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PODCAST: Value Based Pricing with Alastair Dryburgh
How do you put a price on ideas or creativity?
It’s a perennial challenge faced by marketing, advertising and PR agency owners. You know you can make a massive difference to your client’s brand challenges, yet you’re often stuck simply selling time. But not any more. Not if you listen to Alastair Dryburgh, that is, anyway.
Alastair advocates agencies charging based on the value they create rather than the time it takes to deliver it. He has built his 3-Step Intelligent Pricing Architecture to help agencies avoid time-based relationships. Instead, with Alastair’s system, agencies will charge based on the value they create, which in many cases is worth a lot more than the billable hours it took to deliver.
Interested? Listen to the show if you want to get into selling value for money or value based pricing, as it’s commonly referred to. Alastair explains his process, from being clear on the value you add to establishing appropriate points of reference and ultimately making your offer unique.
I promise you will get some value from this show if you run any agency of any flavour:
Connect with Alastair here:
Other Episodes of Through the Line you might enjoy:
Self Running Agencies with Rob Da Costa
EOS and Your Agency with Tim Watson
Great Client Service with Jenny Plant
Transcript:
Here’s the full transcript for those of you who like to read:
Andy (00:00:00) – Welcome to Through the Line, the Agency Squared podcast with me, Andy Bargery. In this episode, I’m talking with Alastair Dryburgh, who is an agency consultant, and we are looking at the subject of value-based pricing. The idea that as agencies we can sell our expertise on the value we create, rather than the time it takes to deliver it. And if you’re in the agency world, you’ve no doubt had this conversation or thought about this many times and wonder just how on earth you’re going to get to a situation where you stop charging billable hours and start charging based on value. If you’re running an agency, I promise you this is going to be a really interesting conversation for you and well worth 30 or so minutes of your time. Alastair really is an entertaining and educational kind of guy. He knows his onions and he’s great to listen to. So with that in mind, I hope that you enjoy the show.
Alastair. Hello. How are you doing today?
Alastair (00:00:59) – I am very well, thanks Andy. And I’m looking forward to talking about value-based pricing.
Andy (00:01:05) – Yeah, thank you for joining me. Value-based pricing is one of those topics that I think has, it kind of comes around every now and again. Everyone gets very excited about it and then doesn’t necessarily know what to do about it. A bit like kind of performance related pricing or pay and all that stuff.
So I was pleased when I came across us, somebody that is an expert in this space and can maybe unpack, decipher some of the mystery, shall we say, of how to use value-based pricing. And we had a really nice conversation about this a few weeks ago, didn’t we? And, I knew immediately that I was talking to somebody that knew their onions. So thanks for agreeing to come on the show.
I, I also knew as well that I hadn’t really explored your background enough to introduce you properly. Much to my embarrassment. And I can see that you’ve done plenty of work in terms of financial management and accounting over the years, and I believe you’ve worked in the agency space quite a bit. Yeah. But, but that’s about as far as my understanding goes.
Alastair (00:02:11) – Should I, should I fill you in a bit on that?
Andy (00:02:13) – Yes, please. Yeah.
Alastair (00:02:14) – Okay. Uh, well I guess probably the, the, the place to start is probably, god it feels like such, such a long time ago, 1983 when I graduated with a degree from Maths at Cambridge. Now, if I’d had any sort of proper careers advice at the time, I would’ve become either a journalist or a psychiatrist or a spy.
But I chose to become an accountant. And this was the, this was the start of a, of a, of a long and winding path. I’ve been, when I was still a finance person, I’ve been finance director of six companies in total periods ranging from five years down to, um, 10 days. But the, the next probably important thing is that as part of this long and winding path, I ended up as a commercial director of a marketing consultancy. And we helped large pharmaceutical companies launch their major new products.
