Put Your Money Where Your Mouth Is

Do your customers feel like you have “skin in the game?” Many times the answer to that question is not an affirmative one. Professionals who bill by the hour or some other common fee arrangement are perceived by their clients as making money whether the clients do or not. Ad agencies, law, CPA, architecture, engineering, consulting and advisory firms all face this uphill battle to demonstrate their understanding of the client’s economic model while simultaneously delivering a service of their own at an acceptable profit margin.

Take the advertising world as an example. The old model was charging clients a percentage of the paid advertising spend. When clients pushed back against the pricing model as a disincentive to do necessary promotion, some agency execs switched to an hourly billing model. There was a disconnect under this model in terms of quality and outcomes. Jaynie L. Smith describes the migration to a new model by Andy Berlin, co-CEO of WPP agency Red Cell this way:

     He stunned advertisers and agencies alike at (a) management conference of the American Association of Advertising Agencies by suggesting a radical change in the way advertising is priced. It boils down to pay for performance: The better the ads do for the buyer, the more the agency gets paid.

     When you stake your claim on your own ability to come through for the client, you and your firm take a calculated risk. Doing so will transform your service delivery model. No longer will “good enough” be acceptable when the client’s success is the focus. By making the client successful, your firm becomes successful as well. Getting your people to make the cultural shift to this paradigm will require strong leadership, courage, and perseverance.

You carve out an enduring competitive advantage when you are bold enough to depart from the strategy of the category killers and pursue client focus and concern. Differentiation on your own terms rather than price or something that undermines rather than builds up your company’s financial position is good business!

To have “skin in the game” means to have greater commitment than anyone else. Show your commitment to your clients by going above and beyond the call. By letting them know that you won’t get paid unless they receive what they seek, you have told the clients that you have their backs–that you are watching out for what’s best for them. That is unique and sustainable and gives you the ability to win people over with whom you would like to do business.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s