersonal skills behind the ability to set a value-based price, empathy is the other. Your empathy can be a source of confidence in your ability to provide value. By focusing on the client pains you address or resolve, the value of what you do becomes clearer. See our 3 step guide to value-based pricing and our guide to tiered pricing for ways you can do this.

The Crafty Moonlighting Agency Financial Analyst

This kind of confident value-analysis isn’t only useful for estimating the value you create for clients. It’s also an effective antidote to the bold, verging on immoral, negotiation tactics that some clients resort to.

One example of this stands out extra well in my memory. I was told of this by my colleagues at the time who attended the meeting and I didn’t get all the details. But the general brush strokes of what went down are clear.

My colleagues were in discussions with a potential client. The “getting to know each other” phase was over. The project goals and details had been covered and the scope was taking shape. They knew the potential client and that the buyers were talking to several potential agencies to find a match. Eventually, they reached the matter of price.

At some point during the discussions, a person on the buyer’s side opened his notebook to a new page. He took out his pen and then asked: “What are you paying in rent for this office?”. My colleagues were naturally surprised and I assume gave him a rough number.

He proceeded to loudly and visibly attempting to estimate every cost our agency had. Ranging from the level of education of our staff to the average salary to overhead costs. Using this “back of the napkin” budget he then argued what our hourly rate should be, given an “acceptable” profit margin.

I bet you’d be surprised and perhaps even crestfallen if someone resorted to such tactics in a meeting. The presumptive client made it abundantly clear how they saw us: a highly fungible means to an end.

As a debate technique to argue for a price as a number, it’s effective. As a way to start a successful relationship, it’s worse than idiotic.

I don’t recall how my colleagues handled the situation while at the meeting. They didn’t walk away feeling excited about the opportunity as I remember it. After all, their worth in the client’s eyes was written on the wall.

Using Your Interpersonal Skills to Turn the Tables on Devaluation Tactics

Without having an idea of why the client needs what you’re providing, it’s hard to counter such insidious tactics. Many would try and win at the same game, arguing from the view of costs and making the case that there’s something intangible and valuable that motivates our asked rate (which was actually rather modest). This type of argument has a long history and many now-defunct advertising agencies used to refer to “creativity” as a price argument.

A better counter argument would be to stand your ground, back straight and turn the tables. Do the very same inventory, but make it about the potential gain and impact of the project and its worth to the client. Displaying strong confidence along with presenting references and cases would make such an argument winnable, if not a downright success. Show a strong belief in what you say, commitment to the results and make abundantly clear that you won’t accept any price. Show that you are prepared to walk. Such a display of confidence will most likely bolster their appreciation of your worth and estimation of the value you can deliver.

The challenge when making such a case is that costs are usually known in advance whereas potential gain is a projection. I wouldn’t recommend it as a method for value-based pricing unless you can make a solid and unassailable argument for each expected gain.

The Interpersonal Skill of Empathy: Understanding How the Client Sees You

Learning: Be able to listen to the buyer’s problems and truly hear them. A sensitive buyer will understand they’re dealing with an empathetic seller and will feel validated and confirmed.

The work we do hinges on communication. When relationships with clients break down, it’s usually about miscommunication. When something excites us and makes us rush to work or turning on the laptop, it’s usually thanks to great communication.

Effective and successful communication depends on empathy. It makes sense if you think about it. Communication goes both ways. You’re not broadcasting your message to clients. No. You’re engaging in dialog. For that conversation to work, you need to understand the other party’s perspective. You must walk in their shoes to be able to shape a message that makes sense to them.

A major part of this interaction is about how you’re being perceived by the other party. Your communication goes beyond what you say or write. It involves how you act. Your manners and choice of clothes send messages. These messages are interpreted by the client which in turn shapes their behavior.

Never Forget That This Isn’t About What You Like

This isn’t about what you like. Imagine that you think that suits are stupid garments. You might even make jokes about how those people in finance look like penguins in their ice-like glass towers. That’s fine. But if you intend to be successful working with someone who views a suit the way you view a t-shirt, you need to adapt. Adapting doesn’t mean you start sharing their sense of taste, you simply say “I respect you and your choices” and dress accordingly. Attuning to the needs of others, no matter how small, will send signals that say “I care.”

