August 16, 2023
How To NOT Get Cut In Crunch Times
Fellow list member and fractional CFO, Lauren Pearl replied to my recent Ditcherville comic about a client’s CFO asking Snail for a “fair market rate.”
In our ensuing email thread, she gave some great tips about selling services in crunch times and how not to get cut by your client’s CFO (shared with permission):
Lauren
Lol, I always enjoy your comics!
Jonathan
Thanks! :-)
Lauren
To be fair, though:
If that new CFO convinces you to lower your prices OR can seamlessly switch their company to another provider who delivers the same value for less, they’re increasing their ROI. That’s our job!
Jonathan
I totally agree!
Part of Snail’s implication is that they wouldn’t be able to find someone else to deliver the same results for less.
Lauren
Selling services in crunch times:
- Sell to the CFO: CFOs aren’t typically involved in every buying decision but that changes in tight times. They are different from CEOs: They’re more risk-averse, they will be more conservative and pessimistic with vendor ROI projections, they’re more likely to seek more information or look at competitors regardless of how unique you claim to be, they have more familiarity with internal company data.
- Of your services, focus on what’s essential rather than “nice to haves.” Sell business needs rather than business wants. Cash crunch-time means dreams go on pause.
- Long-term ROI isn’t as convincing when companies are in a cash crunch. Focus on services with immediate returns. Customers have less budget to wait.
How to not get cut:
- Make value consistently visible: In crunch times, the CFO and CEO will analyze an expenses-by-vendor report to decide on expenses to cut. They pause or cancel products and services where the value isn’t obvious. To stay off the cut list, make sure your values are continuously visible. Something as simple as a “wins this month” e-mail could suffice. Or providing a resource that’s used all the time.
- Be a subscription, not an invoice: If you’re sending invoices each month, you’re basically shouting, “I COST MONEY!” to your client every month. The CFO and the CEO see it (they’ll review bills every week if they’re in a cash crunch). Paying you will feel like an optional decision, and managing your bill costs them time (decreasing your ROI). If you’re a subscription, your bill is auto-paid and probably only gets reviewed by the bookkeeper.
There are definitely some other things I could think of from the CFO seat, but that’s all I got for 20 min on a Sunday. Hope this perspective is helpful!
Jonathan
All great ideas! Very useful! Thanks again :-)
(end of thread)
Here’s the thing...
For many clients, it’s not a lack of resources (i.e., not having the money)...
...it’s a question of prioritization (i.e., what they will spend their money on).
So ask yourself:
“What can I do to become a high-priority investment for my clients?”
Yours,
—J