Episode 151

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In any trade, mastering the work is just the first of many hurdles. But one of the most daunting for most agency owners is pricing. What is the work worth? Who is my competition, and what if they offer services for less? What is the true value of the work we’re doing and what’s the ROI for our client?

There will always be someone (agency or freelancer) who is willing to do the same work for less. But how does that influence our pricing strategy and should it? This episode is all about the value conversation that leads to identifying a price based on the value you are offering. We’re going to dive into both the theories and principles and how to get over the discomfort of putting these pricing principles into practice.

Blair is an expert in sales, particularly in the creative services industry. He started his career working for a number of Canadian ad agencies and design firms. In 2000, he struck out on his own with a consulting practice named Win Without Pitching. In our conversation, Blair will walk us through a framework developed over decades of learning, trying, failing and perfecting value-based selling for creatives.

Blair is the author of Win Without Pitching Manifesto. He has just written a brand-new book called Pricing Creativity. I have spent some time with it, and the cool thing is, it’s not really a book – or more precisely, it’s not only a book. It’s more of a training manual – a three-ring binder full of all kinds of tips, tricks, and the psychology of pricing strategy.

This is a meaty episode and I promise – it’s going to give you plenty to think about.

 

 

What you’ll learn about in this episode:

  • How to effectively price your creative work
  • Why a one-page proposal beats a 75-page presentation every time
  • The value of silence in the sales process
  • Moving from vendor to valued expert early in the sales process
  • Making the closing on the sale a “non-event”
  • The four-step framework for mastering the value conversation
  • How to discipline yourself to not offer solutions too early in the process
  • The mindset shift needed to improve selling skills to become a pricing expert
  • Having value conversations with the right decision-makers
  • How to move from agreeing with sales principles to making them standard practice

The Golden Nuggets:

“If you've never presented a proposal with options in it before, you will quickly notice the difference in response. The client will try to solve the puzzle: which is the best value?” – @BlairEnns Click To Tweet “The pursuit of efficiencies comes at the cost of extraordinary profits.” – @BlairEnns Click To Tweet “The most financially successful agencies have people who are able to master the value conversation. They're not only pricing based on value, they learn to navigate this value conversation with ease.” – @BlairEnns Click To Tweet “Offering one standard price does you a disservice. The brain is wired to make comparisons. So your job is to facilitate the comparison.” – @BlairEnns Click To Tweet “You can't just master the value conversation by reading about it. You have to fumble forward through multiple value conversations.” – @BlairEnns Click To Tweet “Improving your selling skills really comes down to learning how to master that value conversation, which requires a fundamental mindset shift.” – @BlairEnns Click To Tweet “You need to train yourself away from offering solutions. It's almost like an act of meditation where these thoughts come up, and you let them go for now. You let them go because now's not the time.” –@BlairEnns Click To Tweet “The most challenging part is to move away from thinking about solutions. It requires a big shift in mindset to focus foremost on understanding the client’s desired future state, and leave solutions for a discussion down the road.” – @BlairEnns Click To Tweet

 

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Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build a Better Agency Podcast, presented by HubSpot. We’ll show you how to build an agency that can scale and grow with better clients, invested employees, and best of all, more money to the bottom line. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody. Drew McLellan here with another episode of Build a Better Agency and today the topic is pricing. I know a lot of you wrestle with this. A lot of you feel like A, you don’t have a lot of control over your pricing. Some of you feel like the market that you’re in really dictates the pricing or the industry that you’re in really dictates the pricing. And to some extent that very well may be true, but there may be a different way of looking at this. One of the things I think agencies really have to wrap their head around is this idea of you’re going to do the work and at a certain point in time, what you charge for that work is a variable that you have more control over than you think and that there is an agency out there absolutely that is going to offer to do it for less.

And so I think a lot of times you set your pricing based on what you think other agencies are going to price, and I’m not sure that serves you well in the long run. So my guest today is really an expert in selling and an expert in sales, particularly in the creative services industry. Many of you are familiar with Blair. So Blair Enns runs a company called Win Without Pitching. He wrote the book Win Without Pitching Manifesto, and he’s just written and brand new book. And the brand new book is called Pricing Creativity and it’s not really a book. It’s like a three ring binder full of all kinds of tips, tricks, the psychology of pricing, tactics that you can try. He’s got a rule section, which are, these are the rules that you should follow. He’s got a tool section, which gives you some templates and things to do. But more than anything else, what Blair has always done is Blair has challenged the idea that you have to do business the way everybody else does.

