Value/price equation drives hiring decision and client loyalty

friday, 8 august of 2008

Value/price equation drives hiring decision, client loyalty

by Trey Ryder

How much can you charge your clients?

You probably know lawyers who charge a fortune for their services and their clients happily pay it. At the same time, you probably know lawyers who have to fight for every dollar they earn.

What is the difference between these lawyers?

Often, it comes down to the value/price equation, which says:

Prospects will hire your services -- and clients will continue to use your services -- as long as they believe that the value they receive from you is (1) greater than the price they pay, and (2) greater than the value they would receive from another lawyer for the same fee. In most cases, unless both of these conditions are met, you'll lose clients.

How much prospects and clients value your services is the direct result of how well you provide things they believe are important. For example, how do you rate yourself in the following areas?

1) Knowledge, skill and experience. The more you have, the higher your value.

2) Self confidence. The more confident you appear, the better your clients feel and the more peace of mind they enjoy.

3) Responsiveness. How quickly you return clients' phone calls. How quickly you finish clients' work. How quickly clients can see you in your office or talk with you on the telephone. The shorter the time, the higher your value.

4) Understanding and communication. How well your clients understand what you tell him. How well and how often you communicate with clients about their cases. The better the communication, the higher your value.

5) Reputation. The better your reputation, the more your clients value working with you.

6) Results. The better the results you achieve for clients, the higher your value.

7) Relationship. How much clients depend on you. How much clients feel they can trust you. How long you and your clients have worked together. The stronger your client relationships, the greater your value.

8) Your reception area. A pleasing appearance adds value. A dingy or drab look detracts from value. New magazines neatly arranged, a plus. Old magazines thrown in a pile, a minus.

9) Greeting. A friendly, warm, caring reception is a plus. Cold or impersonal, a minus.

10) Access. If your clients get in to see you quickly, a plus. The longer they wait in the reception area, the lower your value.

11) Office location. The closer it is to clients, the more value they perceive. However, if clients never come to your office, this may have no effect on your value.

12) Parking lot. When parking spaces are easily available, that's more value for your clients. If your clients have trouble parking, that's less value.

This is just the beginning. Everything in your relationship either adds to or subtracts from the value your clients perceive. Whether it's good service, peace of mind, or sports tickets, everything counts.

The one element that does not increase or decrease value is your fee. Your fee is your client's gauge against which he measures your value. Regardless of whether your fee is high or low, the fee itself does not add to or subtract from your value.

If you have a low fee, it may be a competitive advantage if other lawyers have higher fees. But if higher-priced attorneys also offer their clients more value, then you're comparing apples and oranges because what the client receives is not the same.

I had a friend who passed away a few years ago. He was a prominent tax attorney in Phoenix. Just after I graduated college, our paths crossed and he invited me to breakfast. From that day forward, I felt bonded to this man because he always treated me as if I were the most important person in the world.

Obviously, I was not in this man's target audience. I was just a kid fresh out of college. But for the 23 years I knew him, I told people about my friend and mentor. I reinforced other people's perception of his value.

This lawyer went to great lengths to add value to his services.  The moment I pulled into his parking lot, I knew he would take good care of me because he provided covered parking spaces for his clients.  (In the summer heat in Phoenix, covered spaces have a high perceived value.)

And the spaces weren't off in some far corner of the lot. They were the very first spaces outside the building's entrance. I knew this man had power and influence or he wouldn't have been able to get those spaces for his clients.

What's more, when I entered his reception area, he served soft drinks in glass tumblers. (You would never find a pop can in this man's office. He wouldn't stand for it.) And ice cubes? Only the hard-frozen kind that were crystal clear. The spotlights in his reception area reflected off the ice cubes like sparkling diamonds in a jeweler's showcase.

What did this man charge? The standing joke was that he charged twice what any other lawyer would dare charge. But his clients loved to pay their bills because they believed they had the top tax lawyer in town and he treated them like royalty.

You can do a lot to increase your value to clients. The first things clients notice are speed and accessibility. The quicker clients get in to see you, the quicker you complete their work, the quicker you return phone calls -- all add value to your services.

Review the 12 points above and identify where you can increase your value. Remember, not all clients perceive value the same way. One client may appreciate a quick response. To another, speed might not matter. One client may like your covered parking spaces. But to the client who doesn't come to your office, parking is not important.

If you want to make improvements in your value, ask clients what improvements they would value most. Or poll your most important clients to see what value they would like you to add.

Client loyalty is the result of value delivered over time. The more value you provide, and the longer you provide it, the more client loyalty you'll enjoy. For years. For decades. For life.

-----

© Trey Ryder

FREE LAWYER MARKETING ALERT: If you'd like to receive Trey Ryder's weekly Lawyer Marketing Alert, send an e-mail to Trey@TreyRyder.com. Write "Subscribe LMA" in the subject line and write your name and e-mail address in the body of the message.