Increasing Revenue Starts Before the First Billable Hour
There’s no magic to revenue, even though it can often seem like there is. And growing revenue isn’t just a matter of producing more, either. The truth is that the biggest gains in revenue will be made before you even punch the clock — all the way back to the first conversation you have with your future clients — and then long after the work is done.
In this episode of Expert Marketing Matters, Mark speaks with founder and CEO of Win Without Pitching, Blair Enns, about what can be the most challenging of the four conversations Blair trains his clients to have as a part of their sales process: The Value Conversation. When had right, it can create extra-ordinary value for their clients, and increase their revenue beyond the billable hour…
You can listen to the episode using the player embedded above, or you can read a full transcript below.
Mark O’Brien: Hello and welcome to Expert Marketing Matters. This is Mark O’Brien. I’m the CEO of Newfangled and I’m joined by the founder and CEO of Win Without Pitching Blair Enns. Hi there, Blair.
Blair Enns: Hi Mark. How are you?
Mark O’Brien: I’m very good. That feels like the most formal conversation we’ve ever had. Maybe since our very first conversation. Can you remember the year of our first conversation?
Blair Enns: No. Do you know?
Mark O’Brien: I believe it was 2005. Mark Shipley introduced us.
Blair Enns: Oh, that’s right. Yeah.
Mark O’Brien: I remember you called me and I didn’t return your call immediately and then you really wanted to work with us because I didn’t get back to you right away.
Blair Enns: Yeah. Mark Shipley said you got to go to this website and check out how this firm builds websites. I was looking for a new website for Win Without Pitching. I saw this demo of how you grey-screen. Was it grey-screen? Is that the process you used?
Mark O’Brien: Right. Grey-screen prototyping.
Blair Enns: Yeah. And I looked at it and said, “Oh my God, this is brilliant.” And I called and left a message. And then after a while, nobody called me back and I started to panic. I thought, “Well, maybe they’re not going to work with me. Maybe they’re not going to take my money.” And I thought, “This is unbelievable. How many customers of web design firms go through this experience of panicking that maybe this firm is too good for them and won’t take their money.” So, that really stuck with me, but it was that grey-screen prototyping that really sold me before I’d even had a conversation with you guys.
Mark O’Brien: That was our bread and butter way back in the day.
Blair Enns: Yeah.
Mark O’Brien: And the rest is history. So speaking of history, what I want to do today, I think most everybody listening to this podcast is familiar with you, familiar with Win Without Pitching. For those of you who aren’t, this is still going to be incredibly informative, but the truth is that your firm has changed about as much as my firm has over the years. We both have evolved a great deal. Some of those things we’ve both been fortunate enough to have front seats to for each other’s evolution. We’ve taken some course together and things over the years. We obviously work with a very similar client base. This is mostly a guess on my part, but I feel it’s a pretty educated one. There’s a lot I want to hear about. I want to understand the basic history of Win Without Pitching and how you got to where you are today.
Mark O’Brien: And also the true nature of it, which is you’re still incredibly involved in it. You’re an integral part of it, but it’s not just Blair. And for a number of years it was. And I also want to make sure we get into the workshops because that has become such a big part of your platform. And I think there’s also some maybe market confusion around what the workshops are for and who should attend and when all that kind of thing. So, I’m going to be honest at the outset here. Obviously, this is going to come off as somewhat promotional.
Mark O’Brien: That’s not the end goal here, but as I mentioned to Blair in prep for this, I consider it a promotion of education because I believe as much as I ever have in all the things you and Shannyn and the team teach and I think they’re all as necessary as ever, primarily because you’ve evolved what it is you’re teaching over time as people have mastered some of the concepts you were really pushing hard on say five, six, ten years ago, you’ve evolved to more complicated and nuanced topics that the general agents who are out there does not have that good of a handle on.
Mark O’Brien: And this is important stuff. And I think there’s a lot of misinformation out there, particularly around pricing strategy, et cetera. And so I’d like to hopefully clear up a few of those things today and also just get a sense of where you are today and if we have time, maybe get into where you might be in two to five years time. Does that sound good?
Blair Enns: Yeah, sure. I’m all for it. Let’s do a 30 to 60 minute Win Without Pitching commercial. Let’s go.
Mark O’Brien: Brought to you by … okay, that sounds good. So, I guess the brief history, how’d you get here from there?
Blair Enns: Oh, how’d I get here? Well, it depends where here is. This is my first work thing of 2020. We’re recording this on January 6th, so just after the two-week holiday break. So, we’ll come back to where here is I guess in a bit. So, I launched Win Without Pitching in 2002 as a solo-consulting practice and agency new business development consulting. I refer to it as sales consulting and still do sales consulting for independent creative firms that always wanted to work with business owners. So, we don’t typically work with firms where ownership is separated from management.
