Coaches Corner: The Solution For Being Too Expensive
It’s early January. My phone rings. It’s Sue, a former client I spoke with two weeks earlier. She had called to share she was leading a new firm and they were growing like mad. She needed our help again. I had always liked Sue. We did really good work for her and she’s a straight shooter. I trusted her. We also hadn’t worked together for quite some time and our prices were higher now and our process more finely tuned.
The conversation we had two weeks ago had gone well. I walked her through our process-framed case studies and gave her a proposal for the work with options. This was the green-light call, I was certain of that.
“Hello, Sue. You ready to hire us again?” I joke.
“Well, I wanted to talk to you about that,” her tone sombre.
Uh-oh. I knew she was looking at other firms. I suspected they were all local and generalist in nature. Is she calling to give me bad news?
“I know you can do a good job. But you’re just so much more expensive,” she says. “My firm is young. And your price is just….,” her voice trails off.
To keep the conversation from turning from bad to worse, I jump in.
“Sue, do you mind if I ask you a question? Is your firm trying to be the low-cost provider in your sector?” I know the answer.
“No, of course not.”
“Well, neither are we. I know you’re looking at other firms, and there are some good designers here locally. But let me tell you why we’re worth every penny. Then you can make your decision. And if the decision is not to hire us, that’s fine. We’ll still be friends, okay.”
“So the first reason we’re worth it is that we specialize in your sector. And this gives us insights that other firms won’t have. Are the other firms you’re talking to going to be able to hit the ground running, or are you going to have to start by explaining in excruciating detail exactly what it is you do? You know me, Sue. We’ve worked together before. You won’t have to train my team. I’ve already done that for you, by working for dozens and dozens of firms in this sector.”
She says something non-committal. At least she’s listening. If I go down, I’m going to go down swinging.
“And Sue, we’ve shown you exactly how we work. I walked you through our process-framed case studies. We’ll take you through each step in that process, just like we do with all our clients. Now, did any other firm show you exactly how their process is going to work, or did they just wave their hands a lot?”
Again, a non-committal answer. But I think I’m making headway, so I keep on. Next, I make a strategic move.
“And Sue, you know you can split this project into two portions. We’re better than anyone on the planet at strategy…” Did I really just say that? “…so why don’t you hire us for the strategic part, and then you can give the tactics to some low-cost (inexperienced) pair of hands?”
I’m doing what Win Without Pitching calls “stepping on the tactical to raise the strategic.”
This has worked with other prospects in the past. Once we finish the strategic component, it’s actually pretty tough for the client to go elsewhere. Their comfort level and their confidence in our abilities is pretty high by that point. But it doesn’t work this time.
“No,” she says. “I don’t want to split this up. All that will happen is the second firm will say, ‘Well, we wouldn’t have done it that way.’ So the results will suffer. And I don’t have time to babysit this process. I’m looking for a firm that can act as my marketing department. I’m too busy to babysit them, or to play referee.”
“I totally understand that, Sue. You don’t want to have to play referee. Our goal is to deliver great results for you, which is why we put together the proposal and price options the way we did. We can handle all your needs.”
“And Sue, there’s one more thing I want to say. I normally don’t do this for very many people, but we’ve worked together before and I trust you. So I’m going to do something I don’t normally do. I’m so confident that our process will deliver great results that I’m going to give you a money-back guarantee. How many other firms are that confident?”
“Not very many.”
“That’s right. So, you want to know whether we’re worth the investment. I understand that. I’ve given you three reasons. First, we know your sector. You won’t have to train us. Second, we’re going to be following a clearly defined, well-honed process. And third, I’m giving you a money back guarantee. If you get to the end of the strategic phase and you don’t think our deliverable will work, then you give us one chance to fix it. If we don’t fix it to your satisfaction, I’ll give you your money back.”
There’s a silent pause.
“Sue, this reduces your risk a lot.”
“Hmm…” She’s thinking about what I’ve said.
“Sue, what concerns do you have?”
“None, I just need to think about it.”
“Okay. That’s fine. Again, I want you to know that I’ll respect your decision, no matter which way it goes. As you think about it, if you have any other questions, give me a call, okay?”
“Okay.” There is a pause. “Oh, I do have one more question.”
“Well, we had a really good year last year, and I need to get some money off my books. Can I pay you for the whole year in advance with money from last year?”
I laugh. “Yes, Sue, I’ll take your money, no matter what date is on the check.”
She laughs too. We trade some pleasantries and hang up.
Less than a week later, I have a check in my hand for more than a quarter-million dollars. She never negotiated the price.
What just happened?
Maybe she called to tell me I didn’t get the job. Maybe she called to negotiate on price. But she called. And I won the work at a higher price than any other supplier.
Reading this conversation, ask yourself how confident I sound. Pretty darn confident, right? Where does that confidence come from? It comes from the expertise my firm and I have built in our one sector.
And how does this expertise manifest itself? It manifests in expert processes.
And the money-back guarantee is a great way to back that confidence with action. I know that most challenges are no match for the systems we use to develop a solution. Yes, there are outliers, those thorny, horrendous problems that cause my team to stretch and sweat. But I’d asked enough questions to know that Sue’s challenge isn’t one of those. So the risk I’m running in making the offer is very, very small.
