Win Without Pitching: Recent Episodes

View Details

When marketing your expertise, you think and work in averages, developing messages that are tailored to the average of a market or segment. Your positioning statement or key value proposition are examples of such marketing messages.

When selling your expertise, however, you are in a conversation with an individual. And almost no individual in a segment is exactly like the average of that segment, no matter how large the segment.* So when you aim for an average, you hit approximately everybody in the group but precisely nobody.

For this reason it’s important to make the distinction between marketing language (crafted for common denominators) and sales language (bespoke to the individual). Because marketing is directed at a construct (an average of many) and sales is intimate (one-to-one), parroting marketing messages in a sale can make it seem like you’re not listening, that you don’t understand the client.

When we’re on the receiving end of marketing messages, we accept that close enough is good enough. But when we’re in a conversation with another human being, we want to be seen for who we are, for what makes us different from others rather than what makes us similar to others.

In your search for the right thing to say in the sale, the mistake is to fall back on generic marketing language and make claims of value creation.

Marketers make claims to averages of groups.

Salespeople converse with individuals.

Marketers use value propositions.

Salespeople use value conversations.

Don’t pitch your value in the sale. That’s marketing’s job. Your job is to uncover the value the client is seeking. Arm yourself with questions, not claims.

Todd Rose’s excellent book The End of Average: How We Succeed in a World That Values Sameness* does a great job of driving home the tradeoffs we make when thinking in averages.

The post Marketing Language vs. Sales Language appeared first on Win Without Pitching.

View Details

Revenue is flat. Your pipeline is molasses. It’s clear you have to do something to get leads flowing again.

You call an all-hands meeting and revisit the multi-page lead generation plan you crafted at the end of last year but haven’t looked at in months.

Your intentions were pure back then in the optimistic sheen of the blank slate of a new year. But the plan didn’t manifest action. Things were planned but not done. Again.

You have your reasons.

In my experience, the most common reason a lead generation plan doesn’t get executed is it doesn’t recognize and leverage the strengths of the individuals executing. By “strengths,” I don’t mean abilities. I mean motivation.

Performance = Motivation x AbilityIn the organizational behavioral model implied in this formula, ability is the answer to the question, “Can you do this?”

Motivation is the answer to the question, “Will you do this?”

If your sub-par lead gen performance is the result of a plan that you can do but did not do, then can we agree that the best plan is one that you will actually execute?

Let’s find out what that plan is for you.

Finding Your StrengthsHere’s a thought experiment I have put to hundreds of people.

Imagine three lead gen “tools” on the table in front of you. You can use only one tool to drive all the leads required to achieve your growth goals. Which one do you choose? (Note, there’s no wrong answer. You’re balancing what you think will work with what you know you will do.)

1. Speaking and/or writing
2. Networking at events and/or online
3. Unsolicited outreach

Now that you’ve selected your tool, go ahead and add a second to compliment the first.

Now you’ve listed these three tools in order of personal priority. There are others not on the list—like paid media, sponsorships, etc.—that are just as valid but not as revealing as these three because they’re not as motivationally dependent.

Look at your prioritized list and then look at your lead generation plan. What are the activities that got done and what were left undone?

Do you see any correlations?

Matching Tools to MotivationsI use the Lead Gen Tools thought experiment to better understand what our clients will and will not do to generate leads. I’ve reviewed and even helped to author too many plans that didn’t get executed (some of which were my own) until I decided to quit trying to change people and start leveraging their natural strengths.

Let’s place your choices in the context of your motivational make-up.

The Needs Theory of MotivationDavid McClelland’s Needs Theory of Motivation posits that people are primarily motivated by three needs:

1. The need for Power
2. The need for Affinity
3. The need for Achievement

These three needs correlate roughly to the three tools:

1. High power-need people are drawn to the podium and the pen
2. High affinity-need people are natural networkers
3. High achievement-need people have the appetite for direct solicitation

There are many different ways to generate leads. Lacking a better model, many people draw up “plans” to basically do everything: publish across all social platforms, blog, podcast, speak at events, write books, unsolicited email, LinkedIn spam, Facebook ads, active referral campaign, event sponsorships, and on and on. This is the lead gen plan of a large organization. Let’s get real. You’re not going to do all this.

Double Down on DessertPlan to do the activities you know you will do. Double down on the first tool you picked up. Maybe consider some activities represented by the second tool. Then delegate, outsource or delete everything else.

Yes, I’m saying skip the lead gen veggies and start with dessert.

I love speaking and writing. It’s my peach cobbler.

I have a strong dislike for networking. It’s my broccoli.

I’m okay with a little bit of properly-executed unsolicited outreach. Let’s call it my red meat.

These are nothing more than personal preferences. (And grossly misrepresentative of what I actually eat.)

Asking me to network at events is like asking me to eat my broccoli. Speaking at events however is my peach cobbler.

The best plan is one that gets executed. Skip the veggies and eat lots of lead gen dessert instead.

The post The Best Lead Generation Plan appeared first on Win Without Pitching.

View Details

“The goal is not to sell what we have to people who need it. The goal is to do business with people who believe what we believe.”

-Simon Sinek

I’ve owned two businesses where people bought from us because they needed what we had, and for more than two decades now I’ve owned a business where people buy from us because we believe the same things.

They’re incomparable.

When you hone your positioning down to a clearly articulated discipline (what you do) and market (for whom you do it) the next step is to articulate a belief about how or why this (discipline for market) should be done.

This belief, ideology or perspective will be one of the final differentiators that separates you from your most direct competitors.

Through a stroke of ignorant luck (or divine fortune, perhaps) our ideology is right there in the name of the business. But the ideology isn’t luck. It’s a deep rooted belief. If you don’t share that belief then you can’t work here and you certainly won’t buy from us.

Your competitors will copy what you do. They will say your words and use your methodologies, believing the magic is somewhere in this combination of language and deeds.

Few of them will ever understand that the magic is in the belief. You believe what they only say, and you attract clients with resonant beliefs.

Ideologies don’t just align in this way, they resonate in a way that can’t be faked. You feel it in your chest. And in that moment of ideological resonance everything and everyone else fades to background noise. They are your people and you are theirs, aligned around a belief that is not shared, valued or even understood by the majority.

When done properly, belief can be your moat.

What do you believe about your discipline and market that your competitors do not?

Imagining the purest form of your business, what are the resonant beliefs that you need your clients to share before you will do business with them?

The post Ideological Resonance appeared first on Win Without Pitching.

View Details

My new book will be out in a little less than two months. The Four Conversations: A New Model for Selling Expertise is the “here’s-how-to” follow-up to The Win Without Pitching Manifesto.

The Four Conversations contains the full set of principles and frameworks that we teach in our Win Without Pitching workshop and team training.

The hardcover of The Four Conversations is available for pre-order on Amazon.com now. Pre-orders of other formats and in other jurisdictions will become available in the coming weeks. Stay subscribed here for more information.

One of the principles in the book is to Assume an Advantaged Player. Here is an excerpt…

Assume an Advantaged PlayerIn every competitive sale we should assume that somebody has the advantage. Someone has inside information, an internal advocate working on their behalf or is identified as the preferred option—sometimes to the point where the decision has already been made and the conversations taking place are for show, the bids being solicited for the purpose of procedural compliance or pricing leverage.

While not all competitive sales begin with a player in the inside lane, someone always comes to occupy it. It would be naive for us to assume that this happens only at the end, with a final weighing of all criteria. It does not. We should assume the game is largely won well before it is declared.

With this assumption, selling is no longer a numbers game, at least not one in which the math is straightforward. If we always assume an advantaged player then our odds of winning in a competitive sale are not 1/n (n being the number of players under consideration). They are far better than that if we have the advantage, and they are far worse when the advantage lies with a competitor. How much better or how much worse the odds are will vary depending on the size of the advantage but even a small advantage can change the odds from less than 1/n to better than 1/2. If the advantage is ours then we see that as an invitation to proceed. If it doesn’t lie with us then we see that as a warning that the odds are long. So let’s find out if the advantage is ours or if it is available to us. We do this by seeking concessions.

Seek Behavioral ConcessionsBy extracting behavioral concessions we affect the buying process, effectively changing the rules as they pertain to us. We ask the client to treat us differently through these concessions and we view their willingness to do so as a measure of their preference for us.

Almost any concession where the client treats us differently or allows us to behave differently can be interpreted as an advantage. The more significant the concession, the larger the advantage. Some examples of behavioral concessions, ranked from moderate to more significant, include the client agreeing to:

• Move the date or location of a meeting
• Provide access to confidential information not being shared with others
• Allow for the submission of an existing credentials document instead of responding to a questionnaire
• Complete a written needs assessment
• Have all decision makers complete a needs assessment
• Assemble all decision makers to discuss the needs assessment findings
• Increase the budget
• Allow access to senior decision makers when we are told that access is not allowed
• Change the scope of the engagement
• Agree to pay for a first phase diagnostic

There are many more concessions that we might seek than what are listed above, most of which are specific to the buying process or the engagement itself.

Revealed Preferences Trump Stated PreferencesOne of the most beneficial impacts we can have on the sale is to get the client to rethink their understanding of the problem or the solution. But this on its own is not enough. The concessions we seek are behavioral—we want the client to treat us differently. We consider preferences revealed through behavior to be validated, and those merely stated as suspect. When a client tells us we have the advantage, therefore, we ask them to prove it but not directly—we simply ask for a concession.

For example, the client might say to us that we are the one they want to work with, that they “just have to go through the process.” Of course this is good news, but we seek behavioral proof. So we might respond, “I appreciate that you have to go through this process, but can we find a substitute for having to complete this arduous questionnaire? We already have a credentials document that answers most of these questions. How about we submit that instead and you can check the ‘Questionnaire Completed’ box?”

Or we might push for a more significant concession. “I’m pleased to hear that you want to work with us. We think it’s a great fit as well. I’m happy to submit a proposal, but I’d like 30 minutes to conduct an interview with your boss to make sure we have all their issues addressed. Can you set that up?”

Or we might go further if the client’s process includes getting competitive bids: “I understand you are compelled to get two more bids. You already know we’re not going to be the lowest bidder, so let me suggest that you get those other bids then let’s have a conversation about whether or not it makes sense for us to submit one.”

Obviously, there are situations and domains (e.g., government or regulated industries) where this last suggestion would contravene regulations, public interest or ethical norms and this approach would not be appropriate. But equally there are situations where a client who seeks transformation is constrained by an ill-conceived procurement process designed to cut costs with no consideration for the negative impact on value creation. The best of the latter client types are willing to spend political capital to bend overly bureaucratic processes to do what is best for the organization.

If we have succeeded in getting the client to rethink their problem or solution then we should be able to garner a significant concession, which might be a paid diagnostic in which we put their selection process aside and ask them to take a small, paid alternative next step. For example, “Since we agree that there is some uncertainty around the underlying issue, I suggest as a next step that we take a small amount of the budget and test our hypothesis.”

Play a Different Game, with Better OddsOn a level playing field, with no advantaged player, a sales strategy built on an assumed win ratio of 1/n might be valid. We would enter as many competitions as we could and, with long-term results reverting to the mean, we would win our fair share. The sale of many lower priced products and transactional services, sold at scale, is based on this more straightforward math.

When we assume an advantaged player, however, a better strategy is to enter as many competitions as we can, determine early on if that favored position is ours (or is available to us) then play only those games where the odds are in our favor. The games we play are the ones where we get the rules changed in our favor, where we have extracted concessions.

Thus it is not the polite, compliant rule follower that is most likely to win. It is the player who asks for, and is granted, behavioral concessions.

Excerpted from my forthcoming book, The Four Conversations: A New Model for Selling Expertise, out later this year.

The post Assume An Advantaged Player appeared first on Win Without Pitching.

View Details

When sales are sluggish you push harder.

And then things happen.

Some of these things are the desirable outcomes you seek, like new leads and closed deals. And some are the unintended consequences you didn’t foresee.

Here are four specific activities that you might be employing today, each of which puts downward pressure on the perceived value of your offering.

1. Selling Thinking in Units of Doing

   “The fastest way to commodify your thinking is to sell it in units of doing.”

   —The Win Without Pitching Manifesto

This first, common approach to commodifying a firm’s offering is untethered from sales pressure and is just endemic to those who sell time.

Setting aside for now the issue of whether or not you should be selling time, if you do succumb to client pressure to price by the hour make sure that you price only the services that are time dependent and you draw the line at selling thinking in units of time.

Design application, development and production are examples of “doing” tasks that are more strictly time dependent. Strategy (arising from analysis and insight) and creative concept development are examples of the higher value “thinking” activities that are far less time dependent.

If your firm is large enough, you can have billable people with hourly rates (people working with their hands) and billable people without hourly rates (strategists and creative directors). That way you can easily push back on requests to break down your pricing by saying that the more strategic or thinking-based services you don’t deliver by the hour—those people don’t have hourly rates.

If you’re smaller, you would just say, “We don’t charge for thinking in units of doing.” Then don’t get dragged into justifying price. Simply say, “This is what we charge clients like you for work like this.”

1. Cutting Price Early and Without ReciprocationI’m not a fan of cutting price to win a new client as it sets a bad precedent, but when you do discount, there’s a wrong way and a right way.

The wrong way is to cut price early and/or without a conditional agreement. At the first sign of a stall, the price cut is offered, unprovoked, even when price is not the obstacle. I find myself on the buying side of this behavior a lot lately, even from people who should know better than to negotiate with themselves.

The right way is to trial close first. A trial close is the conditional agreement I referred to above. It’s a simple if-then question.

“If we were able to do this at that price, would we have a deal or is there something else standing in the way?”

“I would do the deal.”

“There’s nobody else that needs to approve this first?”

“Nobody.”

“There’s nothing else you need to consider—it’s really down to meeting that price?”

“Nothing else. If you can deliver that price then I’m in.”

Now you can cut price—if you must. The rule is that you make sure every other obstacle is removed first and you make your price cut conditional on the removal of those obstacles.

“Alright. If we can agree now then I will commit to that price.”

Now onto the less obvious commodifying behaviors.

1. Using Tech to Scale Your DeliveryThis commodifying behavior, while a little less common, is a byproduct of pursuing scale.

I’ve had many clients over the years who decided to employ technology to lower prices and go down market with the belief that they could easily generate a volume of lower priced work to get them through tough times, only to have it backfire.

During the 2008/2009 recession it was website templates. During Covid it was online courses. Now it’s AI-enabled services.

Each of these could be a legitimate business but the mistake is to think there are quick wins to be had here by a business that is not staffed for scale, does not have a culture of scale and is not willing to fund and do the hard, expensive work required to build a more scaled business model.

What happens instead is the higher priced customized brand gets tarnished by the $5k website template, the $97 course, the $49/month AI tool.

This is poorly understood but the mechanism by which you scale your offering is also the mechanism by which you will commodify it.

Undertake these activities with considerable deliberation—they are new business models, not quick wins easily tacked onto different models.

1. Using an Efficiency Advantage as a Reason to Hire YouWe’re going to see a lot of this one.

You’re likely using AI tools to get work done quicker today. Some of these tools have generated cost savings. You might even have had a breakthrough on this front, doing work in considerably less time, with considerably less expensive talent, or both.

This is fantastic if it’s true. Bank that margin.

The mistake that will commodify your offering is trying to leverage this advantage in a sale, because as soon as you claim a production advantage you have to lower your prices. Your clients will not let those savings accrue to you, they will claim them. All of them.

A message of “Hire us because we use AI to be more productive” has to be reflected in a lower price for the client. What other reason would they have to care about your production advantage?

A message of “Hire us because we use AI to build a better product” can sustain a price premium. Given that we’re in an arm’s race, however, your price premium isn’t likely to last. Your margin is someone else’s opportunity.

The best position to be in is using these tools to gain a production advantage without your client knowing. So if you are using AI to lower your prices and you want to keep that extra margin, keep quiet about your advantage and bank the margin until it gets competed away.

In summary, if you want to stay differentiated and maintain pricing power:

1. Don’t sell thinking in units of doing.
2. Don’t cut price without a trial close.
3. Don’t leverage technology to offer a cheaper, scaled solution unless you are willing to fund and launch an entirely new business.
4. Don’t use production advantages (like AI) as reasons to hire you unless you’re willing to pass those savings on to the client.

The post Four Ways to Commodify Your Offering appeared first on Win Without Pitching.

View Details

We all understand the idea of a target market. Hopefully, you have a formalized understanding of what or who your target market is. But you might be better off thinking about the target and the market as two different things.

The target is the narrow area at which you aim.

The market is the broader area you are happy to hit.

Think of a golfer aiming at the flag (target) and happy to land on the green (market). (I don’t play enough to know if this metaphor holds for proper golfers—I aim for the green and am happy to land in bounds and out of a hazard—but I trust you get the idea.)

Aim for the Target, Hit the MarketThe key idea in making this distinction between the target and the market is that you’re going to hit a larger area than you intend. The positioning language that you craft for your target will have appeal to many outside of that target, and your marketing is going to similarly reach and resonate with a broader audience.

Why is this important?

Because the common intuition when crafting positioning (messaging) and marketing (campaigns) is to go broad. When your target is already too broad, however, your market will be far too broad.

In his book Zero to One: Notes on Startups, or How to Build the Future, Peter Thiel addresses the fallacy of this intuition…

“It’s always a red flag when entrepreneurs talk about getting 1% of a $100 billion market. In practice, a large market will either lack a good starting point or it will be open to competition, so it’s hard to ever reach that 1%.”

The Cost of BreadthWhile breadth increases relevance and reach, the tradeoffs are a watering down of your differentiation and an increase in the volume of more capable competitors. You may be reaching and relevant to more but you’re different to fewer and fighting a much larger pool of more specialized competition.

If breadth were truly the answer then your best value proposition would be “Our solutions get results for clients.”

“Marketing for anyone who needs marketing.”

“Financial planning for anyone who needs financial planning.”

A shocking number of businesses go to market with language not too different from this, the leaders terrified of putting any stake in the ground that would shrink their pool of potential clients. (Search “solutions that get results”—in quotes for an exact match—and ask yourself if you would ever hire any of these businesses.)

