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How the Customer Decides to Buy with Sean D’Souza – 096

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In The Brain Audit, Sean D'Souza uses an analogy of 7 bags, or pieces of luggage, to explain the sequence the brain goes through during the buying process. Open the bags one at a time, in the right order, and the customer will buy. Skip a bag or alter the sequence, and the customer cannot finish the steps to make a purchase.

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Start with the Profile, Problem, and Solution

  • What is the most important thing you can share about pricing?
    • You are charging less than you should be.
    • The real estate agent, buyer, seller, and counsel all have different prices for the same house on the same street in the same market.
    • You can get a lot more based on your uniqueness.
    • You can get a lot less if you don't put that uniqueness forward.
    • Uniqueness is the 7th bag in The Brain Audit.
  • What is The Brain Audit?
    • It is a system that shows what happens in your brain during the buying process.
    • The analogy is that you put 7 red bags on a flight and after the flight lands you wait for your bags, but the 7th never comes out.
    • When do you leave the airport?
    • Most people don't because something is missing.
    • Customers haven't bought or have hesitated because you haven't removed the 7 red bags from in their brain.
    • Buyers go through the same steps regardless of the price of the item.
    • Customers don't buy because you haven't provided information in the correct sequence.
    • If you make the best offer in the world, but if it is in a different language, you still won't get the buyer to purchase.
  • What is the first step in the sequence of the brain?
    • The first step is identifying the target profile.
    • Traditionally people identify a large target audience or a persona they create of someone who doesn't exist.
    • A target profile interview beings with, “What frustrates you the most?”
    • You get the real terminology, frustration, and emotion from your target.
    • You first have to find a real person and discover what his biggest problem is.
    • Drive home the problem to understand how it makes the real person feel and determine the consequences of how he feels.
    • The first 3 bags unpacked are:
      1. Target profile
      2. The problem
      3. The solution
    • Find someone who is very frustrated with a product or service if you don't have a large customer base from which to choose.
    • You can build your product on that one person.
    • The “good customer” doesn't exist; the person with a big frustration does.
  • Why is the problem before the solution in the brain sequence?
    • People tend to bring up the solution because you are taught to preach the benefits in sales.
    • Your brain looks at the obstacles the whole time, to keep you alive.
    • In doing so, it looks for problems, not solutions.
    • Solutions don't register spikes in your brain, but problems do.
    • Talk about the problem the target is having to get their attention.
    • You don't have to make it a negative approach.
    • Talk to the person like you would in reality.
    • The first 3 bags are used to gain the customer's attention.
  • What is a trigger?
    • It is a subcomponent, like something you would use for a tagline.
    • The trigger for The Brain Audit is Why Customers Buy (and Why They Don't).
    • What you need to include for a great trigger is the profile, problem, and solution.
    • The trigger instigates the conversation, with the logical response being, “How do you do that?”

Handle Objections With Testimonials

  • How do you turn objections into a marketing ally?
    • The next 4 bags eliminate the risks, starting with objections.
    • A series of objections occurs even with free products.
    • List the 6 biggest objections that are usually brought up and then destroy the objections.
    • The customer will realize that you have thought through it and become more comfortable.
    • Removing the objections so customers do not need to think about them.
    • Perception is an objection that may not exist.
    • Past experience is another potential objection, which you can deal with through testimonials.
    • You won't eliminate the objections, but you can reduce them.
    • The “unknown” is the last objection, but it could be anything, usually something you wouldn't expect.
    • The way you deal with an unknown objection is to explain better what the service covers to avoid disappointment.
  • What is the best way to create testimonials?
    • A testimonial is a full customer experience, not just a sugar-coating.
    • A reverse testimonial starts with something skeptical because you are tackling objections through it.
    • You start by asking what was stopping them from buying the product or service.
    • The second part of the testimonial is to remove the objection.
    • Get your customer to answer the problem, which provides proof to destroy the objection.
    • The testimonial is the flip side of the objection.
    • You want to correlate the objections with the testimonials.
  • What is your favorite question to ask for a testimonial?
    • “What would have stopped you from getting on the journey?” gives you great insight as to why a customer buys.
    • It provides you with an understanding of how to tighten up those areas.
    • Sometimes you might be able to eliminate the objection because of a testimonial.

