His story reminded me of my own experiences with meetings. Here is one that is germane to Mr. Downs’ story.

I used Stand Up Meetings for staff.

In my first use in a Inside Sales/ Engineering Support department with sixty people on staff, I met every day at 8am sharp. Six managers plus the office manager attended. The rules were:

• everyone stands up, no leaning on walls
• rotating chair of the meeting amongst the managers
• if you can’t attend, your backup from your group will attend
• no status reporting
• only critical situations requiring help are discussed
• you are expected to seek out help in advance of the meeting
• request for help must specify who is responsible, what needs to get done, when it it needs to be completed, and the required results

These meetings generally lasted ten minutes or less. Standing up reinforced the brevity and focused attention on getting to the important. The rule requiring seeking help in advance encouraged people to network around the organization, including other departments. The rotating chair gave everyone more experience leading meetings and meant that when I was called away by my bosses (this happened at least once a week), the meeting went ahead.

After a couple of days of shake down, everyone came to really like this format, everyone excepting those who had been struggling to be at work at 8 am sharp. The meeting gave each manager an opportunity to get help they needed and improved their sense that they were in control of a frequently hectic environment.

A side benefit of this meeting that I discovered was that it tended to jump start the day. If you needed to settle in and get your bearings at the beginning of the day (and who doesn’t), you had to arrive a bit earlier. The meeting and the active discussion of business began at 8 am sharp every day.

I found that I had to demonstrate my own focus around the purpose of the meeting. Early on I found myself interjecting little requests of various managers about issues that I needed to take up with them. For example, “Patricia, see me at the end of the meeting to talk about the balancing of the telephone loads in your group.” This kind of off point talk from me lead to others doing the same thing. This lead to longer meetings and got the focus off  the critical issues of the day.

Do you think that a client who patiently waits for you to get work done for them without complaining is a happy client? In a world with lots of squeaky wheels and more demands than can be met, we treat the silent client with some contempt. In practice we may let their work slip further and further behind. Our thought processes seem to say, “Well, if they think this is important or urgent, they will let me know.” But this is willfully ignoring the facts about silent clients.

Many people do not like confrontation or conflict. They avoid complaining, or even appearing to be demanding. But, they are not necessarily happy with your service and they do not forget. Few people are masochists. The next time they need your services they will very likely be off to another provider who they hope will be more responsive and honest with them.

Now You Have Lost a Client and Finding the Replacement is Ten Times the Cost of Keeping One You Have

There is a much repeated saying in the sales world: “It costs tens times as much to find a new customer as to retain one you have.” Without any extensive studies, you can identify in your own experience how hard you have to work to find new clients. By contrast, the effort to do good work on time is far less.

What is the Life Time Value of a Customer to You?

When you factor in the lifetime value of a client (total revenues typical for your type of business), the argument for treating your existing customers with great attention to this value is absolutely compelling. Then, add to that the fact that you happy customers are your best source of reference and referrals. This life time value swells.

So, when you face a choice between getting work done on time and with superlative quality for the customer you have and  some other use of your time, remember that silent clients frequently become lost clients. Lost clients are extremely expensive in lost future revenues that you should get. Lost clients are extremely expensive to replace. Lost clients will not only not give you referrals, they may even contribute to a negative image for you and your firm.

In a recent discussion with the leadership team of a small engineering firm I listened as they reported on their progress working with a medium size firm on the second project they had worked on with a third coming down the tube. It struck me that they had progressed to a new phase in their marketing and sales work. They had finally reached the point where they are experiencing repeat business from larger firms. They occupy a fairly narrow niche in the engineering world, but they had found several customers for whom their services are now being called on with regularity.

I asked more questions about how they were thinking about these customers. They spoke of getting closer to the engineers at the customer company. They did have some knowledge of the boss of an engineering group, but could not recall who the purchasing or product management people were. So we talked further about the value of getting to know this customer much more intimately. Who are the decision makers? What are the company’s strategic objectives? What is the technology strategy? and so on. Suddenly one of the leadership team popped in from the corner of my Skype screen and said, “This is like a paleolithic village hunting a mastodon. Keep sticking it until it falls over and then you eat for a month!”

