Industry

If you Earn Your Fees, You Don’t Need to Apologize

Brian Graff’s piece on NAPA.net in April, “Retirement Services are not Orange Juice” talked about a recent series of attacks on the retirement services industry following the enactment of fee disclosure legislation. (And, props for the reference to the movie Trading Places by the way.)

retirement oranges

The author states: “Perhaps this is the retirement plan industry’s own fault. With the advent of fee disclosure, we have been so busy competing aggressively on fees … we haven’t been focusing enough on the critical value proposition the industry provides. If we don’t do that ourselves, how can we expect our critics to focus on anything but fees?”

He concludes, “If the retirement plan industry continues to innovate and deliver on these promises, the value proposition that is provided will be self-evident. Retirement plan services are not a commodity — and ultimately it’s up to the industry to show this.”

Well “Amen” to that! If you provide a valuable service, you should be able to charge for that value. Of course, the key is making sure that the value delivered is perceived and acknowledged. But, is the retirement services industry the only place where we find this conundrum? Not really.

I see many industries where the majority of sales people are reduced to a puddle of sweat as soon as the customer questions their fees. It seems that nearly the entire supply chain of the printing industry, and to a lesser degree upstream in marketing services, suffers from this affliction. Matt Parker posted last week that “Failing to Educate Customers is a Mistake for Printers.” While that is true, Print’s customers need help educating their customers (and the industry at large) as well. Funny isn’t it, how suppliers and buyer often have the same problems. Maybe they should talk, eh?

Elizabeth Gooding

Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net

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About Elizabeth Gooding

Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net

4 Comments

  1. Ed Ventura

    I’m fully on board with the above but I must also add that value of the service must deliver an appropriate ROI (get paid for the service you provide and make sure the implication is understood). That ROI is usually financial, but may be associated with service levels or other “soft” metrics. Also, whatever is offered must be approached from a “partnership” perspective (novel concept of buyer and seller talking).

    Here’s where the seller/buyer need to come together – all too often the buyer places the burden on the seller to spec out the ROI. However…….the seller can’t possibly do that for a specific buyer unless the buyer understands their current costs/revenue streams and works with the seller to agree points of opportunity.

    A quick story – I was developing a data governance program for a client and just before the implementation phase I was asked what the ROI of “clean” CRM data would be. Getting under the hood of the financials within the company it was clear that the company had grown through acquisitions and had developed an “intangible” line on their balance sheet to reflect the brand values of their acquisitions. Measuring the maturity level of their data we were able to discern the opportunity for improving data quality but what was the impact of improved DQ on ROI? We worked with the client to understand the composition of the intangible line and applied an algorithm reflecting improved DQ to show that there was a potential ROI of € 362 Million. Needless to say, we (seller) could not have calculated the ROI without the help of the customer’s brand management group who didn’t even know we were working with the company…….and we all lived happily everafter.

    • EGooding

      Ed – great point! You’re talking about selling on value rather than price. Who cares if the solution costs 2 million if it saves 363 million. Those kinds of success stories can only happen in a consultative sales environment – one where you go in trying to solve a customer problem rather than trying to sell a pre-packaged product. Same story in the retirement services industry – if a provider has tools to get more employees to participate at higher contribution rates, offers solid returns etc.etc. -maybe higher fees in the short-term are warranted. This was certainly true with many annuity products in days gone by (sadly no more due to depressed interest rates) where the returns and special riders were worth the fees. On the flip side – annuities were also sold into completely inappropriate environments by under-educated reps. Thanks for sharing your story.

  2. Joe Pigeon

    Amen to your “puddles of sweat” comment Elizabeth. All too often salespeople are ill prepared to justify their price, whether it is fees for retirement services or software sold in the printing industry or print services. And perhaps it’s an education issue. Maybe customer-facing respresentatives – from salespeople to customer service reps – need to be more thoroughly educated in how to answer the “fee/price justification” question. Perhaps because I’m a business owner – and therefore have a bit of a different perspective than the average non-owner salesperson – I more fully understand the value we offer our clients and am not afraid to ask to be paid for that extra value. Part of that conviction comes from knowing that I am fully committed to ensuring we deliver the value that justifies any added price/cost/fee. It’s my business after all and I can control it. Maybe the normal non-owner salesperson or customer service rep doesn’t feel s/he can control the value they deliver so they don’t believe it as ardently and therefore can’t sell it as well? Just a thought.

    • EGooding

      Joe – as an entrepreneur/sales person you are closely connected with what you sell and are the embodiment of “if you believe in it – you can sell it.” Perhaps in larger companies there is a disconnect between the product/service and the sales person. I certainly think that in many cases sales people don’t get enough support in fully understanding their products and the positioning of those products to address the customer’s pain points. Any time you have a complex sale like a retirement plan, an inkjet printer or a series of business communications to a marketing client you really have to understand what you have to offer, how it meets the customer’s needs and how it is different from the other options on the market. I think sales people come off a lot better when they can have that discussion and be willing to walk away if necessary knowing that they offered a solid solution at a reasonable price.

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