And Blair’s model is certainly forcing agencies to think about how to position themselves differently when they come to talking about selling their services, pricing their services, and how they measure and deliver value to their clients. And so I expect that this conversation is going to get really interesting very quickly because after reading the book, I have pages of notes of things that I want to talk to Blair about, and I have a finite amount of time. So I’m going to try and cram as much as I can into this hour. I am going to pick his brain as quickly and as deeply as he will allow. And he’s a generous guy, so I know he’s going to go into this conversation ready to share and teach. And my challenge to you is I really want you to put aside all of the excuses, all of the rationale, all of the yeah buts that pop into our heads magically, automatically when we start talking about pricing.

Put those aside, if you will, for this hour and just imagine what’s possible. Just listen to what Blair is talking about. And I’m not suggesting that for most of you, you’re going to be able to take this whole thing wholesale and do everything that Blair suggests, but I do believe that every one of you listening will be able to grab elements of this and bake it into how you build out your proposals, how you build out your pricing, the kind of conversations you have with clients, and be able to bake some of this thinking into that process to put more money to the bottom line for you. So the reality is you can sell something for $10,000 or $100,000 and the difference is really the $90,000 you get to keep.

So be open-minded to these ideas and one of the questions I have for sure want to ask Blair is when he talks about all this stuff and when I read it, it all makes perfect sense, but there’s a huge gap between understanding it intellectually and actually doing it. And so I want to make sure we get into that as well. I want to stop talking and I want to jump into the interview because I don’t want to waste any more of your time with just me blathering on. I really want to get to Blair. So Blair Enns, welcome to the podcast. So excited that you are with us to share your knowledge. All right so with that, let’s welcome Blair to the podcast. Blair, thanks for joining us today.

Blair Enns:

No, it’s my pleasure, Drew. I’m happy to be here. Thank you.

Drew McLellan:

So I think everybody listening is probably familiar with you. You’ve been certainly in the space for a long time and talking to us about pricing strategies and sales, but for folks who may not be as familiar with you, give us a little sense of your background. How did you come to be who you are today and sharing the kind of information that you share?

Blair Enns:

Yeah. I grew up in the… Grew up, air quotes, professionally in the advertising business in central Canada. I worked for a bunch of ad agencies. I’m fond of saying I worked for some of the largest ad agencies in the world and some of the smallest design firms later in my agency career. I moved over to the design side. And then somewhere around 2000, 2001, my wife and small family and I moved to this little remote mountain village in British Columbia, and I needed a way to earn a living. So I decided to launch a new business consulting practice. I called that consulting practice Win Without Pitching and it really took off from there. There was something that really resonated about that value proposition, the idea that you can win new business without pitching [inaudible 00:06:28], something I absolutely believed and then learned firsthand in my career.

So in early 2002 Win Without Pitching the solo consulting practice was launched. It was a lifestyle business for many years as my wife and I raised four kids in this beautiful remote mountain location. And then near the end of 2012, I made the decision to transition from a solo consulting practice to a training company. So since early 2013, Win Without Pitching has been a training organization. We run training programs. New business development or sales, depending on your bent and your willingness to use the S word, training programs for creative professionals.

Drew McLellan:

So we’re going to set our conversation today around the new book, which we probably won’t show the video, but if we do, if you folks are seeing me on video, then you’re seeing a copy of Blair’s book, which is really when you say book, it is a misnomer to this tome that you have written. It’s really part workbook, part MBA course in sales and pricing. What prompted you to write the book?

Blair Enns:

Yeah, there were a couple of different prompts at different points in time. And I appreciate you saying it’s more than a book because I charge a lot of money for that book and it’s a lot more than you would charge for a normal book. It’s really more like a pricing system for creative professionals. When I was writing it, I was toying with the idea of, should this be a book or should it be a training program?

It’s really a kind of a training program in a book format, but the dual impetus is at different times where if I go back to the beginning when I was a consultant, I was working with a really highly regarded UX firm in Toronto. And as part of my consulting engagements, I had them share with me copies of their proposals and their proposals were one page. They were one page with three columns. The one proposal I was looking at, column one was $200,000. The column two was 400, I think. And column three was 600 or 650 and I just couldn’t believe what I was looking at. I said, “What does your clients say about these big numbers?” “No, they never say anything.” “They don’t ask you how you came up with them?” “No.” “What did the client choose?” “Well, they chose the middle one with some things from option three. I think we arrived at 475.” And they said, “That’s usually how it works. They usually choose the middle one with some options, some things from option three.”