Blair Enns: Around 2000 my wife and I and our three young kids moved to this beautiful mountain village in remote British Columbia, Kaslow. We did this backwards. We thought, “We’ll move here and then we’ll figure out a way to earn a living.” And I’m not very good at the two main industries in this town, which are logging and dope growing. Although, dope growing’s gone away now that it’s all legal.
Blair Enns: So, I had to start a business. I thought, “I’ll start a new business consultancy and I’ll call it Win Without Pitching” because I liked the name and at the heart of it I really believed the promise implied in the name was achievable. I had tested the basic ideas a little bit myself when I was doing agency new business development prior to this, but that’s how it started. It was essentially a lifestyle business that allowed me to move my young family to this beautiful part of the world. I worked as much as I needed to, to support the family and spend most summer days at the beach. In the beginning, most of my consulting was delivered remotely. As the kids got older, I started getting on more planes. I started doing more speaking engagements.
Blair Enns: In 2010, I published my first book. It was really my second book. We’ll come back to that. But it was the first mainstream book, the Win Without Pitching Manifesto. That led to broader reach and awareness and then at the end of 2012 because I felt like I had pushed this solo consultant business model as far as I could, I couldn’t work any harder and I really couldn’t make any more money and the truth is, looking back now, I could have worked a lot less and made a lot more money if I thought of things differently.
Blair Enns: But I decided at the end of 2012 to change the business model to a training company to pursue scale. So, Win Without Pitching became a training company. We’ve added staff. We’re actually smaller than we were a couple of years ago now. We’re larger revenue wise but we’re smaller staff wise. But I pursued scale and in the years since the beginning of 2013 I’ve been shedding responsibilities and I guess that’s where we are now at a high level. Win Without Pitching is a training company. We deliver new business development, which we still call sales training, and pricing training and other kind of related topics to creative professionals around the world in a variety of different mechanisms or channels.
Mark O’Brien: Right. Those channels are of interest to me because in the old days Win Without Pitching, if you wanted to hire Win Without Pitching, it basically meant you hire Blair to be your consultant.
Blair Enns: Yes.
Mark O’Brien: And you will coach them through various things, a mix of onsite and offsite support, that kind of thing and that really has nothing at all to do with who the company is today. Some of the topics are the same, but the manner through which the expertise is delivered is really entirely different. So what are the primary vehicles for delivery now?
Blair Enns: Today we see ourselves as a workshop-first company. The bulk of our revenue doesn’t come from workshops, but it’s where most of our relationships with our clients start. So, typically people will read one of my books or read an article I’ve written or in some other way become aware of Win Without Pitching. Maybe it’s through the podcast I do with David Baker. Two Bobs.
Mark O’Brien: Never heard of it.
Blair Enns: Yeah. And then they show up at our site and if they’re interested in training, they start exploring training, and we suggest that the first step is a workshop. So, we do four or five or six depending on where we are. This coming year we’ll do six workshops a year in various locations. So, we’ll do four of our main two-day Win Without Pitching workshops in North America this year. We’re launching a new five-day workshop called mastery week in April for people who’ve already had some exposure to the Win Without Pitching principles who want to go really deep, almost like a week at graduate school. And then we’ll also be doing an international workshop in Amsterdam in the fall. So, that’s where people start. And for some people that’s enough. Between the books, the podcast, the other free information that’s out there that’s on our website, and a couple of days of training. If you’re a real kind of do it yourselfer, if you’re the type of person that can take on these principles and you have a good discipline, that two-day training program is enough for a lot of people.
Mark O’Brien: And when you say two-day training, you’re talking about the workshop?
Blair Enns: Yes.
Mark O’Brien: Got it. Because the workshop is in person and I’ve been to a number of these myself now. It seems like they’re 20 to 40 people in the room roughly. Is that the target crowd?
Blair Enns: Yep.
Mark O’Brien: Almost all agencies. Creative professionals, right?
Blair Enns: Yeah. That’s the target audience. There’s always some outliers in the room. I always find the outliers really interesting. Like we had a natural path in the last workshop we did. There’s always some independent consultants of some kind. So, it’s interesting. Professional services and knowledge work of all kinds. It’s really all kind of coming together in these complex van diagrams where these services are overlapping. So, there are creative professionals in a lot of what you would consider to be non-traditional professional fields, if that makes sense.
Mark O’Brien: Right. Well, as the agency structure gets deconstructed, what I’ve noticed in those rooms specifically is you do have a lot of forward thinking people who are redefining what names even means.
Mark O’Brien: They’re trying to figure out how these new pricing strategies might work with their vision of what their service or creative product might end up being. And I think that’s pretty interesting. There’s a lot of learning that goes on in the room between the attendees.
Blair Enns: Yeah. And I think that’s one of the best part of any workshop, is an organization that’s getting serious about workshops where we’re really trying to learn from that and try to create as much kind of interaction and collision time as possible.
