I received multiple requests for advice on how to boost revenue from various companies, so I decided to address this topic. Please note that the following discussion primarily applies to service-based businesses.
Let’s approach this from two different angles.
It’s not about price
Many people struggle with selling to others because they fail to understand why customers buy, what motivates them, and what they are trying to achieve.
Most believe that the key is offering a service at a fair price, but this perspective misses the point. The debate around pricing often stems from an outdated notion that things should only be priced based on the labor required to create them. However, this approach is fundamentally flawed.
Consider this: you probably don’t wear the cheapest shirt available or prefer an eight-year-old smartphone over a new one, even though both would serve the same basic functions. Why is that? It’s because the choices we make reflect our beliefs, values, preferences, and taste. We seek meaning and strive to shape our identities.
There will always be someone willing to offer the same service at a cheaper price. Engaging in a race to the bottom based solely on price is not a sustainable strategy, especially with the current surge in AI technology. Unless it aligns with a larger, well-thought-out strategy, competing on price is not a good idea.
It’s not about doing good work
Many of us mistakenly believe that doing good work should automatically sell itself. However, in most cases, delivering quality work is merely the starting point. It acts as a barrier to even be in the business. If your work is subpar, you won’t (and shouldn’t) even be considered in the first place.
There is a very simple fundamental concept that you need to understand: every person is driven to achieve something. Customers want to bridge the gap between their current state and their desired state, and there are barriers to overcome. The key to successful business is in the gap between the two.
Instead of solely focusing on what you want to do and the services you provide, shift your mindset. Put your own needs on hold and focus on helping your clients in the long-term. Remember, it’s the client who determines their needs, and your role is to assist them. Sometimes, the best solution may not even be your service. This approach should guide your actions, including referring a lead to someone else if necessary.
When a potential client schedules a meeting, they likely have something specific in mind and want to assess whether there’s a fit. Avoid rushing into potential solutions. Take the time to ask questions and truly understand what they need. Moving forward without a clear understanding will only result in offering services no one needs.
Think how frustrating it could be if a doctor gives you a prescription without listening to you properly. And the more sophisticated your service is the deadlier neglect could be.
Invest time in understanding your clients. Many people listen merely to stay silent long enough to come up with what they themselves want to say next. Instead, practice full value listening. Pay attention to everything the client says, both verbally and non-verbally. Take notes, ask follow-up questions, and be fully present. This approach will help you identify their concerns and provide tailored solutions.
Getting positioning right matters
Now, let’s discuss what you should do instead of what you shouldn’t do. The short answer is: make yourself or your company difficult to replace. If your service is easily replaceable, you have little control over your client relationships. If you are in the business long enough, you know the signs before you are replaced. And the time it takes depends on how easy it is to find a replacement. One of many ways to do this is right positioning (for more insights, refer to David C. Baker books).
Effective positioning allows you to focus on a specific area, which is immensely powerful. As the saying goes, a 1000Wt LED lamp can illuminate a room, but a 1000Wt laser can cut steel. Focus enables you to identify patterns, develop expertise, and offer services that are hard to replicate.
Once your services are not easily replaceable, the dynamics of your relationships with clients change. You gain the ability to say “no” to potential leads or clients, and you can command a premium price.
Charging less has its advantages and disadvantages. Lower prices may expand your customer base and attract a greater variety of clients, it’s less frightening. It can reduce resistance in the sales cycle. However, it also means dealing with less committed clients and limits your ability to afford subcontractors. You’ll have less attention and focus for each client and may make more mistakes due to insufficient time for refinement.
On the other hand, charging more allows you to invest in improving your skills, software, hardware, and team development. You can be more selective with the projects you undertake, which is always beneficial. Additionally, charging premium prices reduces competition. Fewer individuals are willing to compete in the higher price bracket, unlike the lower end where even fresh graduates may vie for $100-500 jobs.
Here’s an interesting exercise from Chris Do that you might find useful: Imagine if I gave you a budget that is ten times greater for your project. What would you do with it? Instead of doing more of the same, consider building an entirely new offering from the ground up, keeping in mind the client’s pain points and minimizing compromises on their side. Now, try the same exercise but with a budget that is only one-tenth of the original amount.
Conclusion
In conclusion, increasing revenue in the service industry requires a nuanced approach that goes beyond price and good work. Understanding customer motivations and needs, actively listening, and offering tailored solutions are crucial for success. Additionally, strategic positioning that makes your services difficult to replace empowers you to have more control over client relationships and command premium prices. By carefully considering these factors and embracing a customer-centric mindset, you can pave the way for sustained business growth and success.