When your business is small, start with a smaller target. Making the distinction between your target and your market will help bring courage to this exercise of getting sufficiently small.

Make the Target Small… in the BeginningI have straight hair. The person who cuts it has curly hair.

She has a busy roster of clients across the full spectrum of hair types and styles. (She has to—she lives and works in a market of less than 1,000 people.) But when she started her practice (in a much larger market) she looked for a way to differentiate herself against all the established stylists who “cut and styled hair for people with hair.”

Knowing how difficult it was to find someone who is good at cutting tightly curled hair like hers, she launched her practice with an ad proclaiming “Specializing in Curly Hair” and was quickly inundated with clients. Her happy curly-haired clients recommended her to their straight-haired friends who reasoned, “if she can cut and style curly hair then surely she can cut and style straight hair.”

The target is people with curly hair. The market is people with hair.

A family member is a successful financial planner. Previous to starting her practice she was a paralegal in a law firm whose clients included an advocacy group of parents of children with Down Syndrome. When she launched her practice she was invited to speak to the group about their specialized financial planning needs. Some of those parents hired her. She was referred to other parent groups. She quickly built a reputation as the planner for families with special needs. Those clients referred others, including those who didn’t have special needs children.

The target is families with special-needs children. The market is anyone who has financial planning needs.

Then Broaden OutBoth women eventually dropped their specialization. Their businesses are similarly relationship-driven in that they grow through referrals, and their clients stick around for a long time.

The million dollar question is when do you broaden out? When do you drop the target vs market distinction altogether or make your broader market your new target?

The market will often tell you the answer.

Both stylist and planner were seeking to build a finite book of business, so when their practice was at capacity (in the case of the hair stylist) or growing at a pace they couldn’t comfortably exceed (the financial planner) they quit focusing on the target.

The broader market had quickly come to them.

But only because they had focused on a narrower target.

At Win Without Pitching we have long specialized in “sales training for creative professionals.” For 20 years, I resisted the advice of many to broaden out to the larger market of others who also found relevance in our ideology and training.

When the creative professionals in our public workshops started to become eclipsed by these “outliers” from the larger market, we made the broader market the new target: “sales training for expert advisors and practitioners.”

The stylist and planner dropped their narrow targets quickly after benefiting from the rapid momentum afforded by them. We kept ours for 20 years until we could no longer ignore what the market was telling us.

You Have ChoicesThe stylist and planner could have ridden their specialisms longer, farther, if they wanted to be more entrepreneurial. The stylist could have hired other stylists and opened salons in new geographic markets. The planner could have kept growing, adding other planners, perhaps launching a national practice of specialists. Both chose to remain small for their own valid reasons.

If you’re at the beginning of your career you’ll benefit from a smaller market focus. Making the distinction between a narrow target and the broader market will help. When you find success in the niche there will be plenty of signals and opportunities to expand, giving you choices in how to grow.

The opposite approach of starting too broad is the harder slog. Your market might be large but you’re just not meaningfully different to anyone in it. You’ll need exceptional sales skills to overcome the lack of differentiation.

If you’re deep into your career and still struggling, it might be because you’ve given in to the temptation to chase a tiny fraction of a massive market. It might be time to reset your positioning.

Move From Vendor to ExpertThe two examples demonstrate the value of aiming at a smaller target. Properly positioning your offering this way makes your marketing decisions easier and your marketing messages more compelling. This is how good positioning leads to better lead generation which leads to better sales conversations which ultimately pay off in higher closing ratios at a higher average proposal value. It shifts the power dynamics in your favor at the very beginning of the sale.

This interaction between you and your prospective clients via your positioning and marketing happens in The Probative Conversation. It’s the “conversation” that not only gets you noticed but proves your expertise to the client and sees you move—in their mind—from the powerless vendor position to the more lofty expert position. It’s the conversation that happens without you present, through your marketing. The Probative Conversation is the first in our Four Conversations model. Master this conversation and the subsequent conversations become easier.

If you’d like to learn to master all of The Four Conversations of selling expertise, check out a Win Without Pitching workshop or private training for your team.

The post The Target Is Not the Market appeared first on Win Without Pitching.

View Details

In a break from my admonishment that you might be too expensive, let’s explore the idea that your firm has a certain pricing culture that might be in the way of you charging more.

I’m fond of saying that pricing is a prison cell in your mind, of your own making. You see yourself trapped within a narrow band of what you can charge. Your competitors are similarly trapped, but the band or cell they are trapped in is different from yours. Some of your competitors are charging significantly more than you, and some significantly less, yet everyone feels restricted, confined by the idea of an elastic demand that will drop with the slightest price increase.

Even if you bust out of your own prison (i.e., come to understand that you can raise prices if you change the way you price) your team is still back in the joint. That’s because there is a culture of value, money and pricing in your firm that is not easily changed by your epiphany. Culture is a shared collection of behaviors, underpinned by a collective understanding. Seth Godin pithily summarizes it with the line “people like us do things like this.”

As an example, your people might proudly say, “In our firm, we …”

• “Provide good value for money”
• “Treat everyone fairly”
• “Value customer service”
• “Work transparently with our clients”

Each of those statements is admirable on the surface, but consider the possible pricing implications of each. This is what I hear:

• Value for money = Inexpensive
• Treat everyone fairly = Price the service, not the client
• Customer service = We get paid for doing, not for thinking or value creation
• Work transparently = We make our costs visible to the client

Your own pricing epiphany is likely rooted in the realization that you’ve long created far too much value for the prices you’ve charged, and that you deserve a larger share of that value. You are the crab bent on escaping the bucket, and your culture—the shared understanding and behaviors of your people—is the mass of other crabs pulling you back in, saving you from the horrible mistake you are about to make.

Your culture says that higher prices aren’t good value, that charging different prices to different clients based on the differences in value creation isn’t fair or equitable, that your transparent prices need to communicate to your clients how cost efficient you are.

I’ve been in these cultures and believed all these things. I’ve been one of the other crabs rationalizing why the price should be lower not higher. No one escapes on their own. Everyone needs to go over the wall together.

A Series of Pricing PromptsHere are some prompts that you might use (on your own or with your leadership or broader team) as a means of exploring ways of changing the pricing culture in your firm. Some of the prompts are about actual changes you might make to the service offering or underlying business, and some are narrower pricing prompts.

Can You Move Upmarket?Generally speaking, the higher end of the market you serve, the more money there is.

• Why are you serving the market you are serving and not higher up?
• What would it mean to be a “luxury brand” in your space?
• What might a “concierge” or “white glove” service look like?

Can You Combine Disciplines?There are often riches in combining two or more disciplines. When I was a kid the job of underwater welder was famous for paying the highest hourly wage in the world. Think beyond the obvious combinations of disciplines (e.g., design and development).

• What unrelated disciplines might you mix to solve your clients’ more expensive problems?

Can You Shift Culture With New Hires?Perhaps you need to hire people who have priced or sold more expensive things than what you’re selling, someone coming from a larger prison cell or someone who has broken out altogether.

• What place might you hire from that is like the market you serve, but far more expensive, more luxury?

Do You Need a New Anchor?If you have a standard or typical offering that serves as your anchor option in your proposals, consider replacing it with something far more expensive, which then allows you to raise the prices of your other offerings. (If that sentence doesn’t make sense to you then grab a copy of my book Pricing Creativity: A Guide to Profit Beyond the Billable Hour.)

• What is the most you could do to deliver the highest level of certainty that your clients will create the value they seek? What audacious price could you put on this?

Are You Too Focused on Efficiency?I know multiple firms where the owner had a pricing epiphany but the firm’s culture of efficiency—which they so assiduously built through intricate systems over many years—was like gravity pulling their prices back down to earth. Pricing the client, charging for thinking instead of in units of doing, value- or outcomes-based pricing—all these more progressive pricing techniques are directly at odds with measurements of billable efficiency and effective hourly rates. (Explained in more detail in The Innoficiency Problem.)

• What experiment might you do with one client or one small team to free them from the requirements to be efficient?
• What value creation and capture metrics might you measure instead?

Are the Right People in Charge of Pricing?The fastest way to create a more premium pricing culture is to simply move pricing authority to the best pricers. Maybe it’s you. Maybe it’s a more junior team member.

The common mistake is to assign pricing responsibility based on roles (e.g., “You’re a project manager therefore you set price,” or “I’m the owner therefore I should set price”), seniority (e.g., “You’re the most senior person on the account team therefore you set price”), or tenure (e.g., “I have the most experience therefore I should set price”).

The best pricer(s) should set price. Period. Who are they?

• Who on the team routinely commands the highest prices?
• Who on the team most highly values what we do?
• Who on the team doesn’t need to like or be liked by the client?

Summing UpThis pricing prison cell is shared by all on the team—behaviorally if not intellectually. Your own pricing epiphany is just the start. If you don’t work to take others along with you, your own culture—something you might be immensely proud of—will hold you back. Consider the above prompts to try to shift that culture and break out together.

The post Creating a Culture of Premium Pricing appeared first on Win Without Pitching.

View Details

When Win Without Pitching launched in 2002 one of the major problems afflicting the creative firms that we then served exclusively was they got paid for their doing and not their thinking.

I advocated for these firms to start charging for the thinking that preceded and wrapped around the doing. Instead of simply acting on the client’s brief like a server in a quick-serve restaurant, we and other advisors pushed designers, developers and agency-side marketers to see themselves as professionals with the same professional obligation to diagnose before they prescribed or acted on the client’s own prescription.

They called this thinking “strategy” and started to move upmarket. There were some missteps along the way, including:

• Breaking out strategy as a line item in proposals (clients would accept the proposal while crossing out the line, saying “we don’t need to do the strategy”)
• Charging for that thinking in units of doing (hours)
• Appending the word “strategic” to their previous service provider description, giving rise to “strategic design,” “strategic branding” and “strategic communications” firms

In the 2010s when I would ask my clients how they differed from their largest competitor, I would often hear “They don’t do strategy.”

In design, as in many other disciplines that have endeavored to be seen as more strategic and therefore more expensive, strategy is simply some form of stopping to think about the goals and context of the challenge at hand.

That’s Enough Strategy, Thank YouI think too many design firms—and other practitioners of all kinds—are trying too hard to raise prices by presenting themselves as more strategic, when they should instead strive to be more expensive by being different and narrowing their focus to solving specific problems for specific client types.

I don’t want you to see this as me advising you to think less and charge less, I’m simply pointing out the market dynamics. Sometimes people just need something designed—quickly, affordably and of good but not award-winning quality. The days of moving everyone up to pay for brand audits first is coming to an end. They have other choices. Your discipline is becoming commodified. If you or your clients see your firm as a provider of that discipline then your prices are almost certainly too high. This isn’t the case if you and your clients see yours as a firm that uses that discipline to solve their specific, urgent and expensive problems.

The Discipline Levelers Are Here to StayToday, the simpler outputs of many disciplines are too expensive: web design, software development, accounting, engineering and financial portfolio management to name just a few. They’re all too expensive and the market is saying so, steadily wiping out the overpriced undifferentiated. The two main forces that are piling onto poor economic conditions to lay waste to untold discipline providers are offshore labor and AI.

Offshore Labour is Here For Real NowThe act of sending labor overseas to less expensive markets has been around for years but it’s gotten real in the last two years and it’s getting “realer” faster. Already this year (5 months in) I’ve heard the following from business owners:

“I replaced my $130k-a-year CFO with a certified accountant (they went to school here then moved back to India) for $7.50/hour.”

“These people (developers in Eastern Europe) are incredible. They don’t know what a sick day is and they never want to know.”

“Their english is perfect and they (designers and VAs in the Philippines) work our hours.”

“I’m not hiring any more Americans,” said an American marketing firm owner. “They’re too expensive, too coddled and too entitled.”

I know a handful of firm owners who laid off their entire staff during the pandemic and chose to add none of them back, even when their rebounding businesses could have supported it, if not to the same pre-pandemic level. To a person they claim to be freed of the increasing burden of dealing with employee dynamics. In two decades I’ve always seen a smattering of this—the business owner who wasn’t good at the people part and fantasized about being a solopreneur once more—but it’s endemic today. I feel like I have this conversation with someone every couple of weeks.

When these renewed solopreneurs need help they turn to dedicated overseas contractors where rates are 20%-50% of US salaries with no payroll burden, no “sense of entitlement,” no workplace issues around feeling “triggered,” “othered” or “unsafe—on Slack while working from home!” And—so these business owners all claim—no degradation in quality with a huge improvement in desire and drive.

Don’t shoot the messenger, I’m not attaching any judgment to these statements, just passing on what I’m hearing, verbatim. They are representative of other conversations where similar sentiments have been expressed. Something is in the air.

That’s Not Distributed. This is Distributed. It’s not hard to draw a straight line from an expensive team dispersing across the country in the new post-pandemic WFH reality to a less expensive team dispersed across the world. What has surprised me, and I expect will surprise you and your team members if it hasn’t already, is just how intelligent, skilled and hungry many of these offshore workers are. We seem to be at an inflection point where previously many Eastern European, LatAm and Filipino developers, designers and VAs were seen by their Western employers as a cheap and easily disposable appendage to the main body, and today they’re fully integrated team members valued at least as much as their Western counterparts. Globalization of white collar work has gotten real.

Now Add AII’m not going to rehash the 30 other things you’ve already read on generative AI in the last month. The short of it is people are rapidly becoming more productive which means the cost of the most commodified work is on its way to close to zero.

Back in pre-transformer 2020, an engineer friend and client said, “engineering is going to be one of the first professions disrupted by AI so I might as well be the one to do it.” I praised his ambition and wished him luck.

Meet Prenguin. It’s just the beginning. It’s interiors today but bridges tomorrow.

This type of innovation is happening in most of the professions. AI can do your tax return, write a legal brief, turn your blog post into a podcast in your own voice, create a near-perfect headshot from your selfies, edit your photos, animate your video, balance your portfolio, etc.

You do not want to be in competition with AI. You want to be using AI to help solve specific, complex, urgent and expensive problems. If you have to preface your offering with the word “strategic,” if you include “strategy” in your list of services or if you define your firm by a broad discipline rather than a narrow problem statement then you’re almost certainly suffering today because your cost structure doesn’t allow you to compete with offshore and AI-enabled businesses that can do what you do faster, cheaper and often better.

Once your specialism transcends a discipline (e.g., design) and instead orients toward using multiple disciplines to solve more specific, urgent and expensive problems (e.g., physician recruitment or subscription churn reduction) for specific client types (e.g., hospital systems or subscription-based organizations), then you will find creative ways to use AI and perhaps offshore labor to give you a competitive advantage.

I Have Become Waste, Destroyer of BudgetsI worry I’ve contributed to the mass of practitioners—primarily in the creative and marketing space I have mainly served for 22 years—overcharging for basic services through my repeated admonition to raise prices.

The 10th proclamation of The Win Without Pitching Manifesto is We Will Charge More. When The Manifesto was first published in 2010, the state of affairs among creative firms was an almost universal undercharging. But the first proclamation—We Will Specialize—is the basis for the eleven proclamations that follow, including the 10th. Without specialization—in a narrower discipline or market, or a more specific problem statement about both—there is no basis for charging more. Higher prices without increased value creation and/or reduced competitors (through narrowing your focus) are unsustainable, especially in the era of offshore labor and AI.

Adding “strategic” to your discipline doesn’t make you so and it doesn’t justify the hefty fee both of us would like you to command. But if you’ve made that mistake, you don’t need me to tell you about it now. The market has been telling you for the last four to six quarters. I hope you’re listening.

If you “do strategy” or price strategy as a line item it’s time to stop and look at your own business strategy instead. How will you become, and remain, unique, especially in the era of offshore labor and AI? What urgent and expensive problem will you help your clients solve?

The post Have We Hit Peak Strategy? appeared first on Win Without Pitching.

View Details

Almost every leader of a business of expertise has a moment when they realize their delivery team—account managers, project managers, developers, engineers, consultants or advisors—could be a source of instant scale to their sales efforts.

Inspiration tends to hit in moments of sales stagnation or decline. If you’re considering enlisting your delivery team in your sales efforts now, I applaud the idea—the gains could be significant—but there are steps to take and a big tradeoff to consider. I’ll map them out here so you can go into this with eyes wide open.

Been There, Done That?Of course many expert firms have already mastered the dual delivery/sales role. The big consulting firms, which tend to excel at the land-and-expand strategy, are shining examples of firms where growth is driven by the delivery team, with the consultants ably performing the second role of sales. This post is for the rest of you.

The distinction between the two types of firm—one where the delivery team also sells and one where they do not—is pretty clear. In the former:

1. It is clearly communicated to each member of the delivery team that their job includes selling (typically in the form of expanding existing accounts). This expectation is explained even before a new team member is hired, in the job description and the interview.
2. The core training, received at the beginning of the delivery professional’s tenure and throughout, includes sales training on the firm’s particular model of selling.
3. Some of the expert’s compensation—even if only a small amount—is tied to sales performance.

If these three elements are not in place then your delivery team is not your sales team, even if you’ve told them they are. But let’s map the path to making it happen should you desire to make it so.

Take the Long ViewI’m fond of saying that you reinvent the firm one new client at a time. That reinvention also happens one new hire at a time.

Begin by accepting that asking people to now find the time, inclination and skill to start selling doesn’t mean they will or even can. Your current team signed up for their core jobs of practicing or advising, not this second job of selling. Some will doubt their ability to sell and some will harbor an outright distaste for it. It’s my own belief that these issues can be overcome in most people, but I disagree with the age-old refrain that it’s everybody’s job to sell. Some just aren’t cut out for it. They will move on to another role or another organization where they are not required to sell.

This doesn’t mean you shouldn’t make an effort with your current team—you should, but think of the earlier distinction. Yours will become an organization that grows via the delivery team when:

1. Every employee has bought in,
2. The delivery team have been trained and supported,
3. The culture of the firm has changed to one where sales really is everyone’s job (more on this soon).