The same applies to all the things you do. From how you greet someone, to answering the phone to conflict resolution.

Validating Someone’s Perspective Doesn’t Necessarily Mean You Agree With Them

Some years ago I was working on a project together with another consultant. Some things didn’t go according to plan, there was miscommunication and the client was naturally upset. The client’s view was that promises had been made and broken. What was worse, my colleague hadn’t recognized the problems he’d caused. The situation caused my colleague to feel distressed and he asked me to meet the client to sort things out.

So the client and I sat down. We looked over what had been done, what had not been done and what wasn’t done with the quality expected. We discussed the expectations. The vast number of the client’s concerns were valid and I had no problems recognizing them. The ones I didn’t agree with were still valid. They had caused the client stress after all.

To address the concerns, we agreed on a communication plan to ensure he’d be kept in the loop regarding progress. We also created an action plan consisting of concrete deliverables and dates.

We did eventually re-establish trust. I do believe that an important reason was the heart-to-heart conversation during which I focused on the client’s pain. I didn’t necessarily agree about everything he said but I validated his worldview, his experience and him as a person.

Conclusion: Invest in Your Interpersonal Skills as Much as You Invest in Other Skills

Working on who you are as a person is equally, if not more important, than working on your technical skills. Whether you identify as a developer, designer, illustrator, project manager, account manager or executive, who you are is the foundation your professional abilities rest on.

A way to grow your interpersonal skills is to make time for reflection and surrounding yourself with people who are honest. View feedback as a gift and cherish it. Take time to reflect on your actions and role in the situations you face every day.

Don’t be too harsh on yourself either. When you’re disappointed in yourself, give yourself some slack. We all screw up from time to time. The important thing is to try and learn from every experience.

Photo Credits

• Tobi from Pexels
• Andre Mouton from Pexels
• rawpixel.com from Pexels
• Francesco Paggiaro from Pexels
• Samir Belhamra @Grafixart_photo from Pexels
• rawpixel.com from Pexels

The post Humility, Confidence, and Empathy: Secrets of the Winning Self appeared first on The Bondsai Blog.

The year 2019 is here. The turn of the year also marks the first anniversary of this blog. Join us on a trip down memory lane and see what insights and ideas MMXVIII brought.

We went through what we wrote and produced in 2018 to find the most actionable and powerful ideas and insights. These are insights that, if used correctly, could help shape your business.

1. We Cannot Overstate the Value of Knowing Your Clients

When I talk to freelancers and agencies and hear about their challenges, frequently their problems are due to a lack of customers insights. Very few business owners and leaders take the time to understand why people turn to them to solve their problems. I can wax lyrical about the value of great models but those border on useless without real data. And when I say data, I don’t mean anything complicated.

A conversation over a cup of coffee can lead to many interesting questions, answers, and ideas. Why not kick off the new year with some great client conversations?

We’ll keep covering this important aspect of running a thriving business. Stay tuned to learn more about getting actionable client insights.

2. Agencies and Freelancers Should Invest in Learning About Pricing

If traffic data tells me anything, it’s that people who read this blog are very interested in pricing. Our article about tiered pricing for freelancers and agencies keeps topping the charts. It’s no wonder. Pricing matters. A lot.

A humble increase of 2% has a surprisingly large impact. In his book “Confessions of the Pricing Man,” author and pricing expert Hermann Simon gives the following examples:

“If Sony succeeded in raising its prices by 2% without any loss of volume , its profits would increase 2.36-fold; that is, they would more than double. The profit increase for Walmart would be 41.4%, and for General Motors 36.8%. Even highly profitable companies such as Procter & Gamble , Samsung Electronics, or Nestle would see profits grow by more than 10 %.”

For a small business that adopts value-based pricing and starts “pricing the client,” an average price increase of 10% isn’t unrealistic. Assuming costs remain the same, for a company with a 10% profit margin, such an increase results in a doubling of profits.