With this image still in mind, we set as an objective for the next two weeks that they would work on penetrating their current customer mastodon and scrub through their list of old customers looking for companies that were either large enough or otherwise in a food chain that could make them a mastodon.

(image borrowed without permission from mastodon and neolithic hunters borrowed from http://gatesofvienna.blogspot.com/2006/07/men-of-north.html)

Unhappy prospects or customers are an opportunity to display your real value and win a fan for life.

Here is the story from the owner of a start up yoga studio in New York City.

A neighborhood person began to say negative things about the studio on Twitter. Challenges about the pricing being too high and a lack of community involvement in the new studio. A PR person working with the studio’s owner responded and engaged the disgruntled neighborhood person. This lead to the owner becoming engaged and an exchange of emails that clarified the concerns and the facts of what the studio was really doing. The neighborhood person also received feedback from others about the competitive pricing for yoga in NYC. All of this lead to an invitation from the owner for the neighborhood person to come by for tea and attend a Saturday evening potluck party at the studio.

The neighborhood person responded with a 745 word blog entry that recited all of her concerns and the email responses by the owner. This blog postings closes with this:^[[1]]

you should note that B…… & Y…..’s instructors are all members of our Inwood and Washington Heights communities – which warms my heart to no end.  so, go to B…. & Y….. this weekend, take a free class, congratulate M….. and wish her much success. don’t forget to take advantage of their special packages before they end.

no matter what, the most important thing for me is community, and we need support our friends and neighbors in all of their endeavors.

maybe we will see you there… the potluck on Saturday night sounds like lots of fun!

The owner of the yoga studio told me that this neighbor came to the potluck and has signed up for classes.

There are many lessons to be noted.

Pay attention to what is being said about you on the Web

First, in the world of instant social media, you must pay attention to what is being said about you on the Web. When negative comments are made, you need to engage them immediately with positive fact-based responses. Find out more about the person and engage them. Every company no matter how small or large needs to have a process in place to regularly follow the chatter on the web. Follow Twitter, Facebook, local Yahoo Groups, and other places on the web where your customers and prospects hang out. Set up a Google Alert to automatically track comments about you and your business.

Greet every unhappy prospect or client as an opportunity to excel

Second, greet every unhappy prospect or client as an opportunity to excel. Be responsive, do not be defensive, ask and listen for the reasons for the unhappiness. Take action to fix or correct these problems or misperceptions. More often than not you will win that person over and make them a fan for life.

Silent, perhaps unhappy, customers who leave and never return

Third, what process do you have to find the silent, perhaps unhappy, customers who leave and never return? Do you follow up with clients who use your services once or twice and then never see again? Remember, you have already put the effort into attracting these customers. You have a relationship with them. They know what you do, where you are, how much it cost, but, for some reason they have chosen not to return. Most people will not complain or explain why, unless you ask.  Put a process in place to ask those silent customers who don’t come back. You will be surprised by the results and learn a lot about how your business is perceived.

1. names occluded by me

I might add a preface to to these “Five P’s” that is a fundamental precursor to success in web social media (as well as all other marketing).

Focus on your customers, clients, and prospects first – what is your value to them?

Focus on your customers, clients, and prospects first. What is it that they are interested in? What is the value they desire from you? What language do they use to talk and think about the problems you might solve for them? Use the proven tools of FABing to keep your focus on what your customers are actually interested in. Don’t fill up your web space with content that they are not interested in and which is not presented in their language.

FAB refers to Features and Benefits (some say Features, Advantages, and Benefits). This is a simple, powerful axiom of marketing (and sales) that proves elusive even to seasoned practitioners. Simply put: Customers buy Benefits not Features. Features are the physical, functional attributes of a product or service. Benefits are the values, as perceived by the customer, of using a product or service.

For instance, I use a PaperMate PhD pen without fail.  It has all of the usual features of a ballpoint pen: writes well on most media, retractable point, clip to hold on to my shirt pocket, cushioned grip, various colors (mine is black). It has mid range price of around $8. But none of these features interest me. I have been using this series for years because it is large diameter, impressive in size (especially compared to the cheap stick pens common to almost every office and store), has a PhD (something I never earned despite years at Cornell grad school) and you can see it in the hand of Jim Lehrer on the PBS News Hour every night.

