Brett learns he can't afford the luxury of undercharging!
Brett learns he can't afford the luxury of undercharging! Brett was in a quandary. He had been running his sales and marketing consultancy for nearly three years - and while he wouldn't describe himself as successful, he had just about managed to keep his head above water.
One of Brett's issues however, was how to value his service - for although he felt he was every bit as good as his competitors, he mistakenly believed that clients bought primarily on price.
This had led to Brett undercutting the competition - and while initially this policy had won him a significant number of new clients, it wasn't long before he realised that his modus operandi was costing him far more than he realised.
Not only was it hard to increase prices once they have been set, but Brett also found - much more worryingly - that the kind of clients who bought on price alone were the kind of clients who didn't like paying at all.
Several times Brett had been forced to sue clients for the money they owed him - and it hadn't taken him long to realise that he couldn't afford "cheap" clients.
While he recognised the problem, Brett could not however, see the solution. As he poured out his story to me, I felt for him - and remembered the countless other clients I had seen over the years who had shared similar experiences.
One of the problems facing Brett was that he had built his reputation on being the cheapest sales & marketing consultancy rather than the most cost effective - and one of our first tasks would be to change his current and prospective clients' perspective from the former to the latter.
From our discussions it was clear that Brett believed in the quality of his service, so I suggested that he put his money where his mouth was - and not only raise his fees but also offer a full money-back guarantee if a client was unhappy with his work.
Brett spluttered at the suggestion, saying, "Surely that will give people even more of an excuse not to pay their bills! I really can't see how offering a guarantee is going to help me - in fact I think it will make the while situation worse."
"I know where you're coming from," I replied, "but hear me out. You want to be working with the kind of people who understand that good business is based on long term relationships forged on the win:win principle. First though, you need to gain their trust - and by offering something first - like a guarantee - you are showing that you have faith not only in your product but also in the relationship with your prospective client."
Brett began to smile as he realised that perhaps there was a way out of the whole mess after all. "You're right," he said, "I do need to be looking for clients who have the right attitude. I guess that by being afraid of charging a fair price, I have not only been earning less than I should - but I have also cornered myself into working for the wrong kind of people.
"Well, all that's about to change," he said, with a confident grin, "As now I am going to be more choosy about who I take on as my clients. I am also not going to rush into making the sale - but when I'm confident that we can forge a long term relationship, I'll then be happy to offer my prospective client a full guarantee."
As our session came to its conclusion, Brett knew that the next task on his "to do" list was to revamp his own promotional literature - taking into account all that he had learned during the afternoon.
About the Author:
Olivia Stefanino is a leadership consultant, speaker and author of the internationally acclaimed management book, "Be Your Own Guru". Interviewed on more than 25 radio stations and featured in "The Guardian", "Natural Health" & "Red", Olivia is a guest columnist for a number of national and international publications. Download your fr*ee e-booklet, "128 ways to harness your personal power!" by visiting www.beyourownguru.com
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