Friday, March 15, 2013

16 Ways to Resist a Haircut, Post 3


This is the third in an eight part series on how to resist price concession requests. Each two new tips will be posted each weekday for eight days.

Studies show that 74% of price cuts are started by sales people, not customers. In legal services, that percentage may be much higher! Lawyers agree to discounts on their hourly rates, often without a hint of a prospect’s objection to the hourly rate. Here are some proven strategies for resisting discounts and increasing profits.

5. Sell the decision maker on the value of the relationship. Relationships are made or destroyed in the months after the initial engagement. Cuts in prices are often recovered through reduced service levels, something that neither party wants. So, in order to serve clients after the sale in the manner that clients expect, fees need to be maintained at the levels which ensure consistent service levels.

6. Sell everything but price. If you are not the lowest price, be the best value; the most responsive; the most proactive communicators; the firm with the most influential network of contacts; the firm with the best client mix with the most relevant experience. The list is nearly endless of ways that you can differentiate your unique set of benefits and customize them to the needs of the prospect. Ask your prospect to agree not to take the lowest ‘price’ but to take the best ‘choice’. Ask, “If all the bids are within 10% to 15% of one another, would you consider dropping the lowest price and selecting who you think would be the best attorneys to work with, the best service, the best technologies and the best reputation for results?”
 
It goes without saying, if you would like to talk about training your lawyers in resisting pricing concessions, please give me a call. It costs nothing to talk.


Thursday, March 14, 2013

16 Ways to Avoid a Haircut, Post 2

This is the second in an eight part series on how to resist price concession requests. Each two new tips will be posted each weekday for eight days.

Studies show that 74% of price cuts are started by sales people, not customers. In legal services, that percentage may be a lot higher! Lawyers agree to discounts on their hourly rates, often without a hint of a prospect’s objection to the hourly rate. Here are some proven strategies for resisting discounts and increasing profits.
3. Use testimonials. The experience of peers is a powerful endorsement of value. Before succumbing to rate cuts, share the testimonials of similar companies you have worked with to demonstrate the value of your services. You can delay a rate negotiation, often to your benefit, by asking the prospect to speak to past and current clients prior to continuing the discussion on rates. Loyal clients will validate your services and provide further ammunition to resist price cuts. Peer companies held in high esteem by the prospect have the greatest testimonial influence. But choose you references carefully and prepare them in advance.

4. Sell your competitive advantage, not your rates. What sets you apart from your competition? Do you have a unique set of skills or experience? Unique technologies? Particular ‘clout’ or access to persons of influence? Use these differentiators to reinforce the value of your services. Ask prospects questions which highlight the value of these attributes to ensure the full value you provide clients is factored into the analysis.


It goes without saying, if you would like to talk about training your lawyers in resisting pricing concessions, please give me a call. It costs nothing to talk.

Wednesday, March 13, 2013

16 Ways to Avoid a Haircut, Avoiding Price Concessions in Engagement Negotiations

I wish I had a dollar for every time I heard a lawyer say that the firm’s rates were the reason they didn’t get work. Studies show that 74% of price cuts are started by sales people, not customers. In legal services, that percentage is probably higher! Lawyers agree to discounts on their hourly rates, often without a hint of a prospect’s objection to the hourly rate.

When price objections are initiated by prospects they indicate deeper concerns or obstacles that the company has about a firm. These may include a perceived lack of experience, the low ‘insurance’ value of the firm’s reputation, hidden internal agendas, poor personality fits, internal operational issues, incumbent lawyer relationships, competitive pressures and a host of other issues.

But very often, requests for discounts are routine requests in every negotiation. The firms that lack the will to resist or, at the very least, take the time to explore the root cause of price resistance are the ones that allow profits to leak out of the firm. Training in resisting price concessions pays off handsomely.

Discounts are not necessary to win a prospect’s business. In large part, the eagerness to discount is a function of several factors, all well within the control of the law firm. These include a lack of confidence in the value of attorney services; a belief that discounts are required in order to compete; a lack of sales technique and training in complex sales processes; and a lack of understanding of the buyer’s purchase behaviors to name a few. The truth is that by the time the prospect discusses payment terms the firm has made the short list or the decision to use the firm has already been made. Discount requests typically are final efforts to reap a last bit of value at the height of the final negotiations. And because the 'close' is so near, these requests are usually granted.

