A colleague of mine moved house recently. The prospect of shifting household contents, while minimising the upheaval for his children seemed a daunting operation.
He invited three companies to give quotes for handling the move. The first company showed little interest, while the second was happy to quote for packing all the contents and moving the lot to the new house, but would charge for every ‘extra’ it did over and above the basic moving service.
The third company adopted a different approach. It spent time getting to know my colleague and reassured him that it would seek to minimise the hassle of the move. As well as packing the household contents, its fee included dismantling furniture that would not fit through the doors and re-assembling it at the other end. While it was not the cheapest, the support and hassle-free service, it offered was snapped up.
This made me think of the many accountants who tell us that clients are becoming more sensitive to fees. They report having to defend their fees and provide more detailed information in their proposals and fee estimates. Clients are, however, more likely to quibble on fees if they cannot see or feel the value behind them.
The price of accountancy services is still heavily influenced by the value they represent. The most skillful fee negotiators spend time getting to know the client, their requirements, their concerns and the solutions they seek. In doing so, they then communicate the benefits of their service in terms that the client finds attractive.
This means that the time and effort getting to know a client and their situation is well spent. The more time you can devote to understanding a client’s requirements, the less time that you are likely to spend haggling. Accountants use this understanding to build the value of their service in the client’s mind. In doing so the potential cost of not using their firm begins to outweigh the fees they are proposing to charge.
We have often seen accountants stumble over fees because they are not confident about the value they represent. If you cannot see the value yourself, neither will your client.
Increasingly, accountancy practices believe that procurement specialists are seeking to select the lowest price. This is not the case; procurement professionals aim to understand the value in a purchase and do not necessarily favour the cheapest option. The key to successful fee negotiation is to understand the key performance indicators from which they are working. Some of the larger accountancy firms are involving their own procurement specialists to help fee-earners understand and then speak in a language that the client’s procurement experts appreciate.
If you are facing increasing fee resistance from your clients, think about how the solution or service you are proposing adds real value to them. Consider getting to know the client in greater depth to see how your offering needs to change for the client to value it. Look at your delivery models; can the service be composed in other ways to deliver a value, which the client is prepared to pay for? Don’t readily discount to keep a client relationship, be confident in offering fees that match value. If a client chooses one of your competitors, it is often because they saw greater value in that firm’s offer.
Remember, the pursuit of value does not always result in the cheapest price.
Clients are less sensitive to fees when they can see the value in a service. Their perception of value and how you price your work will depend on the factors listed below. The answers to these questions can be found in getting to know the client and spending time with them to understand their situation.
- What is the importance of their requirement?
- What benefits will they derive from the solution?
- What is the urgency of their need?
- What is the number and quality of potential alternative suppliers?
- What are the corporate and personal implications of getting the solution right or wrong?
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