Monday, May 18, 2009

Get Out of Your Comfort Zone

It’s rewarding when I hear clients repeating to me some of the suggestions, advice or phrases that I’ve used in my coaching and consulting sessions. At least it shows they are listening to some of the things I say.

The other day I was working with one of my individual clients, a person who has started his own business and I heard him say to me, “You know, I’ve got to start working more on my business rather than in my business.”

It is a phrase I use often with my clients because I see the positive results of this simple piece of advice often.

As the leader you have a choice each and every day, each and every hour.
That choice is simple: to work in your business or on your business. In the business means spending most of your time on client business – conference calls, account team meetings, attending client meetings, writing proposals, participating in or leading new business presentations, etc.

Working on your business means thinking about and doing things that move the firm towards its vision and your desired culture.

It’s not one or the other – it’s a combination of both. Too often, however, I find that most owners and CEOs spend the great majority of their time working in their business. I have one client where the CEO and COO are often 90-100% billable. That’s just too high. I have another client where the CEO is proud of the fact that he does no billable work. That’s just wrong – you never want lose touch with the work.

The reason you are more comfortable working in the business is simple: most people who run agencies mounted the promotional ladder in other firms. You like the client work. That’s why you stayed and that’s why you grew as practitioners. It’s your comfort zone. Now that you own or run an agency, it is still your comfort zone.

Working on your business, making tough decisions on investments or new hires, or new services takes you out of your comfort zone. It makes people nervous. Why? Because it often involves taking a risk.

Ultimately, how you spend your time as owner or CEO is totally up to you. It’s your choice. Remember, however, if you want to become a great leader and create a vibrant, sustainable business, getting out of your comfort zone and working on your business is a necessity.

Tuesday, May 5, 2009

Is Cutting Prices Smart Marketing?

Obviously the competitors for stressed out coffee drinkers think so. In the face of McDonald’s spending $100 million on a new marketing campaign touting the quality of its coffee at a more affordable price than its competitors, Starbucks announced it is cutting prices on some of its drinks and Dunkin' Donuts followed suit.

In an article, Jean-Pierre Dube, professor of marketing at the University of Chicago Booth School of Business, said it is “extremely important” for McDonald’s to advertise lower prices during the recession because they are less expensive than others.

This brings up a question for me. Is it smart marketing for agencies to lower their prices and promote that to prospects?

Everyone knows it’s more competitive out there. Large firms are going after prospects they wouldn’t touch if times were good. Yet, large firms have a cost structure that makes it more difficult for them to change or lower billing rates and client fees. Smaller firms don’t necessarily have that problem. They can be more flexible and more nimble. And, they can emphasize lower fees in new business presentations. Despite what we would like to believe, many (good) clients initially buy on price and that’s even more true today.

Some will argue that lowering fees or reducing billing rates, or “giving work away” cheapens the value of that agencies bring to clients. They say once you lower costs you can’t raise them. I don’t buy into that philosophy.

If you can establish a price advantage over a competitor (and still make money) why not use this to win the business, develop a relationship and look to increase the scope of work (and fees) over time. Since many agencies increase their billing rates annually anyway, why can’t you lower them and then increase them in years to come?

I think you can. And it may help you win the business!