Mark O’Brien: Right. And one thing I’ve experienced over and over again, especially when it comes to the principals, the owners, partners, management of these firms, is that they’re dying to hear how other firms run. They’re just dying to talk shop. And they could do it for days and days and days and days and days and days and days. And what I found at your workshops is that you do create a lot of collision time and that has two benefits.
Mark O’Brien: One benefit is that these leaders inside of agencies get to really understand how other people are doing it because it’s odd. I think a lot of people come into that room and other rooms like it with their defenses up, maybe wanting to look good in front of their peers, that kind of thing. But very quickly the ugly stuff comes out and you get into the real topics because people really want to learn from each other. So, that’s a huge benefit.
Mark O’Brien: The other benefit that I see in the room is that people get to practice some of your concepts. And as I’ve seen directly these concepts, some of them are really hard and if you’re not practicing them, you just can’t get good at them. You can’t read a book and just start doing it. You’ve got to get the reps.
Mark O’Brien: And that is causing me to want to get into the deeper nature of these workshops. Now, when I think historically of Win Without Pitching, I do think of, like I said, a sales consultancy, sales training organization, whatever word you want to use. I understand the different things. But still the workshops to me really are about pricing strategies. Is that fair to say or am I selling it short?
Blair Enns: I think you’re selling it short. Our overarching framework for how we look at everything in the new business world, and it’s the framework off of which we hang everything, every piece of curriculum, is this idea that there are four conversations in the sale. Conversations are linear and discreet in that one follows the other. That’s not the way the sale always works, but it’s a helpful model way of thinking about the sale. So, we see four conversations. So, at any point in the sale, you simply stop and ask yourself. Number one, what conversation is this? Number two, what is the objective of this conversation? And number three, what framework do I use to navigate to this objective? So, these are all of the things that we teach and in a two-day Win Without Pitching workshop, we’re really teaching you the four conversations.
Blair Enns: Now, the last two conversations, the value conversation and the closing conversation, that’s really about pricing and closing. It’s about understanding value, exploring different ways that you can help the client to create value, and then capture some of that value for yourself in the form of compensation and how you can easily close, seamlessly transition from the sale to the engagement.
Blair Enns: That’s about 50% of the two-day workshops. So, I suspect you and probably others look through the lens of whatever is most important to you in that moment. I mean, this is a challenge I’ve had for 15 years. Somebody will say to me or I’d hear from others, “Oh yeah, we’re totally doing Win Without Pitching.” And then my response would be, “Oh well what are you doing?” “Well, we’re doing this one thing. We’re doing this email outreach technique or we’re doing this three option high anchor pricing or we’re getting out of the proposal writing business or we’re using content marketing.” They would articulate Win Without Pitching as this one thing that they’ve picked up.
Mark O’Brien: right?
Blair Enns: And so to them that seems to be the focus. And I think because pricing is the subject of my most recent book, which came out two years ago this week, Pricing Creativity. So I have pricing top of mind and I think for those who’ve had exposure to Win Without Pitching in years past, if they show up to workshop, the pricing stuff is the newest stuff to them.
Mark O’Brien: Yeah. My perspective there definitely showed my bias and my own point of focus. What I led with was that some of these things just take reps, take practice, and I think that’s true of the probative conversation and the qualifying conversation, but the value conversation and then subsequently the closing conversation, but from my perspective, each conversation builds into the next thing. So, if you do the probative conversation right, well then you’re well set up to have the qualifying conversation. If you do that right, then you’re well set up to have the value conversation. If you do all three right, then the closing conversation is pretty straight forward, if you do a parts one, two, and three correctly. Do you agree with that first of all?
Blair Enns: Oh yeah. That’s exactly it and good for you. Full marks for remembering all of the conversations and understanding them thoroughly. When you explain those four conversations to people, everybody thinks, “Oh yeah, it’s like the chips go all in on the closing conversation. Everything hinges on the closing conversation.” Yeah. Everything hinges on the closing conversations when you’ve handled the previous conversations poorly. When you’ve set them up right from the beginning, when you’ve handled those earlier conversations, well the closing conversation is the easiest one. You’re just simply facilitating a choice, but that’s exactly … yeah.
Blair Enns: Simply facilitating a choice. So, but that’s exactly it.
Mark O’Brien: That reminds me the first thing I ever learned from you actually, which is to talk about money early and often. Those who make money talk about money. One of the first things you were fighting against and one of the first trends in the industry, and this is going back again, 15 years now in terms of my exposure to it, was people putting on this massive pitches and then revealing the price at the very end and only then finding out that there’s no budget for this, that kind of thing.
Mark O’Brien: This is the similar concept where the less there is to reveal, the more you’re just building a really sound, practical, entirely non-emotional non-sales case, the more straight forward the whole thing goes and the better it feels for everybody involved, including the person who’s considering being hired. I do like that. There’s something to so ethical and human and it just feels good when you practice these things properly.