Investing some time in reading our articles about value-based pricing and nuclear event pricing as well as a book or two on pricing is time very well spent.

We will continue to cover pricing insights on this blog. If this is something you’re interested in, then we highly recommend you sign up for our newsletter.

3. You Can Get an Edge by Shaping and Influencing Client Actions With Nudging and Behavior Design

The first interview in 2018 was about a technique called nudging which allows you to influence behavior. We talked to behavior design expert Tommy Lindström about this idea, methods of nudging and all their applications. Nudging isn’t some abstract concept that relies on a complicated model of behavior. It’s about the small things that influence our actions on a daily basis.

We found the topic to be super relevant to agencies and freelancers as nudging is something everyone can do, regardless of budget. It can be used in sales and marketing and can be what tips the scales in your favor.

If you’re looking for an edge in 2019, why not learn about nudging?

4. Agencies and Freelancers Hate Selling, but Love the Business It Brings

When I bring up the topic of selling, I often hear freelancers and agencies say they hate being a sleaze. The stereotypical image of the vacuum cleaner salesman in the out-of-fashion suit is very much alive in our modern business. That image holds many back from investing in selling and viewing it as a way to give, not just something they do in order to take.

Luckily, some brilliant people have written excellent books on the topic. If you feel that selling is something you should do more of, and better. Check out Insight Selling and To Sell is Human. I know they give you new ideas as well as shape how you think about great selling and how it can be done in genuine service to others.

Being a buyer isn’t easy either. What many agencies and freelancers sell seems risky to a lot of buyers. This shapes the sales process. Luckily, we wrote an article about why buyers hesitate. We also made an infographic about buyer fears summarizing these ideas. Handy as a reminder for the next sales meeting.

5. Smart Businesses Know That the World Evolves and They Strive to Stay Relevant

Impermanence might be one of the great tragedies of life. It is a theme that poets and playwrights have returned to over and over again. Nothing lasts forever. So it is with our personal as well as our professional lives.

When it comes to business, the consequence of not recognizing this fact of life is a slide towards irrelevance and bankruptcy. Agencies that plan on remaining in the game for a considerable time ahead plan for it. Todd Nienkerk, CEO of Four Kitchens, a distributed digital and content strategy agency, shared his insights. Todd discusses how they have developed strategies and processes to adapt to a changing landscape, rather than just burying their head in the sand.

Our advice to you: at least once per year, think about what could make your business totally irrelevant and lose all its customers.

6. Feedback Is a Gift, Appreciate It and Handle It With Care

Running a successful business, be it a small one-person freelancer operation or a corporation, requires constant improvement. One of the best sources of ideas and insights for improvement come from those affected by what you do: employees and clients.

During last year, we interviewed 3 agencies about how they collect and depend on client feedback for improvement and growth. The resulting article is full of great advice and tips that are useful regardless of the size of your operation.

7. We’re in the Business of Outcomes, Not Output

As digitalization reaches more and more parts of society, it’s more evident than ever that everything isn’t automatically better just because a computer chip is involved. Those of us who work in digitalization and strive to improve the lives of others through technology are painfully aware of this. Still, we keep churning out deliverables and code, not paying much attention to the impact.

A powerful idea is that a way out of this is for agencies and freelancers to start adopting a product mindset. Such an approach takes a long-term view of the impact of our work and treats customer and user experience as paramount to success, not mere icing. This isn’t about us building our own products but doing work for clients as if we were part of a product team together.

Is your agency ready to give up projects in favor of products in 2019?

8. It Doesn’t Take Much to Make Clients Feel Appreciated

Besides writing, we also build useful tools for agencies and freelancers. First out is the Client Happiness Idea Generator, available at client.love. We designed this little app as a box of ideas for ways to make your clients feel valued and appreciated. The ideas range from spontaneous to strategic. The great thing about these acts is that it often doesn’t take much to make someone smile. Ten minutes is all you need to find an idea on how to make your clients a little bit happier and more loyal to you.

9. To Get Better Customers, Focus on Their Problems, Not Your Services

The last interview of 2018 was with consultant-to-agencies Karl Sakas, who runs a boutique consultancy. Karl’s insight is that agencies should market themselves with the problems they solve, not the services they offer. It’s a brilliant idea which we discussed with Karl who developed his thinking in this short interview.