Alastair (00:03:15) – Okay and things were, things were chugging along quite well until this is, this is one of the things you wake up in the middle of the night thinking, oh my goodness. I realised, you know, these products, our clients had spent hundreds of millions getting them to launch with all the clinical trials and the regulatory approvals and all of that. And there was always competition. Somebody else always had a very similar molecule that they were about to launch. And so the difference between launching really well and becoming number one in your category and launching badly and becoming number four was astronomical. It was in the billions. I mean, Glaxo for instance, went from being a sort of third division New Zealand company that no one had ever heard of to a global powerhouse thanks to one product launched spectacularly well, right, okay. Yeah. Treatment called Zantac.
Alastair (00:04:14) – So it suddenly occurred to me, you know, we significantly moved the odds of a successful launch through what we’re doing. So we’re in a position equivalent to a big investment bank advising on some gigantic transaction, some merger or acquisition or multi-billion dollar fundraising. So I thought to myself, why are we not as rich and powerful as Goldman Sachs? Yes. We’re compensated very differently, aren’t we? Yeah. You know, we spend our time seething with frustration because it’s some stupid argument with a junior product manager over the cost of an illustration. And that was what got me really interested in the topic of pricing.
So then I went on and I, I did other finance director jobs with, well today they’d call it FinTech. Back in the day it was boring old banking technology, um, briefly finance director of a private army. And then I became an independent consultant and I moved from doing general business advice. And I realised that just about everyone, I advised the biggest single lever for improvement was better pricing. And then I went even more niche when I realized that, you know what, the people I really enjoy working with are the creative people, the creative agencies and the consultancies, the people who work with ideas. So then basically by a process of elimination, I arrived at what I’m now doing, which is pricing strategies for consultancies and creative agencies.
Andy (00:05:58) – Yes. And somehow I stumbled onto your mailing list and you send out these really short, entertaining snippets of ideas around pricing. And I, and it’s, I don’t subscribe to many newsletters because quite often they’re terrible, but yours actually isn’t there. I quite look forward to receiving cuz it’s short and valuable.
Alastair (00:06:21) – Good, good. Okay. Can I take that as an, an opportunity for a very, very quick shameless plug. Um, if anyone feels inspired to subscribe, they’re very welcome. URL is intelligent pricing architecture.com.
Andy (00:06:35) – Well, you know, I was gonna ask you for that at the end of the show, but you’ve got it in early doors, so that’s fair enough. But let’s go back to then this idea that pricing strategy is an area that most creatives, and actually I would say most marketers don’t really understand, haven’t quite got their head around. Although of course you would say that, you could say that pricing is part of the marketing mix. I think as an industry we’re not very good at pricing. Yeah. And agencies certainly struggle with this as well. Yes. In terms of typically what agencies do is sell time for money.
Alastair (00:07:12) – Uh, yeah. Yeah.
Andy (00:07:13) – And that’s, uh, I would say how 90% of the industry probably works. And there’s commissions here, there and everywhere, but most of us sell time for money. And your approach is different. It’s, it’s not time for money. It’s value for money, isn’t it?
Alastair (00:07:29) – Basically. Yeah.
Andy (00:07:31) – So how does that work? How do you as an, as an agency owner, how do you move from a position of saying, it’ll take me 10 hours, it’s gonna cost you a thousand quids to you are gonna earn a million pounds from this because of the value we produce. I’m gonna charge you a hundred grand. How do you shift that?
Alastair (00:07:49) – Right. Okay. So that gives me a good lead in to the most important point I wanted to make is that what you’ve given me is step one of the value-based pricing process. It’s actually understanding this thing is gonna take, you know, this thing is gonna make you a million pounds. Now it might actually be my working out how to make you a million pounds is something it’s, who knows how long it takes me. Cuz actually it was just a brilliant idea that came to me while I was in the shower, which quite often happens. But the reason value-based pricing, as you say, has come and gone, uh, is because that’s just step one and there’s a step two to it.
Andy (00:08:33) – Okay.