Create Uniqueness to Complete the Journey

  • What is a risk reversal policy?
    • Risk reversal (bag 6) reduces risk.
    • There is always one risk bigger than all the other objections.
    • A risk for Zappos is that you have to try shoes on to see if you like them, and they fit.
    • “You like it or your money back” was not enough to tackle the objection because the real objection was the effort to exchange.
    • Zappos offered free shipping both ways to eliminate the risk of the effort and cost to exchange it.
    • Psychotactics created The Lawn Mower Guarantee: Run it over with the lawn mower and send it back.
    • The biggest risk was not that you couldn't get your money back, but that your request might be refused.
    • You have to find the hidden risk to address.
    • You can create uniqueness by branding the risk reversal.
    • Customers realize that you are cognizant of their fears through the policy you create.
  • What is the most common mistake when creating our uniqueness?
    • Trying to find your uniqueness is a common mistake.
    • You can list all you can do and then narrow it down to one thing, and that might work.
    • The best way is to invent your uniqueness.
    • He suggested a writer set her uniqueness as delivering the article 3 hours before deadline every single time.
    • The ioSafe‘s uniqueness is that is indestructible.
    • Structure your product and service around that uniqueness.
    • Psychotactics' uniqueness is that it doesn't give you information, it gives you a skill.
  • What is one of your best stories about creating value for a customer?
    • You have to be more than a business.
    • To create value, you have to be a GPS.
    • When you plug in an address, a GPS takes you from A-B in the shortest amount of time.
    • Customers want you to get them to the end point the fastest, easiest way.
    • Be their GPS.

About Sean D'Souza

Sean D'Souza is the founder of Pscyhotactics, a marketing company in New Zealand. He is the author of The Brain Audit, which has over 800 testimonials. He also is the host of The Three Month Vacation, a podcast that teaches why Sean takes a 90-day vacation each year.

Picking Your Value Lane with Jeffrey Shaw – 082

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Jeffrey Shaw is the go-to portrait photographer for exclusive clientele. His portraits have been featured on The Oprah Winfrey Show, in O Magazine and People, and on CBS News. He is a business coach who serves massively talented creatives who struggle with the business side. He lives on an island just off Manhattan, New York, and gets to work by cable car.

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Determining Your Lane

  • What is the most important thing you can share about pricing?
    • Pick a lane.
    • Be aligned through your whole process – pricing, brand image, brand value.
    • Strategically building a business is based on determining who you are serving first, and then focusing on serving them.
    • Most people go in business backwards.
    • Misalignment with regard to pricing is common.
    • By looking at a brick and mortar business, you can determine whether or not you want to go inside just by looking at it.
  • Why are you a photographer?
    • Jeffrey went into business as a photographer when he was 20.
    • He was not conscious of the business he was building then but seemed to have good business instincts.
    • He does not look at what others are doing in his industry because he wants to zag when everyone else is zigging.
    • He is out to take photos of “third children” since he does not have any pictures of himself growing up as a third child.
      • Once he became conscious of his passion, it was easy to align.
    • His 20-year old daughter had to put down her 8-year old horse.
      • The man who put down the horse explained that he got into the business because his experience having a horse put down was handled poorly.
      • His why made it an honor for Jeffrey's family to pay him.
    • There is a true value in explaining your why.
  • Why do you offer a performance guarantee?
    • If you offer a money back guarantee, you are supporting someone's failure. Jeffrey wants to support someone's success.
    • His “I will not let you fail” guarantee promises that if you are not happy, he will work even harder to make it satisfactory.
    • The responsibility of success comes back to the entrepreneur.
    • If you can look inward at your accountability and determine how you could do it differently, you gain the most control over your business and life.
    • Jeffrey will fight harder to make the transformation that his customer is looking for; he will show up deeper.
    • He has never returned a dollar in any of his businesses because he always approaches it with a commitment to success.

[clickToTweet tweet=”Building a business is determining who you are serving, and focusing on serving them.” quote=”Building a business is determining who you are serving, and focusing on serving them.”]

