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Having a value conversation with the customer is important regardless of the size of your business. However, as a solopreneur, it is essential for survival. You have to determine what type of customer is necessary to operate your business profitably. Then use the value conversation to identify and educate customers that you can serve and with whom you enjoy working.
What Is the Customer's Perception of Value?
- What is the most important thing you can share about pricing?
- There is more to pricing than the cost.
- Pricing is not just what someone is going to pay for it.
- Your perception, expertise, and abilities are part of it.
- Price is a component of the relationship with your customer.
- If you undercharge to win an engagement, you have colored yourself in a bad light.
- If you use pricing as part of your positioning strategy, it changes the perception to your customers.
- Is the customer looking at hiring a pair of hands or your brain?
- Once you state your price, it is very hard to change it.
- If you have a relationship with your customer as an expert, you can engage in other areas.
- A customer was willing to train Eric because they wanted him to build it.
- How do you educate your customer about software development?
- If a customer is pursuing custom software development for the first time, you have to educate them about what is possible.
- Usually, they need to customize something that exists, but they do not know what they can do with it.
- Talk with the customer about the problems they are having and how you can help them gain greater benefits.
- A lot of the pre-sales education is identifying pain points and why the customer came to Eric.
- He educates not only on the value for what they asked but looks for opportunities to create more value.
- Often, they start with the original idea for a trial project to make sure it is a good fit. Then they book as much time as possible to continue working with him.
- How do you handle the high demand for your services as a solopreneur?
- His wife is in human resources, and he has heard the bad side of having employees. He felt like he could control the interaction with one customer each week.
- He pushes things back or helps the customer hire its own team to go faster if necessary.
- If there is a huge gap in the business, doing something minimal can cover the gap.
- He works with them on a schedule, budget, and value to prioritize work.
- Once you unlock the value that custom software can deliver, the customer sometimes feels like it is Christmas and asks for more.
- Constraints empower creativity.
- It is the consultant's job to help determine what is the biggest return at the moment.
- The list of features is prioritized based on the client's perception of value.
- His clients need to trust him for the software development, but he has to trust them in their unique business.
- Value, as a dollar amount only, is short sighted.
- When the customer admits there is no value and they still want him to do the code, he will engage the customer.
Creating Value Through a Conversation
- What is one of your favorite questions to ask during a value conversation?
- He starts the conversation via email.
- Asking questions by email lets Eric know if can communicate via email, which is necessary for his business model.
- He will ask them to tell him a bit about the problem to start a narrative with them.
- Once he gets them to open up, he starts to talk about the budget to set expectations.
- “Why did you come to me now?” is a question to unlock the urgency of the project.
- You will learn about the budget, decision maker, and demand for the project from that one question.
- He had a prospect who had a senior developer leave while they were already understaffed and they urgently needed help.
- It was then easier to go into how long they have been looking and what the transition plan is.
- The customer came to him looking for help, and it turned into a staffing augmentation need, giving him the opportunity to train a full-time employee.
- He tries to make the value conversation fluid: timing, budget, narrative, and basic technology needs.
- He asks about the long-term goals of the project, “Where would you like to see this project 12 months after launch?”
- How do you create value for the customer through the sales process?
- The value conversation is before the project starts, which gives the customer value even if they choose another developer.
- He tries to provide alternative resources when the customer is not a good fit.
- The way you have a conversation (sell) with a customer is an indication of how you work (serve).
- Eric's sales process helps identify yellow flags regarding how they will work together.
- One year, he worked only with past customers, since none of the new prospects was a good fit.
- He makes it a priority not to work with people or projects that he dreads.
Managing Projects as a Solopreneur
- Is working with a small number of customers a risk for a solopreneur?
- The biggest risk is getting stuck with a customer that jeopardizes you legally.
- But, if he works with a “yellow” customer, he cannot work with a “green” one that comes along.
- Bad customers drive out good customers. – Ron Baker
- Saying yes means you are saying no to something else.
- Pricing plays a part of getting the best customers.
- When you engage several with small, low-price customers, you will have a hard time raising your prices.
- Those customers are not going to give you good referrals.
- Price in a way where you do not have to sell every waking minute to pay your bills.
- If you are selling all your capacity, you do not have any availability.
- If he sells only one week per month, he is still comfortable because he uses pricing a tool to make that happen.
How you sell is indicative as to how you solve. – Mahan Khalsa
- How do you handle scope creep during a software project?
- He welcomes scope creep, as long as they go back to reprioritizing.
- He follows the chaos model to make a list of everything to get done and then work on the most valuable thing first.
- Eric wrote a blog post on his project management.
- When a customer comes with multiple documents to scope the first phase, often you cannot do everything at once.
- You can deliver the minimal, most valuable items first and then build over time.
- Slowing down helps with project management.
- Every Monday, he reviews the list of priorities with the customer, and they reprioritize what can be accomplished that week since he works week-to-week.
- He likes that process because it shows that the customer thinks about the value they are receiving.
- He guides their priorities but lets them make the decisions.
- What is one of your best stories about creating value for a customer?
- One customer because of a blog post on technology.
- The company was a decent size start up and needed his help.
- They had a hard launch date in less than a month, due to government regulation.
- He started to finish features but then started to question what they were doing and why.
- Early the next year, they solved a lot of the additional issues, and people started becoming productive, rather than in crazy start-up mode.
- He probably brought several million dollars of value and set them up for long-term success with just a couple of months of work.
About Eric Davis
Eric is the founder of Little Stream Software. He has made a conscious choice to start and remain a solo developer, even though he has made over six figures developing for Redmine, an open source software project. He is now making a pivot to developing web apps for Shopify. He shares his knowledge about pricing nad marketing through his curated newsletter, Freelancing Digest.
- Eric's Website: littlestreamsoftware.com
- Eric's Newsletter: freelancingdigest.com/artofvalue
- Eric on Twitter: @edavis10
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