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"Leadership is the ability to convince people to work together in pursuit of a common goal." ~ Scott Galloway.
You might be thinking...what does leadership have to do with sales?!? In short, everything.
The best salespeople (and we are all salespeople to one extent or another) are leaders and not dictators and the way the handle pricing exemplifies the difference. Pricing is a collaborative process between salespeople and customers...they have to agree to pay you what you decide you are worth. In addition, the way you discuss the pricing often determines the degree of satisfaction the client will experience from your engagement.
I like to use stories to illustrate this point and here is one that happened just this past week. One of my clients is relocating to another area (it is going to be amazing for him and his family AND his clients) and put his house on the market to sell...but, the pricing strategy was all wrong.
In short, his agent failed him by neglecting to understand the primary objective that they both shared...get the house sold at a fair price as quickly as possible. Instead, the initial listing price was at the absolute top of the market. This meant that a house in one of the hottest areas of his town...had no viewings. (stay with me I am going to bring this to #financialservices I promise). Here is how pricing in real estate really works:
- Price determines if people will notice the property (it is one of the most critical variables because people are getting approved for loans). Awareness
- Price determines if prospects will decide to look into the property further (ie. that price for that house seems to be really good) Interest
- Price determines if prospects will offer to buy the property. Committment
- Price determines if multiple prospects will bid and then raise their prices. Negotiation
In real estate, the best way to get the highest offer on a property is to have a price that results in multiple offers. That commitment stage for the prospect, emotional connects them to the purchase and usually results in one or more of them offering more than they originally did. The key to getting the most from the sale is having the most people Aware, Interested, Committed and then negotiating for your property.
Note: Any realtor that says "we will try out a higher price and then lower it if it doesn't get an offer" is not worth your time. Fire them and get a professional.
Back to financial services.
Your situation is a little different because you aren't helping your clients 'sell' something. Instead, you are seeking to help them better achieve their goals through your advice and services. Here is where pricing matters for you: How you explain what and why you charge will be a massive difference maker in whether or not prospects choose you and then stay with you.
Pricing in Financial Services:
1. How you arrive at your price must be transparent. Your clients need to understand how you arrived at your price if you want them to (a) decide to buy and (b) implement your advice. This means that your advice actually has to have value that the customer can understand and that they want.
2. Your price must be competitive. This doesn't mean that you need to charge less...it means that you need to clearly demonstrate why your price is fair to them...not just you and your quarterly bank deposit. Clients need to be able to 'defend' what you are charging them to their sphere of influence. They will lose the battle to initially buy and/or remain a customer if they are having to defend against other financial advisor and clients that they meet out in the 'wild'.
3. Your price must accelerate relationship development. The way you explain how your pricing is delivering exactly what the client most desires, tailored specifically to their life is going to set the stage for one of two things: referrals or arguments later over value delivered. Remember the rule of 200? If a client feels like you took advantage of them they will tell that negative story 200 times. Negative emotion is a major factor in remembering events...you need to layer up positive emotions over time to equal the same effect of one bad experience and you have to do so starting with the first time you discuss price.
A couple of questions to see where you stand on this:
- Do you have a process that determines the price for your services? Is it written down?
- Would your pricing structure hold up in a meeting with you, your client and your largest competitor? Meaning, would you be able to show your client, no matter what that other advisor said, that you were pricing them fairly?
- Does the way you share and explain how you price to prospects and clients deliver measurable increases in referral rates? If not, there are some opportunities to be had. (Hint: the measurable increases occur year after year when everything you do is aligned for referral production...not just a reflexive ask)
Pricing, done well, is an act of leadership by sales professionals.
You are pursuing a common goal with your prospect (the results they receive from following your advice both financially and emotionally) and your ability to lead them as you explain how your pricing delivers exactly what they want is critical to you and their success.
As always, I appreciate you reading and hope that something was of value to you. If it was, please share this with others like you...folks that you want to help navigate the future in such a way that they can impact other people beneficially. Think critically. Exercise to get stronger. Practice compassion and empathy with others. Rest and recover so that you can do all the above better tomorrow.
I have time, desire and capacity to help you and those that are most important to you. Don't hesitate to connect with me and/or introduce me to other business people you believe could use my help.
Related: he Unexpected Source for Quick Performance Improvements for Financial Advisors