Pricing for Your Lane

  • How do you price your services to create margin?
    • The best thing you can do for your customers is to charge the maximum amount of money and get paid upfront.
    • When you know you have margin, you can go the extra mile and the value created for the customer is tremendous.
    • If you are paid before the service, you have an energetic level of freedom that empowers a healthier working relationship.
    • When you get the money conversation out of the way, it frees you up to do your best work for the customer.
    • The experience is different when you are pushed into making a sale.
  • What is the typical way to price photography?
    • The healthiest way of doing business is when there is a broad price range for people to pick their lane.
    • Competition keeps industries healthy.
    • One pricing formula is to take costs plus overhead and add your profit margin.
    • Another pricing formula is to look at your competition and choose to be higher or lower, based on where you want to position yourself.
    • Jeffrey recommends neither formula.
  • How do you value the intangible?
    • The current economy allows you to sell very intangible things, even if it appears you are selling something tangible.
    • For the most part, the best way to sell and find your value is based on the transformation you create for customers.
    • How can you put a price tag on the feeling you will have in 20 years when you look at the photo  capturing your children, your family, or your wedding?
    • For coaching, if you can create a transformation in someone's business by $150K within two years, then why would they not invest $20K?
    • The value is in the transformation.
    • Step #1 is to own the transformation – can you really transform people's lives?
    • Step #2 is to determine the value of that transformation.
    • Help people understand and appreciate the value of the transformation you can create for them.
  • What questions do you ask to help the customer believe in transformation?
    • Entice, compel and walk the customer down the path to their transformation.
    • Be bold in stating how you can help transform people.
    • Jeffrey's process is through the acronym, IMPACT:
      • Invitation to walk someone down the path.
      • Motivation, getting people talking about themselves and their dreams.
      • Point out your value and talk about the transformation as a fundamental shift until the customer has an ah-ha moment.
      • Act on the fundamental shift.
      • Call to action is the actual sales process.
      • Transformation is the deliverable.
    • He has changed the value conversation into a standard process.
    • It helps his team not rush the process; they might stay in the “P” stage for 3-4 phone calls.
    • The organic part of the process is discovering the transformation.
    • He will not take a ‘yes' on the first phone call, to slow down the customer to get them fully committed.

[clickToTweet tweet=”The best thing for your customer is to charge the maximum amount and get paid upfront.” quote=”The best thing for your customer is to charge the maximum amount and get paid upfront.”]

Responsibility for Your Lane

  • What innovation in your business has created a pricing opportunity?
    • The way his business innovates is based on the principle between what people know to ask for (acknowledged need) vs. what they really want (deeper need).
    • Most often people ask for their acknowledged need, but they do not know to ask for their deeper need.
    • To be successful, the burden of responsibility is on you to understand the people you serve.
    • Since he did not grow up like his wealthy, exclusive clientele, he had to teach himself what the experience should be and what merchandising should look like.
    • You can broaden the price range if you deeply understand the people you are going to serve.
    • People call and ask for photos, but what they really want is to be responsible.
    • When you have “money”, you have the freedom to be responsible.
    • Parents with financial means believe their children should all be treated equally.
    • Knowing the things that you do that are magical and for which customers do not know to ask, is what creates repeat clientele.
    • Pick the lane that is true and authentic to who you are.
    • You have to do the job of getting to know who your market is; it does not have to be a reflection of who you are.
  • What does “When you know your life's purpose, you can wear many hats and hang them on one hook” mean?
    • It is a cornerstone to how he works.
    • Forcing creative people to focus on one thing blocks creativity.
    • He is a freedom fighter for the creative entrepreneur to become unleashed from traditional business advice which does not work.
    • Creative entrepreneurs go beyond artists and photographers.
    • The freedom to be a successful creative contradicts a lot of common business advice.
    • Asking a creative entrepreneur to pick a niche is too challenging.
    • Instead, focus on what you stand for – everything else is a choice of medium.
    • If you are in a niche, you might have to pivot.
    • A diversified portfolio model is the best way to go.
    • There is tremendous diversity even with brands like Apple and Virgin.
  • What is one of your best stories about creating value for a customer?
    • He delivered portraits one day and the customer was enjoying looking at them.
    • She neatly put them on her lap in her Connecticut mansion.
    • She said, “Your photography is stunning, but your packaging does not hold up.”
    • She suggested he go to Bergdorf Goodman to understand how they package gifts and he took it as an assignment.
    • He bought a $20 candle and was shocked at how gracious the salesperson was and then went to get it gift wrapped.
    • He asked if he could watch how they wrapped the candle and they explained how and why they did what they did in detail.
    • He packages every single portrait the way he was taught that day.
    • Take the time to understand what people value, even if you do not come from that lifestyle, to serve them the best.
    • The delivery and packaging create a great deal of value for his customers.

About Jeffrey Shaw

Value Pricing Is A Business Model with David Wells – 066

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In 2012, David Wells led Moores, a 40-lawyer practice, through a transition from hourly billing to value pricing. From his experience, he learned value pricing is more than a way to determine what to charge a customer. It is a business model, a philosophy, and a way of thinking. David shares how the new model changed the customers, employees, processes, and systems at Moores for the better.