Alastair (00:08:34) – And a step three to it. And what happens if you listen to what you, what’s what’s generally out there and you just implement step one is, as I I’ve found this, other people have found it. You come up with your value ba you your understanding of value, you think, yes, okay, this thing will make you a million pounds. So it deserves a, a decent fee from us. And you put this, this in the proposal and you present the proposal, totally convinced that it’s a fantastic thing for the client and they would be insane not to buy it. And then, you know what happens? It’s like, ooh, suddenly like someone’s flicked a switch and the temperature in the room has gone down 10 cent centigrade, . And after that it’s like they’ve gone into a witness protection program. Yeah. , but you still have unlimited access to their voicemail.
Andy (00:09:21) – Yes. Yeah. We’ve all been there, I think.
Alastair (00:09:23) – Yeah, yeah, yeah. And that, that’s why if you only do the first bit of value-based pricing, it actually makes your frustration worse. Cuz the more convinced you are of the huge value of what you do, the bigger the disappointment. When your proposal doesn’t land with the client extre in extreme circumstances, you end up thinking, oh bloody hell. Am I actually, am I actually as good as I think I am?
Andy (00:09:49) – Yes.
Alastair (00:09:50) – Am I any good at all? Because you’ve only done step one of the process.
Andy (00:09:56) – So there’s two things there. I I really want to have a look at. How do you establish what that likely value is at the outset of a project? But before we get to that, this word you’ve used a few times is process. Yes. And I think having a defined process for how you arrive at value-based pricing is extraordinarily valuable. So can we have a look at the stages in the process? Obviously step one is value, but where do we go from this?
Alastair (00:10:22) – Yes. Okay. Right. So step one is value. Now you need to be clear about your own value. And quite often to be honest, people aren’t because, you know, cuz they’re too close. And there’s one of my associates brilliantly put it, you can’t read the label from inside the bottle . So it’s often very useful to get an inside, an outsider to say, actually you know what, that’s worth a lot more than you think it is. But let’s assume we’ve done that. So I think the best way to understand the rest of the task is what I call, it’s the oxygen versus coffee problem. Now I’ll ask you and your listeners what’s more important to you? Oxygen or coffee? Not a trick question, of course. You know, if you’re a carbon-based humanoid life form, oxygen is more important than coffee. You know, if you are not, you know, if, if, if you have any listeners who are not carbon-based humanoid life forms gonna, they please get in touch cause I’m fascinated to meet them anyway.
Alastair (00:11:21) – But then the next question is, okay, given that you’ve just said oxygen is more important to you than coffee, how much in a typical week do you spend on oxygen compared to how much you spend on coffee? Well obviously you spend more money on coffee. Now why is this, why are you spending more money on something that’s less important to you? And the answer is because you can get oxygen for free. Coffee needs to be paid for. And a lot of creative agencies and consultancies, they present their unique, massively powerful, massively valuable offerings like oxygen. Yeah, we know it’s really good, but I can get something apparently similar in lots of different places. So it’d actually be irresponsible for me as a client to pay you lots of money for it.
Andy (00:12:12) – Okay. So in the context of how agencies win business. So it feels like you are describing the pitch process in that here’s all my ideas for free. Oh by the way, my top 2, 3, 4, 5 competitors are also gonna give you all my ideas for free as part of that pitch process. So hang on a minute, why do I need to pay for the value and I can just Yeah, yeah,
Alastair (00:12:34) – Yeah, yeah. And that’s because ideas, you know, some ideas are hugely more valuable than others. No question of that. Um, in John Caps, one of the legendary men in the forties and fifties, he gives an example of two ads look very similar, carefully written copy photographs, same publications, same, same positions. One produced 19 and a half times the results of another. But if you just go through a standard pitch process and you present all these ideas, you haven’t established in the mind of your prospective client, your superiority, you maybe have established the fact that it could be very valuable, it could produce this amount of extra revenue. So there’s another couple of steps you need to go through. And the the set, step two is to set up the right comparisons. So, um, my, my favorite example here is the 17 words, which raised a fee by 150%. So this was a friend of mine, executive coach, got an inquiry from a big law firm, um, said, would he be interested in coaching some of our senior partners? Well yes, of course he would. Then he got the question, what’s your hourly? Right?