Mark O’Brien: And I think that’s one of the main services that you’ve really created for this great field that you and I both serve, is that you’ve taken a lot of the stigma and fear because of those things, sliminess out of sales, and you keep on qualifying sales. You Keep saying sales and you feel, it’s obvious even now he’s still feel a little sheepish about the word because of the negative connotations associated with it, but you’ve really stripped out the bad stuff from that more than anyone else that I’m aware of out in the field.
Mark O’Brien: These four conversations so beautifully represent your base perspective on things that’s always been there, which is this should get easier as it goes on, both in terms of the immediate transaction you’re working with a specific prospect on, and also all the interactions you’ve got with your prospective clients.
Blair Enns: Some people go through one without pitching training or get exposed to the principles in other ways and go, “Oh, yeah, it’s really simple. It’s just common sense.” I don’t know that it’s simple, but it really is just common sense. My director of coaching, Shannon Lee, wrote an article a year or two ago now. I forget what it’s called. She talked about her experiences being … She’s an intelligent person. She has these wonderful conversations with people. If anybody has ever been coached by Shannon, you know what it’s like to be loved and supported by somebody. So she’s just great at getting to the heart of things and understanding people. You would never suspect her of having any trouble at any point in her career just having a conversation with people.
Blair Enns: But as she writes, as soon as she was put into a sales role back in her agency career, the conversations that she was having, they started to change. She articulates better than I will here, but you feel like this veneer has dropped over you and all of a sudden, there’s this extra pressure on your conversations. You’re being less direct with people. It feels like you have this hidden motive and you’re stumbling over … You’re trying to be this polished sales professional. So it’s really funny how we all as human beings, we’re capable of having these great conversations with our coworkers and some of our better clients and our family, but as soon as context is sales, we think it’s the job of sales to talk people into things. Therefore, we adopt this really funny behavior and things get really difficult.
Blair Enns: So in a sentence, I think the win without pitching approach is really just about say to the person that you’re selling to, just treat them the way you would treat anybody else in your life, including your kids. What I mean by that is if they’re exhibiting bad behavior, you should very politely point out that they’re exhibiting bad behavior, but we don’t do that in sales. We plaster this fake smile on our face. We nod yes when we’re thinking no, and we create these conditions where there’s very little free flow of information where both parties are telling each other what they think. So we’re really just trying to break that down.
Mark O’Brien: Right? And that’s revolutionary.
Blair Enns: Which is silly, isn’t it?
Mark O’Brien: Oh yeah.
Blair Enns: I agree with you, it’s revolutionary. It’s silly that it’s seen as revolutionary.
Mark O’Brien: It is silly and some day because of your work, all of us, if we all truly succeed, we’ll be out of business right?
Blair Enns: Yeah.
Mark O’Brien: Because everyone will have just figured this stuff out and have really absorbed it into their own being. But when you are selling to somebody in this way, the way you’re talking about how to do it, the positive scenario, they’re entirely disarmed and all of a sudden you are this knight in shining armor. You’re a completely different human that everyone else is dealing with. It just feels right. Newfangled, we’re in the marketing side of the equation and the thing I talk about with our prospects and clients all the time is it’s just the pursuit of truth. That’s all it is, is what is the truth? What’s the truth of the organization? Who are you? Who should you be serving? Why?
Mark O’Brien: That’s it. All of marketing is documentation of the truth. When that’s the case, then when it does come time to sell, it’s the same thing, just this talking about what the real situation is, starting with, “Can I even help you?” And maybe I can’t and that’s okay. When the person selling really has that perspective, like, “Let me just figure out if there’s actually a need,” which is what this probative conversation is all about, and really believes it. Not like, “Holy shit, I’ve got to sell this right now or else.” Maybe you do but you can’t act like it, and that’s another one in a million things I’ve learned from you.
Mark O’Brien: If you really are just looking at, “Okay. I am speaking with this human right now. I need to connect with this person based on what their reality actually is and what our reality actually is.” And if you come in from that angle, first, I think you’re more likely to find a possible truth, a possible way to work together and second, you’re going to be instantly more trustworthy.
Blair Enns: I agree with that and I love that point of view that it’s really about the pursuit of truth. I think it’s a noble and helpful and accurate way to think about marketing and sales as well. Like I always say, you have no business trying to talk somebody into anything. It’s not your job to convince people of things. You can’t. It’s impossible.
Mark O’Brien: Right. Tim Williams, a guy that we both know and respect, he has an organization system he uses where he breaks things into things which are based in logic and things which are based in magic. The arbiter of what’s logic and magic is the client because things that they understand and can put together one plus one are logical, things that completely mystify them are magic. There’s always more profit in magic, and this might actually come from Ron Baker. I’m not sure, you’ll know. Is that a Tim Williams thing or Ron Baker thing?
