How to put a price tag on strategy
For starters, don’t make it a discussion about your hourly rate.
In a tough economy, marketing agencies, consultants and freelancers face a daily battle against having their talent and intellectual capital commoditized. I saw this happen early in my career.
In the 1990s I worked for a B2B direct marketing agency that did very well. We had several long term accounts with Fortune 100 companies. We did many ongoing customer relationship programs for them that generated profitable sales over periods of 5-10 years.
We also had a few kinks in the business model that made me uncomfortable.
At that time it was still fairly common for an agency to land full-service business. We were fortunate enough to be one of them. Over time, we got too comfortable with the margins from printing, mailing and fulfillment services while selling creative and strategy services near cost.
Related: The triage marketing death trap
On top of that, the sales model for new business gave away strategy. We would present a complete marketing program, with all the research, analysis and creative rationale at the proposal stage. Many times I would walk away from those presentations thinking, “We’ve given them the whole strategy. They could take the plan, thank us, and then do it themselves.”
When economic hardship hit our biggest client, this came back to haunt us.
In response, they implemented a centralized procurement policy to cut costs. They unbundled all of the printing, mailing and fulfillment services from our programs, pulling them in-house. The body blows didn’t stop there.
Since we had been giving away the strategy work, it showed no value on their ledgers. Eventually we devolved from a full-service agency to a creative vendor. Party over.
I remembered that lesson years later when I became an independent consultant. I resolved to never give away the strategy or creative ideas in a marketing proposal. Instead, I use a proposal format that sells the plan and value I bring. It’s much more than a one-page cost estimate, though. Check out this slide deck to see what I mean.
7 steps to proving your value to prospective clients
Including these seven components in your marketing proposal helps to steer the discussion to how you will help solve a business problem rather than how much you cost. It follows a logical flow that more often than not gets the client to say, “Yes, let’s work together.”
Here’s how it flows:
1. THE OVERVIEW
The overview is a high level summary that tells the client (I’m using the assumptive close, here) you understand their business challenges. And it states the problem you will be solving together.
2. THE OBJECTIVES
Sometimes I refer to these as “starter objectives” to get the conversation started. The goal is to get written agreement on specific outcomes and how they will be measured. For more on writing smart objectives see this post. Everything that follows is based on the objectives, so getting agreement on them is most critical.
Related: When execution beats strategy
3. SCOPE OF WORK
This part details the specific work you will be doing, and when appropriate, what is not included.
4. WORK PROCESS
Here is where you explain the steps you will take to complete the work and identify all the parties and responsibilities required to make them happen.
5. COST ESTIMATES
Now it makes sense to show the estimated costs. They are based on work process, which is based on the scope of work, which is based on the objectives. This gives a value basis and strategic rationale to the costs. Discussions about the budget can be focused on scope rather than your hourly rate.
6. WORKING AGREEMENT
The purpose of the working agreement is to establish the legal aspects of working together before they become an issue midway into the project. It covers cost estimates, ownership of work, confidentiality, payment for services and other elements of doing business together. Addressing this up front shows you are a professional.
7. BIO/ABOUT US
This is the place to end on a positive note. Don’t make it fluffy boilerplate propaganda. Direct your narrative to the skills, knowledge and experience you have specific to the industry and the assignment.
Getting to ‘YES’
The important thing to remember is the proposal is not the marketing plan. It is a discussion tool to set and manage the expectations for the project. And it is a tool to help you establish the value of the strategy and work you bring. It is your best bet for getting to ‘yes.’
Tell me what you think.