Andy (00:13:56) – Yes.
Alastair (00:13:57) – And we talked about, I said, Andy, look, you know, usually you know what I say about hourly rights, do not touch them with a barge pole. But unfortunately with lawyers, their whole lives are organized around the billable. You know, if had better, better chance of converting the pope to Islam than you would’ve getting lawyer not to think about things in hourly terms. They’re
Andy (00:14:17) – Hardwired, aren’t they? In billable hours. Yeah,
Alastair (00:14:19) – No, I, I said don’t try to fight it cuz you’ll lose work with it. So you told tell ’em this, my hourly rate for coaching is the same as the hourly rate of the lawyer I’m coaching. It’s so reasonable. You know, not even a trained litigator would argue with that
Andy (00:14:39) – . I dunno how you could argue against that. It’s a brilliant,
Alastair (00:14:44) – The other terrible thing about lawyers is they’re trained to argue yes, that’s what they do for a living. I think a of them do it for fun as well, but it worked. So he is now, he’s coaching senior lawyers for 500 an hour. A friend of his who’s just as good a coach if not better struggles to get beyond 200. Cuz he works with industrial companies where the executives don’t have hourly rates. So you choose your comparisons. And this is, this is, this is, this is the fundamental law of pricing. Nobody ever ever evaluates a price in isolation. You can’t. Right. It’s always by reference to something else. And either three possibilities, either you choose your point of reference, you set it up in a way that works for you. Like my hourly rate is the same as the lawyer I’m coaching. Or you leave it to the client to try and make a comparison.
Alastair (00:15:34) – In which case you get stuck with a an a, the the going rate, you know the market rate. Yes. And there is no going rate, market rate for unique, brilliant solutions to horrible problems, which is what we do. Or even worse, they end up comparing it with the do it yourself option, which of course a hazard apparent price tag of zero. So you’ve got to set up that, that that comparison effectively. And this is, this is where my, my interest in behavioral economics came in. I, I, I wrote a book which involved quite a deep study of behavioral economics, ended up teaching it to investment bankers for several years. And this is all about, you know, the, the psychology of how we make these decisions, how we evaluate rather vague and wooly things. So if you can set up the right comparison there, you’ve, you’ve taken a big step forward.
Alastair (00:16:28) – And then step three, um, this is all in a guide which you can get when you subscribe to the newsletter you’ve just recommended there. Second apply . But step three is you’ve gotta make it look unique and different. And there are various ways of doing this. My favorite one though is you’ve probably, you may probably got my email about the Cure for McKinsey Envy. Yes, I did. Yeah. I hear people saying, you know, McKinsey do the same thing we do no better. They charge five times as much. Yes. Silicon Valley PR agencies charge two or three times as much as we do and we can do things they can’t. Um, so if you wanna start charging McKinsey type prices, you can either be like McKinsey in s slug for 60 years and build your reputation and get your alumni in strategic positions everywhere. And to be honest, I’m 61 already, so that’s not a viable strategy for me.
Alastair (00:17:27) – , you know, absent major advances in medicine, or you can steal one of their, another item from their playbook, which is really clever and really powerful, which is turn it into a proprietary process. Yes. So you can look McKinsey’s five Ps for installing, um, purpose in your organization. It’s got a beautiful picture. And you look at this, you think, wow, this is McKinsey’s, I can only get it from them. Clearly they’ve done lots of these cuz they’ve got it down. That means yes, they’ve probably, they they’ll almost certainly, it’ll almost certainly work and it looks like something I’m going to spend a lot of money on. Yeah. Justifiably so I did this with a, a client of mine digital agency. They had this thing they were doing for three or four or 5,000 pounds. And I looked at it and said, right on, this is massive. You’re helping your large retailer client uncover huge new completely untapped markets. You should be charging more. And we’ve looked at what they did and with minimal minimal bending of the truth, we managed to get it into the seven Cs format.