Our expertise and the resulting confidence also manifests in expert sales processes. I knew how to help her reach a decision that would be in both our interests. Thanks, Win Without Pitching, for all you’ve taught me.
The Money Back Guarantee Step-By-Step
When I first heard Blair talk about offering a money back guarantee, I was deeply skeptical. No, worse than that, I was frightened at the thought of actually having to write out a check. I’m sure many of you feel the same way. But I’ve been using them for a while now and I’m here to tell you that they’re a lot less scary than they sound. I’ve made this offer three or four dozen times, and I’ve closed a fair share of those and no one has yet to ask for their money back.
I urge you to use money back guarantees. They’re incredibly powerful. The firm that offers them exudes confidence. And that’s exactly what the prospect is seeking. At the end of the buying cycle, buyers need reassurance. Many of your prospects don’t buy what you’re selling very often, so they’re unsure. They need to understand that you represent a safe choice. They need confidence. And that’s exactly what a money back guarantee provides. You’re offering to take their financial risk down to almost zero.
First, only guarantee the strategic portion of the engagement. It’s too easy for the tactical details to go sideways. When I was talking to Sue, that’s what I did, guaranteed just the strategic portion.
Second, you have to require the involvement of the principal. They can’t disappear while you’re doing your work, foisting you off on some low-level person with no power and no vision, only to pop back in and say, “Well, that didn’t work. I want our money back.” I didn’t require this of Sue, because I knew that she would need to be deeply involved in our process. That’s the way she works.
Third, the less “fine print” you have the better. So, no caveats, no exceptions, no escape clauses. This should feel like a handshake deal, not like one where the lawyers have to redline every clause. This is where you need to have the courage of your convictions. The only thing I told Sue in this regard was one minor detail: if it’s wrong, you give us one chance to get it right. But there was no other fine print.
Fourth, there needs to be a limit of some kind on the guarantee. Typically it’s a time limit. The guarantee can’t go on forever. This was implied in my offer; our strategic offerings only last a few months.
Fifth, give them a range of options. “We’ll get to the decision point. Then we can decide to proceed, or we can decide to stop, or we can decide to stop and I’ll give you your money back.” This fifth point is not strictly necessary, but it’s a more realistic representation of the possible futures than just: “You get your money back or you don’t.”
How to make the offer
When it comes to making the offer itself, here are some tips:
- Make the offer to one person, not to the whole room. This will be the highest ranking person at the prospect company.
- Look that one person in the eye. Focus on them. Smile. You want to humanize this moment.
- Slow down. You’re making an incredibly important point. Your audience should sense the room lights dim and the spotlight on your face grow brighter.
- Tell them that you don’t do this for everyone. (That’s true, isn’t it?) They’ll feel special.
- Frame your offer as a way to reduce their risk. You can call it “financial risk” or just “risk,” but you want to highlight the benefit for them.
- Be confident. Exude trust and power, even if you’re shaking on the inside. This kind of offer is the mark of a supremely confident professional. It won’t work if you telegraph your doubts through tone of voice or body language. Don’t mumble. Speak up.
- Place your offer carefully into the flow of the meeting. You probably don’t want to lead with it. Wait for the right time, and once you start, don’t let anyone interrupt you. Once you make the offer, pause. Let the silence stretch. You want to sear this moment into their memory.
Then ask a strategic, high-gain question. The one I asked Sue was a variant of this one: “How many other firms are so confident that they can deliver outstanding results that they’re willing to guarantee their process?” You want to distance yourself from the competition.
- Practice by making the offer to a few “gimme” prospects first. These are the prospects that won’t ever take you up on it, or where the cost of failure is so low that you could afford to pay them back. These types of situations are low risk for you. In using these as practice, you’ll learn what it feels like to make the offer, how the words sound coming from your mouth, and what types of responses are typical.
What could I have done better?
Thinking back over the conversation I had with Sue, there are some things I could have done better:
- I should have sent her an email right after our conversation with the guarantee spelled out. This would have hammered home the point.
- I probably shouldn’t have spent so much time questioning my competition. I was trying to draw distinctions, but looking back, I feel I might have overdone it.
- I could have been much more clear about the three choices: if you don’t like it, we get a chance to make it right, in which case we’d proceed. But if we can’t fix it then we can decide to stop, or we can decide to stop and I’ll give you your money back.
That’s okay. I’ll do better next time.
Did Sue take me up on that offer of a money back guarantee?
We recently wrapped up the strategic engagement portion of the project with Sue. I had all 8 members of her leadership team in the room as my team and I walked through our findings and recommendations. At the end of the meeting, we do what we always do: ask them to fill out an NPS (net promoter score) survey. We got 9s and 10s from everyone, so our NPS score is 100%.
The next day I came into the office and sent Sue an email.
I neglected to say one thing in our Monday meeting. I doubt I actually need to say it, but just in case, here goes:
Do you remember the sales conversation we had at the beginning of the year? That’s when I offered you a “money-back guarantee” on the strategy portion of our engagement.
Well, the strategy is set, so if you want your money back, now’s the time to ask.
Otherwise, full speed ahead.
Her response was simple:
Full speed ahead