Story of the Day: Price vs. Value
Let’s start with a truism “Financial services is a commodity”. Everyone has access to everything on the cheap! How do you communicate your value (and justify your price)? Frankly, my financial services clients and I are in similar situations. Why should our client’s come to us when they can access knowledge easily and DIY their own program cheaply? Why indeed!
Because availability and price is not what matters most!
Consider abundant and cheap commodities, like many foods. People happily buy extravagantly priced food commodities, like salad dressing. There is absolutely nothing expensive or complicated about salad dressing (or other sauces). BUT we buy multiple jars of dressing, sauces, marinades, sandwich spreads etc… all costing far more than we need to pay for something cheap and easy to DIY. Why?
Here’s 10 reasons:
- We like what’s offered
- We don’t want to learn about it
- We don’t want to do the work
- We like the variety
- We like the brand image
- We trust the provider
- We like the reliability
- We like the quality
- We like the unique combinations
- We like the convenience of ready-made
And that’s just salad-dressing! How much more important is the value of the services we provide our clients. Here’s what professionals have that clients do not:
- Professional Training
- Expert Knowledge
- Depth of Experience
- Foresight on Trends
- Breadth of Understanding
- Quality Evaluation
- Relevant Solutions
- Optimized Resources
- Clear Interpretation
- Meaningful Guidance
- Peace of Mind
Resource of the Day: Discounting Leads to Losses
PriceMetrix completed a 3 year study on advisor pricing of equity transactions during 2008, 2009, 2010. They found that advisors who discounted their fees did NOT retain more clients than those who maintained a consistent pricing. In fact, client attrition was worse for advisors who discounted and better for advisors who RAISED their fees. In summary, the CEO of PriceMetrix Doug Trott said “Clients leave their advisers because their expectations aren’t being met not because of prices”. (link to full story at the end)
Tip of the Day: Brand on Value
Most advisors have a clear understanding of their value and won’t engage a client who is overly price sensitive. However, vestiges of the pre-commodity days remain and there’s a temptation to highlight the product as unique, special, different, exceptional and elite. This leads to a losing comparison with the vast array of good and cheap DIY financial services.
The real the value is everything else. People happily pay a HUGE service charge for simple salad dressing. They get much greater benefit and value from quality professional services like yours (and mine). Help clients & prospects see your value and brand yourself around that value. They’ll be lining up and delighted to pay.