Showcase Your Expertise – Increase Your Market Value

Meg Rye, head of Design Recruitment at Facebook in the U.K., posted the following letter on LinkedIn. The letter was written by Mick Jagger to request that Andy Warhol design the cover artwork for the album Sticky Fingers. In addition to the fact that the subject matter is very cool, the communication has a number of important lessons for today’s marketing and sales professional – or any occupation, for that matter. It is a great illustration of how your market value is determined not by what you do, but instead by the differences in the way you do what you do it, and the value the market places on those differences.

How many of us have wished for a client to say, “Take as much time as you need and charge me whatever you want, just please do this work for me.” But remember that it is not the actual value of what you deliver that establishes your market value – it’s the perceived value. In the case of Andy Warhol, the perceived value to Jagger was huge. There were thousands of designers who would have done the album cover artwork for Jagger at a fraction of the cost (or even at no cost to get the portfolio bragging rights), but only one who was told to name his own price.

In every industry, there are tiers of providers, ranging from the highest-priced and highly differentiated  to the lowest-priced and least differentiated. The latter are what we call “commodity suppliers” and are almost always selling based primarily on price.

For example, in my own industry, there are various categories of B2B marketing and sales providers/outsourcers. There are some who gain clients only because they are the least expensive, and most of the time, they are not as effective – definitely not what I would consider experts. At the other end of the spectrum are extremely high-priced consultants, who, with a few exceptions, are not necessarily more skillful than many of those who charge much less. In this case, the client is paying for the perception, not the results received.

The Dreyfus Five-Stage Model of Adult Skills Acquisition is an accepted model of measuring skills across industries and breaks skill acquisition into five levels, explained in this chart:

Skill AcquisitionIsn’t it interesting that the only major difference between the proficient and expert category is that the expert is more likely to make decisions based on intuition instead of data analysis? This is true because the expert has experienced so many scenarios, they can quickly grasp situational patterns and decide accordingly. I call this “pattern recognition” and wrote a blog post about this that you can read here.

Wouldn’t you like to know whether your dentist, attorney, physician, CPA, etc. is a true expert, instead of just being competent? Of course there are times when you need — and only want to pay for —someone at the “competent” or “proficient” level (e.g. house painter). And there are other times when you want — and are willing to pay for — a true expert (e.g. defense attorney, heart surgeon). Unfortunately, you don’t often get to hire the expert at the same rate as those who are merely competent or proficient.

So how do you tell where you are on the scale? In some professions there are established criteria, while in others (like mine), it is mostly subjective. For instance, while I believe I am an expert in B2B marketing, and have the results and credentials to demonstrate this, it does me little good if smart clients are unwilling to acknowledge this by paying me (and my team) fairly for our services. I am unlikely to become the Andy Warhol of B2B marketing, but I can certainly be the best Chris Ryan possible. And you can do the same by following the strategies I will outline in my next post. Stay tuned.

Business Buyers

Types of Business Buyers

When it comes to the buyer of a business, buyers fall into one of two basic categories: financial buyers and strategic buyers.

Financial Buyers
Financial buyers value a business based on its past earnings, but decide to buy a particular business based upon its future earning potential. While small lifestyle businesses are often bought by individuals, larger businesses are primarily bought by investment groups and high net worth investors.

Strategic Buyers
Strategic buyers, also called synergistic buyers, may value a business based on its past earnings, but decide to buy a business based on its intangible assets. Often strategic buyers are buying things you never anticipated.

In one case, I recall a struggling lumber yard was bought on the cheap. The sell just assumed that it was going to sell its business to a financial buyer. Because its sales were declining they thought that the business could not command a premium price. In reality, the buyer was a strategic buyer who had no intention of operating the lumber yard after the purchase. The strategic buyer was actually purchasing a deep water dock on the property of lumber yard.

Strategic buyers are often competitors who want your intangible assets, market share, or location. They could even be customers that want to expand their business downstream or vendors looking to expand upstream.

Can you tell the difference between a financial and strategic buyer?

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