This is going to take time, but that doesn’t mean you can’t start seeing results quickly. Let’s now look at the steps to take with your current team.

Train EveryoneAfter announcing the initiative itself, training is the first step. It should be broadly applied to the entire delivery team. There is a case to be made for first training the most senior and influential people, but everyone on the delivery team should be trained on what you mean by selling, how you expect them to do it, and the tools, frameworks, decision-making criteria they are required to use.

After initial training you’ll get more selective about applying resources to the cause, knowing that some people will buy in immediately, some will try it on and evaluate whether or not this new role is for them and a few might opt out quickly and move on. Put yourself in the shoes of the latter two groups when dealing with them. You’ve changed their job description midstream, adding something they didn’t sign up for, so be prepared for the range of reactions but give everyone a taste of what you want them to do. From there the group will start to sort itself.

Offer Broad SupportTraining is the beginning but it is a small part of ensuring that learning has happened, behaviors are changing and results will be achieved. Support in the form of discussions, practice, coaching and additional training resources is vital to the outcomes you seek. Once you’ve shaped how you will support the team, offer that support to everyone, but don’t force it. Observe who participates and who does not.

Consider it part of the measuring and sorting process that lets you discover who is serious about building new sales skills and who’s doing the mandatory minimum hoping to outwait you on your latest new initiative. Have conversations with those who do not take advantage of the support early—it could be they’re just too busy with their first job at the moment—and nudge them along, but you’ll place your bets on the ones using the resources.

Celebrate the Achievers, Don’t Obsess Over the LaggardsNow raise up and celebrate the engaged individuals, the ones who continue to use the post-training support, whether it’s showing up to the lunch-and-learns or coaching sessions, or continuing to reference and use the training material and tools. Celebrate each of their sales wins, showing the team that this behavior is valued and rewarded in the new culture that you’re building.

It’s important to keep your focus on the ones who are embracing change because it’s easy to get distracted by the laggards. Even if the majority of your team is taking to the new material and mission, you will be obsessed with the minority who are not. This is a real problem. Even if you eventually get near wholesale adoption (let’s say 95%), the 5% will take most of your mental energy and even make you feel like the initiative has failed. It hasn’t failed, you’re just looking the wrong way. Turn around and look at how far the team has come.

Keep accentuating the positives, keep demonstrating through your attention and praise that this new behavior—selling—is valued and rewarded in the firm’s changing culture.

Build a Sales-Oriented CultureThis combination of upskilling willing legacy team members, including supporting, celebrating and rewarding their new behavior, plus hiring for sales aptitude, will change your culture over time. You’ll find the new hires who are attracted to the opportunity to drive growth bring a hungrier, more entrepreneurial energy to the team that speeds up the change.

Culture will take care of the holdouts, the ones who just can’t do this or won’t try. When they are the pained minority they’ll succumb to the pressure to evolve, or they’ll be crowded out and leave of their own volition or otherwise indicate they are obvious candidates for removal. When they move on, the new hires will bring more of the new growth energy you desire.

The Big Tradeoff (Surprise—It’s Culture!)I suspect I’ve lost some readers who are interested in the results an expanded sales team would bring (something I’ve not addressed in this post but will in a future one) but they quit reading because they’re not interested in changing their culture. I understand that, but if that’s you I would implore you to think more deeply about it for a while longer. Consider exploring the culture tradeoff with your most prized team members, your A players. Their thoughts on the subject might surprise you.

Twenty three years ago David Maister wrote a piece of thought leadership that has had a profound effect on my own thinking on organizational culture. (It’s a long piece—a speech transcript actually—but you can skip to the section titled What Team Do You Want to Belong To?) He effectively says that there are only two macrocultures (my word, not his) an organization can have. They can have a macroculture of tolerance, where the priority is belonging and cohesiveness (“We’re a family and we take care of each other”) and nobody ever gets fired. Or they can have a macroculture of intolerance, where the ambitious goal of the organization requires high standards that are enforced. (Maister’s piece is titled The Problem of Standards. The “problem” is they are rarely enforced therefore they are lies.)

At Win Without Pitching our first of five core values is “Greatness” (not to be confused with the more ubiquitous and amorphous “Excellence”). “We strive to be the very best in the world at what we do.” That’s a meaningless goal or value in a macroculture of tolerance. Simply put, if you’re not great and not striving for greatness then you can’t stay. If you are allowed to stay then our core values are lies. It’s pretty simple.

The large consulting firms that have mastered the dual roles of delivery and sales famously have an “up-or-out” culture where it is understood that if you haven’t been promoted in two years then it’s time to move on. If you don’t do it of your own volition then you’re helped out the door, politely and respectfully.

I believe that to properly make your delivery team your sales team you have to sign on to a macroculture of intolerance. This isn’t a license to treat people poorly, only a commitment to enforcing your standards, which now include the standard that delivery people must also sell to a certain level of performance.

So, What Team Do You Want To Lead?I believe I’ve laid out the key considerations, steps and tradeoff to consider when deciding whether to leverage your delivery team into a sales team. If you’re entertaining this move you now know roughly how to go about it.

Your biggest consideration is probably the last—do you want to change your culture—and I doubt there’s much middle ground here. It’s Derek Sivers’s “Hell Yeah! Or No.” Whatever you decide is fine. As Maister says, it’s a personal decision and not a moral one. But when you reach out for training just let us know if we’re training a local house team, serving orange slices at half time, or if we’re training for Olympic gold.

The post Turning Your Delivery Team Into a Sales Team appeared first on Win Without Pitching.

View Details

I’ve always known about this pervasive problem but the true size and severity of it never fully dawned on me until recently. Almost everyone commits this error in sales conversations and it’s awful to behold. I probably do it too but I don’t notice it.

Everyone is talking too much.

Well not everyone. Clients aren’t talking nearly enough. But we–when we’re in our salesperson role—we’re talking way too much and it is costing us in poor closing ratios and sales pipelines clogged with deals gone dark as we unnecessarily drive doubt into the client’s mind.

(Feel free to skip to the section at the bottom on how to fix this if you don’t want to explore the problem with me for another minute.)

Where This Shows UpI see three buckets of reasons why we talk too much in sales conversations.

1. The first reason we talk too much is we’re in a rush to communicate certain things to the client in the sale:

2. Value proposition/positioning language

3. Service offerings
4. Clients we have worked with
5. Projects we’ve done that will impress the client
6. Projects we’ve done that are relevant to the client
7. Our proprietary process

That’s a lot of information that doesn’t leave much room for the client to talk about their needs.

1. The second reason we talk too much is the pressure we put on ourselves to:

2. Be brilliant (We think it’s hard to communicate how smart we are by listening)

3. Match need to supply (We too quickly match our services/solutions to the client’s need)
4. Match experience to need (We readily interject “We’ve done that!” or “We can do that!”)

We’re better off being active listeners than we are active talkers or interjectors.

1. The third reason we talk too much is there’s something about money conversations that we find stressful:

2. We see the client as the prize to be won (even though we might have more alternative sources of money than the client has alternative sources of expertise)

3. We defer the money conversation (stress is caused by the things we don’t do)
4. The stakes might actually be quite high for us (excess capacity, underfunded—we really need some money!)

So let’s fix this. Here are 10 tips to help you talk less and listen better.

Ten Ways to Talk Less1. Use a Sticky NoteRight above my camera is a note that simply says STFU. Try it.

1. Set a Talk TargetI read somewhere that if you feel everyone in the conversation spoke for an appropriate amount of time then you almost certainly talked too much. AI notetakers all record your talk time these days. Seek to keep your talk time below 40%.

2. Go In With Nothing You Have to CommunicateLet go of it all. Try it just one time. Nothing you have to say, only questions to ask.

3. Have a Framework for Your Questions Frameworks are the middle ground between scripts and freewheeling. Almost all sales frameworks are frameworks for the questions you will ask rather than the statements you will make. Use your talk time to ask questions.

4. Get Comfortable with SilenceYou have to create spaces in the conversation for the client to speak. Learn to allow for pauses then seek to increase their length and frequency. Embracing silence—which will feel awkward at first but not after the fifth or sixth time you do it—is the single biggest little thing you can do to improve your sales outcomes.

5. Get the Client to ElaborateDon’t be satisfied with brief responses to your questions, prompt the client to keep going. E.g., “Hmmm. Say more about that,” or mirror back to them their last words with a question intoned.

6. Name That EmotionDistract yourself from the urge to speak by playing the game of trying to name the emotion the client is feeling. It’s a trick to keep your focus where it should be—on the client. Once you name it, pay attention to whether or not it changes over time. Keep checking in on it to distract yourself from making unnecessary statements.

7. Ask The Client What Information They Need From YouAfter you’ve asked all your questions and received your elaborated-upon answers, ask the client “What else do you need to know about us?” Answer the questions then ask, “What else?”

8. Audit Your ConversationsHave someone audit your sales conversations calls for precisely this issue of speaking too much. (You’ll be surprised at how many of your other sales challenges disappear once you reduce your talk time.) They can sit in live or review afterward if you are recording. If it’s the latter, have them comment in or otherwise annotate the transcript that tends to accompany the recording. Where did you talk when you should have listened, paused or tried to get the client to elaborate?

9. Can You Gamify This? Can your auditor score you, perhaps giving points for lower talk time, pauses and questions, and demerits for statements or otherwise missing opportunities to get or keep the client talking?

Try These In Your Next CallOvertalking is so pervasive in sales that you should assume you are doing it even if you really believe otherwise. Record your calls and have others be the judge—share this post with your auditors as a guide. Try to improve your performance in the very next call and see what the downstream effects are. Feel free to share your results with us.

The post Can We Dial This Down, Please? appeared first on Win Without Pitching.

View Details

I love a double entendre. Pricing Creativity—assigning prices to your creative outputs, but also bringing some creative thinking to your pricing decisions.

Selling Expertise was long the working title of my next book (out in September) before I changed it to…something I’ll tell you at you launch.

“Selling Expertise” refers to the selling of expert advisory or practitioner skills, and also building expertise in the domain of sales. When I say “the expert salesperson” I mean an expert (advisor or practitioner of some kind) who also sells, and who performs both roles at a high level. After having worked with thousands of experts across various fields of creative, consulting, finance and other domains, I am struck by how few people do both well. The problem, I believe, is all the old clichés of what it means to sell.

Let’s explore both sides of the expert salesperson.

Expert YouYour first job is being an expert at something. You’re a creative or a marketer or a consultant or an advisor. You have domain expertise and possess the natural confidence that arises from it. You know how an expert should behave and you show up in your engagements this way. As the expert your job is to advise, to counsel and maybe to execute with skill. Your clients expect you to guide them, to lead. Depending on what you do, they put their most precious assets—careers, businesses, financial security, health, loved ones—in your hands. They trust you and you rise to that trust. In the engagement you are the best version of your professional self.

Salesperson YouYour second job is selling that expertise. You don’t enjoy it as much and you don’t bring the same confidence. There seems to be a separate sales playbook that is at odds with how an expert behaves. Your discomfort with this clash of behaviors shows up in the results. The numbers don’t lie: you don’t love selling.

In the sale you feel a lesser version of your professional self. You think you have to pursue, to convince, to pitch. You search for scripts, hoping to learn exactly what to say. You seek to improve your presentation skills and you build larger, more elaborate pitch decks. Even if you’ve never been trained to do any of these things you intuit them. Salespeople behave a certain way. They prefer answers to questions. They present instead of converse. They bring urgency, leverage scarcity and make their pitch.

The conflict between expert you and salesperson you is rooted in your mistaken belief that the latter needs to be different from the former.

Selling expertise is not the same as selling products or transactional services. Playbooks for selling timeshares do not readily translate to selling ideas or advice. In any engagement of expertise there is a relationship that follows, and the dynamics of that relationship are established in the sale itself. Sell like a needy vendor and you will be relegated to vendor status in the engagement, robbed of your ability to do your best work and to command your highest fees. Sell like the expert you are and the client will try on what it will be like to work with you. You will claim the high ground of the expert and you will spare both of you the embarrassing sales clichés.

There is no need for the slick salesperson. The ideal salesperson version of you is the expert version of you—you in the engagement, leading the client, you at your best. That person can become an excellent salesperson. They can enjoy better closing ratios, higher fees and maybe even fall in love with selling.

Okay, So How?Look at the conflicting attributes of expert you and salesperson you below. Clearly salesperson you is a horrible advertisement for expert you. No wonder you don’t enjoy selling.

It doesn’t have to be this hard. Strike every attribute under salesperson you and copy and paste the attributes under expert you. This is how you should show up in the sale.

The world needs more of expert you.

The post The Dichotomy of the Expert Salesperson appeared first on Win Without Pitching.

View Details

There is a personality trait (known as “autonomy”) that has some people wanting the freedom to do and say what they want in the sale and others wanting to know exactly what to say. The former desire the right to reinvent the wheel with every opportunity and the latter want scripts.

Neither should get what they want. Instead, your job is to arm them with frameworks.

High and Low AutonomyUnderstanding that autonomy is the term used when measuring a person’s need for the freedom to do things however they want on the one end (high autonomy), and their need for systems and routine on the other (low autonomy), we can see why creative people tend to have high autonomy scores. They desire the freedom to think about the challenge differently every time because creativity is the ability to bring a novel perspective to a situation. 1

Watch a photographer evaluate a scene—like a building, a grove of trees or a couple having a conversation. The amateur sees the scene, points and shoots. The pro walks around looking for exactly the right angle. They know that this is not one scene, one photo. It is an untold number of scenes and photos depending on where they are standing—depending on their perspective. The pro spends a lot more time finding and setting up the shot than does the amateur. They spend much of their life looking for a better perspective on whatever they are considering. Their need to move around and find the novel perspective exists in non-physical realms of intellectual problem solving, too, including in a sale. The high autonomy salesperson wants to try out new language and a new approach with every prospect. The last thing they want is to be hemmed in with scripted language.

The low autonomy salesperson, on the other hand, wants visibility into the future to reduce uncertainty and eliminate unknowns. They prefer to converge on the right thing to say—the thing they will say every time with little variability. They want a script. There are plenty of low autonomy salespeople in the world, as evidenced by the popularity of my posts that model sales language, such as I Wish I’d Said That! and Seven Words You Can’t Say in Business Development.

It’s not difficult to see why neither high autonomy salespeople nor low autonomy salespeople should get what they want. Total freedom is messy, inefficient and leaves too much to the chance of the individual’s strengths and weaknesses. Scripted language makes the salesperson sound, well, scripted—the last thing you want in a consultative sale. So if nobody should get what they want on this autonomy spectrum, how do you support your people doing the selling?

The answer is frameworks, which exist in the middle between total freedom and prescribed language, supporting those who desire either. Make no mistake: while frameworks exist in the middle they are by no means a compromise. Everyone—regardless of where they are on the autonomy spectrum—will benefit from being armed with frameworks.

The Four Conversations : A Framework-Driven Model At Win Without Pitching we use a model that views the sale as a series of four conversations, each with its own objective and its own framework for navigating to that objective.2

In this model the objective is the destination—the place you want your salesperson to end up at the end of the conversation. The framework is their guide for getting them there. You might also think of the framework as the map. But the map shows multiple routes and the salesperson has the discretion to get to the destination how they see fit. They are free to use their intuition to navigate within the map. They are free to use certain set pieces—statements or questions that they might reuse often. There is no language that anyone must use, beyond a brief positioning statement that ensures everyone in the firm is making the same succinct claim of expertise. But there are lots of questions and other set pieces that people are free to use.

Nobody gets exactly what they’ve asked for, but they get what they need to become a better salesperson.

A Qualifying FrameworkLet’s take the qualifying conversation as an example. It’s the vetting conversation where the objective is to qualify the lead to see if an opportunity exists and determine the next step. A common framework for navigating to this conversation is known as BANT, which stands for Budget, Authority, Need and Timeframe. Each firm and even individual salespeople will have a series of questions that they might ask to get the information they need in each of the four BANT quadrants.

Vetting the lead is the destination (to qualify them in or out). BANT is the framework for navigating to that destination. The salesperson is free to choose from a selection of questions—provided to them, conceived by them or a combination of both—to get to the destination.

1. Objective = Destination
2. Framework = Guide or Map
3. Question Sets = Numerous Possible Routes

This is the combination that supports those who think they need scripts and reins in those who think they need to eschew routine.

Complete Your Set of FrameworksFrameworks are useful throughout the arc of the sale. You should have frameworks for how you and your people:

• Introduce and speak about the firm
• Solicit referrals and other forms of lead generation
• Qualify leads
• Set price and write proposals
• Close the sale
• Negotiate

None of these areas require scripts. None of them should allow total freedom to the individual. Frameworks are the answer to most of your sales support issues and many of your personnel issues.

1. This definition of creativity that I subscribe to was defined by noted psychologist Mihaly Csikszentmihalyi, author of many books on creativity and happiness, and originator of the term “flow state.” ︎
2. A model is a view of the world, used to organize complexity. “All models are wrong, but some are useful” is author George Box’s line worth sharing here if you’re stuck on the idea that the sale is not always four linear, discrete conversations. You’re right, but it can be useful to think of it this way. ︎ The post Flip (the bird to) the Script appeared first on Win Without Pitching.

View Details

Late last year I did something that’s been on my to-do list since 2012—I visited Alt Group in Auckland, New Zealand. There have been numerous nights over the last decade where I’ve sat in my kitchen long after everyone has gone to bed, poured a glass of wine and just stared at Alt Group’s website, thinking “I wish I had the guts to do that.”

Their site hasn’t changed in 20 years and it probably will not change in the next 20. Owners Dean Poole and Ben Corban and their 30 team members (capped at 30) have more important work to do. They’re not optimizing their website, let alone updating it. They’re not pitching for work. And they’re not on social media. They just exist. Doing great work. They’re willing to talk to anyone who makes it to their unmarked door in a distant corner of the world, but not many make it. And they’re certainly not waiting for people to knock.

My friend Carl Richards recently sent me this quote from Confucius …

“A man, sitting in his house, attending the way, will be heard a hundred miles distant. Work done truly and conscientiously, in isolation, calls unknown friends.”