An example of speaking in your customer’s language is the use of “low fare” vs. “cheap” in key word searches by customers of Southwest Airlines (this example comes from a presentation by Greg Jarboe at a Boston Social Media Club event in February 2008). A head-to-head test of online marketing for air flights between Philadelphia and Atlanta showed that customers searched for “cheap” airfares not “low fares”. The lesson for Southwest was that, despite a corporate policy of never referring to themselves as a source of “cheap” transportation, if they want to reach their customers they have to use “cheap” in their web media because that is actually how their customers think.

So, before you undertake any marketing, perhaps espeically in the social web sphere where attention spans are very brief and sensitivity to authenticity is high, understand your clients, talk with them in their own language and then take on the Five P’s of Social media.

1. Thanks to Brendan McLaughlin at Westglow Technology Consulting for pointing this article out to me.

This podcast is 12 minutes 41 seconds long.

A text version is available here

Here is a conceptual model for improving how customers value services.

There are three basic phases in a service event or client engagement:

1. Pre-service awareness – establishing expectations
   
2. Service engagement – making the process visible
   
3. Post-service follow up – the ongoing engagement

Lets walk through each of these phases and explore opportunities to increase customer perception of our value to them.

Establish Expectations

Typically we think of marketing as a tool to attract customers to our services. Filling the sales funnel with leads is what marketing is all about. If you think this way about marketing, you are missing an opportunity to radically improve your success rate.

Inevitably, the initial contact with potential clients establishes in their minds expectations about who you are, what you do, and how they might interact with you. There is no escaping this fact. First impressions do count. You had better manage them.

A first step in managing customer expectations is for you to understand your value to customers and plan to develop the set of expectations you want to set based on that value. If you do not have a clear and convincing value statement your prospects will fill in the blank with whatever assumptions are already in their heads. Why should a client engage you instead of someone else? Once you have this figured out,  your marketing needs to establish these  expectations when you make the initial contact with a potential client.  If you introduce your company simply as “wealth management firm”, “web design”,  ”financial planning”, “estate and wills”, or, the one closest to my heart, “management consultant”, you are immediately allowing the prospect to imagine what you do and who you are. As soon as you utter that first phrase they put you in a mental box. This is true whether the message comes verbally or visually.

Lets look at an example, to shake up our thinking a bit. What do you think of when you hear the words, “I am a general contractor”? For some of us, this will be an image of a guy with a tool belt, hammer dangling off, with whom you have had unpleasant  conversations about why a remodeling project is late and over budget. Think of what iamge comes into your mind when you hear the words, “general contractor”?

Here is what a general contractor really does (thanks to Rob Ferree at the Ferree Group in Boston, MA^[[1]]  for this):

• Accountable for project results
  • Schedule
  • Budget
  • Quality
  • Overall client satisfaction
• The more complex the project, the more value a GC should deliver
• Healthy and productive relationship with client (and other constituents)
  • Communicate, communicate, communicate
  • Manage expectations
  • Wear the client’s hat / work in the client’s interest
  • Be discerning with client’s budget
  • Problem solve the inevitable glitches
• Organize the project and manage the work flow
  • • Team building (and bench building)
  • • Planning and scheduling
    • Phases
    • Trades
    • Materials
    • Inspectors
    • Client meetings
    • Invoices and disbursements
  • Constantly strive to deliver time efficiencies - Deliver upon commitments
  • Plan for zero punch list
• Trade experience and understanding of dependencies
• Financial and accounting skills
• Attention to detail
• Completion orientation
• Strive for the “Wow Factor”

How would you set client expectations for a general contractor?

The benefits I expect from  a general contractor include:  WOW (Wow, this remodeled kitchen looks super!), on time, no surprises, within budget, and the comfort that someone is looking out for my interests. I think a great way for a general contractor to introduce themselves is: “I create WOW for homeowners.”