Blair Enns: Tim uses it. It’s origins are actually client side. I read this a couple of years ago when I was writing Pricing Creativity. I forget where the origins are. I’ve actually written a bunch about it, but I’ve never published it, but Tim’s taken that model and made it his own in a really wonderful way. My mistake is I would, without using those words of magic and logic, I would just say, “Well this is magic and this is logic,” but Tim’s absolutely right. Just like value is in the eye of the beholder, the things that are magical to that client are going to change from client to client.
Mark O’Brien: And this is a lead up to my explanation of what … I think this helps describe my bias as to what I thought your workshop was about. But bear with me a little bit because this also relates to your point that as soon as people hear about this stuff, they say, “Oh yeah, that’s common sense.” Okay, sure. It’s common sense. There’s nothing new under the sun, but it’s all about embodying it and really just making it a part of your instinctual behavior. Like martial art, it’s about practicing standing over and over and over and over again. So in a real situation, you just naturally react. You don’t think about it, you just do it. Your body just knows. There’s muscle memory there, and there’s has to be a mental memory in place with these things.
Mark O’Brien: But when I think about your workshops and the two day thing, and again, day one is probative conversation, qualifying conversation, day two is value conversation, closing conversation, I separate those things into logic and magic. Because when we talk about probative and qualifying, I think when you get the response like, “Oh, that makes a lot of common sense,” I think that falls more into that side. It’s critically important. It’s got to be done right. There’s a method to it and that’s the method you teach. Many people think they get it, but they actually are doing maybe 5% of it, to your point earlier.
Mark O’Brien: But once we get into value and closing conversations, that really is magic. And I would imagine, please correct me if I’m wrong, but I would imagine very few people in the room or in private conversations with you would ever, once they really get this say, “Oh yeah, that makes common sense. That’s just what I would normally do.” I think there’s a lot to be learned and a lot to be unlearned about what value pricing is first of all, and how to close around that properly. Would you agree with that or disagree?
Blair Enns: I would agree with that, and I think of all of the things that I do in my business and in a training room, if I just could only do one thing, if I couldn’t cover all of the things I cover across the four conversations, I would just teach people how to do the value conversation, which is I think is the most valuable skill in all of business, the ability to have this value conversation. It’s really simple, but it’s hard to do because you have to unlearn a whole bunch of stuff.
Blair Enns: So I think when the light goes on after the first value conversation exercise, that’s the moment that, to me, that’s the most fun. In some ways, the way you see your business will flip almost 180 degrees and it’s like we can talk about it, you won’t understand it till you do it.
Mark O’Brien: Right. You won’t understand till you do it. And again, from my perspective, the workshop, the collisions you create by doing these people when they’re just … Neither of them really understand how to do this. They’re both fumbling through it, but yeah. After you go through it one time, two times, three times, it’s like, “Okay, yeah, yeah, yeah. Now I get it.” By getting it, what I’m talking about here, but getting it is like, “Oh, I understand how I do this. I understand how I can say these words and actually make it sound like me because it is me, because I understand at that level.” That’s the thing that you can only get through the reps and I don’t know how else people are going to do this without being in that context. That’s very carefully managed.
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Mark O’Brien: Before people even get into that room, I think there’s an issue and if we can do one thing today, I would really love to dispel this. There is so much misinformation, unintentional misinformation, and deep misunderstanding about what value pricing even is. It’s become such a buzz word that has become quite polarizing and there are a lot of people, particularly among digital shops, who just write it off. Write off the entire concept of what they think value pricing is, and it’s their belief that, “Okay. We run on billable hours and that’s how we run and that’s it, and that’s the only way to run for reasons X, X, X, X, X, X, X, and the entire practice of value pricing does not apply to us.” What can you say about that?
Blair Enns: Let’s describe it first or explain value-based pricing. So value-based pricing is the idea that you price your services based not on the cost of the inputs, not on the “market value” of the outputs or the deliverables, but based on the value to the client of that service. So implied in value-based pricing is the idea … There’s a term known as price discrimination, which is simply willingness to pay. The idea that different people, different clients are going to pay different amounts for essentially the same services.
Blair Enns: Now it’s actually quite rare that you would have two clients for whom you do exactly the same thing, but in theory, if you did have two different clients of two different sizes who valued your service, say it’s designing a website, differently, then if you’re pricing based on value, you would change the price of that website design based on the client even though it took you the same amount of time and is effectively the same website. So that’s what we mean by value-based pricing, charging based on the value to the client and not based on the inputs or the outputs.
Blair Enns: When it comes to digital firms specifically, there are a couple of challenges that owners of digital firms tend to have when it comes to value-based pricing. First of all, if firms are agile shops where they’re using some variation of the agile and non waterfall project management, they’ll tell you, “Well we can’t determine the value of …” The problem they have is at the beginning of the engagement because of the way they work, they cannot put their arms around cost at all. “We have no idea what the solution is going to be. We have no idea what the costs are going to be. Therefore, it would be foolish of us to be able to put a price on this because we really don’t know what this is at the beginning of the engagement therefore we don’t know what the costs are.”
