Chapter 3
Beyond Pixels
Selling a Service Is Different from Selling Things (and Harder, too)
Selling high-end expert services is different from selling ice cream or iPads.
Economists call consulting and professional services “credence goods.” Asher Wolinsky, a microeconomics professor at Northwestern University, puts it this way:
The term credence good refers to goods and services whose sellers are also experts who determine the customers' needs. This feature is shared by medical and legal services and a wide variety of business services. In such markets, even when the success of performing the service is observable, customers often cannot determine the extent of the service that was needed and how much was actually performed.
We all know the feeling. You drop off your laptop at the repair shop in the mall because you woke up on Monday morning to the blue screen of death. There is a nice guy there whose job it is to wrangle customers. He tells you he will call you later once they look under the hood. You suspect he was hired because he is a smooth talker and not because he really knows anything about computers. It feels like his job is to keep you away from the tech guys.
He calls you mid-morning.
“We took a look at your laptop. Your memory board is most likely fried. We're going to run a diagnostic test and that will help us better understand what is going on, but I wanted to warn you that it might require a new memory board.”
You search for the right way to respond. “It's just over a year old.” You are whispering into your cell because you are on site at a client. “Why did this happen?”
“It is actually fairly common with this computer. The company claims there are no manufacturing defects, but we see the same problem in here all the time. It was a bad batch of chips from a startup manufacturer in Taiwan. Depending on what we find, you might get away with just adding a memory board. Or it could require a new motherboard, which is not going to be cheap. Next time you may want to consider the extended warranty.”
“Okay,” you say weakly. “Give me a call when you are done with the diagnostic.”
“Will do.”
You are in the hands of an expert and totally at their mercy.
It's the same thing at the doctor. “Let me consult with some of my colleagues and then we can talk about therapy options….”
It is a queasy, helpless feeling. They are the experts, and they are both defining the problem and making a recommendation. Dr. Wolinsky calls this “information asymmetry.” One side knows everything, and the other side knows what they Googled on WebMD.
This asymmetry is one of the reasons selling legal services is a lot like selling cybersecurity expertise, even though the lawyer's capabilities are very different from those of the security consultant. All expert service providers sell services under circumstances in which the client has to trust them implicitly.
Think about when you speak with an attorney about using a boilerplate nondisclosure form you got off the Internet. Businesses have been swapping NDAs for decades, you say. Surely they're all the same. Inevitably, though, your attorney uses their expertise to point out that the generic form you found on www.howhardcanlawbeafterall.com doesn't actually cover your specific business. “Because your intellectual property resides in Ireland, we will need to include a section to make sure you are protected there. Also, we will need to change the arbitration clause.”
Chagrined, you say something like, “Well, why don't you look it over and do what needs to be done.” Two days later you get a red-lined version and a bill for 3.4 billable hours. It's in that moment that you understand exactly what Dr. Wolinsky means when he writes, “Customers often cannot determine the extent of the service that was needed and how much was actually performed.”
The word, “credence” comes from the Latin word credere, a verb that means to believe or to trust. It is a root that has given rise to words like creditor (someone who trusts you) and credibility (a quality assigned to someone worthy of trust). When you buy credence goods, you have to trust the expert in whom you put your care.
Selling Consulting and Professional Services Is Hard Because Our Clients Have to Trust Us Before They Buy from Us
Clients must believe the expert will diagnose their problem correctly.
Clients must believe the expert will prescribe an effective solution.
Clients must believe the expert can and will do the work in a way that will achieve the outcome they want.
Clients have to believe the expert will fairly price the service based on work actually done.
The Three R's
Credence goods are sold on trust. It is the electricity that powers engagement between experts and those they most want to serve. Trust is transmitted from one person to another in three ways:
- Relationships—I go to church with an attorney and know her to be a good person.
- Referral—I have a friend whom I trust, and he recommends the web developer over in the tech park. He says I should ask for Ann.
- Reputation—I read in the Village Wrap that Criterion Solutions was voted #1 in HR consulting for the second year in a row.
These are the ways clients buy. Clients hire people they know, respect, and trust or who come recommended by a close friend or colleague.
