Plenty of Features, But No Benefits
LinkedIn Article by Tim Williams
December 17, 2016
Do you stumble when trying to describe your firm’s “elevator pitch?” Most business executives do. The unfortunate truth is that most of us don’t have a very thorough understanding of how our companies create value.
You can likely recite your services and products, but these are only the featuresof your firm — not its benefits. Economists have long argued that people don’t buy actual products and services, but rather the utility these products and services create in the life of the buyer. As Harvard’s Ted Levitt famously taught his marketing students, “No one ever buys a three-quarter-inch drill; they buy the expectation of a three-quarter-inch hole.”
Visit the websites of leading companies in your sector and you’ll quickly see that most are merrily engaged in selling “drills,” failing to understand the multidimensional value their offerings create for customers. Of all firms on the planet, advertising agencies should know better, yet most agency websites read like a list of components found on the window sticker of a new car. By atomizing their services into elemental parts, these firms are unwittingly commoditizing their offerings.
Multiple Dimensions of Value
The value of a meal at a restaurant is not just the quality of the food. The cuisine is critically important, but so is the ambiance, the service, and other factors that combine to deliver an experience that makes us feel that an expensive meal was worth the price.
Breaking services down into the lowest common denominator is the job of the buyer, not the seller. Sophisticated buyers (especially procurement professionals) do this intentionally as a way of focusing the dialogue on direct “apples to apples” price comparisons to competitors. But the seller has a job, too, which is to frame the value of the offering.
To dimensionalize the value offered by your firm, you must go beyond services to solutions. One of the most effective ways to do this is to ask “What job is our product/service being hired to do?” The real answer is not as obvious as it may sound. On the surface, an advertising agency might say it’s being hired to produce a series of ads. But an advertising campaign is a means to an end, not an end in itself. The “job to be done” is something else; increase trial, improve sales velocity, help the brand protect its premium price position.
When agencies focus on just the outputs (or worse, just the inputs in the form of hours required to do the work), they pass up the opportunity to frame the real value they create for their clients. Marketers don’t really buy campaigns; they buy the effects of the campaign in the marketplace.
To ensure you understand the benefits most important to your client, start each new relationship with a "success workshop." Spend a least a half-day walking your client through a series of exercises designed to help them uncover the multiple dimensions of value created by their product or service, as well as the key outcomes they're seeing by hiring your firm in the first place.
Breaking Down Benefits
At the most basic level, the value of your firm’s offering exists in two dimensions:
Functional benefits, which are the most obvious. These are concrete attributes of your offering: systems that produce accurate tax returns, the ability to create a detailed schematic, the capabilities required to manage a social media campaign.
Emotional benefits, which sometimes feel fluffy or extraneous, but are tremendously powerful buying motivators. Unless prospective clients feel confident about your firm’s reputation and expertise, you’re unlikely to make a sale at any price. Remember, companies don't your firm; people do.
When you drill down further on the question of value, there’s an entire constellation of benefits buyers seek — most of which never appear in an RFP, but ultimately sway the actual buying decision. Research done by Bain & Company has produced what they call a “Value Pyramid,” which features rational benefits that ladder up to strong emotional benefits.
Curiously, most professional firms assume these benefits apply to every industry but their own. This explains why sales literature and presentations of professional firms are littered with the same tired language about “client centricity,” and “a custom approach to every problem.” These firms simply haven’t stopped to analyze where they are on the ladder of potential benefits, and more importantly, what their clients and prospects value in the first place.
Bring to mind an important new prospect. Using the list below, could you rank order what this client is most interested in buying?
Saving time / Reducing cost / Making money / Reducing risk / Integrating services / Simplifying process / Reducing effort / Improving organizations / Enhancing reputation / Reducing anxiety / Accessing expertise
Most of these well-researched factors appear in the Bain & Company study and are shown to drive real purchase behavior in a variety of different categories from banking to smartphones.
Not Just Want Your Clients Can Gain, But What They Can Lose
Master strategist Michael Porter teaches there are three basic ways firms create value for their clients:
By helping to increase revenues
By helping to lower costs
By helping to reduce risks
Of these three forms of value creation, two are common and familiar. Every company wants revenue growth, and a good many of their suppliers promise products and services that will help them increase their sales. In the same breath, buyers express the unrelenting need to cut costs. Since the late 1980s, corporations have had an almost unhealthy obsession with cost cutting as a proxy for real growth, usually in the name of “shareholder value.” Clayton Christensen and his business school colleagues refer to this as the “financialization of business,” which they believe has been responsible for the decline of innovation compared with the decades immediately following World War II.
It’s the third dimension of value creation — the concept of risk reduction — that provides the most fertile ground for unique ways to frame the value your firm creates. Jonathan Bond, co-founder of the well-regarded agency KBS+, believes advertising agencies are in the “insurance business,” essentially helping to both ensure marketing success as well as reduce the risks of marketing failure.
The Risk Reduction Business
Broadly speaking, it could be argued that most professional service firms are actually in the risk reduction business. But their business practices point in almost the opposite direction. Most behave in the most risk-averse ways imaginable, starting with their unhealthy attachment to the seemingly risk-free concept of the hourly rate.
Bond and others argue that unless you purposefully inject risk into the business relationships you have with your clients, you’re never really fully leveraging your earning potential. This is the concept of risk as an economic positive; something to be actively pursued, not avoided.
A practical application of this concept is proposed by Scott Brenman of the agency MEC in London, who writes in a recent issue of the publication Atticus, “Agencies sell the promise of business growth, but boardrooms prefer to buy insurance against business failure.” He advocates for the idea that in today’s climate, agencies should sell the benefit of “brand immunization” rather than the more conventional promise of brand building. Brenman suggests agencies should be offering their clients services such as “threat audits” and should prioritize the elimination of value-depleting weaknesses over the creation of new sources of value.
As models such as Maslow’s influential “hierarchy of needs” have shown, there are indeed a set of near-universal motivations and benefits that apply broadly to many situations. But most firms are less than deliberate in the way they frame the benefit of their offering. Of course your clients want to sell more, but you can help them in other beneficial ways that reduce the risks they take every day in the marketplace.
It’s a curious fact that we humans will work harder to keep a dollar than to gain a dollar (which has been repeatedly demonstrated in fascinating experiments by behaviorists). It’s therefore even more curious that professional service firms rarely capitalize on this aspect of buying behavior when casting their net of promised client benefits.