Blair Enns: I have some sympathies to that, even if your project management approach is more waterfall based than even that is a bit of a reality. So there is some validity to that but it doesn’t mean the baby needs to go with the bath water. I think the biggest reason digital shops are averse to value-based pricing is that digital shops tend to be run by engineering minded people. We talked about this earlier, there’s this convergence of all of these different professions and you see it in the design world, design, consulting and engineering, specifically software engineering typically, they’re all converging.
Blair Enns: So in these digital shops, when you get people with engineering mindsets, they’re risk mitigators. They tend to be process oriented, so they’re linear. They have low autonomy scores. I’m referencing an obscure assessment that we use, but what that means is they want visibility into the future. Whereas the typical creative director, principal of a creative firm, they don’t need visibility into the future. As David Baker likes to say, “They’re comfortable diving off the diving board and inventing water on the way down.” So they’re way out at the end of the spectrum of being quite comfortable with risk and uncertainty. Engineers are at the other end of the spectrum. They want visibility into what’s happening next.
Blair Enns: If you take that person and you put them in a sales role, the first thing they ask is, “Where’s the script? What are the exact words I need to say?” Because they want visibility into how this conversation’s going to go. Because they’re that way inclined and they’re risk mitigators, they gravitate towards pricing strategies that are less risky. Value-based pricing is the riskiest, especially when you start to put compensation at risk, but it’s a risky pricing strategy.
Blair Enns: Now, Peter Drucker said, my favorite Druckerism, “In business, all profit is derived from risk.” So if you want to earn extra ordinary income, extra ordinary compensation, you have to take some risk. Now, let’s go back to the agile approach to doing business. In the agile approach, if you think from an efficiencies point of view, you’re 100% utilized, and if you can sell the client on this approach, then essentially all of your people costs get passed onto the client. So your utilization rate is at 100% or at-
Blair Enns: All right. So, your utilization rate is at 100% or at close to a 100%. And if you’re 100% utilized, you’re kind of maximizing the efficiency based approach to running a firm. The idea that you should give this up and pursue value-based pricing, it doesn’t mean that you should, and we’ll come back to this. I don’t think there’s any agency out there that would endeavor to value-based price all of their engagements. I think about 20% of your engagements is a good number to strive for for the average firm.
Mark O’Brien: Okay.
Blair Enns: But if you’re a highly utilized firm, and you’re running a really good business, and you’re taking decent profit, and you’re comfortable with that, then you’re comfortable with that. And I can see why people wouldn’t want to change.
Mark O’Brien: Mm-hmm (affirmative).
Blair Enns: Now, if you want to grow past that, you’ve run out of efficiencies, right? So, how are you going to grow?
Blair Enns: You’re going to grow by changing your base rate, your hourly rate or your daily rate, or you’re going to have to let go of that approach altogether, and you’re going to have to let go of efficiencies, and embrace a more innovative pricing structure that would see you being more creative and taking more risk in the compensation plan.
Blair Enns: Here’s a great thing that I’ve got from Ron Baker and Tim Williams. This idea that you should view your client portfolio the same way you would your investment portfolio. And you as the business owner, you have like a risk profile, and if your financial advisor is selling you investments in some jurisdictions like Canada, where I am, they have a legal obligation to do a financial risk assessment with you and figure out what your risk profile is. And then in theory, they’re supposed to sell you investments that balance out to your risk profile so that you’re able to sleep at night.
Blair Enns: So, if you have a moderate risk profile and I’m your financial advisor, I can sell you high risk investments, but it has to be a really small percentage of your portfolio. The bulk of your portfolio, I’m going to put in low risk, a few medium risk, and maybe like a one small high risk investment so that you can sleep at night. Now, you think of your client base the same way. You’ve got 10 to 15 clients, or at least you should. Most firms have more, but let’s just say you’ve got 15 clients. And those 15 clients, the way you’re paid, in my world, what I believe is pricing is a creative act and every engagement should be priced differently. It should be constructed as a bespoke engagement and it should be priced creatively and uniquely to that client. You can decide how much risk you want to take in your pricing, so if you’re an engineering kind of focused mind and you want visibility into the future and you want to be low risk, then go ahead and lean on efficiencies and sell time.
Blair Enns: But if you want to grow past that, when I say you should really think about value-based pricing, I don’t mean chuck everything out the window. I mean start looking for those few opportunities where you see a chance to create extraordinary value for the client. And when you’re putting your proposal forward, put forward in at least one of your options, put forward an option for you to take more risk and earn more money based on the outcomes that your work helps to create.
