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SMART IDEA #39: How to avoid selling on price

Weekly inspiration for the staffing industry

ISSUE #39  |  July 13, 2024

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• How to avoid selling on price

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SMART IDEA #39: How to avoid selling on price

David Searns | Co-CEO


AFTER 10 MONTHS OF SALES…I JUST LOST A CLIENT ON PRICE!

 

Earlier this week, I received an email from a client that was feeling quite frustrated.


He had spent 10 months closing a deal with (what he thought was) a great prospect.


The terms of service had been worked out, and they were down to defining reporting requirements.


And then, out of the blue, he gets this message:


We received an offer sheet from a competitor with lower rates, including a very fair onsite price. Because of that, we will need to postpone/cancel our meeting. 


Ouch. 10 months of hard work. And a fair deal down the drain.


What could have been done to prevent this?


This client really got me thinking about the challenges of commoditization in our industry, and what staffing companies can do to sell on value.


Here is the response I sent to the owner of this staffing company:


I’ve been thinking more about your pricing challenge since I wrote yesterday. Coincidentally, I’m also reading a book called “Scaling Up” by Verne Harnish, and part of what I read last night really addressed this issue.


The issue, as I see it, is that buyers of staffing services don’t see differentiation from one company to the next, so if someone can offer what they perceive to be the same service for less, then why pay more?


From the book I am reading (and everything I know about sales and marketing), there are a few keys to sales success:


1. Target the right customer

 

While any company can use staffing, which ones are the best match for your company?

 

What makes these companies the best match? Size? Type of need? Volume of need? Problem to be solved? How they value staffing (i.e., strategic resource or necessary evil)?


For example, you might be able to sell to a big manufacturer that needs 200 people a day, but they are more likely to be a MSP or VMS buyer, or be juggling five different staffing vendors to fill their needs, so they really don’t want a staffing company to be anything more than a low-cost supplier.


That type of client is probably not the right kind of prospect.


Your ideal client should be a business that sees and appreciates your unique value.


Which brings us to…


2. Define your brand promise


What are you really selling to your clients?

If it’s temp staffing and direct hire, that’s a commodity.


Instead, focus on the emotional pains your ideal clients have and how your service delivery is structured to eradicate those pains.


For HR, the pain might be a lack of respect, stress from a lack of time to get things done, or pressure to simply reduce labor costs.


For a business owner, that pain is the struggle to drive growth in a down market and the frustration with not having reliable employees they can trust to give 100% every day.

You are not selling staffing. You are selling a service and a process that eliminates pain for your ideal clients. Define this and you move your company out of the commodity zone.


3. Solve for the job your client needs to get done

My favorite analogy for this is that if you go to Home Depot and buy a ¼” drill bit, what you really want is a ¼” hole, but they do not sell holes.

When your ideal customer purchases staffing services, what is their ¼” hole?

It could be as direct as “we have to get boxes filled or widgets made” or it might be more along the lines of “we have to meet production quotas and shipping deadlines.” Or “we need to achieve certain growth metrics or improve labor efficiency ratios.”

Your ideal customer has a job to get done. Your value is in how you provide a COMPLETE SOLUTION to enable them to get this job done. The better you understand the problem to be solved, the more you can provide that complete solution—which may go beyond just staffing services.


4. Craft a compelling brand promise

Your clients have LOTS of choices for staffing service providers, so what are the compelling reasons why your ideal clients should choose your company? Most companies will strive for three brand promises.

Example: McDonald’s brand promise is speed, consistency, and fun for kids.

For your firm, your brand promise should match what your clients want from a staffing partner AND address what they find most frustrating about working with staffing companies.


Then you need to ensure your service process is designed to consistently deliver on those promises.


5. Define your brand promise KPIs


How will you measure your performance to ensure you are delivering on your promise?


For example, if your promise is the right talent in 24 hours, then you need to measure the percentage of jobs filled in 24 hours and the percentage of fall offs, so you have a measure of both quality and speed.


6. Offer a brand promise guarantee.

This is a tough one for most companies – what guarantee will you put on your work?


The guarantee should match your ideal customer’s biggest fear about using your services.


Maybe something like, if we don’t provide the right person, the first time, we’ll replace that person for free…and give you the next placement for free as well! (Not suggesting this is the guarantee you use, just sharing as an illustration of the concept).


7. Differentiate your HOWs


What three to five things do you do differently than everyone else in the industry?


Your HOW defines the process you use to provide a different outcome than everyone else. It should ensure you fulfill your brand promise every time.


Sometimes you make these processes public. Sometimes they are your “secret sauce” or your “black box” that you don’t disclose because these are your trade secrets.

In staffing, this part is really hard because most companies are using the same technologies, assessment tools, and hiring processes. So where is the differentiation?


This is a challenge for you and your team – how can you change the way staffing gets delivered so that you are fulfilling your brand promise in a way that no one else is—in this way, you are offering value to your ideal clients that no one else can match.


Please note that none of what I have written above is easy to do.


I’ve been through this exercise multiple times for Haley Marketing, and we still struggle with parts of it.


But when you have a clear target customer, value proposition (the job you do), brand promise, and proprietary methods, it works.


I'd love to hear how you apply these principles and what works best for your business. Or if you're struggling with this challenge, let me know how I can help.


And I hope this book review is helpful! 😊


David

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The SMART IDEAS Summit is back!

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