We need to have some electrical work done around our house and my wife related a conversation she had with the electrician. 

When he was last out to do some work, he noticed that we have a light switch inside our bathroom, right next to the bathtub.  He mentioned that this was actually illegal as light switches should be on the outside of the door that leads to the room with the bath.  He said that we should look to get it moved and that if we ever wanted him to do work in the bathroom, he’d be obliged to move the switch.

Well, we need to have some work done and he reminded us of the need to move the switch.

It’s interesting what he’s done here – he’s created more work (and income) for himself without us getting resentful about it.  The switch needs to be moved – there’s a very good reason (safety) for the move.  We trust him based on the previous jobs he’s done for us – he always turns up on time, does what he promises, doesn’t leave a mess etc.  Over the years we’ve built up a good relationship with him and trust him.  When we need to get electrical work done we don’t get any other quotes – we just call him.

How can you become like our electrician – trusted and indespensible?

How do you build trust with your clients and demonstrate your capabililties? 

I’m always challenged when I see the need to suggest something extra to a client – a bit like the need to move the switch.  I sometimes feel worried they won’t see the need for it but when you think about this example, if they trust you, they won’t doubt that you’ve got their best interests in mind.

Finally, how do you become indespensible to your clients?  How can you get to the point that they no longer consider using your competitors?

How much is a can of Coke worth?  In Australia, it could cost you around $2 if you buy it cold from a store.  If you buy a can as part of a box of 24 from a supermarket, the cost per can might be as low as 60c.  On the other hand, if you’re at a sporting event or a concert, the same can may cost closer to $3.

Why does the same object vary in price by so much?

It’s all about the value that the customer sees in the product.

If I’m organised and plan to buy cans in bulk, I’ll be more price sensitive, because part of what I’m trying to do is save money. The value in that instance is to be able to buy in bulk.  If I’m out and incredibly thirsty and decide a can of Coke is what I’m after, I’ll pay more.  I’ll gladly pay extra for the convenience.

Value is an amazing concept.  People will gladly pay more for something that is of value to them.  The big problem is working out what it is that they find valuable.  You may actually be surprised.

If you sell a service, in many cases the service consists of knowledge.  You may write that knowledge down in the form of a book, you may verbalise it in an audio program, the knowledge may be used to prepare financial statements (accountant) or argue a point of law (lawyer).  In any case, your clients will happily pay for the information you have, if they see the value in it.

A few weeks ago I met with a client, aged 60 who is saving for retirement.  In the course of our conversation I learnt how much he was contributing to his retirement plan.  In Australia, there are limits that apply to how much you can save into your superannuation fund (like a 401k).  This man was on track to exceed the maximum allowable amount by over 50%.  Had I not picked this up and advised him to stop, he would have had to pay penalty tax on the excessive component.  This could have cost him around $20,000 extra.

What is that advice worth to him?  If you calculated my fees based on time, it would be worth only around $400.  If you calculated it based on value, conceptually, it could be worth up to $20,000.

Here’s another example to get you thinking.

A few years ago in the MBA I studied an accounting subject.  We were learning about how to ascertain the cost of producing goods.  They gave us the example of a manufacturing company who discovers a new way to make a gasket that goes into its machines.  This new design of gasket costs only 30% of the cost of the old one, and lasts up to 3 times longer.  The question was – how much do you sell it for?  We were given details of the company’s labour costs, and their desired profit margins.

Almost everyone suggested selling it for less than the cost of the existing one.  They all worked on the assumption that the company wanted to keep the same profit margin. 

I took the opposite view and suggested they could charge more than the existing gasket.  I figured if it lasted three times longer than the existing one, the buyer of the product could happily pay up to three times more.  They wouldn’t care about how much it actually cost the company to manufacture the gasket – they cared about the fact it would last three times longer – that’s where they saw the value.

Think for a minute about the service you sell – what to customers find valuable?

The easiest way to find the answer is to ask your customers and potential customers.  I know financial planners who have surveyed their clients and discovered the things the clients really valued were far different to what they thought they would value.

