With this issue, VISIONS introduces a new ask-the-expert column focused on occupational health sales and marketing. The responding expert (Dr. Marketing) is Jack Harms, president of The Marketing Department. He has been helping clients improve their competitive advantage since 1986 by expanding service differentiation, improving communication, and strengthening sales processes. He has been a featured presenter on sales and marketing topics at Ryan Associates’ annual national conferences and occupational health sales training seminars.
Q: Prospective clients are asking us to lower our rates. What can we do to maintain the pricing levels we want?
Dr. Marketing: There are two basic issues to address: First, when a prospect asks for a lower rate, in essence, it means he or she sees no meaningful difference between your program and that of your competitors; therefore, a lower price may be the only way to justify a choice. Second, providing only a “price” allows the prospect to easily compare what they feel is your program’s value to others. When price is the only basis offered for selection, lower fees are almost always chosen. My advice? Don’t think of your services as having prices. Instead, tell the customer what they’re going to get out of doing business with you. Then describe the cost of your services as an “investment.” This will allow you to define the value of your program in terms of the purchaser’s return on investment (ROI) and make it difficult for prospects to do price comparisons.
Q: How can we produce a meaningful ROI for our Clients and Prospects
Dr. Marketing: An investment can only be correctly judged in relation to the size of the return it produces. For example, $8 may be a lower price than $10, but $8 invested to get back $12 (50% ROI) isn’t nearly as good a choice as $10 invested to get back $18 (80% ROI). Creating an effective ROI proposition starts with a calculation of the primary value of any occupational health program, i.e., its ability to reduce an employer’s workers’ compensation costs and/or improve overall company productivity. To make a differentiated ROI claim, a program must contain features that 1) directly influence the gains and 2) are not offered by competitors. The addition or expansion of features usually requires increased cost and/or risk, since your organization is now doing something it wasn’t before. However, if done properly, the cost is more than offset, and risk is mitigated by the greater revenues and higher margins generated through increased sales at higher prices.
Q: What features should we focus on to differentiate our program?
Dr. Marketing: In general, offer more than the customer has a right to expect. Hold your company to a higher standard of service delivery or outcome, and pay a financial penalty should there be a failure. Assume activities normally performed by the customer and paid for through their overhead costs. A program containing differentiated features that generate positive gains for the customer, combined with a presentation showing the magnitude of the customer’s ROI, is an effective way to avoid the battle over prices.