And for years I had been saying the proposal is the words that come out of your mouth, the document is the contract. And in the creative professions, we’re so in love with the deck and the presentation that when I asked for a proposal, I’m used to getting these 50 or 75 page decks that [inaudible 00:09:22] proposal and contract and sales pitch document.

Drew McLellan:

And by the way, probably give away half of this stuff you should be selling.

Blair Enns:

Oh yeah, yeah. Strategy, free diagnosis, background. Here’s everything we Googled about your company last night. So I’ve been making fun of those things for years. So I’m used to seeing these lengthy proposals and then, “Okay, there’s something we’re going to fix,” because I believe you should come to an agreement in principle with your prospective client, and then you start writing.

But I was looking at this, so I’d asked these questions. This firm, they were skilled pricers and they had worked previously with Tim Williams, who works a lot in the advertising agency space on the subjects of pricing and business models. And that’s where they had learned this. So I started applying… I tacked some of that learning in that moment from my client and consultants are always learning from their clients, right?

Drew McLellan:

Thank God, right?

Blair Enns:

Yeah. It speeds up the learning process. So I taxed some of the learning onto my own neophyte thinking on the subject of pricing, but it wasn’t until 2013, a few years later, when I was onboarding a client into our training program. I was on the phone with the principal of an ad agency in Jersey or outside of Philly. He specialized in pharma and I knew him because he’d come to seminars I’d done before and he’d been a subscriber to our annual webcast for a few years, and we traded a few emails.

So as I was onboarding him into the training program, he said to me, “Blair, I have to thank you. I’ve made a lot of money from your advice over the years.” And I said, “Oh, that’s great.” He said, “No, no. I’ve made a lot of money from your advice.” And I went, “Oh?” So he proceeded to tell me these stories of how he had derailed these million dollar pitches, multi-year contracts and the figures were significant. And I was struck by my own reaction because first of all, I was happy for him, a logical human reaction. Second, I recognized that he was overweighting my role in his success, but I was appreciative of that. But my overriding feeling was, “That’s not fair. You haven’t paid me enough money to have earned millions of dollars from my advice,” because I totaled up what he’d paid me. It was only a few thousand dollars.

And then I had this visceral reaction to my own feeling. And I thought, “Okay, I need to explore this. I need to explore the subjects of value and getting paid based on the value that I create.” So those two moments combined over a few years to just set me on this journey of endeavoring to learn everything I didn’t know about pricing. The end result is years of research. I’m a voracious reader. So I’ve read everything on the subject and applying, experimenting with my own clients. And then a friend of mine who owns a small agency suggested I write the book and that’s how it all came to be.

Drew McLellan:

Yeah. Well, I’m glad you did it. It is a great book. It is thought provoking. It is challenging I think. I think that some of the concepts that you present, it’s easy to nod in theory and say, “Well, yes, of course you should do that.” And very difficult, I think, to apply in real life. And so that’s really where I want to dig in. I want the listeners to get as much counsel on how to actually do this as possible. So one of the sections of the book is the rule section. And actually you just mentioned rule number six, which is any unpaid proposal should be a page or less. Can you talk a little bit more about that? You teed it up in terms of how that idea came to you, but help people understand, what does that one page look like?

Blair Enns:

Yeah. There are six rules. So there are four sections in the book. First is principles and the principles are… The fewest principles that I could distill, all of the pricing theory that I absorbed, distilled down to the fewest principles. So the idea is learn the principles, but then follow the rules. And rules is the second section of the book. And there are only six rules. What I encourage you is to try to follow these rules every time. And as you pointed out Drew, the last one is keep your unpaid written proposals to one page.

So on other rules that [inaudible 00:13:58] would manifest themselves on that one page are the ideas of options. Well, let’s see. The first rule, and it took me a while to determine, if I’m going to order these, what’s the most foundational rule? The first rule is to price the client and not the job. And that means when a client comes to you and says, “What do you charge for X?” You don’t have an answer. You not only don’t have an answer that you share, you don’t have an answer that you tell yourself. You try to let go of any idea of solution, because if you’re charging based on the value you create for the client rather than the inputs of time and materials or the market value, again in air quotes, of your outputs or deliverables, if you’re charging based on the value that you create for your client, and that’s the goal here with the book and that’s the goal with anybody’s pricing strategy, pricing based on the value. Then you will not have an answer to that question, “What do you charge for X?”

Because the answer will be, “Well, that depends.” And it depends on many variables, but the most important variables it depends on are, how much and what forms of value would doing X for you create? That’s the place we want to get to. So that’s rule number one.