So, to repeat the rhetorical question: “How can you set client expectations from the very first meeting?” I am not going to explore how you set client expectations from the very first meeting here. Determining your value in customers’ eyes and coming to a useful marketing strategy is outside the scope of this discussion. You might take a look at Stephen Melanson’s Jaw Branding for a challenging approach to the branding portion of this task.

As an aside, when formal proposals and contracts are used, they should carefully reflect the expectations that you have so carefully worked to establish.

Use Processes to Engage and Transmit Your Value To Customers

So, now you have set your customer’s initial perceptions of who you are and how you create value for them. For example, if you are a business lawyer, they understand that you will help them prevent future problems by putting the right legal structures in place now. They don’t think of you as the guy who turns on the clock each time the phone rings.

How do you make your value visible during your engagement with them?

Before getting to visible professional services, we need to reemphasize that value is entirely determined by the customer. This means, reflecting back to our general contractor example, they are not thinking about all of those tasks Rob Ferree outlined. Customers think about the benefits delivered, not how the benefits are produced, nor the features of a service. Customers perceive and buy benefits. So, as we go through this upcoming discussion of processes, think about how you can demonstrate the end benefits to the customer, not every task and technique you use.

A useful approach is to develop a clear process that encompasses your value creating work. A process is all of the steps required to create the service value. We won’t spend time here describing all of the details of how to develop a process description. But, keep in mind that a component of your process description must be describing how you work with clients and how this reinforces the expectations you set in the marketing phase of your relationship. Consistency and honesty are a must. People are very sensitive to anything that even hints at deception. Do what you say you do.

A simple block flow chart is the single most useful way of presenting your process to your clients. Keep it simple and high level. This is not a cook book nor should it look like a checklist or template^[[2]]. Emphasize the steps where you help your clients to create a new vision of the solution to their problems. Then you can move on to the steps where you add specialized information and analytical tools that bring the solution to life. Don’t forget the final steps in which you help the client to convert the work into actionable tasks. For instance, an estate planning attorney can make part of their processes steps that put the state planning into action, like funding the trusts, assigning trustees, and establishing anniversary dates for planning reviews.

A General Rule of Professional Services Production

In general, in professional services, the more you engage the client in the production of the service the higher the level of satisfaction and engagement by the client with the end result.

Follow Up – The Ongoing Relationship

In professional services the service event or engagement should never be thought of as just a one-shot activity. A professional service is best thought of as an ongoing series of services, ideally a working relationship with a long life. One way to accomplish this is to build follow up into your business process. In this age of the Web, it is extremely easy to communicate new, useful information to your clients. However, too many newsletters and emails contain old information or worse information that is readily available elsewhere. Regurgitating the Wall St. Journal is not a good approach. If you are in a niche, exploit it. On another hand, make some part of your newsletters actionable and clearly connected to your core business values for clients.

In many cases you have legitimate, if not compelling, reason to contact the client again to assess results and make course corrections. By making this a visible part of your service process your clients will understand why, how, and when this will occur. Even if your service is like that of a general contractor where you might imagine the service to end when the owner takes occupancy, there are still opportunities to contact them in the future. Just be aware that if you contact them it must be genuine. If there are problems with the service, you had better be ready to tackle them.

Summary

You can get your profesional services’ clients to have a stronger perception of your value to them by:

1. Manage their expectations of what you will do and they play a role through good fundamental marketing. Think through your fundamental value proposition and make sure that is on display the first time you met a prospect and at every step through your services to them.
2. Make  value creating processes visible to the client. Engage your clients as much as possible in the value creation process. The higher their engagement the higher their valuation of it merits and the more likely they will follow through.
3. Follow up after a service engagement. Many professional services lend themselves to long life cycle management.

1. Rob can be reached at rob@ferreegroup.com
2. Lisa Morrisey at Lido Consulting Group pointed out to me how important it is that clients not think that simple cookie cutter templates can solve significant business problems.  There certainly are areas of business in which templates are very useful and appropriate, for example small company employee procedures and rules. However, fundamental value-creating business processes are far more complex and interwoven.