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Switching to Value Pricing

  • What is the most important thing you can share about pricing?
    • When you charge by the hour, you are not pricing at all.
    • There is a transformation that happens in a professional knowledge firm when it starts pricing.
    • Lawyers who value price are more content in their profession.
    • Lawyers in their office celebrate after a good proposal that is accepted, rather than only after a big legal win.
    • The transformation of the personnel was unexpected and delightful.
    • They were introduced to value pricing by John Chisholm in 2010.
    • One of the principals was bold enough to suggest he would do it in his department on a small scale.
    • In 2011, they decided to have a red hot go at value pricing.
    • Twelve months from starting the trial, they were opening  50% of their files on value pricing.
    • In 2012, they committed 100%.
    • The transition was well-supported and a process.
    • It has provided a competitive advantage.
  • What is your advice for a firm that is making the switch to value pricing?
    • It was not a grand design; they just tried different things, and they worked.
    • If you just flirt with it, it is unlikely to result in success.
    • Commit to a trial period; at the end, be all in or all out.
    • Measure the results that you attain.

The Business Model of Value

  • Why is value pricing a business model, not a pricing model?
    • Moores Agreed Pricing is a business model, not a pricing model.
    • To embrace value pricing, they had to make changes to their knowledge management system– the way they collect and shared their knowledge.
    • A new set of competencies had to be developed to measure employees, to avoid basing it on hours.
    • The new competencies are more innovative and encouraging for the employees.
    • Systems for managing projects had to become more sophisticated.
    • Business development also had to be modified to determine which customers would be most suitable.
    • It has enabled a completely different practice than what they had 4-5 years ago.
    • The results are:
      • Happier customers.
      • Different customers.
      • Different employees.
    • Total headcount is about 80 people, reduced from 120 in 2012, but they are more profitable.
    • The ability to strategize upfront for value and implementing the value has resulted in parting company with some lawyers.
    • The value-pricing model scales if you are committed and have buy-in from leadership.
  • What are the three steps you use to set a price?
    • Determine the objective.
      • There is no point in Moores embarking on a process unless they know they can create value for the customer.
      • Determine what it is the customer is hoping to achieve.
      • Sometimes the result they hope to achieve is not the best result for the customer.
      • If they cannot create the value needed, they will refer them to someone who can.
      • Sometimes the cost of delivering the result might be about the same or less than the profit/value for the customer.
      • If they agree on the objective, they then will scope the work.
    • Determine the scope.
      • Clarify between the professional and the customer what the contract is going to say.
      • Get agreement upfront about the scope and then move to pricing.
      • If you choose to operate a little beyond scope, you need to tell the customer you are adding value.
    • Set the price.

Setting a Price With a Guarantee

  • Whose perception of value do you use to set a price–the customer, yours or both?
    • It is a combination of both.
    • An early mistake was not spending enough time understanding the customer's perspective of the value being created.
    • Effort is needed to convey the value to the customer.
  • How do you negotiate a price with value pricing?
    • They do not negotiate in the strict sense of the word.
    • They have a dialog with the customer and offer options.
    • Options can be classified as negotiation.
    • They will not discount their price.
    • They will discuss what scope can be removed from the agreement, which reduces the value and the price.
    • Customers know they can discuss the scope and price, which builds a strong relationship.
  • What is the difference between guaranteeing the value vs. the service?
    • You cannot guarantee a customer will get a specific result in court.
    • When experimenting with the business model, they were careful to ensure the customers knew they were not guaranteeing the outcome.
    • They can guarantee the level of service they provide.
    • They discuss with the customer what level of service/quality he desires, as it affects the price.
    • You can price (and manage) litigation by breaking the work down into stages.
    • With the billable hour, you can get away with poor project management.
    • You have to be able to manage projects well to value price.
  • What is the opinion of the legal community in Australia about value pricing?
    • A lot of lawyers are ambivalent as hourly rates have worked well in the past.
    • Change is harder to embrace if you have had success.
    • The challenges from those who oppose value pricing are as follows:
      • It works in a small firm, but not a large one.
      • You cannot know what costs should be awarded in a court scenario if there is no timesheet.
    • The timesheet is not necessary for a practice.
    • The idea that the value comes from the input of time is absurd. (Labor Theory of Value).
    • The capability of tracking time has been switched off in their practice management system.
  • Why are attorneys afraid to use their best skill, judgment, to set a price?
    • Kirk first realized this distinction in an interview with Jay Shepherd.
    • Many lawyers are not aware of how much good work they have done for a customer.
    • Their confidence and skill level have improved based on value pricing.
    • You need an ego to price for value; have confidence in your intellectual capital and how you leave a customer in a better place.
    • When that happens, it improves you as a person and a professional.

About David Wells

David Wells is the managing principal of Moores, a legal practice in Australia. They started out as a traditional legal practice. In 2012, David led them to value pricing. They are the largest value-pricing firm in Australia, with over 40 attorneys. His background is in commercial dispute resolution, which includes mediation and litigation. As an avid cycler, he has cycled through the Alps in France.