How to Move From Cost-Driven Clients to Value-Driven Clients

June 14, 2017

In just about any business and market you can position yourself as cost-driven or value-driven. This is often the difference between brands that are positioned as the cheapest and the best- akin to comparing a Timex to a Rolex. Some would say that these can’t be classified as the same accessory.

Similarly, you may have noticed that you have some clients that are polite, understanding and easy to deal with. But of course, there are the others: they are demanding, difficult, take up most of your time and usually spend the least.

These clients are cost driven; in stark contrast, easy clients are value driven.

What Are the Differences between Cost-Driven (CDC) and Value-Driven (VDC) Clients?

• CDCs rank cost above all other elements when making a buying decision. VDCs rank service, quality, experience, and convenience above cost. They are prepared to wait or pay more for the perfect product.
• CDCs make buying decisions based on short-term logic, i.e. “I need a new vacuum, which is on sale?” Conversely, VDCs make buying decisions based on their long-term goals, i.e. “I need a new vacuum. I want something small and powerful so I can vacuum quickly and effectively. I would like it to be light to make doing the showroom stairs easier. It also needs to be wall mountable, because that looks much nicer.”
• CDCs are preoccupied with profit margins. VDCs, although also aware of profit margins, are more interested in your ability to provide a solution to them.
• CDCs measure cost in time. i.e. “The consultation appointment cost us $50 and lasted only 30 minutes, which is more than $1 per minute, and we have three more of these consultations.” VDCs recognize that they are paying for your experience, your training, and reputation for quality. While they also identify that you may have a higher cost, they acknowledge the value of the time, because you can provide a solution that works.

How do you move from CDCs to VDCs?

We all know that in an ideal world we would have only VDCs, but how do you get there?

These are a few strategies to move from CDCs to VDCs.

1. Demonstrate your value; develop a speaking, writing or digital presence that raises your profile as the go-to expert in your niche. Whether you publish a book, launch a YouTube channel or speak at every event within a 100-mile radius. You need to create the right kind of hype about your business.

2. Package or bundle your products and services. Regardless of whether you are a consultant, carpenter or a chef, if you sell singular units, prospective clients can compare your price to another service provider before even reaching out to find out what value you can offer. If you package your sessions or services, they can no longer compare solely based on price, and must make additional considerations before purchase; if you have positioned yourself, you may beat out your competitors in these scenarios.

3. Remove all references to price or cost from your marketing and promotional material, including your website. You are exceptionally talented, experienced and great at what you do. By having your prices on your website, you deprive prospective customers the opportunity to communicate with you about your product, receiving advice and great service instead of making a decision on your price alone.

4. Consider a waiting list or referral-only approach to foster demand. Find a way of building exclusivity into your services. Some of the most sought-after businesses, including consultants and advisers, will only take clients that have been directly recommended to them. Otherwise, requests are added to the waiting list. When you limit availability, you might increase demand.

5. Develop a red-tape policy. Build an avatar of your ideal client: the person that values your experience and expertise and is willing to pay for them. Don’t be afraid to publicize on your site that the people that generally benefit the most from your services are “x”, let it be known that you will politely decline clients that don’t meet your criteria.

6. Consider adjusting your prices. Nothing says quality like a nice price tag. It’s difficult to convince someone that the best car on the market is the cheapest. It might be the most fuel efficient, or even the most environmentally friendly… but the best? We wouldn’t buy it. Equally, there will be no convincing people that you are the best unless your prices reflect that. The really amazing thing is this: if you adjust your prices, the increase in revenue can offset the loss in your customer base. Be advised, however, that in a fluctuating market for your good or service, remaining competitive on pricing should be your top priority.

As a business owner, you will not be paid your worth until you request it. Demonstrate your value and then set about attracting the clients that appreciate value, over what it costs to work with you.

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