Creating a Value-Centric Relationship With Your Clients
By Tim Williams
The essence of effective pricing in professional services is to get paid for the value you create, not the hours you work. This means trading a cost focus for a value focus. Instead of investing energy in tracking inputs, we must instead do a much better job of identifying and understanding the outcomes that are critical to our client’s success.
Because of time pressures and client-dictated workloads, most firms make the mistake of jumping straight to Scope of Work without first stopping to assess the Scope of Value. It’s simply not possible to price based on value without having an in-depth understanding of the client’s objectives, desired results, and metrics of success.
In written plans and recommendations, the tendency to just fill in the blank on the section labeled “Objectives” is habitual. This unfortunate habit is compounded by the fact that many clients are not able to provide a concise articulation of their objectives for a given program. When asked the question, the majority of marketers will identify “sales” as their primary objective. This is not a very useful answer.
For starters, it’s a given that every organization wants to increase sales and grow their revenues. But the main problem is this answer lacks precision. There are literally hundreds of success metrics related to revenue growth. “Sales” is only a tip-of-the-iceberg way to define marketing and business objectives.
What predicts sales?
It would be much more useful to know what predicts sales. Sales is a lagging indicator, along with other measurements like market share and stock price. While lagging indictors have their place, they are essentially historical metrics. We can only view them in the rear view mirror.
Leading indicators, on the other hands, are predictive. They are the metrics that create the success represented by the lagging indicators. In the car business, total sales may be key lagging indicator that management tracks and pays attention to. But what predicts sales in the automotive category? Toyota’s answer to this question is “test drives.” For this brand, there is a one-to-one correlation between test drives and sales. More of the leading indicator produces the lagging indicator.
Given that most marketers default to the obvious lagging indicators when identifying their objectives, it’s the job of the agency to help them drill down to the metrics that matter. It could be argued that helping a brand identify its leading indicators of success is remarkably valuable in and of itself. This is an opportunity to involve the best strategic talent in the firm, particularly brand planning and analytics, to engage in a process of helping brands understand the cause-and-effect relationship between their leading and lagging indicators.
Formalizing your exploration of Scope of Value
While most firms would say they have a discovery process that includes identification of client objectives, this rarely goes deep enough to articulate specific metrics of success. It’s not enough to have a new client lunch, a new client kickoff meeting, or even a formal new client “onboarding” session. There are too many other topics to be covered in onboarding meetings.
What’s needed is a formal session devoted to defining success, attended by not only the day-to-day client contacts, but (to the extent possible) the C-level executives of your client company as well as other functions that work in a complimentary way with marketing, such as sales, operations, and technology. It’s essential to have the point of view of the senior decision makers in the client organization.
Similarly, the agency should be represented not only by the people on the front lines of the account team, but also the appropriate C-level executives.
The goal is to go beyond the obvious and peel the onion around the question “What does success look like?” Consider this list of key diagnostic questions:
1. What is your company’s profit model? How does your brand/company make money?
2. How do you know when your brand is succeeding?
3. How do you know when your brand is failing?
4. What do you consider to be the critical success factors for your business? For your marketing program?
5. If these metrics are not clear, to what degree can we help you identify them?
6. What do you not measure about your business that you would like to measure – and why?
7. Based on your profit model, which of our firm’s offerings do you most value?
8. What specific results do you hope our services will help you achieve?
9. How do you measure success with your current agency?
10. If money weren’t an issue, what role would you want us to play in your business?
Next time your client tells you the objective of a campaign is “sales,” politely insist that you engage the agency-client team in a more thorough exploration of what constitutes success. This will help transform a transaction-based relationship into one guided by a shared commitment to achieve clear marketplace results.
