Scoping for value
There is so much written about value pricing yet its still not widely accepted by clients.
We aim to get recognised and paid for the value we create, not the hours we spend on the project.
We want to shift from a cost focus to a value focus. To do this our scoping needs to identify and understand the outcomes that create value for our clients.
Typically most firms get straight into the scope of work without defining the scope of value. This is a missed opportunity. But you can’t scope the value without understanding the client’s objectives, outcomes and metrics.
In many cases the problem begins with the client beacuse they can’t articulate their objectives for the project. How many clients simply say ‘increased sales’ is the objective? That’s a ‘duh’ response because every client wants to increase sales and grow their revenues.
The problem’s in the indicators the client uses. We need to look at the leading or lagging indicators.
According to Bernard Marr best-selling author, keynote speaker, strategist writing in Forbes.
A simple way to differentiate leading indicators from lagging indicators is to think of your business as a car. When you are looking out the windshield, you are looking at what’s ahead of you—those are leading indicators.
Conversely, looking back at the road you just traveled, as you do in a rearview mirror, describes lagging indicators.
How do you answer the ‘more sales’ client response
Head up the sales funnel.
Sales is a lagging indicator, along with other metrics like market share and products made. Lagging indicators have their place but are essentially historical metrics. We can only view them in the rear view mirror.
Leading indicators are predictive. They are the metrics preceding the sale. For a car dealer, total sales is a lagging indicator but test drives are a leading indicator.
Most clients default to the obvious lagging indicators when briefing so we have to help them drill down to the metrics that matter. The aim is to find the leading indicators because they will add value further up the sales funnel. With the car sales example the aim is to get more test drives or increase the sales rates from test drives.
Scoping on value by identifying lead indicators adds value for clients in itself. Our role is to understand the relationship between our client’s leading and lagging indicators.
Contact Greg Branson if you would like to learn more developing a value scoping process.
Here’s more information on design maturity:
- Prioritize performance and article about leading and lagging indicators – here
- Efficiency and effectiveness with leading and lagging indicators
- How design mature are your clients.
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