And this one from Naval Ravikant…

“Be a maker who makes something interesting people will want. Show your craft, practice your craft and eventually the right people will find you.”

Both Confucius and Naval were clearly influenced by the Canadian novelist W.P. Kinsella…

“If you build it, they will come.”

Alt Group is the Confucian man in the house, “attending the way.” They simply practice their craft, largely in isolation, and eventually, people find them.

All this is lousy business advice, of course. I mean, it’s seriously, dangerously bad advice—advice that would bankrupt many established businesses and cause many more to never get off the ground. But Carl, Confucius, Naval, Kinsella, Dean and Ben—these are not business people. They are philosophers and artists, each of them. Some of them own businesses that are embodiments of their philosophy and art, but business goals are never allowed to outrank the art. There is something in this idea of focusing on doing great work at the expense of almost everything else—including chasing the work, talking about the work or spewing vacuous drivel on social media to attract the work—that is compelling. That “something” is the power of putting principle above all else.

“We are artists with a 50-year plan.”

“We only work with decision makers.”

“Our clients have to already have design as part of their ethos.”

“We expect to work with our clients forever.”

These are some of the many principled comments I heard from Dean and Ben in our conversation. I’ve heard similar comments from others before, but they rarely ring with such authenticity. This is a firm where it’s clear the founders have no interest in compromising their principles for money. And, fortunately for them and their families, the money has followed. But you get the strong sense that they would keep going no matter what. If clients quit coming and the team had to be let go, the two of them would still be there doing their art. I hesitate to share too many specifics about Alt Group because their story is not mine to tell and the mythology is part of the allure. The mystique of this firm had built to such an extent in my mind that I was certain they could not measure up, that I was going to be disappointed by what I found. Instead, I was inspired.

Late in my agency career I had a difficult job working for a difficult person. They weren’t a bad person, just damaged from earlier experiences I knew nothing about. That job broke me, psychologically, but if I had not endured that experience I may have never started my own business. I can vividly recall the profound sense of freedom I felt from my willingness to be poor to be happy. I probably wouldn’t have taken the leap as an entrepreneur if financial security was above happiness in my principle stack. There is no freedom like having principles on which you absolutely will not compromise. There is zero stress in your decisions.

Youth and the early days of your business are the times in life to be principled—when you don’t have much to lose financially, and when you’re young enough to still make money if you do lose what little you have. It gets harder as you get older and more people—family and employees—depend on you to keep delivering the lifestyle to which they’ve become accustomed. And then there’s your own need for that lifestyle to keep going in just one direction. At some point the survival of the business moves to the top of the principle stack, above doing meaningful work and maybe even above happiness. And then growth moves to the place where survival used to be. And then after many years, a lucrative exit might make it to the top of the stack—because why would you want to stick around in a business where you’re doing mediocre work for people who don’t share your values when you can pocket a few mill and walk away?

The cure for all this is to spend a little time with people who truly are “attending the way.” It will reset you.

If I’m allowed to say so, I fancy myself a bit of a philosopher and artist (with words as my medium) but make no mistake, I am a business person, too. These things exist in tension, with me being pulled back and forth between the principles of doing meaningful work—attending the way—and growing a business. I believe that growth—in people and in organizations—is mandatory. When you stop growing it’s over. There’s no shame in it being over; all growth stops one day and everything comes to an end. And to be clear, growth in a business doesn’t mean headcount, and it doesn’t necessarily mean revenue, although revenue and profit are often approximate measures of growth in many businesses because they can reflect the value that business creates in the world. But when profit, revenue or headcount growth moves above more fundamental principles in the stack, that’s when the joy of the business becomes elusive. That’s when I edge toward the lesser versions of myself.

I once wrote that I was never going to sell this business and never going to retire, but at times I’ve had more thoughts of both than I am comfortable admitting. And there was a period of a couple of years where the words going out under my name were not written by me, they were written by an HI (human intelligence) that ingested everything I had written and recycled it into something approximating new content for something approximating value for the reader, all so we could sell more training. And since I’m confessing my sins, while I believe revenue and profit growth are important on their own, and also good rough measures of the value a business is creating in the world, every time I have set specific goals for either it has never sat well with me. There is something about a specific number that says “our principles are subservient to the goal.” I felt it when I set those goals and I set them anyway.

These thoughts and behaviors that come from the lesser versions of ourselves arise when attending the way gets subsumed by specific measures of growth, or when we get worn down by doing work that isn’t meaningful—the wrong type or for the wrong people. There is nothing like spending time with people attending the way—doing work truly and conscientiously, perhaps in isolation—to remind us of the better versions of ourselves. When we’re focusing on meaningful work, when our principles are immutable and immovable, when we’re playing the long game, then the direction of growth becomes more important than the amount of growth and our most valued and foundational principles remain at the top of the stack.

So what, dear reader, are you to do with this self-indulgent introspection of mine?

I don’t know. If you are young and principled I would say to you, hold onto those principles and build your business around them. Do not accept that business has to be done a certain way, that you should compromise your principles for commercial success. Push back on bad practices that others would impose on you and walk away from people whose basic values conflict with yours. Being dangerously bad business advice, of course, this might set you back a few years, but if you don’t take a principled stand now, you never will.

If you’re older and find yourself struggling to find meaning in your business, I’m less confident giving you advice. I don’t know if I’m willing to be poor to be happy anymore. I hope I never have to find out. But if I do find myself in that place again I hope I think of Dean Poole and Ben Corban, two men and a team that will never exceed the size of an extended family, sitting in an unmarked studio in an opposite corner of the world, attending the way.

The post Attending The Way appeared first on Win Without Pitching.

View Details

“The elementary mathematics of compound interest is one of the most important models there is on earth.”

-Charlie Munger

Charlie Munger died last month. I have no doubt that he will go down in history as one of the most quotable humans of this and the last century, among other more remarkable achievements. This post is not a eulogy, however, it’s the application of one of his pithy, insightful phrases into the area of growing and profiting from expertise.

Of the three key variables of the future value of an investment—the principal amount invested (P), the rate of return (r) and the length of time (t) the money is invested—the latter is, somewhat counterintuitively perhaps, the biggest driver of results. This compounding effect of time is why the authorized biography of Munger’s partner in Berkshire Hathaway, Warren Buffett, is titled Snowball. Money invested over time is like a snowball rolling down a hill, starting out small but growing with time, interestingly at first and then with an awesomeness that is almost incomprehensible.

Just as the interest on money compounds over time, the interest on knowledge compounds similarly, under the right conditions. Whether we are experts at seeing (and therefore advisors) or at doing (practitioners), knowledge is the foundation of what we do and each of us wants more.

The compounding effect is not intuitive because people are not good at thinking exponentially. Consider a thought experiment. Off the top of your head, what do you think the future value of a $1 investment would be in 30 days if the value of that investment doubled every day?

Not many guess at anything approaching the right answer: just over $1 billion.* Here’s the follow-up question that many people also struggle to answer correctly. How many days does it take for the investment to reach half that amount, about $500 million?

Many intuit the halfway point of 15 days which shows that we think linearly and not exponentially. The answer, which is obvious after you hear it, is 29 days. A $1 investment (at a ridiculously short doubling period, granted) yields $500 million in the 30th doubling period—in one day—when it yielded just $1 in the first one. On day 31 the investment is worth $2 billion. On day 40 that initial dollar is worth $1 trillion, and well before a year it’s worth more money than has ever been generated in the history of humanity.

The time value of knowledge has the same effect as the compounding effect of interest. In this domain of knowledge, the principal (P) is what we know at the start of our career. Our rate of return (r) is the rate of learning—the pace at which we get smarter. Time (t) is time; it remains the same. From this we can draw two important lessons.

Lesson OneThe first lesson is that P and rdo not have to be large when t is.

Our knowledge base at the beginning of our career (P) is almost irrelevant. A rate of learning (r) is vital but it doesn’t have to be large when time (t) is long. We can overcome a disadvantaged starting point or a slow rate of learning with time, as long as we continue to learn. Play the long game and keep learning.

We all know people who are coasting through the last few years of their career. We can spot them not because of their age (Warren Buffett is 93 and isn’t done. Charlie Munger was still compounding just before his death at 99.) but because they telegraph that they are done. They are enjoying the fruits of their career, taking a last victory lap around the track before they head off into the Florida sunshine. That is their prerogative and it’s not my point here to marginalize someone for their choices or diminish anyone who decides their work is done, I’m simply pointing out that the compounding of knowledge is not just a function of age (t). Older people are not necessarily wiser. Older people who are lifelong learners, however, are.

Lesson TwoThe second lesson is that the biggest gains—by far—come at the end.

Our $1 investment went from $1 to $2 in the first period (1 day) and from $500 million to $1 billion in the 30th period of the same length. Persistence really does pay off—when you keep learning.

I have a scientist friend with whom I have the most interesting conversations because he brings his domain to bear on my business and I bring the business domain to bear on his work. He’s 74 and in his words he was retired from the age of 18 to 45. Then he went back to school, earned his PhD at 50 and proceeded to have an impact in his study area over 24 years that any of us would be proud to have in our own worlds. In a recent conversation I was marveling at the impact he’s had in the last 2 years alone, a few years after most people would have retired. He is an example of a person whose growth has been exponential instead of linear and as a result has achieved a massive amount in a short period of time—after sticking with it for a long time.

The Tricky Variable of rIt’s fair to say that most people don’t get an exponential return on their knowledge and it’s probably because rate of learning (r) is the difficult, amorphous variable in our model. Unlike a rate of return on financial investments, our measures of any rate of learning are likely to be intuitive, inconsistent and plain wrong. Just as people’s ideas of what constitutes exercise changes, diminishing almost imperceptibly as they age to the point where one day they mistake walking for exercise, so too I suspect does the sense of our rate of learning.**

Here’s another thought experiment. Consider the idea of someone building a chatbot version of you. They train a narrow AI on all of the outputs of your career—your work and your thought leadership—up until 1 year ago. None of the material has been weighted, meaning the people building the model treated all your work with equal value, ignoring the fact that you learned with time, improving some ideas, surpassing, correcting and even disavowing or refuting others. What’s your reaction? Do you laugh at the idea of someone skating to where the puck used to be? Or do you bridle with rage that almost everything you know is now out there, that you’ve effectively been replaced by an archived version of you?

If it’s the latter then you’ve let your rate of learning (r) decline with age.

Okay, one year might be the right threshold for this test for a 57-year-old writer, but maybe not you. How about a chatbot based on everything you knew up until two years ago? How about five years ago? There is a point in time at which you think, “yeah, prior to that my competitors can have everything I knew. I’m miles ahead of that place now.”

I can’t tell you where that line should be for you, but I think you’ll arrive at an honest feeling about your rate of learning (r) by doing the thought experiment. Has your idea of learning diminished to the exercise equivalent of walking? It might be time to hit the gym, so to speak. And maybe the actual gym?

Keep GoingStick with it—whatever “it” is. As long as you do not let your pace of learning diminish with time (age) you will have massive gains in a short period of time—after a long period of time.

-Blair

*In the original version of this post I mistakenly had $1 turning into a mere $1 million in 30 days and not the correct $1 billion.

**Yes, walking is good for you but it’s not exercise. It is its own category of thing—called “walking”—in between “fresh air” and “exercise.” No need to email me your thanks for clearing this up. I’m here to help.

The post The Time Value of Knowledge appeared first on Win Without Pitching.

View Details

Bounded rationality is the idea that we humans don’t make rational decisions based on all relevant criteria. Instead, we narrow the boundaries of the information we consider in order to make quicker decisions. If the majority of human decision making wasn’t artificially bound in this way then few decisions would ever get made. We are too limited in time, the availability of information and our own cognitive abilities to try to make perfect decisions, so we settle for “good enough” decisions. Social scientists call this compromised decision making “satisficing” and the mental shortcuts we use to narrow the bounds of such decisions “heuristics.”

Like all heuristics, these boundaries are good enough to make quick decisions of minor consequence, like employing “extremeness aversion” and defaulting to the middle “Silver” option when selecting a carwash without even bothering to learn what is included in that option. But heuristics also serve as useful starting points from which we make more consequential decisions. “Price anchoring” is a classic example of using a heuristic (in this case, starting with the first price we see or hear) and then adjusting from there. Kahneman and Tversky, who coined the term “anchoring” actually refer to it as “anchoring and adjusting” for this reason. The anchor is the heuristic—a useful starting point for thinking about a subject—in this case, the first price. Then we reason our way away from the anchor. When we price anchor in a sale—whether we are the seller anchoring high or the buyer anchoring low—we are effectively hacking this heuristic, leveraging the fact that people stop reasoning well before all the information is considered.

I’ve described the two different uses of heuristics to set boundaries that help us make decisions. In inconsequential decisions like a car wash we use these shortcuts to make the decision quickly and completely. In decisions of consequence like buying a car, we use the same shortcuts as a starting point from which to then reason our way to a more thoughtful decision. The more consequential the decision, the more reasoning we apply to get a more fully-informed decision.

I’m sure you’ve already spotted the problem. These artificial boundaries that are meant as starting points for consequential decisions can calcify and become more real than is useful. In some cases they become a form of social or organizational law. One example of this is the 80/20 heuristic of the “working” and “non-working” components of a client’s marketing budget.

Who Are You Calling “Non-Working”!?Before we get to the 80/20 boundary itself, let’s dwell on the ridiculousness of the labels. In this model, media spend is referred to as the “working” part of the budget and creative and production are known as “non-working.”

Kyle Reese was sent back in time to save Sarah Connor so she could give birth to John Connor who would then lead the human resistance against the machines. (It’s true, you can look it up.) But I wonder if he shouldn’t have been sent back in time to stop the person who came up with these insulting labels. It’s hard to know what has been more damaging to the cause of effective marketing, the 80/20 heuristic that has been codified into law or the disparaging label of “non-working” spend.

If creative and production really are non-working then why be so irresponsible as to spend 20% of your budget on them? Shouldn’t you be focused on getting that to zero?

The obvious, undeniable truth is that creative and production are multipliers of the media spend, not subtractions from it. Every rational thinking marketer intuits this. And yet, so many still use this label. Non-working. Fuck you. Piling more GRPs on a shitty ad is the definition of non-working.

Now, About That Ratio…Okay, this label clearly pushes my buttons. I can write a little bit more calmly about the 80/20 ratio, because this idea of what should be a starting point (“80/20 feels approximately right, so let’s start there and then begin reasoning”) getting calcified into law (“It’s 80/20. My boss said so.”) well, it happens a lot.

Even the Pareto Principle—what most people refer to as The 80/20 Rule—isn’t as specific as “80% of effects are derived from 20% of causes.” According to Wikipedia, “the term 80/20 is only a shorthand for the general principle at work.” That principle is that a large percentage of outcomes are driven by a small percentage of effort or resources. Sometimes it’s 90/10. Sometimes it’s 70/30. Sometimes it’s 70/20. (There’s no requirement for the numbers to add up to 100.)

80/20 is a heuristic—a tool for quick decisions of low consequence and a starting point for decisions of greater consequence. Marketing spend is a decision of sizable consequence but many seem to have dropped the important step of reasoning away from the starting point and instead view the starting point as law.

If we actually applied the Pareto Principle to marketing budgets we would value the creative and production more highly than the media spend. I’m not saying we would reverse the spend ratio, but we certainly wouldn’t be bound by the heuristic.

Media is a commodity. The ad is what leverages the commodity into something useful, useless or in between. The shortcut of spending 20% of a marketing budget on creative and production and 80% on media is as good a place to start as any, but if your budgets always end up at this ratio then you’re clearly skipping the important step of reasoning. You’re just going through the motions, blindly following a law that was never meant to be a law at all, only a place from which to begin reasoning.

Let the reasoning begin. Be guided by this rational starting point but not bound by it. And ffs, don’t label the investment in the creation of the ad “non-working.” It’s always been the most important and hardest working part of the budget.

The post “Working/Non-Working” Doesn’t Work appeared first on Win Without Pitching.

View Details

Your two main levers of profit are to lower your expenses and to raise your revenue. (Profound opening, I know. Stay with me.)

Of course, like any business owner, you should understand your costs, and you should have a sense of how those costs compare to other firms like yours, without being a slave to any benchmarks or averages. (The good and bad of benchmarks is a topic for another day.)

But the other lever—revenue—is the easier one to pull, the one that has the outsized impact on profit. And one of the easiest ways to impact revenue is to raise your prices. Not all your clients will accept a price increase of course, so earning more through improved pricing is often more nuanced than a straight price increase across all clients and services, but it’s still relatively easy to do and the impact on the top and bottom line can be significant. Let me show you just how significant by taking a hypothetical firm that is reflective of some industry averages and typical pricing success stories.

To make sure we’re isolating pricing success from sales success, let’s use the same closing ratio across multiple scenarios.

Your Closing RatioYour closing ratio (CR) is the number of proposals won over the total number of proposals submitted. For example, a firm that wins five of ten proposals has a closing ratio of 50%.*

Your Revenue Closing RatioA more revealing ratio is what I call your revenue closing ratio (RCR). To calculate your RCR simply use the monetary value of the proposals in the same calculation. If the ten proposals written in our example are all of the same value—let’s use $100k—then the RCR is the same 50% as the closing ratio.

Still pretty straightforward. But things get interesting when you embrace multi-option proposals that I outline in Pricing Creativity: A Guide to Profit Beyond The Billable Hour.

Let’s assume that for each of the ten proposals submitted the client’s stated budget was $100k, but the proposals submitted had options to engage the firm at $100k, $150k and $250k. (Note that the RCR denominator is always the client’s stated budget or the lowest priced option, which are typically the same.** RCRs start outpacing CRs when clients commit to spending above their stated budget.)

In this new scenario the 50% closing ratio doesn’t change, but in three of those five wins the firm nudges the client above their stated budget. The results break down like this:

The firm’s selling skills haven’t improved, per se—they still have a 50% closing ratio—and the clients’ budgets haven’t changed ($1m combined) but a small improvement in pricing skills and simply giving the client options has improved RCR and revenue by 50%.