10. Keeping a Blog Interesting Isn’t Easy, But Totally Worth It

Keeping a blog worth returning to isn’t easy. I can’t confidently say I’ve still to figure out everything when it comes to this little corner of the web. Some of what I’ve managed to pick up in the last year I have shared in a three-part series. Hopefully, it will make someone else’s blog journey less challenging.

Reading our three-part series is a great place to start if you plan on delivering on your new year’s resolution regarding blogging ambitions. As always, the comments section is open to questions. I’m happy to help.

Conclusion: 2018 Was a Great Year of New Insights and Ideas and We’re Sure 2019 Will Be Even Better

We’d like to thank all our loyal readers who have been with us throughout the year.

Our new year’s resolution to you our dear readers:

We will keep doing the same – bringing you new actionable ideas and insights and not just paper models but things you can implement in your own business.

If you just discovered us; a warm welcome! We hope you’ll find much useful advice, tips and ideas here.

If you want to stay in the loop and get new posts by email, subscribe to our newsletter and follow us on Twitter and LinkedIn!

Photo Credits

• Photo by Mike from Pexels

The post Top 10 Insights of 2018: The Most Powerful Ideas We Shared Last Year appeared first on The Bondsai Blog.

In our first post in this series, we looked at how you can get the user insights you need for a successful blog. In the second part, we discussed how to find the right topics for your blog. Welcome to the final part in which we’ll put it all together in a blogging plan you can stick to.

The Third Pillar: Make a Realistic Blogging Plan and Stick to It

Just so we’re clear: blogging isn’t an easy win. There are 440 million blogs and 2 million blog posts are published each day. If your blog isn’t interesting or worth reading then it’s a waste of everyone’s time.

For your blog to be interesting and stand a fighting chance, your blog content must be so good that you could charge for it.

Producing content of that quality isn’t easy but it pays off over time. I haven’t found any clear evidence that supports the idea that organic traffic resulting from blog posts and the like converts significantly better than traffic from well-targeted advertising. However, it has one major advantage, organic traffic keeps coming regardless of whether you paid your Adsense bills.

Getting there requires a plan. Just like when you move to a new city and are looking for new friends. Your social plan might include habits like attending a yoga center and going to meeting places such as microbrewery pubs. Your blogging plan could similarly include a blogging habit and ways to reach an audience.

And, most importantly, you need to be able to stick to your blogging plan.

The Best Blogging Plan is the Plan That You Can Honestly Say You’ll Follow

Blogging often fails because people feel they have more important things to do. That initial burst of excitement often runs out after a few weeks. Things that seem more pressing suddenly make a good case for your time.

That is the time to remind yourself of why you blog. Your commitment to blogging must be firm, or it’s meaningless. You must be prepared to make time for it.

Use a SWOT Chart to Plan for When Your Motivation Will Be Waning

This will happen. That’s why it’s important to think ahead of the obstacles that could stand in the way of making your blogging ambitions real.

A way to do this could be to draw a classic SWOT chart, mapping out:

• Your unique position and perspective as strengths.
• What’s hindering you as weaknesses.
• Why you blog as opportunities.
• Who’s competing for your time as threats.

Feel free to use the SWOT chart above as a template for your own, or draw it on a whiteboard to discuss these questions with your team.

Strengths: Your Unique Position and Perspective

This is what we covered in the previous part of this series in which we discussed finding the sweet spot. You and your agency have a unique perspective and voice which you need to capitalize on. You also probably have done, or are known for, things that could strengthen your blogging impact. This is where your brand meets your blogging niche.

If you draw a blank here, refer to the blog mission statement.

Weaknesses: What’s Hindering You

These are the things that make blogging hard and challenging. It could be a lack of knowledge, hosting, software or a workflow that your team needs to collaborate. Make a prioritized list to know which ones you have to fix first to start blogging and getting the blog off the ground. You can always polish it later. A blog is like a treehouse, it’s never truly finished.

