Real estate and financial advisors are under a lot of pressure to lower their fees for clients.
The pressure is sometimes audibly heard from clients who blatantly ask: “Would you consider lowering your fee for me?“. And sometimes it’s not heard at all because the prospective client doesn’t bother using your service and decides to go a “do-it-themselves” route.
How can real estate and financial professionals overcome this pricing pressure and charge what they deserve to earn for their services? And, how can you attract and retain clients who happily pay this rate instead of trying to grind you down or try to do it themselves without your help?
LOOKING ELSEWHERE FOR INSIGHT
We can find the answer by looking at businesses (in other industries) that get clients to pay higher fees:
- Movie theatres charge higher-than-average prices for a ticket to a movie… and then they charge even more for popcorn and drinks.
- Apple charges higher-than-average fees for their iPhones and iPads and yet they enjoy massive growth and marketshare retention.
- Visa and MasterCard charge controversially high interest rates (19% on the low-end) but that doesn’t stop people from running their expenses through their cards and even maxing them out sometimes.
What do all of these businesses have in common? They offer something that the customer cannot get anywhere else.
That’s the secret.
Although there are cheaper alternatives (such as renting a movie, buying a non-Apple mobile device or tablet, or paying with cash or debit), the businesses listed above offer products and services that make the cheaper alternatives pale in comparison.
Customers perceive that the theater experience or the Apple brand or the own-it-now-instead-of-later convenience of credit cards are so valuable that the extra cost is worthwhile.
For many years, the financial and real estate industries enjoyed a similar “exclusive” reputation but…
FINANCIAL AND REAL ESTATE HAVE CHANGED
Clients used to put a lot of trust into their financial advisors and real estate agents because these professionals provided exclusive high-value service that the client could not get anywhere else. But the internet transformed these industries and levelled the playing field between professionals and their clients.
Clients could perform far more of their own research and gain easier access to information and services that were difficult to access.
Although financial and real estate professionals still provide an invaluable service, clients don’t perceive the value that they used to perceive so they want to try doing the same thing on their own. Unlike the businesses we listed earlier, the difference between the higher-priced offering and the lower-priced alternative does not seem different enough (in the clients’ eyes).
Therefore, professionals need offer even more services and demonstrate even greater value than they ever have before.
It’s time to put your innovation hat on and do the following:
- List all of the services you perform (both free and paid). Then find ways to ramp them up and make them even more valuable for your client. Consider adding more information, new technology, and go-the-extra-mile service.
- Think about the information you currently provide. Chances are, quite a bit of it is available online for free. So dig deep and find additional insight you can give to your clients that they can’t get anywhere else.
- Brainstorm activities that your clients do, which are related to your service but not something you currently provide. Figure out how you can extend your services to include those related activities. For real estate professionals: Once a client buys a home, they have to make arrangements to move in. Can you extend your services to include managing those end-to-end moving details for them? For financial professionals: Clients who buy investments and insurance from you might also need accounting done. Can you bring an accountant into your office to provide a full net worth management service?
- A big part of the value difference is simply perception. People who go for the do-it-themselves approach instead of hiring you are doing so because they don’t see a difference between your services and the cheaper alternative. Revisit your marketing to see how it positions you. If your marketing isn’t positioning you as the ONLY professional for your prospective clients’ needs, find out how you can be different and rework that marketing content. If you’re not sure where to start, try listing all of the things that clients would miss out by choosing a do-it-themselves approach instead of using your approach. List as many items as you can. Then brainstorm further to create a larger list (and develop new services of your own, if possible). The larger the list, the better.