Diamond engagement rings might be the most impressive marketing creation of all time.
Today, most of us assume they fetch an average of $6,000 apiece because of the rarity of the stones they feature. But, among gems, diamonds are actually the most common.
So when a hopeful fiancé-to-be splurges on an engagement ring, what is he really paying for?
It’s not the actual value of the stone, or the work it took to cut, set, and transport it to a local jeweler. Anyone who’s ever tried to resell a diamond can tell you that.
Instead, the gem’s high price tag comes from its perceived value, created by diamond manufacturer De Beers in the 1940s.
With the help of NW Ayer, (the ad agency famous for the “A diamond is forever” tagline), they convinced men that the only suitable way to request a woman’s hand in marriage was with a diamond ring. And they convinced women that the bigger the diamond, the stronger the love (enter ‘2 months’ salary’ rule).
Almost eight decades later, their marketing messages remain ingrained in our culture. People still pay top dollar for diamond engagement rings today, even though they depreciate more than 50% in value the moment they’re purchased.
But, what do gemstones have to do with your marketing agency? The same way De Beers boosted the perceived value of their product, so can you of your marketing services. Here’s how...
1. Raise your rates
In his book, “Influence,” author Robert Cialdini recounts a fascinating story that uncovers a little psychological bias you may be able to use to boost your agency’s value. It involves a business owner who was having trouble selling some turquoise jewelry. He recalls:
“It was the peak of the tourist season, the store was unusually full of customers, the turquoise pieces were of good quality for the prices she was asking; yet they had not sold.”
Frustrated they weren’t moving from the shelf, she tried some typical sales tactics. She instructed her salespeople to aggressively push them to customers, and even relocated them to a more visible display case in the store.
Still, after weeks, they weren’t selling. So she threw in the towel.
Before leaving town on a business trip, she wrote a note to her head saleswoman. “Everything in this display case, price x ½,” it read.
Who could resist such a discount?
When she returned days later, she found that every piece was gone. However, because the saleswoman misread the “½” in the note as a “2,” the turquoise had actually fetched double the original price instead of half. The reason?
Our brain’s tendency to stereotype.
On the whole, we’ve been taught that stereotyping is a bad practice, but it’s actually a valuable cognitive shortcut humans use to make quick, efficient judgments when time doesn’t allow for more informed decision-making. In fact, it’s been protecting us as a species for thousands of years.
“Picture that it is 10,000 B.C.E. Imagine that you and your clan come across a rocky terrain and one of the members of your group gets fatally bitten by a snake that was hiding in those rocks. Now, imagine that you and your group travel on further, but come across a different set of rocks. What very helpful stereotypes might you and your group make about the rocks that might just increase your chances for survival? Might you stereotype that all rocks like that have the potential to have hidden snakes in them?”
Instead of snakes, in this case stereotyping protected tourists from wasting their money (or so they thought) on low-quality jewelry.
Because the majority of tourists that visited the shop didn’t know much about turquoise, nor did they have enough time to learn about it (indicators of quality, value, rarity, etc.), they had to rely on the price to determine its worth.
Keeping the old adage, “you get what you pay for” in mind, they made the association “low cost = low quality,” and “high cost = high quality.” And while usually that stereotype holds true, in this case it actually backfired, ultimately preventing customers from capitalizing on a good deal.
Similarly, many of your customers will make that association between the quality of your services and your rate. Is your agency suspiciously affordable compared to others?
HubSpot reports that the average agency retainer is between $2,500 and $5,000 a month:
If your agency charges below that, consider bumping your rate up somewhere closer to the industry average. You might find that in the future, clients won't question your value the way jewelry shoppers did those turquoise pieces.
2. Tap into the power of social proof
Starting at a very young age, we shape a surprising amount of our lives according to the behavior of the people around us.
When we see celebrities wearing a particular article of clothing, we determine it’s trendy. When we hear our friends loved a new movie, we decide it’s worth seeing.
This “everybody’s doing it so it must be valuable” mentality has a name: “social proof.” In its many forms, social proof can be used to enhance the perceived value of a product or service.
Here are a few ways you can use it to boost the value of your agency:
Add testimonials to your website: Testimonials are helpful to your prospects because they’re the opinion of someone other than yourself. Any business can claim its team is great optimizing content for search engines. However, it’s not until a customer vouches for them that the claim becomes believable.