Many attorneys assume there’s no risk on the part of prospects to ask for a discount. But discounts can present risk for the client, especially if it leads to choosing the lowest price provider. An inferior result effectively shifts a portion of the blame to the decision makers who choose the lowest rate provider. Choosing the cheapest forgoes the ‘insurance’ value of higher priced services. Additionally, there is an inherent fear, if not a complete acceptance, that rate cuts result in corner cuts. The company hopes that cuts will be absorbed in the firm’s profit margin. The reality is that this is the last source of cuts. Savvy buyers know this.
Working from this common ground of shared risk, several techniques can re-direct discussions away from price concessions and minimize the financial impact.
1. Just say ‘no’.
Present the offer you submitted as a fair and reasonable offer that the firm stands behind. Suggest that the relationship be reviewed at a later date and, if the client is not happy with the value at that point, a discussion about discounts should happen then. Let the prospect push for the discount. Often, the client won’t take the issue further.

Regardless, prepare in advance your justification for why the firm or the attorney’s rates and fees are set at their current levels. Use comparative studies of rates, publicly available records of past competitive bidding processes, projected ROI calculations and other objective evidence of the competitiveness of rates to justify your fees.

2. Use the fact of higher rates as a reason to buy. The market place is a brutal equalizer. Higher prices result from higher quality and service. Long established firms with robust track records of results continue to thrive with higher rates because other clients find value in those fees. Use the power of market success to justify your fees.
This is the first in an eight part series on how to resist price concession requests. Each two new tips will be posted each weekday for eight days.

It goes without saying, if you would like to talk about training your lawyers in resisting pricing concessions, please give me a call. It costs nothing to talk.

Tuesday, March 12, 2013

Map your network of contacts.

Take some time to write down all those people that you know in the various activities and travels of your life. This includes professional and personal contacts. Record, at minimum, where they work, their title, and contact information. If possible, note relationships and associations of each that you are aware of. Also note if they have special knowledge or access to resources. For example, if your friend also welds and makes sculptures or fixes old cars, record this as well. One day you may be able to use this information to connect two people who will benefit from knowing one another- and you in the process.

The better you know each person the more ‘degrees’ you will be able to take that person's relationships out. If you can link up on LinkedIn (a system that tracks the degrees of separations in relationships), do so. Think through who you know at the gym, at church, the grocery store, your wine club or poker guys, golf buddies, etc. There are literally dozens, if not hundreds, of people that you know and the second and third degree relationships can number into the thousands. Capture them in a list and start to map out who you know, who knows whom and who knows what.

Once you have this list compiled, study it for the relationships that may lead to important introductions, the relationships that you want to learn more about and the resources your network has available for you to leverage. What you will find is a list of contacts that represent a rich environment for networking and connecting people together. This is the essence of rainmaking.

Monday, March 11, 2013

Stop Fishing in the Elevator

“Let’s talk about me.” Sounds odd, doesn’t it? And yet, the vast majority of client development programs teach lawyers to sell themselves right out of the gate, in the short space of time it takes to rise to the next floor in an elevator. Do you have a 30 second elevator speech? Then you’ve probably been through one of those programs. Now, how many truly good rainmakers do you know that have learned to pitch their services in three sentences or less? The complexity of legal advice and counsel can rarely be reduced to a few well-crafted sentences.
So, how do you respond to the question, ‘What do you do for a living?’ Simple. “I am a lawyer. I help people.” Enough said. The trick is to make them believe it. Professionals who have the ‘Midas Touch’ do one thing consistently well. Great marketing is based on attraction rather than promotion. Great marketing creates an environment where people seek you out, rather than you constantly having to seek them out. And universally, it is human nature to be attracted to people of give freely of their time and who are genuinely thoughtful. The great rainmakers find ways to give a little bit of themselves away each day. They actively listen for ways to help other people, regardless of their station in life and without expectation of reciprocity. They take it upon themselves to do something unexpected and thoughtful for the friends and strangers they meet. Great rainmakers understand that you have to give in order to receive.