How Services Are Different
Now think about how products are sold.
You're sick of your iPhone. The microphone keeps going on the fritz and apps randomly slip off of the screen. To be fair, you did drop it on the pavement in Dallas two weeks ago. You get online and search for “best phones,” and after scrolling past the sponsored ads, you see reviews by CNET and PC Magazine where phones are ranked by various attributes—speed, weight, reliability, cost, picture quality, and battery life. You look at that list and give each attribute your own weight. “I care about battery life a lot, but I don't care about camera quality or price.”
You scan through the comparative tables and allow yourself to be colored by the reviewers' florid prose either advocating for the phone or against it. Then you make a choice.
There would be information asymmetry between you and the phone manufacturer—you don't know anything really about how phones work—but two forces intervene:
- CNET and PC Magazine volunteer to act as impartial information intermediaries.
- The attributes can be objectively quantified. Cost is known. Battery life can be tested.
The result is that, at least partially, you're able to buy a phone rationally and not overly rely on relationships, referrals, or reputation to drive your decision. We say “overly” because, of course, this distinction is not binary. Lots of us call up friends and ask, “What phone should I buy?” or buy based on a brand relationship.
There is always a push in consulting and professional services to make credence goods more like regular goods. The market intelligence firm Gartner has made a good business of ranking IT professional services firms according to completeness of vision and ability to execute in an effort to create a CNET analog for IT service buyers.
“Completeness of vision” and “ability to execute” are more difficult to quantify than speed or camera quality and are somewhat subjective criteria. You can do a bench test on a phone and measure processor speed and pixels per square inch. Still, using a proprietary algorithm, Gartner divides tech service firms into Leaders, Challengers, Visionaries, and Niche Players in an attempt to provide guidance to buyers.
But this effort to make buying more rational does not take away the wider truth that clients engage with those they trust when handing over something important to an expert who will both diagnose the problem and make a recommendation on what to do—whether that is a doctor or web designer, compensation specialist, or plant security consultant.
David Maister, the former Harvard Business School professor, who for two decades was widely acknowledged as the world's leading authority on the management of professional services firms, shares this point of view:
The need for trust in dealings with clients should be obvious. Consider your own purchases of professional services. Whether you are hiring someone to look after your legal affairs, your taxes, your child or your Porsche, the act of retaining a professional requires you to put your affairs in someone else's hands. You are forced into an act of faith, and you can only hope that they will deal with you appropriately. You can research their background, check their technical skills and attempt to examine their past performance. In spite of all this, when it comes down to making the final decision on whom to hire you must ultimately decide to trust someone with your baby—which is never a comfortable thing to have to do.
David's perspective resonates with us. If your parents are in need of a will and you volunteer to help them find an attorney, it is most likely you won't Google, “best attorney in Miami.” Likewise, you're unlikely to ring up the number of an attorney whose phone number you saw on a billboard or the side of truck.
The way you'd find your folks a good attorney is by recommending someone with whom you worked, or you would call a friend who is an attorney and ask for their recommendation. Or use a combination of both: “I used this great attorney at work for our mergers work. I asked her who she would recommend.”
Product and credence goods are sold very differently. Clients do not buy credence goods based on features or attributes; they buy consulting and professional services based on intangible criteria.
| Product Sales | Credence Goods |
| Tangible | Intangible |
| Specifications | Reputation |
| Attributes | Credibility |
| Features | Respect |
| Warranty | Thought Leadership |
| Promotions | Relationship |
| Brick and Mortar/Internet | Trust |
Systemic Hurdles
We've just described why selling consulting and professional services is different from selling a product—and harder, too. But it is worse than you think. In addition to the very nature of the consulting and professional service sale being different from selling products, there are four systemic obstacles that stand in the way of us getting good at selling services.
Let us try to understand these obstacles because the seeds of a new way of thinking about selling consulting and professional services must grow in this rocky soil. Understanding each of these obstacles is necessary so we know what we are up against before putting till to ground and learn how to better cultivate the kind of new clients that will cause our practices to grow and thrive.