Focus on Outcomes to Deliver Value
Tuesday, March 23, 2010 at 10:43PM
Joey Brannon

Your customers have no business asking how you deliver value. What do they care how you do it? The only thing that should matter is that you deliver what other people cannot. This sounds harsh, and perhaps it is a little overboard. I like our clients to see how we work through problems and business strategy sessions in real time. It gives them a sense of what is happening. But it is also dangerous. In our business the danger lies in having a client watch what we do, put us on the clock, and say "that took you about 4 hours and it cost me $5,000. How can you possible be worth $1,250 an hour when everyone else is charging $200 or $300 or $400 an hour?"

This happens to me all the time, and it happens more often on due diligence engagements than any other type of work we do. Due diligence is the process of examining a business that is about to be purchased, kicking over every rock you can find, and basically trying to avoid any nasty surprises for the purchaser. Due diligence from the legal side involves making sure that the contracts, corporate documents and legal track record of the target company are all in order. From the financial side it involves a gut check to say "Is this business worth buying?"

Just this week I was meeting with a potential client regarding this type of work and when I told him how we typically quote our fee (1.5% of the asking price) his response was typical. "That's a lot of money." He then proceeded to tell me that he had budgeted about three times as much for legal fees as he had for financial due diligence. Understand his position. He was willing to spend a lot of money to make sure the contract was written correctly, but comparatively very little to determine whether the money he was going to spend would be a good investment, whether the business had a reasonable chance of success and whether or not the financing terms were something the business could afford.

When customers don't understand outcomes they skimp on $15,000 in due diligence and invest $1 million in a failing venture. They save $500 or $1,000 on a logo for their startup and have trouble landing their first big contract because it looks like they're operating out of the student union.

Customers need you to teach them why your outcomes are so much more valuable than your competitors. They don't need to know how your process or product is different from your competition. In sales they call this focusing on benefits rather than features. In service businesses it is sometimes hard to describe features and benefits but everyone understands the difference between process and outcomes.

The next time you draw up a professional services proposal avoid the temptation to spell out HOW you are going to go about your job of delivering value. Instead explain exactly what the customer is going to get in the form of tangible and intangible outcomes.

Article originally appeared on Axiom CPA, P.A. (http://www.axiomcpa.com/).
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