This podcast is 7 minutes 21 seconds long

“Price is only an issue in the absence of value.”

This pithy little sentence reminded me of the continuing importance of the concept of “value”. One tough part of understanding and leveraging “value” is to understand where it originates.

Most business people act as though, and believe, that value is something that they develop, design, promote, sell, and produce for customers. Every function in a company believes that they produce value for their customers. Marketing and product development invent, position, and promote customer value. Every other function along the way to the actual delivery of a product or service to the customer declares that they are producing value for customers. But, ask, “How do you know that you are producing value for customers?”  Very few can demonstrate that they systematically ask real customers to evaluate the value provided and actually act on the feedback they receive. So, this value is a self-defined and self-evaluated proposition.

The toughest point about “value” is to actually understand and embrace that customers define value. They define it as they make purchase decisions for products.  In the case of services, customers continuously evaluate value. This occurs through those Moments of Truth^[[1]] that happen every time a customer engages you for a service.  It is easy to say, “Customers define value”. It is enormously difficult to follow the logic of this statement and implement the processes to assure that value definitions flow from customers. This commonly starts at the very beginning of the product development and marketing processes. Then, other processes pick up and carry it throughout the life cycle of a customer relationship.

Start with some basic ideas and work to the more rigorous. For example, think through the implications of the age-old selling technique, FABing (Features, Advantages, and Benefits). Most of us are reflexive and exhaustive in listing the features of our services. But, discipline yourself to confirm what the benefits are. Here is the parallel with the principle that customers define value, customers only buy benefits. Start with benefit statements and work backwards to the supporting advantages and features. This simple tool, applied to the new product development process, for example, means that you actually ask customers to help you invent the product/service. They get to define the benefits they are seeking. Then, engineers and others can develop the features to supply the benefits. Always ask, “How does this feature deliver a benefit customers said they want?” This will help to prevent feature creep and gratuitous design.

Now back to our aphorism – “Price is only an issue in the absence of value.”

Now that we think that we might have a method for determining what a customer desires in a product or service, how do we attach a monetary value to it? Our aphorism suggests that if we can present some real value to customers, then the price we charge will always be OK. However, if you are involved in a commodity, or near commodity business, for example, pizza, automobiles, refrigerators, aspirin, and so on, you are stuck with the fact that the price is quite driven by direct comparison shopping. So, by and large price really is an issue.

Some of these commodity markets actually offer substantial price ranges based on perceived brand valuations. Think of the price of Bayer aspirin versus generic aspirin, for example.

But, for most small businesses the only brand available that can win the higher price is one supported by real values like proximity, friendliness, promptness, politeness, courtesy, responsiveness, reliability, thoroughness, and others. Note that these values can be produced reliably and repeatedly. Note that these values offer opportunities to build a sustainable advantage over competitors.

These values apply to professional services, retail, home services, medical, wholesale distribution, in fact anywhere where business is conducted between humans. Without much of a stretch these same values apply on the Web.

The key challenges for most small businesses, especially those involved in services, is to correctly understand the total value you are delivering to customers. And, you must present this to customers in a manner that upsets their mental framework, their points of view, that they approach the service with. For example, is a will just the 20 page document that costs $800 placed in your hand? Or, is a will really a series of services that encompass uncovering your real desires for passing things and values along to your heirs and ends after your death with the proper carrying out of your wishes?  An initial difficulty is to overcome the presumption by the customer that a will is just a document. How do you upset that framework and replace it with a new one that encompasses a larger, more valuable, cycle of services?

There is no cookie-cutter solution to this. But, the first necessary step is to envision the value, ask customers about this new vision, revise the vision based on what you learn, and then you will be positioned to answer the questions: (a) how do I reframe the value proposition, and (b), what monetary value do I attach to it?

I believe that if you do a thorough job of answering the first question then, in fact, assuming no craziness in the valuation, the aphorism will hold:

“Price is only an issue in the absence of value.”

1. you can download a whitepaper on Moments of Truth – “Managing Moments of Truth  – Value Creation for Services Organizations” from our Resources page

This podcast is 3 minutes 51 seconds long. The text is available here.