Andy (00:18:37) – I love that. I mean, I, I teach a lot of marketing. So McKinsey’s seven S’s, for example Yeah, yeah. Is a model I reference an awful lot. So yeah, the seven, sorry, the seven Cs did you say?
Alastair (00:18:49) – Yes, yes. We managed to get, you know, seven steps each, each starting with a c customer channel commercials and, and a few others that I, I, I can’t to my mind now. So, and that took the fee from three or four or 5,000 pounds up to 46,000.
Andy (00:19:05) – A phenomenal improvement. Yeah.
Alastair (00:19:07) – Because some brilliant ideas unfortunately look like someone else’s brilliant ideas.
Andy (00:19:13) – Yes.
Alastair (00:19:14) – My unique process, in their case of seven Cs in my my case, three step intelligent pricing architecture that’s different. That’s got a level of uniqueness about it.
Andy (00:19:25) – Yes. It, it suggests that, yeah, that you’ve done it a lot. You are a true expert in this space. So much so that you’ve created your intelligent pricing architecture three step process or yes. Your seven Cs for retail channel excellence or what, whatever that
Alastair (00:19:42) – Particular thing. I mean, you know, it’s, it’s, it’s also, it’s also genuine because what, what happens and what, what happened with the digital agency I mentioned as we said, okay, what can we do here? What have we got? And we came up with the seven Cs and we went through, you know, 0.1. Yep. We’re doing 80% of that already. Point two, we’re doing 60% 0.30, we’re only doing 25%. We need to increase that. So once you’ve got your framework or your process or your steps, whatever you want to call it working, you have actually come up with something more powerful than what you were doing previously. So it’s not entirely presentation. You’ve also got a, you know, genuine story behind it as to why this is more powerful, why this is more likely to work, why this is actually worth a lot more money.
Andy (00:20:26) – That I think that makes perfect sense because you can evidence the, the fact that you have done this, you’ve got track, you’ve, you’ve understood that as a defined process. I, I kind of get that. And I, and I, and I think that’s really important. And we talk a lot about processing in agencies so that you can get away from the day-to-day running of an agency for the owner or the founder for example. But this is a different kind of process. This is a process for how you position yourself in the market basically, isn’t it?
Alastair (00:20:58) – Yeah, yeah. And how, you know, you, you know, you position yourself as unique.
Andy (00:21:04) – Yes. So
Alastair (00:21:05) – It’s not you as one of a crowd, it’s at, at worst it’s you versus the best of the
Andy (00:21:10) – Rest. That’s right. This is the only place I can go to to get the seven Cs and the seven Cs is exactly what I need for my, my challenge. I’ve gotta go to this agency, otherwise where else do I get it from.
Alastair (00:21:22) – Absolutely.
Andy (00:21:23) – Yeah. Makes sense. Okay. So is that, is that the three step process then? So first of all, understanding and defining
Alastair (00:21:32) – The your own value,
Andy (00:21:33) – Your own value, then it’s to context really, isn’t it, the comparisons? Yes. Yes. And then last, it’s, you know, doing something that is unique to you that you can own. It’s your own proprietary model, method, system, whatever that looks like. Yeah, yeah. And, and, and that actually doesn’t sound that difficult, but it is , isn’t it?
Alastair (00:21:57) – Well, it is. I mean I I, I’d like actually to go back to the, if I could, I’d like to go back to the, the first step Yeah. Which is understanding, um, your true value and that that can be enormously difficult, you know? Yeah. There is my digital agency client doing something for three or 4,000 pounds that ended up as 46,000 pounds. I mean, another example I’ve got, I’ve got on my bookshelf, I’ve got this book, and the, the author’s preface ends with the rather gloomy sentence. I had hoped to write a good book. It has not turned out that way, but the time is passed when I could do anything about it. So that was what the author thought of his book.