Closing ratios can never exceed 100%, but revenue closing ratios can, and do. That means that some firms writing proposals for $1m in combined client budgets are closing $1m in business—and more—at close to standard closing ratios. While our example firm is only halfway there, they’re just getting started.

Upward MomentumThe more our firm builds pricing skills and experiments with multi-option proposals, the better their results get. With the same 50% closing ratio, they keep finding ways to expand their clients’ budgets by providing more elaborate and expensive ways to create more value (or certainty of value) all while still allowing those clients to buy at their initially stated $100k budgets, if they prefer. Where the firm once saw the client’s stated budget as a rule of law, they now feel free to present options that are limited not by arbitrary budgets but by return on value created. This sometimes leads to options that are priced at many multiples of the client’s stated budget.

And their average selected price keeps going up, with the results of their next 10 proposals looking like this:

This firm has now fully closed its revenue gap. The $500k in proposals that they didn’t win is offset by $500k in revenue that they closed above their clients’ stated budgets. (I previously wrote about how you should track and gamify this revenue above budget, or RAB.)

This 100% RCR is a threshold of pricing success that is within reach of most creative firms and one every firm should aim for. And there are levels beyond this.

The Elephant in the Pricing RoomSome will find the proposal amounts I’ve used so far to be incredulous. After all, $250k and $400k are multiples of the client’s $100k budget. Some won’t believe that a client with X budgeted would spend 4X. And others are thinking that only sinister manipulation can get a client to spend multiples of what they intended to spend.

But have you ever been hired by a client to do A, only to find out deep into the engagement that they didn’t need A at all, that what they really needed was B?

Or have you ever worked on an underfunded project where it was so clear that if the client had invested more the returns would have been massive instead of paltry?

Or have you had a client try to frame a potentially transformational strategic opportunity as a tactical project that they needed to get done quickly and cheaply?

I have found myself in each of these scenarios multiple times. On some occasions I summoned the courage to do the right thing and challenge the client to think differently or bigger. And on too many occasions I took a pass and let the client get away with a mistake or miss an opportunity.

With a multi-option proposal you can challenge the client to think bigger (in one or two options) and still allow them to buy what they intended, or spend what they budgeted—if that really is their preference—after you’ve had the adult conversation.**

You don’t raise your prices by conning your clients, you raise your prices by raising your clients.

Closing Ratios Will Go UpSo far the closing ratio has remained constant at 50%, but the introduction of multi-option proposals almost always drives an increase in closing ratios, for the simple reason that by offering the client three options you raise the percentage of positive outcomes by 50%.

The three-option approach raises this firm’s closing ratio by another 10%, meaning one of the five loser proposals now gets accepted, driving the closing ratio to 60% (six out of ten). And let’s say that the relatively inexpensive option of $150k is selected. Our results now looks like this:

…And UpWe’re tracking a hypothetical firm, using industry averages and typical pricing success stories. Their baseline ten proposals yielded a 50% closing ratio and a 50% revenue closing ratio, generating $500k in revenue.

After introducing multi-option pricing, ten subsequent proposals enjoyed the same 50% closing ratio but their revenue rose by $250k to $750k, for a RCR of 75%.

In their next ten proposals, again with the same closing ratio, they closed their revenue gap completely, earning $1m on $1m in proposal value. That’s a 100% RCR at the same 50% closing ratio.

We then recalculated those last numbers based on the reality that multi-option proposals almost always increase closing ratios. One proposal moved from the loss column to the win column. Revenue is now up 130% (from $500k to $1.15m) with a RCR of 115%.

Gains in QualifyingMore time passes and skills keep improving. The firm is feeling confident. But their 40% loss ratio is starting to nag at them. They do a rudimentary analysis and learn that in half of those lost proposals the signs were pretty clear that they were never going to win. They couldn’t corral key decision makers, the process was driven by procurement, they could never escape the feeling of being treated like a vendor or some other factor made it obvious that two out of ten proposals never should have been written.

Seeing the patterns, they summon the resolve and quit writing proposals for the two out of ten proposals where it’s obvious they won’t win. This increases their closing ratio to 75% (six winners out of every eight proposals written), and it lowers their average cost of sale by 20%.

Their numbers now look like this:

Again, this example is hypothetical based on industry averages and patterns we see in our clients, but it’s not an outlier. We routinely see firms hit 100% RCRs and beyond with continuous improvement for years when they layer in better qualifying, as this firm has done, improved closing skills, more advanced pricing techniques, and perhaps changes in service offerings, target market or business model. In the typical creative firm, revenue and profit can both rise dramatically with the same expense ratio and lead flow.

It’s Pricing. It’s Always Been Pricing.So, yes, you should keep an eye on your expenses, and yes, more leads is a better state than fewer, but neither of those levers are as easy to pull or as impactful as simply getting better at pricing. There is no lower hanging fruit on the profit tree than pricing.

It’s pricing, it’s pricing, it’s always been pricing.

Buy the book or reach out if you need help, but would you please go get that money? It’s just hanging there, waiting to be picked.

-Blair

*Multiple sources suggest that the average closing ratio for all proposals written in an independent creative firm is somewhere between 25% and 30% but it’s a curve with a fat tail.

**When you submit a proposal to a client with a stated budget, I believe you are obligated to show what you can do (profitably!) for that budget, if only to show what little can be accomplished when a project is underfunded.

The post Quantifying The Value of Pricing appeared first on Win Without Pitching.

View Details

There was no trace of the fog now. The sky became bluer and bluer, and now there were white clouds hurrying across it from time to time. …the trees began to come fully alive. …soon the beech trees had put forth their delicate, transparent leaves. As the travelers walked under them the light also became green. A bee buzzed across their path.

‘This is no thaw,’ said the dwarf, suddenly stopping. ‘This is Spring. What are we to do? Your winter has been destroyed, I tell you!’

-C.S. Lewis, The Lion, the Witch, and the Wardrobe

Something is in the air in Agencyland. After a long, cold and seemingly endless winter, something is finally in the air. Free pitching, the addictive and destructive opioid of both client and agency is disappearing like the White Witch’s endless winter. It may not yet be summer, but spring is most definitely here.

Ditch The Pitch, Says ForresterEarlier this year (2023) Forrester published a research report that was the first rigorous attempt to quantify the cost of free pitching. It’s conclusion: free pitching costs the US agency industry up to 17% of its $73B annual revenue. That’s $12.5B a year. Nice to finally have a number. It’s… uhhh… large.

There’s a lot of blame to go around for this large cost and the implied waste therein, claim the report’s authors, and they spare nobody, blaming:

1. Procurement for prioritizing cost savings over other goals
2. Marketers for being disinterested in and underprepared for their own pitches
3. Agencies for giving too much away for free
4. Outside consultants for unnecessarily driving up complexity and costs

I could go on about each of these four topics at length, but it’s another report that I’d like to dive deeper into.

The ANA and 4As Gang Up on PitchingIn July, the American marketing trade body the Association of National Advertisers (ANA) and their agency counterpart the American Association of Advertising Agencies (4As) published a joint research report, The Cost of The Pitch. (For the rest of this post when I refer to “the report” it is this one I mean, unless otherwise noted.)

The verdict shared by the ANA and the 4As is that pitches are expensive—for everybody—and while sometimes appropriate, clients should think twice about putting their account into review. But I’m getting ahead of myself. There are three insights from the report that I found most notable and worth discussing here:

1. The cost of pitching to both parties
2. The role and impact of the incumbent agency

3. Clients’ motivation for putting their account into review

4. Pitches Are Expensive—For EveryoneIt’s long been known that a pitch can cost an agency hundreds of thousands of dollars. The report shows that those costs are, on average, about $200k for a non-incumbent agency and more than double that—about $400k—for an incumbent. But this might be the first report that speaks to the cost of the pitch to the client: another $400k or so. All in, the average pitch has a cost to all participants of over $1m. Again, we knew this was expensive but it’s nice to have some numbers. I think they’re likely understated because they don’t factor in the costs of disruption and relationship degradation, but at least we have a big round number to approximate the starting point of the cost of the pitch.

So it’s over $1M per pitch and $12.5B per year. In more than 20 years of conversations on the subject I’ve always been struck by how little thought clients give to where those costs go. They see them being borne by the agencies, which they are initially, but they appear to be uninterested in the longer term reality that much of those costs ultimately get spread across the entire marketer landscape. How much of that $12.5B is pure waste is anyone’s guess, but it’s billions and it shows up as higher costs to the client and the best talent in the agency being allocated to winning business instead of serving existing clients.

1. The Incumbent Wins—or DeclinesPerhaps most interesting to me is how the report’s findings definitively answer the question, should you participate in a pitch when the incumbent is involved? Of course the answer is no, but now we have a picture of just how skewed these agency reviews are.

The report shows that the incumbent is reappointed 66% of the time, and 25% of the time the incumbent refuses to defend the account. Let’s unpack that. Across 100 agency reviews the incumbent is selected 66 times on average. But in 25 of those reviews the incumbent agency, seeing the writing on the wall, has declined to participate. So when the incumbent chooses to participate their odds of winning the review are 88% (66/75). An agency that finds itself pitching against an incumbent in a four agency shortlist has odds of winning that are roughly 4% (12% chance a non-incumbent agency is chosen, divided by the three non-incumbent agencies). Talk about long odds.

It’s clear that when the account goes into review the incumbent agency either bets the account is safe with them and that the review is a policy-driven process that they just have to endure, or they see the relationship as over and do not try to defend the account.

From the report’s summary of key findings:

“Clients should ask themselves if the cost of an agency review is worth the potential savings, especially when one factors in that client respondents retained the incumbent agency two out of three times following an agency review. Clients also risk alienating their incumbent agency when asking them to re-pitch business. One in four incumbent agencies declined to participate in a pitch to keep their client’s business. And 54 percent of agency respondents said being put up for review had a major to moderate impact on their decision to resign the account.”

While the report did not enumerate the costs of the degradation of the relationship that an agency review engenders, it did speak to it. 42% of incumbent agencies and 38% of clients said the account review caused an erosion of trust between both parties, and 41% of both said it resulted in the incumbent agency taking fewer creative risks.

“From an incumbent agency perspective, being asked to participate to defend an account for which the agency believes it has done a good job is demoralizing. This study pointed out the negative impacts an agency review has on the existing relationship, and combined with ongoing resource constraints, these are likely explanations for why an agency may choose not to participate when asked to defend the account.”

Only 13% of incumbent agencies claimed the review process had no detrimental impact on the relationship.

1. Reviews Are Largely About Getting a Better PriceSurprise! Didn’t see that coming, did you?

Of the top factors considered when selecting an agency, “Cost/price” was number one, cited by 62% of all respondents (and by 71% of our friends in procurement). This was followed by “Creative execution” (45%) and “Strategic big idea” (36%).

While I was not surprised that price was the driving factor in hiring an agency, and I’m sure you were not either, the report’s authors claimed to be.

“It was surprising and disappointing to see cost/price as the top factor considered to select a winning agency. Agencies are not commodities and price should not be the key factor. While it is important for a client to select an agency it can afford, the discussion should more appropriately center around the value that an agency can deliver.”

The Sentiment is ThawingSo the report’s three key findings, to me, are that pitches are expensive, the incumbent wins or declines, and they’re largely about getting a better price. It’s nice to have some data to back up what most of us have long known.

The real value of this report however is the sentiment. It appears to represent the first time that the client’s marketing trade body (the ANA) and the agency trade body (the 4As) have come together to say that perhaps it’s time to rethink this archaic practice of the pitch-based account review.

“A pitch is an extremely stressful situation for agency staff. Often livelihoods are on the line, and in some cases, careers can be enhanced or severely damaged by the outcome of the pitch. Adding to this stress is the need for the agency to maintain a high level of service to its other clients, and in the case of an incumbent pitch, to that client in particular. Any type of alternative to a pitch is worth considering when the emotional toll is added to the cost and potential business disruptions a pitch entails.”

The report is worth reading in its entirety. You can download it here. I congratulate the ANA and 4As for commissioning it and making it broadly available.

“The forces of the creative profession are aligned against the artist. These forces pressure him to give his work away for free as a means of proving his worthiness of the assignment. Clients demand it. …other creative professionals resign themselves to it. Trade associations are powerless against it.”

Thus opens The Win Without Pitching Manifesto, first published in 2010. I don’t want to get too carried away just yet, but for the first time I’m wondering if there might come a day when I have to revise that opening for a future edition, one in which we look back at free pitching as a ridiculous but quaint convention.

“It’s hard to believe now, best beloved, but in my day we used to give our most valuable product—our thinking—away for free. You laugh, but it’s true! There was once a reason for it in the beginning, but the practice stayed long after the reason was forgotten. It seems silly when I tell you of it today, but it’s just the way it was. Everyone did it, and no one ever thought to ask why!”

-Blair
1The Chronicles of Narnia (New York: HarperCollins, 1954/1994), 165-166.

The post Are These The Last Days of The Pitch? appeared first on Win Without Pitching.

View Details

Selling and negotiating are related, but they're different enough from each other that they may require different ethical standards.

The post The Conflicting Ethics of Selling & Negotiating appeared first on Win Without Pitching.

View Details

Payment terms are right below price on the list of important items you will negotiate. On one hand, I think some creative firms don't think creatively enough about using payment terms to get an otherwise tricky deal done, but on the other hand, some larger clients can be ruthless at imposing arduous terms on their agencies and other suppliers. Let's look at how to leverage the former and defend against the latter.

The post Payment Terms, On Your Terms appeared first on Win Without Pitching.

View Details

I’m of two minds when it comes to referrals as a lead source. On one hand, I’m jaded by the people who claim their number one source of clients is “word of mouth and referrals,” when they really mean, “I have no idea and no plan.” On the other hand, I know people and businesses that have absolutely mastered the art of referrals, driving all their growth through this one channel. 

The post The Best Referral Machine I Have Ever Seen appeared first on Win Without Pitching.

View Details

I’m a fan of constraint-driven exercises, so let me pose one for your consideration. Imagine that you could never employ a full-time dedicated new business person (let alone a team) What changes would you need to make in your business as a result?

The post Do You Even Need a New Business Person? appeared first on Win Without Pitching.

View Details

Two common refrains that you are “always selling” and that “everything is a negotiation” are often stated as facts, but they’re not facts, they’re points of view, and I don’t happen to subscribe to either of them.

That doesn’t make these perspectives wrong, just unhelpful—to me, anyway. One or both of these views might be helpful to you, and if so then it makes sense for you to go through life treating every human interaction as a sale of some kind and every decision made with another human being as a negotiation. You won’t be right and you won’t be wrong, but you will have a model for understanding your interactions and, likely, a related framework for how to act. That can be very helpful.

I’ve previously quoted statistician George P. Box on the value of models, which are views of the world that allow us to make sense of it: “All models are wrong but some are useful.” Box’s point is the value of a model is its utility, not its veracity. I don’t find these models of the universality of selling and negotiating useful. But that’s just me.

Another profound statement I would add to the discussion is the observation that “all strategy is autobiographical.” (anon) Who thinks we’re always selling? Salespeople, of course, and other high-drive individuals whose natural disposition is talking people into things. And who thinks everything is a negotiation? Every author of every negotiation book ever, apparently. (I’m making my way through the canon now.)

The salesperson who thinks we are always selling and the negotiator who sees every multiparty decision as a negotiation are both the proverbial carpenter to whom every problem looks like a nail. But that’s the problem with models, or more specifically, that’s the problem with having just one model. It’s helpful quite often, but if it’s the only club in our bag, we go to it too often. It’s best to have multiple models.

Sometimes we simply seek to understand someone else, not so we can tailor our pitch to them or extract more from them, but so we can learn something about them and maybe even ourselves. It’s okay to just be listening, learning, helping, doing what’s right, creating a new connection or deepening an existing one—all without thought of a tradeoff, with no consideration for what might be in it for us. Where is the negotiation in being a trusted friend? What is it that we are selling to our spouse?

I recognize that the frameworks of selling and negotiating can be helpful in our personal lives and I draw on some of these tools myself, but my personal view is that, in the most important relationships in our lives, much is lost when we see ourselves as salespeople and negotiators. I think this extends into many of our business relationships as well, including some of those with clients and suppliers. Yes, there are times when we are selling and there are times when we are negotiating, and sometimes we are doing these things in our personal relationships. It’s still too big a leap in my own mind however from having some helpful tools to being the always-on salesperson or negotiator. I think the latter is a path to alienation, divorce and a transactional life devoid of richness. But that’s just me.

The ideas that we are always selling or negotiating may be helpful to some of us, but just as helpful might be the ideas that we are never selling and never negotiating, that we are human beings trying to learn and grow and that we can’t do that without the help of others.

These models are wrong, of course, but you might find them useful. Or not. Find one that works for you. Don’t be held hostage by someone else’s view of the world, especially if it leans on a word like “always” or “everything,” and certainly don’t mistake it for fact or universal truth. It’s not.

The post You’re Always Selling. Everything is a Negotiation. appeared first on Win Without Pitching.

View Details

Do you ever wonder why some of your clients are transformed by your work and others, meh—not so much? It’s the multi-million dollar question, isn’t it?

I think about it all the time. This post is going to read like my therapy for a minute but I promise I’ll bring it back to how you can have better success in implementing the ideas in my books, podcasts and training programs.

I wonder why, on the one hand, we at Win Without Pitching can work with a firm for two days and then watch as their culture completely transforms over the ensuing months, with the front line team replacing old, needy, vendor-like behavior with new expert advisor behavior; replacing a firm-wide focus on hours, FTEs and staffing plans with a new focus (and pricing) on value creation… and then we can work closely with another firm for over a year or more—training, coaching and consulting across the whole organization—and get only marginal gains. Yeah, they learn the frameworks, they improve their closing ratios and their prices go up, but it’s limited. It’s an evolution instead of a revolution and there is no fundamental change in culture that has people changing their mindsets, letting go of old limiting beliefs, and showing up differently in the sale. The people eventually turn over and things revert to the old ways with only a few small things sticking.

