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THE 5 MINUTE FRACTIONAL CFO

#004: Price Discounts for Referrals and Testimonials Don't Work. Do This Instead.

Jun 24, 2022

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#004: Price Discounts for Referrals and Testimonials Don't Work. Do This Instead.

Jun 24, 2022

June 24, 2022
Read time: 5 minutes

Most new firm owners have this conversation with themselves:

"I'm going to offer this potential new client a big discount. They have a huge audience and I'd love their referrals and testimonials."

This is what we think will happen:

• We will land the client by offering a steep discount.

• They will be amazed at what we do for them at such a low price.

• They will tell their big audience how amazing we are.

• New business will come in as a result of the testimonials.

THIS IS A MYTH.

Here's what actually happens:

• The new client undervalues us because of our reduced price. 
...We grow resentful.

• We don't deliver our A game because of the low price point. 
...The client grows resentful.

• We don't get as many referrals as we expected. 
...We grow MORE resentful.

• The referrals that come in expect similar deliverables at a similar price point. 
...No one wins.

When we underprice our services for any reason, we undermine our quality.

The reason is simple: people correlate price to quality.

Like it or not, our pricing sends a message about our perceived quality. 

Several years ago, I had a sales meeting with a potential client. After going through the whole sales pitch, I gave him our pricing. He chuckled and said he wouldn't even entertain a firm that wasn't at least 5x that price.

He was checked out from that point forward. The psychological anchor around our quality had been set.

That same anchor gets set regardless of your reasoning for reducing your pricing. Even if it's to get referrals or testimonials.

Your job IS NOT to wow them with a great service at a reduced price in exchange for testimonials and referrals. 

Your job is to wow them with a great service at your usual price in exchange for testimonials and referrals.

I want you to ask for testimonials and referrals - but I don't want you to discount your price as a bargaining chip.

Because you don't have to.

The best clients (who also have the best referral opportunities) value the quality you bring and they are willing to pay for it.

When you do your best work and provide a valuable transformation for their business, great clients will want to share that story. And they will do it with a smile - while paying you full price.

Referrals will know what you can do and what they should expect to pay.

Everyone wins.

Great clients will pay for great service and still give great referrals and testimonials.

It's tempting to undercut your pricing to get a big client with a huge following.

But this is the way of the amateur.

Price fairly. 

Deliver with excellence. 

Get the referrals and testimonials.


That's all for this Friday.  A smarter approach to getting better referrals.

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Your coach, 
Michael King


Whenever you are ready, here are 3 ways I can help you:

1. The Inner Circle - every month my team and I go live and share the most impactful lessons we've learned in our journey to start, scale, and optimize our own CFO firm (including live Q&A). Plus you'll get access to our private community of nearly 150 fractional CFOs.

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3. If you'd like more amazing (and free!) content about starting, scaling, or optimizing your Fractional CFO firm check out: 
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Whenever you are ready, here are 2 ways I can help you:

  1. The Inner Circle - every month my team and I go live and share the most impactful lessons we've learned in our journey to start, scale, and optimize our own CFO firm (including live Q&A). Plus you'll get access to our private community of nearly 200 fractional CFOs.
  2. If you'd like more amazing (and free!) content about starting, scaling, or optimizing your Fractional CFO firm check out The CFO Report.

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