Andy (00:22:40) – Wow.
Alastair (00:22:41) – Then if you read the blurb on the back of the book, it says on its first post posthumous publication, this book was recognized as a masterpiece. That was 1950 posthumous publication in 1953. This book was recognized as a masterpiece. Um, ensuing decades have confirmed that assessment. And, uh, this book is now considered as the single most important philosophical work published in the 20th century.
Andy (00:23:12) – The, the, you know, the opposite ends of the scale in terms of understanding the value
Alastair (00:23:16) – Of, right. Yeah. And the, the, the book is, the book, uh, book for the philosophy geeks is, is Wittgenstein’s philosophical investigations. But anyway, I think the problem was because Wittgenstein was comparing what he’d actually written with this ideal view in his mind of what he wanted to write, which may have been realistic or it may have been not. He wanted to write the absolutely perfect book. He basically, he wanted to end philosophy by answering all the questions
Andy (00:23:50) – An an impossible task, Shirley,
Alastair (00:23:53) – Which is an impossible task. And I think a lot of creative people and consultants set themselves those sorts of impossible tasks. And because we fall short of our own wildly, wildly exaggerated goals, we lose sight of the fact, Hey, you know what, it’s not perfect. And you’ll come back in a few years time and think, oh, I could have done that better. Could have said that better. But it’s actually, as of today, it’s massively better than anything else this client is ever going to find. But we can’t see that, partly because, you know, if we weren’t constantly striving for excellence, we wouldn’t be in this business. And partly because we’re so close to it. Do,
Andy (00:24:37) – Do you think as well, there’s an element there that creative people are our own harshest critics.
Alastair (00:24:43) – I think a lot of creative people are very, um, insecure. And actually it’s not me thinking that, I mean, I’ll I’ll quote, um, David Ogilvy here. Yeah. David Ogilvy said one of the, one of the things about running an agency, which he obviously knew everything about, was that you are managing a lot of very insecure people. And he also says, I have never once started on a project without thinking, oh my God, this time I’m going to fail.
Andy (00:25:17) – Wow. That says a lot about the, the psyche of David Ogilvy, doesn’t it? From, you know, one of the true greats of the industry.
Alastair (00:25:28) – Yeah. But he, he had, he clearly, you know, he clearly he clearly had doubts and I think he recognized that a lot of the other great people he recruited, had, had, had, had, had had similar doubts. And so I think you’ve got, you know, um, I’m, one of my clients said, oh, we need a pricing model that leaves our personal inadequacies outta it. That’s right. And I said, no, you don’t. Right. I don’t, I I, they were very impressive people. I don’t think they had personal inadequacies, but I said, no, you don’t need a pricing model that leaves your personal inadequacies out. You need a pricing model, a system that actually works. So, you know, forget psychotherapy. I mean, do that if you want, but you don’t need it in order to price effectively.
Andy (00:26:18) – It’s interesting, isn’t it? I mean, when, when, when I think about value for clients over the years and that agency client relationship, many times you see or do a piece of work, let’s say it’s a fees a hundred thousand, and then you ask for the impact and you either the client will say, I can’t release that, that’s commercially sensitive. Or you get a, a realistic, well the pipeline off the back of that project was 10 million or something. And you think, wow, you know, that’s a significant contribution. Or you have a kind of target, whether it’s a Romi or a roas, for example. You know, we’re gonna spend $1 with you, but we want $20 in return kind of stuff. And that gives you a real pounds and pence sense of value. Yeah. But some of the things that you’ve referenced, like going back to Glaxo for example, it’s impossible to know the value of the contribution you’re gonna give Yeah. For the launch of that drug before it’s launched. Yeah. How do you reconcile that? How do you work with that?
