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:

  1. Remove pricing from the front lines (centralize in a value or pricing council)
  2. Keep the scoping function tied to the pricing function (thereby centralizing that, too)
  3. 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
  4. Have the account leader brief the value council on the key areas uncovered in a value conversation:
    1. What the client wants
    2. The metrics of success
    3. The value that might be created
    4. What the client might pay for that value
  5. Have the value council construct a draft one-page proposal of engagement options and prices
  6. Invite the account leader to comment on and contribute to the draft
  7. 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.

 

Open Book Management

Blair gets David to admit that he was kind of wrong about open book management being just a fad when he originally wrote about it almost two decades ago, and David offers ways that it can actually improve relationships with both employees and clients when used appropriately.

via 2Bobs

“Let’s see what kind of client you’ll make.”

The Questions to Ask When Considering a High-Risk Client Relationship

On my parents’ wedding day, family legend goes, my maternal grandfather turned to my father and menacingly said “We’ll see what kind of a son-in-law you make.” By all accounts my grandfather’s concerns were quickly assuaged and he and my father became very close.

Let’s try on the idea of you being as ruthlessly discerning with your prospective clients, if a little kinder in your language. What are the questions you would like to know in advance of working with a client to determine if this relationship is going to work? Employing the Win Without Pitching principle of Say What You’re Thinking (aka Kind Ruthlessness) let’s list the questions to which you would like answers and the direct-but-kind language you might use to get those answers.

Decision Makers

The most frustrating clients are often those with too many cooks in the kitchen. In any sale you need to identify the decision makers, but often, people other than those with a say in hiring you will have a say in the work you do—or they will feel that they have a say. You want to find out who on the client team has the ability to say no, to make or request changes, to delay the project or to just offer input; and if the number is high enough to concern you, you want to speak up.

“Once we’re working together, whose input or feedback on our work will be invited or welcome? How many people will have the ability to slow things down or degrade the quality of the work?”

If still concerned by the number, you might share that “In our experience—with creative work in particular—the organizations that limit the number of people having input tend to make braver decisions.” Groupthink, as we know, leads to lowest common denominator work.

Another danger of too many meddlers is your work being “circulated for comments.” If you’re worried about this, head it off before the engagement even begins by invoking policy. “It’s our policy that when the work we do is presented in your organization, we do the presenting. That way we can communicate all the subtlety and rationale that we don’t typically put into writing. I assume you’re okay with that?”

Alignment on Relationship Length

You might be set up to turn over clients and project work quickly, or you might be pursuing the slightly delusional idea of “clients for life.” Wherever you are on the relationship length spectrum, you want to make sure your clients are in roughly the same place. So go ahead and ask.

“What length of relationship are you looking for and why?” You might also ask “Is it the policy of your organization to review the account at defined intervals?”

I imagine my father clearing my grandfather’s first hurdle and then being told, just before their second wedding anniversary, that “As a matter of policy, I’m reviewing my daughter’s marriage every two years. I’d like you to complete this questionnaire, this financial forecast and prepare for the interview.”

“Why,” I can see my bewildered father asking?

“Well, people get complacent and we owe it to the family to make sure there’s not somebody better out there—more caring or with greater earning potential.”

If that’s your client’s policy, then they’re likely to be a shitty, price-buyer client and you’ll want to know it before you decide to work together. If you do decide to take them on at least you’ll know what you signed up for.

Another way to pose the question might be, “What do those in your organization see as the proper length of a relationship like this?”

Past Relationships

There may be questions you want answered about the client’s past. Just ask. “How long was your last relationship? Was that the right length or did you feel it ended too soon or went on too long? How did it end and why? What would you do differently if you had that relationship to do over again?”

If you’re particularly concerned—and feeling especially brave!—you might ask, “Would you mind if I had a conversation with the CEO or managing director of that firm?”

Money

You want to know, in advance, if your client has any ideas on what your profit margin should be. The only acceptable answer is a variation of “we want you to make a lot of money by making us a lot of money.” Any client that wants to control your profit margin is not a good client.

“What are your thoughts on how profitable your account should be for us? Do others in your organization have the same view?”

You might even state, “I hope that our clients respect our right to earn extraordinary reward for ourselves by creating extraordinary value for them. What do you think about that?”

Procurement

If procurement is going to be involved, you want to find out when they will appear and what their role will be. Again, direct questions are best. “What, if any, is the role of procurement in hiring a firm like ours? Do they share your view on our right to make money or are they solely focused on cost reduction?”

If you suspect procurement might be a problem, say so. “You seem to have a point of view that aligns with ours, but it hasn’t been uncommon for me to have reasonable conversations with people like you, only to be met with unsavory tactics from procurement later on.” Pause here and see if the client fills the silence. You might then ask, “If we get that far and I find myself in that situation, what’s your advice to me?”

Conversations Instead of Presentations

The Second Proclamation of The Win Without Pitching Manifesto is We Will Replace Presentations with Conversations. All of the language I have modeled above is just straightforward; questions to which you deserve straightforward answers. This is common sense but not common practice because we tend to think of the sale as a series of one-way communications: the client briefs you, you go away and do the work, then you present. The client listens then goes away and makes a decision. They then present that decision to you. There’s very little real proper dialogue in such a model and that’s what you want to change.

By learning to say what you’re thinking you create a real dialogue between professionals and an environment where everyone can speak frankly. You’ll also find that moving from presentation mode to conversation mode, in which you ask direct questions like the ones above, shifts the power balance toward you and you communicate that, like the client, you too are discerning of the fit.

I’ll ask my father how he replied to my grandfather, but I suspect he did the proper thing, said something polite and worked hard to gain his trust. I also suspect he was thinking to himself, “It’s a two-way street, old man. Let’s see how you shake out, too.” If he were looking for kinder words to speak, he might have said, “I’m sure we’ll both work hard to prove that we’re worthy of being in each other’s lives.”

Say what you’re thinking. Be kind, for sure, but be direct. Good clients will welcome a proper conversation.