Fee Sensitivity Doesn't Exist
Mar 03, 2021
One of THE best books I've ever bought on the subject of the relation between value and fees is Priceless by William Poundstone.
Over these next couple of blogs, I wanted to share a few insights from the book that I've used extensively when helping my clients to make it easier for their clients to say yes sooner as part of their new client engagement process.
It's obviously just one part of the framework I teach - The Appointment Flow system - but for me, it's about a system that:
- Allows you to have a deeper, more "real", goals-based conversation,
- Deliver those lightbulbs, "ah-ha" moments where clients come to realise what they need (aka help and advice),
- Outline your value proposition clearly and get a "we'd like to work with you" on the day.
That last bit - on-the-day - is key. We owe it to clients to take action, and if you get your meeting right there should be no reason they can't make the decision to take action there and then.
But what about the question of cost?
I think the most important shift that I had to personally make, which allowed me to make this work first for me, was to accept the fact that fee sensitivity does not exist.
To be honest, I found it hard to agree with for a long time after it was put to me. I mean, surely, there was a point where something was simply too expensive, right?
But that's the thing - it's not the case.
In truth, if we look at anyone who gets themselves in financial trouble, the issue is usually a lack of cost sensitivity.
It explains why most people are more likely to spend money on things they can't afford than sensibly refuse anything above a certain price level.
The vast majority of buying decisions are emotional ones, which means when people make a decision to pay a fee they either:
- Believe the benefit(s) they will receive - be it financial, emotional, or otherwise - exceed the value of the outlay,
- Are more motivated by what they will receive now than any future negative impacts of paying for it,
- Have sufficient resources that the outlay is not significant enough to cause any negative impacts (which is a whole other issue when it comes to the value equation for wealthy people!).
In truth, our own perceptions of fee sensitivity are often driven by our own perceptions, experiences, and even insecurities, all of which can be addressed by having a process that works to follow.
However, being willing to suspend the belief that fees are a barrier to new clients engaging is good starting point.
My third Fast Track short course of the year on New Client Engagement starts on 12 March 2021.
For information about how you can get involved, check it out [here]