Mark O’Brien: That’s one of those things for me, like I can’t hear that enough, right? So again, I’ve been in a number of your workshops and it’s the kind of thing where each time you get into it and listen to it, it kind of meets you where you are, at your level of mastery, and you learn new subtle little tricks. I’ve been in rooms a number of times over the past year, especially with owners of primarily digital firms, thanks to my friend Carl over at the Bureau of Digital. He puts on all kinds of amazing events. And the topic of value pricing everything, it comes up every time at some point during these long events that are just with some owners in a private room. And what I’ve tried to do is sort of debunk some of the misconceptions about it and also tried to make this a little more palatable to people.
Mark O’Brien: Here’s how I do it and I’d love to hear your thoughts on the approach I take here. The first thing I talk about in these rooms in a very informal way is just basically your concept. The whole idea of winning without pitching is based in part, although you started way before this book came out, in the study of the Challenger Sale. The firm who really changes the game for the hiring agent or the prospect, they’re going to have a different sort of inside track just because through their process from the very beginning, they got the client to think differently. And through that process, the client thinks differently of them. The prospect thinks differently of them. We don’t need to get into the details of the Challenger Sale, but that’s the idea that the Challenger basically kind of reinvents the problem that needs to be solved. And what I encourage people to do at the very outset is you can have the value conversation without promising or even offering to value price.
Mark O’Brien: You can just have the conversation if you understand how to have the value conversation, which is why everything at the workshop is so important. But just having it like, “Okay, you need this website redesigned” or whatever. Like, “Well, why? What’s this really about? What is this going to change for you? What’s the reality? What’s your business reality?”
Mark O’Brien: And all you’re doing is showing a mass amount of empathy because you care. The value pricing’s not about squeezing every dollar out of the end prospect. Value pricing is, you talk about all the time, is about creating the most value for them. And that’s a complete flip that most people out there do not get at all. They assume that value pricing is just another way of just being kind of sheisty and stealing almost. I shouldn’t say most, but it’s a very common misconception. But the value is about creating the most value for the client.
Mark O’Brien: And if you start off your conversations with them really being in your heart in that spot, like, “What’s this going to do for you? Why? Well, how’s it going to affect your business? Tell me about that part of your business.” Like you’re really getting into their issues, their problems, and right off the bat you’re separating yourself completely from the pack, and Win Without Pitching is all about that, about differentiating yourself through behaving in an elevated way. That to me, that is an act of value pricing even if you never get to that, right? And one thing you talk about all the time is about guarantees. And the first thing to say about guarantee is, “I’m not saying we can, but if we could guarantee X, would this be worth X?” And the whole thing about putting ideas out there without committing to them or promising them, just like experimenting.
Mark O’Brien: But the first thing is just like having that initial value conversation, I think is really disarming, and welcoming, and helps you really diagnose a problem. Because oftentimes, the client’s looking to solve a problem they don’t need to solve. They actually have this other problem that really needs to be solved and this conversation right out off the bat clarifies that.
Mark O’Brien: The next thing is one thing you just alluded to, which is offering options and offering tiers. And a lot of firms out there do not offer tiers. They say, “Yeah, the price is this. You told me the problem is this. Okay, the price to fix that problem is this.” And when you just have that initial value conversation and then offer the pricing tiers, which you do an amazing job of explaining during workshops. If You just do that and then do Agile, Waterfall method, whatever it might be, still sell hours, all that kind of stuff, even those two things, I think would have a really significant impact on most firms quarter over quarter, year over year. And I think once they start doing those things, I think it’s like a gateway drug. Those will lead to them doing what you’re talking about, which is expanding the portfolio and taking on some real compensation-based, risk-based solutions, outcome-based financial compensation arrangements.
Blair Enns: I agree with you, and to summarize what you just said, there are so many wins to be gained in how you sell and price your services from almost everybody listening to this. Like where are you are now, some of you are killing it, you’re acing everything, and you’re in the minority. For the average agency principal listening to this, there’s so many gains to be made. There’s so many little things that you could do differently that would yield big gains, even if at the end of the day you end up pricing very few of your engagements on the value that you helped to create. If you throw out the notion, the idea that value-based pricing is not valid in your domain, you’re throwing out all of these other things as well and it’s not one or the other.
Blair Enns: Again, I think I’m often asked, “What’s the biggest mistake people make in pricing?” And my answer has changed over the years, but for the last year or so, the answer has been the biggest mistake is to think that there’s only one way to price. They want all their clients to be on retainers. That’s a mistake. If you think this is the way we need to price, whatever this is, then you’re making a mistake. Pricing is a creative act. Yours is a customized services firm. Every engagement is a creative act. Every proposal should be a creative act. Every price should be a creative act.
Mark O’Brien: I love that. That’s great. I think there’s just so much value, so to speak, available to firms who just start embracing some of these concepts and it’s not as if you have to do all of it or none of it. Right?
Blair Enns: Yeah.
