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Pricing strategy in professional services marketing

My new video addresses the increasing importance of pricing strategy in the professional services arena. The tradition -- prices being developed by a handful of professional service partners -- no longer affords an effective competitive advantage. That’s why mid-level marketers considered the Pricing Strategy module to be one of the most valuable subjects offered in the first cohort of the Professional Services Leadership Initiative (PSLI) at the Smith School of Business.

Effective pricing is fundamental to the business success of a professional enterprise. Marketers have a unique understanding of the client’s perception of value and the always-shifting global marketplace. They should understand pricing models in order to become key partners in the creation of a professional service firm’s growth strategies.

  

 

 

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Mid-level marketers learn about The Client Experience

Astonishing!

. . . or maybe not.

Last week I was a panel moderator of chief marketing officers at the 16th annual Marketing Partner Forum. This well-respected conference is targeted to senior-most marketing officers and partners at law firms. In my session, CMOs discussed their work to increase the effectiveness of marketing and business development, and their "doing things differently" approaches to lead autonomous professionals to make critical changes.

At another panel discussion, featuring corporate law department heads, one of the panelists read his Top 10 list of pet peeves in working with law firms. His list featured a sharp critique of attorneys' insensitivity to their clients' budgets; poor communication on the work being billed; and outright mistakes and inflexibility regarding invoices and fees. He outlined his plans to further protect his company against the insensitivity of legal services providers. His fellow panelists heartily echoed his comments.

A marketer sitting next to me leaned over and whispered, "But we don't have anything to do with the accounting practices of our law firm." I whispered back immediately, "You absolutely must have something to do with the accounting practices of your law firm."

The more I think about her comment, the more astounded I am. At the least, her comment implies she has no idea if this situation exists for her own law firm. At the worst, she knows it does and has decided not to address it. 

Why doesn't she feel more concerned about clients' negative perceptions of law firms? Aren't marketers supposed to be advocates for the client? Why does this senior marketing professional feel so disconnected from her accounting or finance colleagues? What kind of culture exists within her law firm that people feel no mutual accountability for making marketplace gains?

I used to be an in-house PSF marketing professional. I know what happens when professional firms prevent shared accountabilities and impede collaboration between functions. I know how under-resourced most professional services marketing pros are, and how this situation impacts their feelings -- usually negatively -- about leadng change within their organizations.

But, oh, how astonishing and disappointing it was to hear the dismissiveness with which this marketer reacted to the panelist's comments.

Professional service firms must get a handle, right now, on their marketing and business development silos. Client complaints about pricing and accounting practices will lead directly to the commoditization of the professional sector and each firm's marketplace position within it.

Here's my own advice, for all marketers and client-facing practitioners: find a way to integrate your firm's marketing/business development with its firm's accounting or finance functions. It's a competitive imperative.

RainToday's pricing research

The folks at RainToday.com asked me to share my thoughts on their new series of research reports on pricing.  The studies are targeted to five specific sectors: consulting; marketing, advertising and PR; architecture, engineering and construction; legal services; and accounting and financial services. 

My one-word reaction:  HURRAY!

Pricing has been a too-mysterious subject for as long as I can remember in professional services.  In some industries whose businesses are more driven by competition-driven RFPs, the AEC arena for example, pricing is a more open (and sometimes vexing) subject.  In other sectors, it's painfully obvious that some professionals are feeling their way in the dark.

For the PSF pricing neophyte, RainToday's reports shed light on many of the more arcane aspects of the subject.  Who's using hourly fee pricing, and how much are they getting?  What is value-pricing and how can we start using it?   

The good news / bad news about these studies is that they benchmark the various pricing models used by the sectors. That's a sign of the maturation of the professional services arena, isn't it? 

The studies also address the relationship of a PSF's perceived unique value to its pricing models and its relative preparedness for economic downturns. The answers to THOSE questions are too firm-specific for these reports, but they do "call the question."