Opportunities: Why You Blog

These are your guiding stars and the proverbial pot of gold at the end of the rainbow. They are the reasons why you decided to start a blog. It could be finding great new team members or creating a steady flow of more work.

I recommend making these reasons as concrete as possible. Write them in a way that explains how they will improve your daily life:

• “Find a project manager who drives work and is proactive, someone I whose judgment can have complete trust in.”
• “Generate new leads so that I don’t have to spend my Sunday mornings queuing up cold emails to be sent out on Monday to prospects.”

Make them visible. Print them out and put them in a place you can see them and get reminded of the boons of your blogging efforts.

Threats: Who and What Are Competing for Your Time

I went to the movies a while ago. While waiting for the main feature, commercials ran. One of the commercials was for a bowling and game place featuring a bar and a restaurant. Oops!

The theatre chain had fundamentally misunderstood what business they were in by thinking in false verticals. They were giving their competitors a first class ticket to a place in the minds of their own customers.

The point of this inverted parable is that the threats to your blogging initiative aren’t what you think. The primary threats to your blogging efforts aren’t other agency blogs. It’s your lack of time. It’s all the other demands that call on your attention that are the direct threats to your blogging. A competitor’s blog might even be an asset in the sense of inspiring you to do blog more.

To combat this, always remind yourself of your reasons, prioritize shamelessly and delegate everything someone else can do so you can focus on the long-term goals.

Brainstorm to Find the Best Content Ideas for Your Blogging Plan

Refer to the analysis we did in the previous step, defining a sweet spot and considering post formats. We can now use those insights it’s to come up with an initial list of post ideas:

1. Brainstorm: Start by brainstorming topic ideas. There are lots of ways to brainstorm. It’s a bit outside the scope of this articles so I recommend you consult your nearest search engine for ideas how.
2. Rank Ideas: Write down the very best ideas you come up with in a spreadsheet. Add columns for:
   • Audience Value: One column for each of your target groups and rate how well the piece solves that group’s problems.
   • Difficulty: Writing or production difficulty, as in whether this is easy, medium or hard to produce.
   • Keywords if they are obvious, otherwise leave it blank for now.
   • Actions you want your readers to take after consuming the content.
3. Find the Low-Hanging Fruit: Now filter and sort the spreadsheet so that you find the low-hanging fruit: content ideas that are easy to produce and generate maximum value for your most important blog audiences. These are easy wins and great to start with to build momentum.

This is an exercise you should do on a regular basis to keep your blog’s bag of post ideas full.

Making a Content Plan for Your Blogging Plan

With a content plan, everyone knows what will be published when and can backtrack to ensure work is started well in time. Outlining, research and keyword analysis take time and require that work is done in parallel. This requires the kind of overview that a content plan offers.

1. Make a Schedule: Create a new sheet titled “Blog Content Plan” and leave the first column (A) blank. In cell B1, C1 et c write the type of content you want to produce . Write the name of each month on every third or fourth row in column A. I usually plan for one week per row so each month has four rows, or potentially one post per week.
2. Add Post Ideas: Pick the best ideas with you came up with earlier and add them to the plan. Consider whether they require research or have dependencies (interviews depend on interviewees, for example). Space them out to reflect the posting frequency you’ve decided on.
3. Define your success criteria: Add your KPI’s and targets to your content so you can easily check them later. Set SMART goals that are realistic yet challenging enough to spur you on. This gives you a birds-eye view of your efforts and the results. That makes it easy to reason about why a certain target was or wasn’t met.
4. Delegate and Clarify Accountability and Status: Make it clear who is responsible for what and when each content needs to be due for review or proofreading. Some teams use Kanban boards and tools like Trello to track blog post content through its various stages (idea, outline, draft, proofed, images added, SEO optimized, ready to be published, published, promoted et c).

Workshop With Your Team to Create a Shared Blogging Plan

A good way to arrive at a realistic blogging plan is to bring those involved together in a workshop. Ensure everyone is heard and that all risks that might derail your blogging ambition are discussed. One way to do this is to draw the SWOT chart (see above) on a whiteboard and discuss it.