Mark O’Brien: It’s not that way at all. This has been really helpful for me and I hope and expect for the audience as well. In the few minutes we have left, what are your thoughts on the future of Win Without Pitching? You had told me once, and I quote you on this all the time, then this is the quote, which is the great thing about predicting the future is it doesn’t matter if you’re wrong or right, you just do it and no one’s going to hold you accountable to it.
Blair Enns: You keep making me my own dog food, Mark. What is the future for Win Without Pitching? So, this is the beginning of 2020. I’ve been traveling a lot for the last two years, primarily in support of my most recent book, Pricing Creativity, and my travel is going to continue. I’m doing onsite training of public workshops, speaking engagements. It’s going to continue until the end of April. And then from the end of April, mostly to the end of the year with some exceptions, I’m staying home to write. So, I’m not going to say what I’m writing because I’ve learned the lesson of my last book came out two-and-a-half years after I said it would. But I’m staying home to write.
Blair Enns: And increasingly early when I was a consultant, over half of what I did was write. And then at some point, the volume of writing went down, and even when we transitioned to a training company, transitioning your business model takes a lot of times. So, I wasn’t able to write as much as I wanted to. Now, I’m at the point where I’ve delegated all kinds of areas of responsibility, and my primary job, once again, is to write. So, I’m writing. The goal is to write at a fever pitch in 2020. And I’m not going to make any promises as to what the outputs of that writing will be at this point.
Mark O’Brien: As long as it’s not a business novel, I don’t care.
Blair Enns: There’s a story that nobody’s going to get to hear. You hate the genre. I started one years ago. I may finish it one day just to piss you off.
Mark O’Brien: You might. I wouldn’t put that past to you. Okay, great. And one last thing. These workshops that we spent so much time talking about, what are the dates of the ones you’ve got? You said you’ve got a number of coming up between really the first half of the year between now and April.
Blair Enns: Yeah. So, four of the two-day Win Without Pitching workshops, so that’s where we cover the four conversations at a high to medium level. February 11th and 12th in Miami. June 24th and 25th in Portland. September in Chicago and November in Austin. We’re also doing one in Amsterdam in October. And then in April, the week of April 20th in Chicago, we’re doing mastery week, so it’s five days, five long intense days of deep Win Without Pitching material.
Mark O’Brien: Lauren and I will be there in Miami, which I’m looking forward to. That’ll be a lot of fun.
Blair Enns: Yeah. I’m looking forward to seeing you guys. That’ll be great. It’s always great to have you in the room. You’ve been exposed to this stuff for years.
Mark O’Brien: Mm-hmm (affirmative).
Blair Enns: I love watching the light go on on a concept that I swear I’ve talked to you about 10 times over the last 10 years. That’s not a comment on what a slow learner Mark O’Brien has. I see that with everybody who comes back. They think, “Oh, yeah, I know all this stuff, but maybe it’ll be nice to go get a little refresher.”
Mark O’Brien: Yeah.
Blair Enns: And then they’re whacked between the eyes with some of it’s new, our material’s always evolving, and some of it’s just stuff that they weren’t ready to hear last time or they were just … I’ve been guilty over the years of forcing people to drink through the fire hose, and I think we’re getting better at that, so.
Mark O’Brien: No, absolutely. Absolutely. And that was the first thing that struck me in Scottsdale around a year ago. So, it was just the organization of it and breaking things down into these four conversations, just for me, and I think for so many others, just makes everything you’ve ever spoken about, your entire ideology just fall into these very neat, understandable containers. And I’ve been really impressed with that over the years. I’ve seen you speak many times. We’ve done some events together, it’s been a lot of exposure. But these four conversations, just the system that you’ve created of it is just beautiful now, and it makes it far more absorbable than it used to be. It used to be a lot of good ideas, but they were sort of in different places. And now every single idea you have, everything you talk about falls into one of these very neat categories and it’s just incredibly helpful. It’s got to feel really good from your perspective too.
Blair Enns: Yeah, thank you for that. I feel like one day I’ll actually be good at this.
Mark O’Brien: That’s the pursuit, right?
Blair Enns: Yeah.
Mark O’Brien: And then we never actually get there.
Blair Enns: Yeah.
Mark O’Brien: Well, great, Blair. This was a lot of fun, as always. Thanks so much. Looking forward to seeing you in about a month or so. This podcast will be airing before January is out.
Blair Enns: Great.
Mark O’Brien: So, everyone will have plenty of time to check out those dates, et cetera.
Blair Enns: Thanks, Mark. We’ll see you in Miami.
Mark O’Brien: That sounds great. Thanks again, Blair.
Speaker 1: Thank you for listening to Expert Marketing Matters, a podcast by Newfangled. We are a digital marketing consultancy helping expert firms use their knowledge to build and deepen relationships with prospects and clients. To learn more, connect with us at Newfangled.com.