The short answer to the “why” question is that change of any kind is hard. The slightly longer answer is that complex issues like culture change are always multivariate. But some variables are weighted more heavily than others, and among all the variables, one stands out more than others.

Somebody Senior Really Owns ThisLast year I told you a story about my last agency job, over 20 years ago, when my boss, the agency owner and president, signed up some co-workers and me for sales training. He made the decision, he paid for it, but he didn’t attend and he didn’t drive the change internally. Fatefully, I was transformed by the training, but my colleagues were not. I left soon after to start Win Without Pitching and I know the training didn’t stick with the team for long. It probably paid for itself but there was no transformation, no revolution. The reason it didn’t stick is that the owner who funded it didn’t have the capacity, ability or interest to drive the change into the organization. In fairness to him, maybe he didn’t view that training as an opportunity for transformation. Most training isn’t. Maybe incremental improvement was all he expected.

I guess we get hired for incremental results too, sometimes, and you do too, I imagine. But I don’t think it’s what either of us want. We want to make a dent in the universe, to quote Steve Jobs. We want to transform others.

So my boss paid for the training but he didn’t take personal responsibility for leveraging the investment to change the culture of the firm. It wasn’t his rock, to use the EOS term for large commitments for the quarter or year. And that was his prerogative. Who knows what his competing priorities were? I’m not judging him.

Fast forward 20 years and this is what I see as the key differentiator that separates incremental, transitory success from sustained cultural change and next-level financial reward: a senior person in the firm makes this type of cultural transformation (moving from vendor mindset to expert; from cost-based thinking to value-based) their sole focus for the quarter and their top priority for the year.

That’s it. I wish there was a magic hack like all the influencers and hustlers promise. If there is one, I don’t know it. Somebody with authority has to really own this. It doesn’t have to be the business owner and it doesn’t have to be the CEO but they have to have the respect of both and the authority to do what’s necessary. They have to have the gravitas that inspires people to follow. They have to coach out of the organization those that won’t. They have to break down the systemic barriers to change. And it has to be their #1 priority for a sustained period of time—the one big thing they get measured on.

Simple, but not easy. Who’s going to own this? Really own it? That’s the answer to the multi-million dollar question.

The post Who’s Going to Own This? appeared first on Win Without Pitching.

View Details

The more I get to know procurement professionals through my pet project that is 20% – The Marketing Procurement Podcast, the more I am struck by how bad we in the creative professions are at negotiating.

I see six main reasons for this.

1. We’re Emotionally Attached to the WorkCreativity is personal, with a little bit of the creators left in every campaign, design or code. This puts us on the defensive in a negotiation: we want it more than the client does, even in cases where the raw facts say that we have the upper hand.

One of my more common exhortations is, “You want to get better at selling? Three words: No Sunk Costs.” There are lots of ways we overinvest in the sale and swing the power balance to the client (the pitch is designed, in part, to do just that), but the most damaging one by far is simply wanting it too much.

P=db/DThe formula P=db/D helps remind us that our power (P) in the sale is a function of our desirability (db) being greater than our desire (D). In other words, whoever wants it most has the least power.

The things we do to increase our desirability are long term activities that are months and years upstream from the negotiation. It is our desire, or at least the expression of that desire in a negotiation, that we must learn to modulate.

Emotionally, we almost never have the upperhand. We therefore have to find ways to compensate for this deficit, while doing what we can to tame those emotions.

1. We’ve Got the Wrong People Leading the NegotiationsSee emotional attachment above.

At the smallest firms, the people doing the work are also handling any negotiations, and on the other side of the table is usually a small business owner or a department head in a medium-sized business. At the largest firms with the largest clients, the negotiations are more likely to be led (or significantly supported) by finance, with the client’s procurement team on the other side of the table.

As your firm grows, you want to look for the first opportunity to remove negotiating from the front lines. Too many firms let the wrong people—the emotionally invested—lead the negotiations for longer than they have to. Finance is the obvious place to look for a cooler head, but a person’s job title only hints at their strengths. When the bias of emotional sunk cost is factored out, the remaining characteristics to look for in a dedicated negotiator are an understanding of the commercial aspects of the firm, temperament and of course skill.

When the firm is large enough, negotiating skills need to be part of the hiring criteria for a finance or commercial director.

Hire a ContractorIf you find your firm at the negotiating table only rarely, then consider bringing in an outside negotiator or advisor once it becomes clear that a negotiation is on the horizon. My 20% podcast cohost Leah Power and I have interviewed a handful of these accomplished ex-procurement professionals who now advise agencies, each with different specialized backgrounds. Comb through the episodes or reach out if you want us to do some matchmaking.

1. We Lack LeverageYour two most powerful points of leverage are your awareness of the options of both parties and your willingness to use yours and walk away.

The Client’s OptionsNegotiation pros use the term BATNA (Best Alternative to a Negotiated Agreement) to describe each party’s options and thus measure their negotiating power. If the offerings and expected value of your firm are seen to be similar to those of numerous other firms then the client loses nothing by walking away and engaging with the next firm in line. They have all the leverage.

The idea that we lack leverage isn’t nearly as true as it used to be. While there was a time not long ago when all ad agencies and design firms were fungible and the client could use that leverage to get firms to pitch their ideas for free then dictate price and terms in the negotiation, the creative firm landscape is now more complex. I see it as fully bifurcated with large generalist agencies on one side and highly specialized entities on the other. The generalists continue to lack negotiating leverage while many specialists possess it but don’t use it. (See We’re Not Trained, below.)

The leverage swings to you when the client can see no like-for-like alternatives to hiring you, i.e., when you are effectively positioned. Undifferentiated agencies try to find a story of meaningful difference for every pitch. Specialized firms leverage a difference that is easily observed from afar (although they may still have to differentiate themselves from their much smaller number of direct competitors), and avoid a pitch altogether. These improved dynamics tend to carry through to the negotiating table.

Your OptionsAssessing your own options is a bit more complex than assessing the client’s. Simply ask yourself what the consequences are of walking away from this negotiation. There are external and internal variables that go into answering the question. The external ones can be identified by your opponent and factored into their assessment of your BATNA, such as the fact you just lost a major client and are under financial pressure.

Money in the bank, high staff utilization, a deep sales pipeline and a robust economy all represent options because they give you the confidence to walk away from a bad deal. Each of these external variables is discoverable by your opponent (and trust me on this: they are doing their homework on you) and listed in their assessment of your BATNA. Their assessments, however, do not account for internal factors.

Confidence is the X Factor of Leverage

Your opponent’s calculation of your leverage is missing a vital coefficient: your confidence.

Your self-belief.

Your belief that there is a better opportunity just over the horizon.

Your faith that things will be okay if you do walk away. (“Everything always works out in the end. If it hasn’t worked out, it isn’t the end.”)

Your sense of self-worth. (“Why would we work with someone who doesn’t value what we do?”)

Your commitment to yourself that you’re not going to impair your team with a client relationship that has no room for error, no time for unscheduled proactive ideation, no possibility for the type of creativity and innovation on which you committed to building your business.

Your willingness to say fuck it, we’re outta here.

The shorter you are on confidence, the more money you will need in the bank and the more opportunities you will need in the pipeline before you consider walking away. Strategic Coach founder Dan Sullivan maintains that the most valuable asset of an entrepreneurial organization is the confidence of the entrepreneur. Few wiser words have been written about entrepreneurship, but that foundational importance of confidence also applies in negotiating. It is the magical coefficient of leverage.

1. We See the Client as the PrizeTwo concepts I have borrowed from Oren Klaff’s wonderful book Pitch Anything, are the idea of “frame control” and the mantra “I Am The Prize.”

Frame control is a conceptual model that says people enter any social interaction viewing that interaction and the larger relationship through a frame, or point of view. Each party enters looking through their frame, and if the frames don’t align, says Klaff, they clash. One frame destroys the other, causing both parties, ultimately, to view the relationship through the same lens. The common shared frame in a typical sales negotiation is the view that the client is the prize to be won.

Why do we call it “winning” new business? Why isn’t the client “winning” a new agency?

Some highly specialized firms are able to reverse the standard dynamics, effectively saying in the sale, “Here’s how our unique program works. Here’s how it would work for you. Here are the outcomes you can expect and the value that will be created. Here is our price, our terms and our next available start date. If you don’t want it, that’s okay because others are stacked up behind you.” In such an example the shared frame at the end of the first meeting is that the agency is the prize, even though it’s likely the client came into that meeting seeing themselves as the prize. How confident do you think the salesperson is in that scenario? Do you think the client has any negotiating leverage at all?

That’s an example of a meaningfully differentiated firm that can demonstrate a high likelihood of economic value creation, with the addition of a real or self-imposed capacity constraint. The same I-Am-The-Prize attitude, however, can be had even without such backing. (See confidence, above.)

A Failure to LeverageFor over twenty years now I have watched the “hot shop” ad agencies rise and fall. At their peaks, Fallon, Goodby, Chiat, Martin, Cripsin, Mother and others truly have been the prize many clients would have loved to win, but while that I-Am-The-Prize frame was surely pervasive in the creative department, it was usually destroyed at the negotiating table, with the client negotiating team’s frame of “we have the money therefore we are the prize” dominating. Many of these firms could have leveraged their status to effectively say, “If you want to do business with us, it’s going to be at our price, on our terms.” That commercial rigor could have been codified and then applied even when the status of these firms inevitably reverted toward the mean and they were seen as just another very good agency.*

Be the prize.

Expert or VendorIn Win Without Pitching training we point out that the job of new business isn’t just to “win” the business but to do so with the firm being viewed as the expert rather than a vendor. These are frames in Klaff’s parlance. Your new business team should view every opportunity through this frame of “we are the experts, we are the prize.” By the time you get to the negotiating table that frame should dominate. Procurement will then bring their own I-Am-The-Prize frame to the table, of course, and so the clash resets.

Now, however, you have the economic buyer in marketing viewing things through your frame. Remember that, as much as procurement implies otherwise, the decision to hire you is not theirs. They can only take the best deal they can negotiate back to the economic buyer with a recommendation. Be the prize.

I am the expert, I am the prize

I am on a mission to help

I can only do that if you let me lead

All will not follow, and that’s okay

1. We’re Not TrainedTraining equals preparation. You will not encounter a procurement professional who is not trained in negotiating. None. It’s part of the job. What is the agency equivalent? What is the position in the firm the title of which suggests a near 100% likelihood that this person has been trained in negotiating?

At larger firms it is (or should be!) the finance and/or commercial director and perhaps some of their reports. At smaller firms there is no easy answer because the role—if it’s formally assigned at all—tends to be assigned on the basis of aptitude rather than title.

But if the negotiating function is assigned to someone—anyone—that someone should be trained. They have to be. Let’s look at the list of disadvantages we’ve discussed:

1. The client is emotionally detached from the work
2. The have the right person leading the negotiation
3. They have a keen understanding of the objective leverage both parties have
4. They see themselves as the prize to be won, the ones in control
5. They are trained and prepared

At its best, negotiation is a considerate and polite exchange of two parties trying to maximize value in an agreement approximating win-win. At its worst, it’s war. It’s games and lies and ridiculous-but-often-successful tactics drawn from a playbook written by 20th century labor negotiators. Your negotiator should be prepared for every scenario. They should be trained.

1. We Still Think This Is a RelationshipIn a forthcoming episode of 20%, Leah and I speak with Rory Sutherland, who is Vice Chair of Ogilvy UK and author of Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life. Alchemy, to me, is the legitimate heir to Ogilvy on Advertising. It’s the book the profession has been waiting for since 1983.

In the episode (likely dropping on May 17 or 24, 2023—you can subscribe here) Rory makes the distinction between what he calls relationship capitalism and its counterpart, transactional capitalism. In relationship-styled capitalism, both trading partners play the long game, recognizing that the balance of accounts doesn’t have to be settled after each interaction. Sometimes the client overpays, other times the agency over delivers. Both parties are generally aware of trade imbalances without resorting to ledger entries, and the relationship continues with the normal give and take that is evident in any successful marriage.

Where relationship capitalism might be analogous to a marriage, transactional capitalism, according to Sutherland, is like paying for sex. It is the settling of accounts on every single transaction.

When procurement first breached the wall into marketing just over 20 years ago they brought with them their direct goods mindset and negotiating tactics. They got transactional. Negotiating was a battle to claim as much value back from the agencies as possible. Procurement didn’t understand the value of that agency relationship to their colleagues in marketing, and if they did understand it, it was subordinated by the incentives—bonuses and promotions—to cut costs.

Clients started to ask their agencies more directly for concessions. And we granted them. We heard, “I need you to do this for me.” We said okay, you need something? We got you. We heard them ask on price. We heard them ask on terms. We heard it on the need to see our costs. When it was our turn to ask there was no reciprocity.

Leah points out in the podcast that we said yes, initially, because we thought we were still in a relationship long after the client had decided they were paying for sex.

So what now? Do we get transactional, too? We can. But we can also push back. We can point out what has been lost to both parties by playing the short game, and we can stand up for ourselves and only enter into relationships with those who are interested in the types of relationships we’re looking for.

The good news on this front is that the marketing procurement profession has come a long way in recent years and there are many senior, respected people who are advocating for a return to what Rory calls relationship capitalism. They’re still in the minority, and old habits die hard, but the direction of travel is encouraging.

From This Day ForwardReading the reasons for our historically poor negotiating performance listed above can be depressing, but in each of the six areas there is a path to improvement.

You create tremendous value for clients and you deserve your fair share of that value. Map out your plan to go get it. Let us know if you need help.

*The I-Am-The-Prize frame was actually destroyed earlier—in the pitch—when the star agency agreed to audition. Everyone knows stars don’t audition.

**Maybe some have—I have no inside knowledge of any of the firms mentioned.

The post Why We Suck at Negotiating appeared first on Win Without Pitching.

View Details

I’ve become aware recently that when I’m speaking to creative and marketing firm owners or other advisors in this space, we can sound like we are describing two entirely different industries. One person sees a positive trend in something like profit or impact and the other sees a negative trend. One sees a trend to a certain pricing or staffing model and the other sees something different. Of course the agency owner is biased in thinking that the industry is made up of firms like theirs, and advisors like me are influenced by the types of agencies that we’ve most recently worked with. We all extrapolate from these biases to assume the market is a macro expression of our limited or recent experience.

Those assumptions used to be largely correct because there was, for the most part, one agency business model. Generalist firms in the clearly defined advertising, design, public relations and then digital (web design, at the time) disciplines all had client rosters that spanned all the major categories. (In my agency biz dev roles I was always chasing clients in categories where we didn’t have clients.) The fee structures, too, were the same: commissions & markups in advertising, hourly rates and markups in design and monthly retainers in PR.

Today of course the lines between these types of firms are blurred. David C. Baker and I discussed this last year in the 2Bobs podcast episode The Evolution of a Marketing Firm, where we reviewed the positioning strategies of the 20 most recent firms that each of us had worked with. Among the forty or so firms discussed, there was very little overlap in claims of expertise. It would be silly, therefore, to assume a near total overlap in business models, but I realize I’ve been doing just that for far longer than has been wise.

Mea CulpaIn 2018 I wrote the post The Great Convergence is Upon Us in which I described the three functions of design, consulting and software engineering converging to form a broad new category of hybrid speciality firms, with each one slightly different from the next. That was an easy trend to spot and one that just keeps growing, with numerous sub disciplines, skills and tools like AI, social, AR/VR, ML, computer vision, SEO/SEM, etc., etc., all factoring into a large and growing body of unique specialty firms that solve specific problems for specific clients.

But also in 2018, I released my book Pricing Creativity: A Guide to Profit Beyond the Billable Hour in which I cautioned owners against the trend that I saw as the over-productization of services. Creative agencies, I argued, should see every engagement as a blank slate. Every engagement, proposal and price, therefore, should be seen as a bespoke creative act.

That’s wise advice, if I do say so myself, but it’s valid to an increasingly smaller number of generalist firms. Today, in 2023, that guidance does not apply to the majority of creative firms, and I’m not sure now that it did even back in 2018. [Note: this oversight in no way invalidates the main guidance in the book, and therefore does not provide you with a reason not to buy it now!]

Anti-Agency ModelsAnother good pricing book of recent years is Alex Hormozi’s $100M Offers from 2021. In it, Hormozi describes his own success at making tens of millions of dollars by solving marketing and sales problems for a very specific niche business (single location, owner operated gyms, in his case). When a firm is focused on a niche this tight, and where a solution to an expensive sales or marketing problem can be scaled across almost every other business in the niche, then the obvious business model is to sell one converged program—the solution—as Hormozi did.

There are a lot of different forms such a program could take and a lot of different ways such programs could be priced, but the commonality of the problem and the repeatability of a proven solution renders the idea of selling bespoke services a foolish mistake.

In between fully customized bespoke solutions and a convergent single program that you might sell to all clients is the idea of productizing your services into different products. This too is valid, but, for reasons I pointed out in Pricing Creativity and in this post on recurring revenue, a successful productized services business tends to require a scale beyond that available to what I used to think of as “the typical agency.” (The whole point of this post, dear, suffering reader, is that there is no typical anymore.)

Can We Ditch the “Agency” Label, Please?Customized services, productized services and a single program are all different, valid business models for marketing firms. There are more that we haven’t talked about here (e.g., I think most clients would prefer to buy their websites the same way they buy other software: as a subscription) or their combinations, but it’s really only customized services that fits with the old agency model I described at the top.

I’ve preferred the term “firm” to “agency” for years now (the topic of another 2Bobs episode) for the obvious reason that it’s been many decades since advertising agencies were agents of daily newspapers. But the less obvious reason to ditch the outdated term is that it unnecessarily limits our thinking on how we shape and deliver our expertise. I’ve seen many great business ideas crushed as their owners tried to squeeze them into the agency business model.