Feature your well-known clients: If your service is good enough for well-respected businesses like Google, then it’s likely good enough for others. Take a page from Noble Studios’ book on this one:
Showcase your awards: Most marketers care more about results than awards, but that’s not true for all clients. We know from the Hiring and Firing report by AMI that some businesses choose an agency strictly based on their industry accolades. Check out how Leo Burnett prominently displays their “Agency of the Year” award on the business’s homepage:
Use fan/share counters: The bigger your following, the more valuable you’ll be perceived. If 40,000 people “like” your agency on Facebook, the way they do Jeff Bullas, then your updates must be worth paying attention to:
3. Prove your effectiveness
You’re only as valuable as the ROI you produce. If your client is paying you to generate leads or brand awareness, you'd better be prepared to prove you are.
Granted, that's easier said than done. In fact, it's one of the biggest problems facing marketers in 2016:
Today, while analytics tools are more powerful than ever before, prospects are still incredibly difficult to track.
Countless touchpoints in the buyer’s journey, both online and offline, make monitoring customers every step of the way seem nearly impossible. When prospects can interact with your business via channels like social media, email, mobile apps, and phone — what's a marketer to do?
Increasingly, best-in-class marketers are creating highly integrated marketing technology ecosystems made up of 7 or more tools, according to the Aberdeen Group.
And at the heart of that ecosystem, for top marketers at least, there’s a powerful analytics tool which integrates with all others. Industry influencers turn to software like Google Analytics, Hotjar, Crazy Egg, and Kissmetrics Analytics to prove their worth.
As far as technology goes, the biggest thing separating best-in-class marketers from all the others is the adoption of analytics tools.
If you’re serious about proving your value to clients, your marketing stack should feature one too.
4. Clearly state your value proposition
When someone buys a Mercedes, they expect luxury. When they purchase a Honda, they expect reliability. A Volvo? Safety.
Those expectations are the result of consistent branding that reinforces the company’s value proposition. When yours isn’t clearly stated, it can lead to confusion among your clients. What should they expect of you?
Do you market yourself as the choice for businesses who expect impeccable customer service? Are you the go-to agency for clients who need a high volume of content with quick turnaround? Or are you the luxury brand that finishes one product per month at unparalleled quality?
Your unique selling proposition is what will set expectations for your relationship before it even begins. Without a clear one, your clients may anticipate getting service that you’re not prepared to offer.
5. Sell based on value, not price
The only reason you'd ever market your agency based on price is if you were positioning it as a low-cost alternative. Unless you're willing to risk being perceived as cheap, that's not a great move. Instead, establish value by describing to your clients what it is they'll get by retaining your agency.
Ask yourself, “What am I actually selling?”
Is it search engine optimization or increased online visibility? Landing page services or more leads?
The best way to market your agency is based on the impact you'll have on your client’s bottom line. Frame your services in a way that emphasizes their value to the client, and use past case studies to prove they're effective.
Then, if you do form a relationship with a business, make sure to tie your value to top-of-funnel metrics that make sense for the work you’re going to do. If you’ve been tasked with generating leads, don’t charge based on an arbitrary number you’ve used for past customers. Instead, determine what a lead is worth to your current client and base your pricing on that. That way, they fully understand the potential customer lifetime value of each lead being generated.
6. Give clients a peek under the hood
Like the clueless tourists shopping for jewelry, sometimes clients will undervalue your agency simply because they don't fully understand what goes into producing the end result. When that happens, Demian Farnworth at Copyblogger recommends you clue them in:
“For example, say a potential client asks for the cost to write a 1,000-word sales letter for a landing page. Instead of whipping out the cost, explain to her everything you will do: research, dig through analytics, gather testimonials for proof, write a rough draft, present for evaluation, revise and so on.”
With a better idea of all the work that goes into getting from point A to Z, it’ll be much less likely your client underestimates the value of what you do.
7. Incentivize your team
Be honest with yourself. Are you delivering what you’re capable of? If the answer is “no,” the reason you’re being undervalued is that, well, you’re not providing value.
According to HubSpot, only 42% of agencies incentivize their employees to produce results. The others are satisfied with efficiency (sticking to hours billed):
Are you motivating your team effectively? If not, consider offering your employees performance-based bonuses or even commission. But do it carefully.
Tying compensation to a specific metric can cause creativity and quality of work to drop. Angel investor and CMO, Mike Volpe, explains:
“Imagine if I got paid to blog by the word or the article. I would just pump stuff out all day, not actually think about things and try to come up with ideas that challenge conventional wisdom. Not a great way to serve our company or our readers.”
Instead, he suggests offering employees a combination of stock options and promotions/bonuses linked to overall performance, which would be evaluated both quantitatively and qualitatively by a manager.
Ultimately, the more incentive your team has to produce results for your agency, the harder they’ll work, and the happier your clients will be.
How do you boost your agency’s value?
What tactics have you used to prove your value to clients? Let us know in the comments, then begin generating new business opportunities with an optimized landing page.