Alastair (00:27:18) – Well, if you look at, if you look at the system at step one, understanding your value, there’s a checklist of about six or seven different areas in which value can exist. So it might be financial in the, you know, the return on investment metrics you’ve just referenced. It could be competitive about market shares share of mind. But there’s some sort of interesting ones. One particular interesting one, which people very often miss, is assurance. Now, I had a client, um, they were doing something for free. They were scanning social media, looking at questions that were being asked, looking at questions that weren’t being answered very well by anyone currently there and suggesting opportunities for their client. And also basically keeping their client on top of what was going on in a very, very scary in the middle of the pandemic. Right. And their client was a big retail chain with all its shops closed.
Alastair (00:28:14) – And I said to them, look, you know, you’re doing this thing that’s actually hugely, hugely valuable to them. It’s the difference between them feeling like, oh, I know what’s, you know, I know what’s going on. I might not like it, but I know what’s going on. I know what the next thing is gonna be that comes at me so I can develop a plan to deal for it. It’s the difference between that and just complete mental collapse, you know, as some people got to in the pandemic, you know, like, you know, a bit like Rishi sunk, you know, rabbit staring at the headlights. So it’s the difference between the rabbit staring at the headlights and the person who, if you like, is competently surfing
Andy (00:28:55) – Yes.
Alastair (00:28:57) – Tsunami. And they got that. And we found a way of packaging that, which I stole for them from 1970s military strategy. And, and then that became, you know, that became a a a a a a 10,000 pound a month retainer, which subsequently became a 20 20,000 pound a month retainer. And interestingly, it was the only thing that client kept going right through the pandemic when all those shops were closed.
Andy (00:29:24) – Gosh, okay.
Alastair (00:29:25) – Yeah. And that’s, that’s, that’s the value, that’s the value of, um, assurance.
Andy (00:29:32) – How, how did you put that 10,000 pound price tag on that piece of work though? What, because obviously, you know, traditionally an agency would say, well, it’s gonna take us 10 hours a week to do that monitoring and reporting. That’s not the way you did it.
Alastair (00:29:48) – No, I mean, what I would try to do in a situation like that is to say, okay, look, what is, what is the level of business that we’re actually supporting here? Okay. And one of the things we talked about there, we came up with this concept of customers adrift. This was a retailer which had a, it was based around repeat business. And so if people lost the habit of going there re to be regularly, would they come back once you reopened? So we, we could talk about these figures, you know, what would happen if 25% of your existing regular customers who you’ve been investing in and nurturing for years, what would happen if they never came back once you opened the shops? Cuz they’d lost the habits or um, you know, they, they, they’d found an alternative. You know, it’s just, you know, it’s just like me, you know, years and years ago I would go to the dental hygienist every six months and then something happened, I lost the habit and they lost me for about four or five years. And the, you know, the session I had at the end of that was so painful. I’m gonna go back to every six months.
Andy (00:30:55) – And
Alastair (00:30:56) – That’s the point you got repeat business, it can be lost. And so that, that’s, that’s, that’s, that’s that’s what
Andy (00:31:01) – I see. So you painted the picture of if you don’t do this, you might lose a proport of your repeat customers. So a lot of assumptions go into it, but enough for the client to say, oh actually you’re right. You know, if people get outta the habit, this could be extraordinarily impact.
Alastair (00:31:17) – Yeah. Yeah. I mean another one, another one, I mean this technique has got a little bit of a bad rap recently is the whole idea of control. Now that was, that was the idea that sold Brexit, take back control. But I was actually there years earlier cuz when I was doing one of my finance director jobs, I did crisis management and I ended up as the CFO working for a chief executive who was the most unpleasant and difficult person I’ve ever had to deal with. Um, but I found a way of getting him to do exactly what I wanted and he came to me and I was reading their marketing literature and this word control kept jumping outta me and he was a total control freak. So I’d say, you know, we need more accounting staff to keep control of whatever. And he hated the finance department, thought he was a waste of space and wasted money. But if it was about control, he’d authorize these extra hires. We need some more accounting software to keep control of maintenance expenditure. Yep. I honestly think if I’d said to him, we need to invade Poland to increase our control over the European market, he would’ve said yes.