If Alex Hormozi had thought of his business as an agency then he would have sold bespoke creative and marketing services priced by the hour. That business model might have earned him a nice six figure living. (Actually, most of us would look at Hormozi’s niche and think, “that’s not lucrative enough for an agency to specialize in,” and we would be right. But it’s lucrative enough for other business models that solve expensive problems in other ways.) Instead, Hormozi converged on a repeatable program to help his clients make more money with a high degree of predictability. He collectively made those clients over $100M and made himself many tens of millions. That just doesn’t happen in any business that sees itself as an “agency.”

Some agencies do make jaw-dropping amounts of money, but that’s down to how they charge, not how they deliver. I’ve tried to steer clear of pricing models in this post so as not to confuse them with business or delivery models. Plus, I wrote a book on it.

There is no one right business model for creative and marketing firms anymore. You could choose the old model—what we used to call an agency—but you could choose many other models, too. Don’t limit your thinking.

I’ve written this post for me as much as for you.

The post Is The Agency Model Suffocating Your Business? appeared first on Win Without Pitching.

View Details

Win Without Pitching’s mission is to change the way creative services are bought and sold the world over. Our focus has been on the sell side of the equation, teaching creative firms how to get better at selling their expertise without giving it away for free in the process. For 20 years we have worked to dismantle decades of bad practices and replace them with a saner, more logical and empowering approach for creative firms around the world—and for other sellers of expertise who have also found relevance in the WWP principles and frameworks.

Last year I started to think more about the other side of the equation: is it possible to change the way clients buy creative services? Some of this happens of course when agencies begin to sell differently, but is there a faster way to move clients away from ridiculous pitches and ill-constructed RFPs? Can this be done en masse?

Most advertising and design trade associations around the world have published white papers on this topic, laying out for clients a codified process for better procurement practices. The sum impact of all these papers is close to zero, and for that I’m grateful because most of them are misguided. I applaud the authors for trying but the problem is largely ours—on the agency side—and clients aren’t interested in listening to the pleas from agency trade associations on how to save agencies from themselves. Besides, in pursuit of what the authors see as “fairness” most of these papers call for further codifying the bad practices that Win Without Pitching has been trying to dismantle.

It’s not for us to tell clients how to buy our services. We can continue to drive a better process through the WWP principles and frameworks, but we can also shine a light on some of the bad practices on the client side, of which there are many. The mechanism for this illumination is not white papers, lectures or books. It’s conversations. And I’m starting to think that it might just work, that we might be on the cusp of a change in how clients buy creative services. The reason for my optimism is a podcast.

Six Months of Conversations, and CountingIn 2022 Leah Power and I launched 20% – The Marketing Procurement Podcast with the goal of solving the marketing procurement problem, which is effectively the question How do you procure creativity without killing it? (The marketing procurement problem is itself a function of the Innoficiency Problem, if you haven’t already gone down that rabbit hole, here you go.)

In six months we’ve interviewed CEOs and consultants from agencies; we’ve talked to procurement and marketing professionals from some of the world’s largest companies, and we’ve even found a few people who have played all three roles. Between them, a consensus seems to be coming together on a few issues:

• Procurement needs to shift their focus from cost-cutting to value creation
• About 10% of procurement professionals and departments already operate with this mindset, and the profession knows they need to keep moving in this direction if they want to maintain relevance
• Agencies need to get better at understanding procurement’s role
• Marketing—the party in the middle—needs to stay involved in the conversations between procurement and the agency to ensure that their priorities are not negotiated away
• Agencies need to continue to improve their commercial acumen and negotiating skills, starting with getting better at saying no
• These three parties don’t talk to each other nearly enough

This last point is the big takeaway for me. We in the agency world have our conferences, where sometimes clients participate. And procurement has theirs. But these three parties are almost never in the same conversation. And while so far Leah and I have only interviewed one person at a time, we’re striving to create something for all three parties. It’s only six months and 13 episodes but I am struck by my own optimism at what might be possible here. Every guest has surprised me in some way, leaving me more hopeful that we can better understand each other and continue to erode away the bad practices on all sides, like Kuerig Dr Pepper’s 360-day terms for their PR firm. (We’re trying to get someone from KDP on the show but no luck so far. )

A Catalyst for Better Conversations with ClientsIf you are a 20% listener, consider sharing the podcast with your clients and their procurement teams and use it as a catalyst for better conversations. Whether you’re getting beat down by procurement to the point that your marketing or product client cannot possibly get from you what they hired you for, or you’ve just received the world’s worst RFP, a shared 20% episode might just be the thing that gets everyone to the table and talking sense again.

Finally, we’re always on the lookout for enlightened procurement people and we’re keen to shine a light on the worst procurement practices. If you have examples of either, please send them my way.

The post Can We Change the Way Clients Buy? appeared first on Win Without Pitching.

View Details

My inbox is filled with spam these days. It’s getting on my nerves, but it’s also timely because my friend and 2Bobs podcast cohost David C. Baker and I have been debating the topic: Is there any way to do outbound lead generation without giving up the expert high ground, or does any solicitation taint you with the stench of a needy, powerless vendor?

David is adamant that any outreach activity makes you seem desperate and knocks you off the expert’s perch. I disagree. (We battle this out in a forthcoming 2Bobs episode. Subscribe wherever you get your pod fix.) I think there are ways to do outbound respectfully and effectively, without giving up the expert’s high ground.

Understanding Lead TiersI use the idea of three tiers of leads to explain their quality and value to you, with tier I at the top (like the gold medalist on the podium) tier II in the middle (silver) and tier III at the bottom (bronze).

Tier I Leads: InboundTier I leads really are gold. These are inbound leads that you drive through referrals, press, awards, and, most commonly, through your marketing. Marketing-driven tier I leads can themselves be ranked based on the status they confer (with leads driven by free content ranked higher than leads generated by paid media, as an example) but for this discussion we will lump all inbound leads into the same tier I.

A tier I lead reaches out to you and says “I know what you do and I need some of that. Let’s talk.” Any creative firm or expert practice strives to get to this place where it’s all inbound all the time. Few get there, however, so the reality of the younger firm, the poorly positioned and those who have not made the investments in time, effort and money to get to this vaunted place is they must drop down a tier to make up the lead shortfall.

Tier II Leads: Warm OutreachThat brings us to tier II leads, the most underappreciated place on the podium. The saying “you don’t win silver, you lose gold” explains why the bronze medalist always seems happier than the silver medalist. There’s a bit of that going on here, too. But there’s gold on that silver tier, and too few firms are mining it.

A tier II lead is someone who demonstrates their interest in your firm by engaging in your content, typically on your website.

Reaching out to tier II leads is straightforward. You can choose to reference their activity (e.g., “I see you are interested in our case study on one of your competitors. Would you like to have a conversation on how we might help you with the same challenge?”) or you can omit the reference to their behavior, knowing that everyone understands that if they have converted on your site then you have visibility into their activity on it. This approach sounds more like an introduction. “Hello Susan. I am the principal owner of XYZ agency, we specialize in (focus). We have a particular expertise in (subject matter they were exploring on your site).” Then a similar offer to help. “Feel free to say no if you don’t see a fit, but would you like to have a conversation on how we might be of assistance to you in this area?”

Like tier I leads, these people know who you are and are engaging with your content. There is an implied interest (recognition that they might have a problem or opportunity), possibly even intent (a decision to hire a firm like yours to help) but they haven’t reached out. So you should.

Respectful outreach with an offer to help is not only appropriate for an expert firm here, failure to do so is a lead gen crime of neglect. Someone on your team should have responsibility for monitoring traffic and appropriately following up on these tier II leads.

Too few firms have this function assigned and tracked. Others, however, are overzealous, supporting David’s view that outreach is unprofessional and unbecoming of the expert firm. The keys are in determining what level of engagement merits outreach (hint: it’s not one page view!) and the content and tone of that outreach. Note the language in my example above.

The bottom line with tier II leads is there are nuggets in your web traffic and you should have a plan for mining them responsibly.

Tier III Leads: Cold OutreachTier III leads are names on a list—demographic clues to a possible sale, with no behavioral data attached. Cold outreach to your LinkedIn connections or any other source of contact information for people who are in your target market but who have not demonstrated (as far as you can discern) an interest is mostly the domain of spammers. But this, too, can be done respectfully, in a manner befitting the expert. It rarely is, however.

The respectful approach is the introduction language modeled earlier. Here’s who we are. We help organizations like this solve problems like that. The reason I’m reaching out to you is because of (valid reason, specific to lead). Are you interested in exploring how we might help?

Tier III outreach is tricky and I cringe while writing about this because most of the new generation of spam in my inbox follows this approach fairly closely, with one exception: it’s automated.

Automation: The Line Separating Outreach from SpamI recently received an email with the subject line “Doggerland University Pride.” Doggerland was once arable land but it has been under the North Sea since the end of the last ice age. According to 23andMe, my ancestors hail from Doggerland (I’m basically from Atlantis), hence the fake Doggerland University on my LinkedIn profile.

The spammer begins, “Hey [FirstName], I see you went to [FakeUniversity]. That’s a great school – I’d be interested to hear how it influenced your direction in your career.

I came across [Company] and I have a question. Would you be up to making 2023 a year of mad success?”

We can laugh at this example because of the fake university and the obvious disconnect between the opening and the promise, but add just a little ChatGPT-like AI functionality and even the most vaunted and noble expert firms will be tempted into the spam business. Your inbox is about to blow up and it will be harder to separate the wheat from the chaff. The net result, I suspect, is an even further decline in open and response rates.

David and I effectively agree that cold outreach to tier III leads is the domain of spammers. I personally believe there is a small window left for experts to do this properly, which means we’re just quibbling over the timeframe.

Tier II leads however are where the real opportunity lies. This is where experts can reach out directly to someone who is engaging in their content and showing signs of interest. How that is done will be the key to success. Here too you will be tempted to automate this outreach, but that mistake would put you smack into the spammer camp.

The post Inbound, Outbound & In Between appeared first on Win Without Pitching.

View Details

I’ve written for years on the impact that three-option proposals can have on your closing ratio and your average selected price. Providing your clients with three or four different ways to engage you—at different price points—might be the simplest and fastest path to improving profit.

The Power of Options, In ShortPeople imagine themselves as objective decision makers who go through life making decisions based on facts and truths, when in reality, most of the decisions they make are subjective and contextual. When we give a client options on how to engage us, at different price points, we change the question we are asking them to answer from “Is this proposal worth this money” to “Which of these is the best value?” The latter, contextual question is the one the human brain is wired to answer.

Options increase the number of positive possible outcomes, they let you control the client’s decision-making context and, most importantly, they change the closing conversation dynamics from a zero sum “win/lose” to a more collaborative “let’s figure out what’s best for you.”

In short, multi-option proposals are game-changing.

Good, Better, Best…for Whom?The term “Good, Better, Best pricing” is often applied to this three-option technique, but I see this label getting people into trouble.

The lowest (but still valid) expression of the three-option approach is three different sized buckets of either inputs (time and materials) or outputs (deliverables). In this form, the cheap option (Good) includes a list of inputs or outputs, and the middle option (Better) contains everything included in “Good” plus some more, and the expensive option (Best) contains everything in “Better” and still more.

In such examples, bringing judgment to the options by labeling them Good, Better, Best or Bronze, Silver, Gold isn’t a crime because the inputs or outputs being purchased don’t change, just the quantity. Whether it’s best for the client to select the most expensive option probably depends on your point of view. Certainly the client understands that it’s best for you!

But there are higher, more powerful and lucrative expressions of the three-option proposal, and in these other realms, any judgment imbued into the names is misplaced.

“Three Different Ways to Engage Us”The highest expression of a three-option proposal is three different ways of doing business together. For example, you might give the client the option of buying the inputs of time (e.g., a certain number of hours, days or sprints), the option of buying the output or deliverable (e.g., website, campaign or app) or the option of paying you to achieve the outcomes or value they seek (e.g., target of leads, brand sentiment, conversions or sales).

In such a proposal, the labels of Good, Better and Best do not apply. The tradeoffs the client has to consider in choosing any of these options go far beyond the simple one of more or less money for more or less inputs or outputs. In the higher expressions of the three-option proposal the client has to think deeply about how much risk they want to take and how much they want to pay you to make some of that risk go away. There is no right or wrong decision here, only tradeoffs.

Tradeoffs All The Way DownThe client has numerous tradeoffs to consider in a good three-option proposal, and no matter how good a sales person you might be, you are unlikely to uncover or understand all the tradeoffs the client needs to make. Therefore you have no business imposing a judgment on the client’s decision.

Let’s list just some of the risks of which any client might want to take more or less:

• price and price certainty (not only “how much” but “can I be sure it’s only that much?”)
• performance risk (what’s the likelihood that this will work?)
• time (theirs or that of their teammates)
• career risk (promotion, reputational damage, firing)

Every Option is a Good OneAny option you put forward should be a good one. Your job is not to sell one over the others. Your job is to explain the options and speak to some of the pros and cons of each—mapping out the obvious tradeoffs. Some tradeoffs, like career risk, are only overtly addressed when the client brings them up. They are real and will have weight in the decision making, but they are also personal to the client and unlikely to be shared.

Use Descriptive NamesIf you agree that you shouldn’t be telling your clients how much career risk to take then you will agree that you shouldn’t be telling them that one option is better than the others. So eschew labels like Gold, Silver, Bronze and stick with naming the options based on what the client is buying, such as Diagnostic, Four-Week Sprint, Retainer, Performance Pay, 20% Increase in Conversion Rates, Website, Skin In The Game, Guaranteed 1st Page Ranking, First Phase Only, Comprehensive Engagement, Fast & Light, Concierge Service, etc.

All of the above names are descriptive without being judgmental. Give your clients real options in your proposals and respect the tradeoffs they have to make.

The post Beyond Good, Better, Best Pricing appeared first on Win Without Pitching.

View Details

Everyone likes games. I have a fun one for you. There’s a simple financial metric that you might want to use throughout the year. Once you start measuring it, you will become addicted to improving it. The metric is a cumulative measure of your pricing and closing success. If you want to play along for the year, I’ll come back to you at the end of December to ask you how you did, and I’ll give out some Win Without Pitching merch to the highest performers. (Just make sure you are subscribed to these posts via email here.)

The metric is called your RAB score and the cumulative amount is called your RAB fund.

WTF is RAB?RAB stands for Revenue Above Budget. It’s the amount of fees you close on above the client’s stated budget or the lowest priced option in your multi-option proposal. If you read these posts but you’re not using multi-option proposals, then get with the program and come back to this once you’ve quit leaving piles of money on the table.

How It WorksLet’s say you have a client with a stated budget of $20,000 and you present a proposal with options priced at $20k, $35k and $90k. (Don’t read too much into those numbers or their relationships with each other.) If the client chooses the middle option of $35k, then your RAB score on this proposal is $15k, and you have $15k in your RAB fund for the year.

If on your next proposal your RAB score is $40k, then you add that to your previous total ($15k) and you now have $55k in your RAB account. Repeat until the end of the year, watching your RAB fund grow. I promise you will become obsessed with this number, celebrating each time you add to it. With just a basic application of the rules and principles in Pricing Creativity: A Guide to Profit Beyond The Billable Hour, you might be astounded at how big this fund can get.

Begin NowStart tracking this metric now and watch your RAB fund grow. In 12 months time the number you will be staring at represents the real economic value returned in one year for a tiny investment in time and money to learn some simple pricing practices. Your return on that investment will blow your mind.

The post What’s In Your RAB Fund? appeared first on Win Without Pitching.

View Details

Let’s do a thought experiment. Let’s try on outrageous success by moving to the outer range of what you have already proven is possible for a firm like yours.

Let’s Start With Your ClientsLet’s begin by looking at your best clients and the value you create for them. If you rank your clients by revenue, profit or the value that you create for them—whatever you see as the most relevant metric—it’s likely that you will easily be able to draw a line that separates your very best clients from the rest. That line is probably somewhere between clients two through five. After that the quality typically drops off quickly.

Ignoring the clients below this line, let’s rebuild the firm around your best clients only. Right-size your client roster by imagining having around ten active clients at any one time (between eight and fifteen is fine for a typical customized services firm), but with each client as high quality as your top two are today. That starts to look like a great business.

Value CreationNow look at the value you might create for such an elite client roster. Think of the highest value work you did for your best clients last year and estimate the economic value that you helped to create for such a roster. (Unfortunately, this exercise doesn’t work if, like a residential architect, interior design firm or almost any firm serving not-for-profit clients, the value created by your firm isn’t economic. In such firms “willingness to pay” is rooted in other factors that we won’t address here.) As an example, let’s say you estimate that your work helped to create $15m in net new profit for your two best clients, generating $7.5m in profit per client. Multiply that value creation per best client times a right-sized client roster (e.g., $7.5m x 10 = $75m in profit created).

With this sense of the economic value an optimized firm might create in the world, you can begin to glean the revenue that you might generate with the right pricing model.

Profit isn’t the only measure of economic value. Maybe you work with early-stage companies and a more appropriate metric is increase in enterprise value. Whatever your metric of value is, try to estimate how much you could create in an optimized roster filled with clients that look like your best today.

What’s Your Cut?Now, with no regard for the costs incurred, what do you think is fair compensation for your role in helping to create this net new economic value across a properly sized roster of great clients? Is it 20% of that value? Is it 50%? Five percent, maybe? There is no universally “correct” answer, but consider if the profit created is one-time or recurring. And consider your role in that value creation—are you a major driver or a mere bit player?

Continuing with our example of $75m in new profit created for our client roster, I’ll use $15m, or 20% of the total value created, as what I think constitutes fair compensation for our example firm. Don’t read too much into that ratio. Like I said above, it can vary greatly depending on variables. To me, 20% represents a firm that is a good contributor to lasting economic value creation, uses value-based pricing often but not all of the time, and only occasionally puts some compensation at risk, choosing to lower fees for a chance to participate in a larger upside maybe a couple of times a year. Change any of those variables and that 20% number could go up or down.

In our example we have a firm that we know based on past experience could create $75m in profit for ten good clients and for which we think $15m in revenue is fair compensation. So we can see this firm scaling to $15m in revenue if we can get a few more clients that are like our very best ones, and we can improve our pricing skills.

