Rethink Account Management, Raise Your Prices
Why The Account Manager (or Consultant) Role is a Barrier to Extraordinary Profit, And What to Do About It
In an earlier post called The Most Valuable Skill in Business I talked about how letting go of solutions and focusing intently on what the client wants, and the value she’s looking to create, is indeed the most valuable skill in all of business. Unfortunately, this skill of focusing on the customer—and by extension, forgetting for awhile about what you might sell to her—is not all that common, especially in the creative and marketing professions where most of the communication is one way at a time.
A Series of One Way Communications
Think for a minute about how we are conditioned to communicate with our clients, right from the very beginning of the relationship. First, the client decides what they need. Then they lob us an RFP. We compose our response and lob it back. The client reviews our submission then informs us we’ve made it to the next step. We are invited to present. In the presentation we do most of the talking and the client gives very little away. After a few cursory questions they finish with “Thank you very much; we’ll be in touch.” We wait for the decision. If we’ve won, we are invited to the proper brief where we once again largely download the client’s directives. We then retreat to prepare our solutions, again in isolation, and begin preparations for the next presentation.
In such a world there is very little real collaborative conversation. There is one party transmitting and the other receiving. One exchange at a time, we are either presenting or being briefed.
Conversations Instead of Presentations
At the heart of much of what we teach at Win Without Pitching is simply getting back to conversations. The second proclamation of The Win Without Pitching Manifesto is We Will Replace Presentations With Conversations, and our framework for navigating the sale is The Four Conversations—the idea that you should view the arc of the sale as four discrete conversations, each with its own objective and framework for navigating to that objective. Conversations instead of presentations.
Substituting One Type of Expertise for Another
I’m advocating that account managers (I include consultants in this term—essentially anyone on the front lines regularly interfacing with the client) learn to substitute one type of expertise for another.
There are two main, broad categories of expertise: subject matter expertise and process expertise. Account managers in specialist firms are typically subject matter experts. Like dead people in The Sixth Sense, they see patterns everywhere. (My 2Bobs podcast co-host David C. Baker points out the relationship between pattern matching, innate intelligence and expertise building in his book The Business of Expertise.) When the client starts describing their situation, the experienced account manager taps into his mental history of other clients expressing similar sentiments or symptoms and immediately begins to form hypotheses as to the problem, the solution and—jumping ahead further—either the price the firm typically charges for such a solution or the maximum price the client is likely to pay for said solution. This jumping ahead is what needs to stop if you want to access the highest levels of value creation and profitability. By going too quickly to our mental library we bring all kinds of limitations and biases. Most grievously, however, we shift the focus away from the client and what she wants to us and what we might do and charge.
What I’m advocating is that account managers endeavor to build expertise around the process of conducting a value conversation. In the appropriate moment in the sale, they must learn to let go of their subject matter expertise, clear their minds of any possible solutions or prices, and focus on facilitating a value conversation—the most valuable skill in all of business. If you can make this transition in your firm, I believe you can open up levels of profit that you previously viewed as ethically unattainable.
Enter The Value Council: The Central Repository of Pricing and Scoping Decisions
I first encountered the idea of a value council in Ronald J. Baker’s book Implementing Value Pricing: A Radical Business Model for Professional Firms. Building on an earlier idea of a pricing council, Baker advocates the full centralizing of all pricing decisions in the firm to a small group (picked based on skill, attitude and temperament rather than on role or rank) led by a chief value officer or CVO.
Representing full centralization of pricing, the value council and CVO is indeed a radical rethink of how to handle pricing in a professional firm. For the greatest impact, however, the firm must also centralize the scoping of the engagement. Centralizing the pricing function without centralizing scoping represents only a small step toward the extraordinary value and profit creation attainable through value-based pricing.
The Roles of the Value Council and Account Managers
Each of the few value councils I have had the pleasure of working with has been limited in their power to affect price because the account leaders were still scoping—focusing on solutions—instead of uncovering value creation opportunities unencumbered by their ideas of the shape or scope of the engagement.
At the highest level of pricing centralization and, I believe, value-and-profit creation, here’s how account leaders and a value council should work together:
- Remove pricing from the front lines (centralize in a value or pricing council)
- Keep the scoping function tied to the pricing function (thereby centralizing that, too)
- Train your account leaders to embrace the idea of becoming process experts, allowing them to conduct a value conversation without crossing the line into scoping solutions
- Have the account leader brief the value council on the key areas uncovered in a value conversation:
- What the client wants
- The metrics of success
- The value that might be created
- What the client might pay for that value
- Have the value council construct a draft one-page proposal of engagement options and prices
- Invite the account leader to comment on and contribute to the draft
- Agree on final changes and have the account leader conduct the closing conversation with the client
There are many more elements of the value council covered by Ron Baker than I have touched on here (and Tim Williams nicely summarizes much of it here). My main point is that while centralizing pricing in your firm is a step toward building a firm that is intently focused on extraordinary client value creation and the corresponding profits, to finish the journey and get to the highest levels of profit you will have to centralize scoping too, and reshape the account manager role as one of dual expertise in both the firm’s subject matter and the process of mastering the value conversation.