Clients are looking for things like peace of mind, trust, ease of doing business, experience etc.  Planners are thinking of things like good returns, products, quarterly statements etc.  Why would a client value a planner sending them quarterly statements of their investments when they can get that information every day off the web?

Many clients see a high level of value in planners monitoring their investments – letting them know if a fund manager is underperforming and recommending something new.  This is something most planners do, but few actually tell their clients they’re doing it.

I’m fascinated by the range of e-books and programs available for sale on the internet.  There are resources available for almost every topic.  Again, it’s a question of value.  How much will I pay for a book that enables me to make an extra $10,000 pa?  Is it worth $100?  $10?  $1,000?

Then answer is that it depends on the value I place on it.

Your role as a marketer is to help clients discover the value in the product or service you sell.  In our financial planning business, we talk a lot about our skills and experience – our clients see value in this.

There’s value in specialisation.  If you’re a lawyer who specialises in personal accident cases, a client who has a need in that particular area of law will place greater value on your knowledge.

If you’ve got a track record in a particular field, clients will place greater value on your knowledge or product.

Challenge yourself.  Ask some clients about the things they see value in.  Are there things you aren’t currently doing that they would see value in?  Are there things you currently do, but your clients see little of no value in?

Have a complete re-think and make your decisions based on fact, not just on what you think the truth is.

And next time you’re calculating a price for a client, think about the value you’re creating, and price according to that, rather than by your usual method.

He makes this comment.

Saw this in one of your articles. “Even the best bands get it wrong on stage sometime, and I’m not suggesting you control the service delivery so tightly that the individual personalities of people get stifled.”

Miles Davis once said something like – “It’s not about the mistakes you make but how you recover from them.”

I think Miles was on to something there.

In a previous article we talked about how clients make decisions about the quality of a service.  One of the points was that if you wanted to exceed the client’s expectations of service, you need to be able to demonstrate the qualities of Tangibles, Responsiveness, Assurance and Empathy.

One point I didn’t make is that when the service delivery goes poorly, you have an opportunity to make it good and, through that opportunity, you can exceed the client’s expectations.

If you run any business that involves people delivering the service, things will go wrong from time to time.  There’s a lot you can do to reduce the instances of service failure, but as long as there’s the human element involved, you won’t be able to eliminate it.

Think about a time when you bought a service – or a tangible product – and something went wrong with the service.  Let’s assume you said something to someone in the organisation about it (if you don’t provide clients with an opportunity to provide feedback then you need to start thinking about how you can begin to).

This is where things get interesting.  You tell the company that the service delivery was not great.  This is their opportunity to make it good again.  What do they do?

The poor companies either do nothing, make you feel like the mistake was yours, or grudgingly try and fix the problem. 

Other companies will do what they have to do to fix it – nothing more, nothing less.  In one sense, they’d argue they’re doing what you paid them to do (albiet late).

Good companies see service breakdown as an opportunity to exceed the customer’s expectations and win a customer for life.  You see, they know how to use the qualities of Tangibles, Responsiveness, Assurance and Empathy to their advantage.

Think about it.  A customer has complained about something that went wrong at your business.  Can you demonstrate empathy – putting yourself in their shoes and thinking about how they may feel.  Can you provide assurance to the client – a sense of confidence in your abilities to fix the problem. 

Can you be responsive – there’s nothing worse than complaining about something, and then having to follow up on the complaint because no-one seems to be doing anything about it.  One organisation I worked at at a slogan called TOFU – Take Ownership and Follow Up.  In one respect it’s a bit sad that these things need to be said – they should be common sense, but at least the TOFU concept reiterates the importance of being quick to fix a problem.

Finally, when there’s a breakdown in a service delivery, the tangibles become more important, because now more than ever your client is looking for visual cues to reassure them that your organisation can provide the service they’re looking for.

The important concept here is that service breakdown actually provides you with an opportunity to exceed the customer’s expectations and provide exceptional service.  It’s possible to develop a stronger client relationship out of a service breakdown than if everything went well the first time.

So, maybe Miles was right.  Mistakes are going to happen.  Accept that.  It’s what you do about them that can make your business great in the eyes of your customer.

What are some examples of how you’ve either been a customer and received poor service and then had your expectations exceeded, or done it in your own business.