Workshop Questions to Discuss

• Who will be writing?
• How frequently will they write?
• Who will proofread?
• Will you need help with graphics or illustrations?
• What style should your photos be?
• How much time will you spend on each post?
• How long should the posts be on average?
• What is your tone or writing style?
• What day of the week do you publish and what’s the schedule and workflow?
• How does this fit in with your SEO strategy?
• How will you coordinate this with your newsletter?

Blog Marketing Questions to Discuss

• How will you promote the content?
• Where will you promote it?
• Do you intend to cross-post it to several social networks?
• Will you need a social media marketing tool like Missinglettr or Edgar to promote content?
• Will you allow other sites to republish your content after a while (syndication)?

Congratulations, Your Blog Strategy Is Now Complete

You now have the third pillar of your strategy: WHAT. That means all the three components are in place so you can stop only talking about blogging and start doing it.

Conclusion: Consistency Wins the Race

Whew! Congratulations. You can now push the proverbial “go” button. But once you do, you have to commit. This only works if you stick with it over time and stay consistent. It needs to become a habit, a mental beaten track.

Blogging can be a very effective way for a freelancer or agency to earn traffic that grows over time as content gets shared. Unlike paid traffic, earned traffic is a true investment that keeps giving. But it takes dedication, discipline, and hard work. There are no shortcuts to blogging success. However, those who persist will reap the benefits of their hard work, year after year.

There are many aspects of blogging this article doesn’t cover. For that, I recommend picking up a book or following one of the thousands of digital marketers who write daily about blogging.

I hope this article will encourage you to take the step to start blogging seriously. I’d love to hear about your success and your setbacks. Don’t hesitate to comment below or writing to me.

Photo Credits

• Startup Stock Photos
• Pixabay
• Krivec Ales

The post Part 3: The Blogging Plan that Leads to Success appeared first on The Bondsai Blog.

In our first post in this series, we looked at why agency blogs so often fail. We explained why understanding your audience is critically important in order to write posts that get read. In this second part, we show you how to find the right topics for your blog.

The Second Pillar: Find the Sweet Spot Where Your Interests Meet Your Audience’s Needs

“Where can you be the leading expert in the world that truly matters to your customers and your business?” – Joe Pulizzi

Have no illusions. Writing a blog is a rather thankless endeavor. At least in the beginning, before you have followers who comment and cheer you on. It’s like shouting from a mountaintop, or into a wall and doing it on a regular basis. Effective blogging requires consistency over time. It’s a work of patience.

To sustain that patience you need to write about something you care about. Something that piques your interest. Not a topic for which you run out of things to say about it. It needs to be something you can say something interesting about at least once per week or twice per month.

This topic exists where your interests overlap with the needs of your audience. I’ve referred to it as “the sweet spot” in the chart below.

Your Audience Research Helps You Find the Sweet Spot for Your Blog Topics

To find the sweet spot for your blog, you need to consider the results of your earlier research.

Make a spreadsheet and rank all the blog topics your empathy maps or personas mention and rate them from 1 to 5 on:

• Difficulty: Does this blog topic require a lot of research or fact-checking?
• Popularity: Do you expect many more people to want to read about this?
• Interest: Does this blog topic interest you?

Use Mind-Mapping to Identify Themes

Using the sorting feature in your spreadsheet application, order the spreadsheet by the interest column. Highlight the topic ideas that rate highly on interest and popularity but aren’t too difficult. Write them down on a paper as a mind-map. Using arrows, connect related blog topics to identify overarching themes.

If there’s more than one theme, choose the one that seems to be the least difficult, most popular and which interests you the most.

Now, go back to your research and look for the formats that your audience has stated that it prefers. Look for what they have said about how they consume content. This will give you clues regarding the ideal post length and whether you should focus on writing or creating infographics or do something else.

For example, if they say they prefer reading while on the metro, keep your pieces under 1,200 words or perhaps consider producing audio content.

Blog posts can take many forms:

Clarify Your Blog Objectives and Blog Topics With a Mission Statement

With this information, you can now write a mission statement. This is something I picked up when reading Joe Pulizzi’s “Epic Content Marketing.”