Andy (00:32:27) – So in other words, finding the, put the what matters most to the, the audience
Alastair (00:32:31) – Find what matters most. And it’s usually not financial. It’s, I say this as a finance
Andy (00:32:37) – Director, as an industry of marketers whose job it is to understand our audiences, to find out what they care and, uh, need and want and sell them stuff. We should be able to do this, shouldn’t we really?
Alastair (00:32:49) – Yeah. Uh, I think it’s easy to get hung up on the return on the investment calculations, but may know, my current theory on this is people do things because they want to do things and it’s about being able to sleep at night. In the retainer example, it’s about feeling in control. That’s massive for lots and lots of people. It’s maybe about, I wanna do something that’s gonna make me look good so I I get the next promotion or I can leave this crappy company and get, get a job somewhere better. Whatever it’s, or there’s the weirdly Freudian stuff that my, my wife is a psychotherapist used to specialize in. That’s I think what they really make the decision on. But then of course you need to give them the rational basis. Yes. Which comes from all your, your, your various return on investment calculations. And I used to say the only people who actually make decisions based on spreadsheets are venture capitalists and private equity people. Then I realized that’s not true either cuz you know, they are basically driven by panic. They’re driven by fear of missing out. Yes. They don’t wanna be the firm that didn’t didn’t invest in the first Facebook fund.
Andy (00:33:56) – Yeah. Yeah.
Alastair (00:33:57) – And they’ll fiddle and I, I did some due diligence for a venture capital firm. They wanted to do the deal and they fiddled the due diligence. You know, I pointed out to them, you’re projecting 105% market share in year three. I didn’t care. They still did the
Andy (00:34:12) – Deal . That’s really interesting. I’ve been doing some work with a startup recently and they’re trying to raise some investment and I, I did a, a marketeers forecast that was reasonably conservative and they wanted no, no, let’s go for the ambitious. And I highlighted the fact that the Yeah, yeah. The audience numbers were incredible, but they still wanted to go for it.
Alastair (00:34:33) – Yeah, yeah. So anyway, and you know, mo more moral of the story is you need your, you need your financial calculations, you need your return on the investment calculations, but the thing that will actually move people is, is, is is somewhere else,
Andy (00:34:46) – Alastair, I get the sense we are just touching the scratching the surface of a really, actually a fascinating subject, but I, we, um, we must draw it to a close. So if people want to find out some more and get in touch, I know you’ve mentioned your newsletter, but is there another way to reach out and, and, and say
Alastair (00:35:04) – Hello? Okay. Um, you can go to the int intelligence pricing architecture.com page. Um, you will then get, uh, you can, you can get the newsletter and I’ll, I’ll give you a guide to the three steps, how to get paid, what you are worth. And I’ll also give you access to very quick online assessment. So if you do suspect that your pricing could be working better for you, three minutes, completely anonymous. Um, and it will tell you, you either reassure you or tell you where the problem is and and how to fix it. And that that will come if you’d like to, um, put your details into the box there. Um, otherwise you can reach out to me by email I’m or LinkedIn. I’m really easy to find. Excellent. My parents knew nothing about this in 1961, but they gave me the perfect search engine optimized name. I’m the only Alastair driver in Google
Andy (00:36:07) – . That’s excellent. Perhaps your parents are very forward thinking and saw this massive change coming. Yeah. Thank you so much for sharing some of your expertise and your insight. I know that that’s gonna be of extraordinary value to many people and uh, I will definitely be reading your book, so I appreciate that. And looking back for your earlier book, you mentioned about behavioral economics as well. Yes. Is that what I can source on Amazon? Is that Oh
Alastair (00:36:34) – Yeah, yeah. That’s, um, the, the title of that is everything you know about, everything you know about Business is Wrong,
Andy (00:36:40) – very provocative. Perfect. Thanks so much. And.