I received a call the other day from a meeting planner. “I heard you speak three years ago, it was one of the best speeches I’ve ever heard, I’ve read your book, I agree with your thinking, you’re a great fit for our group…” At some point I got a word in edgewise. I asked, “Who has spoken at your event in the past?” My yellow flag went up when I heard names I didn’t recognize. Then I asked for the budget range for past keynote speeches. The red flag went up when the caller said, “$500!”
I’ve been musing since that brief phone interchange because it struck me that here, once again, was an uneducated buyer, ripe for misalignment of expectations about price.
Uneducated buyers desire steak but want to pay taco prices. Even people who understand the relationship of price to value when they’re shopping for a product or service seem to fail to apply that knowledge when they’re searching for a relationship.
Those of us who sell the value between our ears are really at risk of this kind of misalignment of expectations. I have devoted 10 years to research into strategic relationships; I’ve written four commercial books; I deliver 50 to 60 speeches a year. Clients are paying for that knowledge, that experience, that practice that has led to world-class delivery when I’m at the podium. And you think $500 is a fair price for that?
If our buyers are uneducated when they reach out to buy something, anything—a meal, a machine, a keynote speaker—they are at risk of potential misalignment on perceived value. We all must recognize this. Before we undertake to deliver something—our time and expertise, our products and services—we must work to educate our buyers, diligently, throughout our engagement process.
Traditional advertising and marketing are rapidly losing their effectiveness. This creates a need for buyer education through other channels. The latest Global Trust in Advertising research report from Nielsen (released in spring 2012) found that 92 percent of global consumers trust recommendations from people they know, compared to under 50 percent trust in advertising. And that 50 percent has fallen by roughly 25 percent over the previous two years. You can see where that trend is headed, right?
If most of your target market looks to their peers for trusted recommendations, then as the provider of that value we must make it easy for them to find their peers among our past clients. My customer list is on my website. I make it easy for people who want to hire me find their peer organizations and do their due diligence. They can call and say, “You hired Nour. How was the experience in working with him?” Put your client roster out there and encourage prospects to contact them. Those conversations will educate your buyers.
If the caller who wanted me to speak for $500 had taken a look at my customer list—better yet, spoken to a few of my past clients—his understanding of my value would have been grounded in reality. He would have known that his budget and my value-based pricing framework were not in alignment.
So let’s talk about that budget for a moment. I’ve found that budgets are seldom a financial issue. More frequently, budgets are a priority issue. Given the size of the organization the caller represented, I don’t believe they truly have only $500 for a speaking engagement. They have money to spend—it’s just been allocated differently, or has been spoken for by a different level of individuals. My caller wasn’t at the table when the budget decisions were made.
Price is an issue only where there is a lack of perceived value. Which brings us back to education. Buyers develop a sense of value based on something. More and more, its based on the messages they pick up from their peers. But it’s like that joke about the psychologist and the light bulb. (How many psychologists does it take to change a light bulb? Only one, but first it has to want to change.)
Buyers have to WANT education about price and value. They have to realize they need it, and take action to pull it toward them. Are buyers rising to the challenge? Does that 92 percent of the market that distrusts advertising make the effort to replace it with another stream of fresh information?
Uneducated buyers can’t form a realistic expectation about price and value. Therefore they are likely to overestimate what money can buy, simply out of wishful thinking. We all do it. As value providers, we must meet the challenge to create the market gravity that will pull buyers to seek education about what we offer. There is simply no other way to get them to form realistic estimations of how our value will transform their lives.
We all get what we pay for. Whether we get the steak or the taco depends, now more than ever, on how we package and position ourselves.
- Work diligently on your buying process to align customer expectations about your value.
- Make it easy for potential buyers to gather trustworthy peer recommendations.
- Budgets are usually a reflection of priorities. Work to increase the priority of what you offer by emphasizing its transformative value.