Headcount and ProfitNow I’ll assign some constraints based on your new target revenue number. The first is headcount. Take your new revenue number and divide by $500k to get your full-time equivalent (FTE) headcount maximum. This is a difficult one to try on, but we want top line revenue to convert to bottom line profit. Something needs to change here, doesn’t it? Yours needs to be more of a consulting or advisory firm and less of an implementation firm if you’re going to hit this new revenue number with this constraint of so few people.

The good news is the next constraint I’m imposing on you is profit. I want you to assume 50% EBITDA as the minimum satisfactory number. Think of this number as tied to headcount. To get to this one you have to hit the other.

So in our example, we have a firm that generates $75m in profit for its clients and earns $15m in revenue for that result. It does this with just 30 people and it earns $7.5m in pre-tax profit.

What numbers did you come up with?

Three Steps to ReinventionWhatever your numbers are, I imagine you’re contemplating them, thinking “How would I ever make this happen?” But you already have the answers.

1. Focus on client quality over quantity. You probably have too many clients of poor quality. See every new client as a step toward this new vision of your firm. The new business function moves from a volume game to one of selection and precision as you add a small number of high quality clients and you Do Not Compromise.
2. Think about pricing as a skill rather than a model (e.g., cost-based or value-based). Build that skill in yourself and your team. It’s likely that you are already creating the value that should see you get paid a lot more, but collecting your fair share requires different mindsets and conversations. I hear people reject value-based pricing like the model “doesn’t work” in their business but the model is rarely the problem, the lack of skill is. There is no higher ROI skill than pricing. Formalize how you will grow it and commit to the plan.
3. Reevaluate your headcount and delivery model. Do the exercise of imagining how you would hit your new revenue and profit targets with your new headcount constraint. What got you here won’t get you there. You will have to let go of some things and fully reinvent others. Your labor arbitrage model is a mental prison cell from which you need to bust out.

You could choose to lower your revenue and profit numbers to what still constitutes a big jump in success. Likewise you could soften the headcount constraint ($400k/FTE?) and you could target 40% EBITDA instead of 50%, but there is greater value in pursuing the more ambitious numbers. They force reinvention (if only on paper at first), causing you to let go of beliefs, measurements and practices that helped get you to where you are today but are now impeding further progress. These ambitious targets and constraints are the source of the creative energy required to reimagine your firm at much higher levels of impact and reward.

You’ve already proven most of these numbers possible. In this new version of your firm you are simply scaling the best work you are already doing to more of the best clients you are already serving, while getting paid for your contribution to the value you are already creating. It’s not such a stretch.

Think big.

-Blair

The post Think Big. No, Bigger. appeared first on Win Without Pitching.

View Details

Some firms are black holes where accounts go in and seemingly never come out. They have little pressure on their new business development function and don’t think too much about it. Growth just happens organically. Other firms are new business development machines, consistently generating 40%-50% (sometimes more) of their revenue from new clients every year.

Obviously, every creative firm owner wants a business with high client retention and organic account growth, balanced with a formidable new business development machine. And while there are many firms that succeed at both over the medium to long term, I believe they represent a small percentage of the agencies out there. Most struggle with both functions to a certain extent, but every once in a while I encounter a firm that is extremely successful at either keeping and growing clients or getting new clients, but horrible at the other.

Let’s look at how these firms differ from each other then try to answer some questions about how to achieve the right balance.

The Black Hole FirmThe black hole firm is the Hotel California of agencies, the place where clients check in and never leave. The first obvious implication of such firms is that they do good work. The second is that a firm that keeps a client for ten years or more, while doing good work, is likely to outlast a few of its client counterparts. This sometimes means that the institutional marketing memory resides in the agency and not the client. I worked in one such firm in my agency career. The client personnel would turn over regularly and we were the constant. The new marketing lead could not get up to speed, let alone function, without lots of help from us. We knew the approval processes. We knew where the bodies were buried. We were indispensable and unfireable, and everyone knew it.

Another implication of these black hole firms is they are good at not just keeping clients but growing them. Their clients tend to be relationship buyers who use most of the agency’s services. When the client grows, the account grows. When the client has a need adjacent to the agency’s services, the agency adds new services to meet it.

In these black hole firms a healthy percentage of client-side personnel rehire the creative firm when they move on to either another division within the client company or to a new organization altogether.

Put all these variables together and you have a firm with little pressure on the new business function. They grow by keeping and growing existing accounts, with occasional new clients added through the career moves of the client-side personnel. Growth seems to just happen—in a slow but steady way, with no panic or drama and little expense. Many of these firms don’t even have a fully dedicated new business person, with the principal and account leads doing the selling.

I’m always impressed with these black hole firms when I encounter them, but I’m not sure I know the recipe for how to become one. The ingredients seem to include some combination of attention to quality work, relationship building, the size and nature of the market served, the personality of the owner, seasoned account leads who are all team players, and other variables that speak to the culture of the firm. But it’s not all rainbows and unicorns for black hole firms. They have their challenges.

The New Business Machine FirmAt the other end of the spectrum there is the new business machine, capable of replacing 50% or more of their revenue every year through new client acquisition. These “machine” firms tend to be exciting places with their high energy level typically originating in the competitive nature of their owner, who is usually the engine driving the new business machine.

New business permeates the entire culture of the machine firm. I’m always impressed when I encounter these firms because I appreciate anyone who excels at selling. But these firms also have their problems. These skills of keeping/growing clients on one hand and getting new clients sometimes seem to be at odds with each other.

The TradeoffsIn some ways the black holes are a little boring. It’s grown-up people doing grown-up work for grown-up clients. These firms have the same “feel” about them. I like the way they feel—measured and responsible—but I understand that they’re not exciting enough for some others in the creative fields.

The danger of course for the black holes is they never develop a proper new business muscle, so when they do lose a large client, they’re unsure of how to actively replace it. When they lose two, they’re in trouble.

Black hole firms also tend to be less focused in their positioning. They’re more full service in their offerings, often operating as departments of their clients’ businesses because of their deep integration. So when they do have to build a bit of a new business machine, they find they lack a good starting point: a differentiated and compelling value proposition. Everything a black hole firm needs to do to build some new business generation capacity—sharpen their focus, staff the position, do some actual marketing—seems at odds with their history, therefore they rarely do it. They are wonderfully successful, but can go extinct with a pulse of two coincidental client losses.

The new business machine firms, on the other hand, are so successful at client acquisition because they have to be. They live on the edge because of their inability to keep, let alone grow, clients. This too seems to be a cultural issue. I can spot the ingredients but cannot discern the recipe. Some commonalities I see are a value proposition that sounds different but isn’t, a culture that is a little too in love with the frenetic pace and stress of always having to sell, and an understaffing of the account management function at the senior level.

Striking a BalanceI’ve described two types of firms at opposite ends of the spectrum, and let me reiterate that I think the vast majority of firms out there are somewhere in the middle, with decent competency at both retaining clients and adding new ones.

If you see your firm in either of these extremes, however, then consider the following:

• Black hole firms might consider launching a specialized entity as a hedge. Take a narrow discipline or market expertise, create a new specialist brand and launch and market that. It’s an easier entree into new clients and can always lead to delivering the more generalist services of the mother ship later. If the mother ship implodes, the specialist entity will serve as the escape pod for the highest value team members.
• New business machine firms need to face the reality of the value they are not creating for their clients. Clients don’t stay because the promises made in the sale don’t get paid off. The positioning is mostly smoke and mirrors and should be revisited, and the delivery (account management) function needs to be valued as much as the sales function. Look at who leads each and what they are paid and the imbalance that needs correcting will become clear.

Both types of firms possess enviable skills, but both have systemic challenges, with black hole firms vulnerable to the rare but devastating loss of more than one client, and new business machine firms having to live under constant sales pressure. Both challenges can be ameliorated, once the pattern is spotted.

Do you see your firm in either of these descriptions?

The post Is Your Firm Addicted to New Business? appeared first on Win Without Pitching.

View Details

Over 20 years, I’ve heard a lot of success stories from people who have implemented our advice. This post is for everyone else—those who haven’t been able to make Win Without Pitching work for them.

The post 6 Barriers to New Business Success appeared first on Win Without Pitching.

View Details

I’ve written previously on the steps creative firms should take, but here I’m suggesting we finally call bullshit and throw out the RFP altogether.

The post Are RFPs the Spawn of Satan? appeared first on Win Without Pitching.

View Details

Qualifying is the act of vetting. In a qualifying conversation, the agency vets the lead to see if this prospective client and their project is a good fit for the firm, and the client vets the agency to see if their expertise is a fit for them and their project. That’s how it should work.

The post More Better Vetting appeared first on Win Without Pitching.

View Details

You reinvent your firm one new client at a time. You are only 3-4 years and 10-15 clients from being whatever you want your firm to be—if you treat every new client as a step in your reinvention.

The post Reboot Your Culture Through New Business appeared first on Win Without Pitching.

View Details

The Innoficiency Principle states that innovation and efficiency are mutually opposable goals. In any reasonably functioning organization, one cannot be increased without decreasing the other.

The post The Innoficiency Problem appeared first on Win Without Pitching.

View Details

If you run any business of expertise you will come to rely on all sorts of models. The longer you are in business, the larger your model toolbox becomes.

The post The Role of Models In Your Firm appeared first on Win Without Pitching.

View Details

It’s been a couple of years since I fully delegated the sales function at Win Without Pitching but last week I found myself taking a few sales calls. I logged off of each one with an overwhelming sense of exuberance. “That was fun!”

I wondered how many other people felt the same way. At the end of the week I posted a twitter poll asking, “Is selling fun for you?”

The post Are We Having Fun Yet? appeared first on Win Without Pitching.

View Details

The Flip is our name for the moment in the conversation between you and a prospective client when you move, in their eyes, from the position of lowly vendor to the more lofty one of expert practitioner.

The post Everything Can Change In One Conversation appeared first on Win Without Pitching.

View Details

If you have the appetite for it, consider investing in a venture unit where one success has the potential to generate the equivalent of years of profit.

The post Should Your Firm Launch a Venture Fund? appeared first on Win Without Pitching.

View Details

In this post I lay out the five levels of pricing success and ask you to do an assessment of where you are now. Then I identify the best resources to help you move up from your current level.

The post The Five Levels of Pricing Success appeared first on Win Without Pitching.

View Details

Enough time has passed now I can tell this story without naming names.

The post Leading Through Disruption appeared first on Win Without Pitching.

View Details

You never want to make assumptions in the sale. If you feel yourself assuming something, you need to lean into that and ask a question about what it is that you are assuming. Because when you make assumptions in the sale, it will likely lead you down a really long and expensive path.

The post How Assuming Can Cost You Time and Money appeared first on Win Without Pitching.

View Details

In this 2Bobs podcast, Blair addresses the internal struggle for margin that happens in many firms between delivery teams and business development teams due to their lack of distinction between cost and price.

The post The Enemy Within appeared first on Win Without Pitching.

View Details

There are three keys to getting paid: start with new standards for new clients, summon the resolve to enforce your new standards the moment client behavior starts to slip, and be willing to walk away from clients that don’t honor their commitments.

The post Getting Paid appeared first on Win Without Pitching.

View Details

The subjectivity of value works both ways. Value is highly personal and subjective but it is so to all parties on both sides of the buy-sell divide. Just as two different clients considering the same offering from the same firm will assign different value to that offering, so too will two different salespeople trying to sell that offering.

The post Five Alternatives to Cutting Price appeared first on Win Without Pitching.

View Details

What a year. Our Win Without Pitching annual planning meeting is tomorrow and I can’t help but think back to the plans we made a year ago for 2020. The phrase “We plan, God laughs” comes to mind. Who planned for this? Putting aside the human tragedy of more than 70 million infected, 1.5 million ... Read more

The post In 2020 You Were Spectacular appeared first on Win Without Pitching.

View Details

Blair and David discuss the seven most common mistakes firms make when positioning themselves.

The post Seven Positioning Mistakes to Avoid appeared first on Win Without Pitching.

View Details

The battle to increase gross profit margin isn’t that complicated. By simply charging more you generate a higher top line with no change to delivery costs, thus increasing the bottom line. Battle won, right?

Not so fast.

While almost any firm can learn to increase their average prices across their client base by unlearning some bad habits and embracing a few simple rules about pricing, once accomplished, the battle shifts from an external one on the front lines with the client to an internal one that is even more fierce. It is rare that all the newly won gross margin survives the journey to the bottom line. The unfortunate norm is this margin won by business development through better pricing gets handed back by the delivery team through over servicing.

But this battle can be won.

First, Understand that Price is Not Cost Cost and price are two different things but most creative firms conflate them and use their hourly rates as a vehicle for both.

Let’s look at how price and gross profit should be determined in the two main pricing approaches. In cost-based pricing, price equals cost plus profit. In value-based pricing, price minus profit equals cost.

Steps to Determining Price & Profit With

| Cost-Based Pricing | & | Value-Based Pricing | | 1. Scope solution | 1. Set price | | 2. Determine cost | 2. Deduct profit | | 3. Add profit | 3. Arrive at cost | | 4. Arrive at price | 4. Scope solution |

Regardless of the pricing approach, isolating gross profit on the job (adding it in cost-based and deducting it in value-based) is always part of the equation. But the typical creative firm never isolates profit at the job level. Because the hourly rate is seen as both a measure of cost and price, any excess margin obtained in the sale is converted to hours and therefore allocated as cost that the delivery team sees as available to them to use.

To illustrate, let’s say Tyler is working on a cost-plus basis to price service X for client Y and he determines it will take 100 hours at the blended rate of $225. The client signs off on the $22,500 statement of work (SOW) and those 100 hours are allocated to the delivery team and spent.

But let’s say Gina notes that the value created for client Y from service X is far greater than $22,500, so she intervenes before Tyler issues the SOW and convinces him to increase the price to $30,000. That’s $7,500 in profit added to whatever expectation of profit was built into the hourly rates.

That $7,500 should be allocated to profit even before the first hour is spent on the job. It should be taken off the table and away from the delivery team. But this rarely happens. Instead, the delivery team, taught to conflate price and cost, sees there is $30k in time to be spent, so they spend it. They don’t really see this extra $7,500 as profit—they don’t see anything as profit because gross profit is always hidden from them—so they rationalize the extra time (profit) spent as “an investment in the relationship.”

The first step in fighting this internal margin battle is to have everyone understand that hourly rates are internal tools that provide an estimate of cost, and that profit needs to be visibly added to that cost for every job (or deducted from price to arrive at cost when value pricing).

Pay Yourself First The second step is to protect that profit by taking it off the table entirely and making it unavailable to the delivery team. The moment this gross profit is atomized into hours, or a higher effective hourly rate, it will disappear. In the mind of the delivery team such atomization turns that profit into cost available for them to spend.

Some firms routinely add a margin of error into their prices (ca. 5%-10%), but when the delivery team knows it’s there, it typically gets spent. Instead of “margin of error” that padding should be viewed as a different type of margin—“profit”—and it should be taken off the table. Tyler, after Gina’s intervention, should remove the $7,500 in profit and communicate to the delivery team that they have 100 hours to complete the job—a job that “cost” $22,500.

Align Any Incentives While I’m not advocating either for or against commissions for business development or account people, or profit sharing for the broader team, if you do offer any such incentives consider taking those incentives from the pool of visible gross profit taken off the table. (A friend calls this the “POT stash” for Profit Off the Table.) Omit from the incentive pool any invisible profit that might accrue because of high utilization levels—the old source of profit that is entirely dependent on volume and efficiencies.

The Value of Making Profit Visible In addition to creating a visible incentive pool that people can see and directly impact, isolating profit in every job also serves the function of begging the question, “Why is there no profit in this job?”

The honest answer might be “this is the best price we can get for this work from this client.” You may decide that is a tradeoff you are willing to make because of other, profitable work being done for the same client. But if you’re not evaluating profit on a project basis like this it becomes too easy to assume any project on which the delivery team spends all the allocated time is profitable. The equally incorrect follow-on assumption is the firm should continue to build a book of business exactly like this (unprofitable) work.

While this first assumption of profit built into time spent can be true, it is only true at high levels of utilization. And it is limiting. If profit is a measure of spending time, your relative profit will never increase beyond a certain, frustrating point and you will erroneously equate increasing your profit with increasing the size of the firm. You will be trapped in this narrow utilization band of say, 60% on the low end, below which you are unprofitable, and perhaps 75% on the high end above which you need to add more bodies and thus lower your profit ratio.* You will feel as though you are running a race on a treadmill; running faster, exhausting yourself, and no closer to your goal.

But if Gina’s $7,500 price increase was allocated to the POT stash, the firm could get off this treadmill and realize a dramatic increase in profit without adversely affecting delivery cost, headcount or utilization rates. This is the type of growth you want. This is the path to loosening the tethers of financial success from size, effort and efficiency.

Putting It All Together Imagine a firm where your people on the front lines are Pricing Creativity masters. Where they easily increase prices where appropriate, with the client fully prepared to pay. Where it is understood by everyone that the hourly rates used are an internal measure of cost only. Where the pricers see themselves as having responsibility for gross profit by isolating it and taking it off the table so it cannot get spent. Where the higher value work you do delivers significantly higher profits. And where people can see their impact on the firm’s bottom line and perhaps are even incentivized to improve it.

This is possible.

Make the distinction between cost and price, isolate profit on each job and take it off the table so it cannot be spent, and align any incentives to increasing the POT stash, which should be viewed as the real profit generated by the delta between cost and price. Treat any “invisible” profit generated the old way, through volume and efficiencies, as a secondary source of profit derived from management acumen, but never prioritize it over visible profit.

Now the battle is won.

(*These figures are for example only. When David C. Baker and I discussed this topic in a recently-recorded 2Bobs podcast episode, he rightly pointed out that there are better sources for these numbers, and general operations advice, than me. Like him for example. I accept his admonition but the principle stands: limiting profit to a percentage of cost will create limited outcomes, no matter what prices you charge.)

The post The Complex Battle for Margin appeared first on Win Without Pitching.