The 4 Ps of Marketing – Product, Price, Place, and Promotion – really aren’t applicable to a professional services firm (actually, they probably aren’t applicable to most businesses in our knowledge/experience economy – but I digress).
For a professional services firm (or any services firm), the four P's you should be looking at are:
- Positioning (differentiation)
- Perfect client persona
Let’s take each of these in a bit more detail – in reverse order.
The Perfect Client
The perfect client is not the one willing to pay you whatever you ask, no questions asked. (We like them, but they aren’t perfect.) We’ve written a lot about ideal clients – they are the ones that value your insight; they are profitable to work with and refer you. For a services firm, I would add one more criteria to make them perfect: you trust and respect their firm and their approach to business.
At Leading Results, we are a service firm. We deliver some products (website, graphics), but ultimately it is our service, our consistency, our knowledge, that keeps our clients engaged. Our perfect client – and I think it's the same for most services firms – is one that trusts our council, is profitable to work with (they understand that more work incurs more charges, and they pay their bill on time), refers us to their clients and peers, and runs a business that we find both interesting and one which we are proud to be associated with and promote.
So to ensure your marketing and business development efforts and budget go to the right place, build out your perfect client persona. Start by looking at the clients that meet the above four criteria – make a spreadsheet with the client name on the left and then four columns for profitable, value you, refer you, you like them – and go through and check the boxes. It will probably only be ten to fifteen percent that get all the boxes checked.
Then look at the commonalities of those whose boxes filled out. Somewhere in those commonalities lies the definition of your perfect client.
Why are you different than every other firm that “does what you do”? Please don’t tell me its because you are smarter, have more certifications, or give better service. While they may be true, you can’t demonstrate your service level until I am a client, your certifications probably mean little to me, and as for smarter, well how do I know you are smart about my particular need? So how do you differentiate? We think it comes down to three things: process, culture, and packaging (which we’ll discuss in a bit).
Process: Your processes, as a services firm, are your magic. It is how you get the work done – your knowledge and expertise transferred into value for your client. For your prospective customer, buying your service without understanding your process is like buying a black box – they really don’t know what will go in or what will come out.
You don’t have to tell your prospect ALL that you do, but by delineating your processes – steps, expectations, milestones – you set expectations and remove fear and uncertainty. And by giving your process a name, you make it yours. You can use the names to differentiate. Sure, other companies may do the same thing, but they don’t call it your name.
Culture: The way you go about executing those processes is dictated by your culture. Are you “fun” to work with? Are you serious? Are you “professional”? And what do those terms exactly mean? Your company culture will happen – either purposefully or accidentally – and it has a direct impact on how you position your business. You can be known as the environmental firm that is easy to understand (and work with) or the law firm that actually makes things fun (well, that may be a stretch, but you get the idea).
Staying with the above: if you decide that you want to be known as the environmental services firm that is easy to understand and work with, then you are going to have to make sure you build your process with the right kinds of communication – the kind that occurs at a layman’s level of understanding. This affects the people you hire and the way you train them. It affects the way you write on your website and the way you do your proposals. In short, your processes and your culture affect how the world sees your business. Your price and your packaging are reflective of this in how someone buys your services.
Consider this question: What was the last time someone asked to buy an hour of your time? As a services firm, you are delivering a result. A legal problem solved, a building designed, a mess cleaned up, a lead generated. But you probably price your services by the hour – either explicitly by quoting an hourly rate or intuitively by rolling up your projected work effort and multiplying it by an hourly rate.
Tim Williams has a tremendously well-thought-out blog post on Verasage.com where he discusses how large client buyers are demanding to see the costs of the service firms they work with to apply an approved profit margin – something you would never do with a physical product.
Tim writes: “This nonsensical buying and selling of inputs (hours, FTEs, time of staff) produces neurotic behavior on the part of buyers (who live in constant fear of getting less than they paid for) and less-than-scrupulous behavior on the part of sellers (who fret about getting all their hours billed by the end of the year so they can earn their full fee). This serious misalignment of economic incentives produces not only an environment of mistrust, but virtually insures [sic] that neither party fully gets what they want. It also prevents the type of “partnership” that is a stated goal of both the firm and its client.”
For most services firms, pricing should be influenced, in a large part, by the results the services deliver. And results can have many different ways of being measured. It could be measured by savings, specific results, an action being taken (or not), or time – just as a few examples.
Consider this example of time: Imagine if your car mechanic told you that he can have your car back in two days, with the repair done, for $250, but if you were willing to pay $375 to avoid the inconvenience of having to find a ride for two days, he could have it done by the end of the day. There is value in time (the airlines have known this for years).
Our final P is packaging. This is the way you bundle up what you do to achieve the results your clients want. A bundle of hours, however, is not a package. For this P, let’s use a mechanical design firm as an example – we’ll call them M-Designs.
M-Designs works with clients to design prototypes that are eventually used in the production of a finished product. Their work includes consultation, research, design, mechanical drawings, and a finished 3-D printed prototype.
They could charge by the hour for their services, but clients want to know what the final cost will be, not the hourly rate. Instead, they can offer various levels of services. In this case, maybe they offer Consultation and Material Recommendation as one package, Consultation through Design as another, and Consultation through Prototype as the third.
They can then price each package as a percentage of the whole (of course, for the client, committing to the complete package up front is less expensive then committing to working together one stage at a time). And in this case, the pricing is separate from the package. To determine the package(s) pricing, M-Designs first has to go through a discovery process with the client to understand the complexity of the work they are proposing on. This is the sales time investment that all firms undertake, but note that it is discovery, not consultation, so there is a discrete process and commitment on the firm’s part.
At the end of the discovery process, M-Designs is then able to tell their prospective client that:
- Consultation and material recommendation is $10,000
- Consultation through design is $18,000
- Consultation through prototype is $25,000
And they add the caveat that separately, each stage in their process is $10,000, so by committing to the entire process as a package, there is a $5,000 savings.
Selling your knowledge and your experience is not the same as selling a product. It is intangible and, as a result, needs to be made more “real.” Working through these 4 P's will help you do just that – and increase the speed of your sales cycle and your profitability.
When an ideal prospective client understands and relates to your positioning (culture, processes), and understands the price/package and value relationship, you have removed most of the uncertainty of the process.
If you’d like some help working through these P's, reach out and contact us – we have a strategy workshop perfectly tuned to help you accomplish clarity.