Rule number two that will show up, so if I put a one-page proposal in front of one client and then the next day put another one-page proposal in front of another client who has a similar challenge, those prices are going to be different. Not only the prices, but the solutions are going to be different. So I will bundle up specific solutions for the specific client based on their variables and the value that we would create for them and then price it accordingly. So that’s the first thing that you would notice is, and I saw it in that client example I shared with you, the folks in Toronto, their proposals were all different. It wasn’t just a copy.

So that’s the first thing you’ll notice, the prices are different, the solutions are different. The second thing you’ll see is every proposal has options. Usually three, sometimes four, and that’s rule number two. So if rule number one is to price the client, not the job. Rule number two is to offer options because there’s lots of reasons for this, but the most creative firm proposals are essentially take it or leave it proposals. We’ve scoped out your situation, here’s what we would do, and here’s how much it would cost. And the client’s brain isn’t really wired to answer that question. Is what you’re proposing to do worth this much money? Your brain is really wired to make comparisons. So your job is to facilitate the comparison.

Drew McLellan:

Yeah.

Blair Enns:

All your proposals should contain options. That’s the second point. And then the third one that I guess merits talking about here is when you share the proposal, when you walk the client through the proposal, you begin with the most expensive solution first.

Drew McLellan:

Right. [crosstalk 00:17:04] rule number three, anchor high, right?

Blair Enns:

Yeah.

Drew McLellan:

Yeah.

Blair Enns:

Those are those first three rules rolled up in the sixth one of keep your proposals to one page.

Drew McLellan:

So the one-page proposal, because I want to go back and dig into some of those other rules too, but the one page proposal, what you’re saying is basically it’s… And this is something that I’ve been teaching for a lot of time. I think I learned it from Ron Baker, who I know you quote and reference in the book several times too.

Blair Enns:

Stolen shamelessly from, yeah.

Drew McLellan:

He encourages us to do that as long as we say [crosstalk 00:17:40], “Ron Baker taught me,” right?

Blair Enns:

Yeah.

Drew McLellan:

But the whole idea of three options with bullet pointed or whatever the list of the deliverables, not the deliverables, but what are the outcomes? And then with the thought that in most cases, people will choose that middle option. But in any case, it gives the recipient of the proposal the sense that they actually are in control and have some choices and can really customize what we’re doing based on their expectations, needs, budget, whatever it may be. Right?

Blair Enns:

Yeah. And if you’ve never presented a proposal with options in it before, you will immediately notice the difference in response when the client, instead of looking at it and trying to make an assessment and furrowing her brow or whatever it is, immediately goes to work to solve the problem that you’ve put in front of [crosstalk 00:18:38]. Which of these is the best value?

Drew McLellan:

Right, right. Yeah. It gets them over the hump of, “Should I buy?” And now they’re immediately deciding, “Which one should I buy?”

Blair Enns:

Yeah.

Drew McLellan:

Yeah.

Blair Enns:

Yeah.

Drew McLellan:

Yeah. One of the points that you make that I think is worthy of some focus, and I think it’s particularly challenging for agency folks is silence, master silence. It is the most effective thing you can master to get better at sales. Talk to us a little bit about that.

Blair Enns:

Yeah. I think I say it’s the most effective thing that you can easily master. The most effective thing you can master to get better at sales would be the value conversation. And there’s an entire chapter on that. You kind of alluded to… I’ll come back to silence in a second, but you kind of alluded to right off the top, this gap between knowing the principles of value based pricing and applying them. And so the value conversation is where value based pricing theory goes to die. But mastering silence is just one of those things, if you can be the party most comfortable with silence in a conversation, you have a significant advantage because you learn so much in silence.

And so as part of the Win Without Pitching approach to new business, we have people say no, if it’s appropriate to say no, create obstacles in the sale, if it’s appropriate to create obstacle. Voice an objection if you’re thinking. If you think, “I don’t think that’s the right thing to do Mr. Client,” put it on the table and voice it. So whenever you do any of these things, say no, put a hurdle in front of the client, voice an objection. Any of those things should be followed immediately by silence, because in that silence, you learn what the client’s really thinking and you also learn how much power you have in the sale. And there’s, nature abhors a vacuum. So when there’s a silence in the conversation, there’s pressure on both parties to fill the silence.

And in a sale situation, salespeople around the world have been known to fill the silence in that conversation with words like, “But we could do it for less.”

Drew McLellan:

Right, right.

Blair