The relationship between bottled water and agency pricing

The same bottle of water costs the same to make but is priced differently if you get it at a convenience store, grocery chain, or four-star hotel.

What can you learn about that when it comes to pricing and positioning your agency? Are your lower-priced clients that much easier to service than the high-ticket ones?

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin 

Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin, and I’m Gini Dietrich, and we’re not going to mess around today. So we’re getting straight into the show. Well, right after this. We are on a tight schedule for recording today. We don’t have our usual time to kibitz and gossip, and rant and rave and all that kind of stuff. So we’re just going to get right into the show here, too. I mean, why not?

Gini Dietrich 

Why not? It’s this is very strange for us. Because usually we spend a half an hour doing all those things you described?

Chip Griffin 

Yes. And usually we sit there and look at the clock, and we’re like, oh, crap. We’ve had a great conversation, it really doesn’t do much to advance the podcast if nobody ever gets to hear it. We should record some of that sometime. Because some of it but probably not all. Definitely not all. All right. So anyway, so since we’ve demonstrated that we, even when we’re on a tight schedule, we can still have some fun on the show. What are we talking about today, Gini, you know,

Gini Dietrich 

I saw on Facebook, a woman posted a picture of a water bottle, and she said, a bottle of water costs 50 cents to make. In the grocery store, you’re gonna probably pay a buck for it in a restaurant, you might pay $1.50 in a really high end restaurant, you may might pay $3, or $5. And I’m really no high end hotel, like a four seasons, you might be paying even more than that. But the cost of the water bottle or the bottle of water is 50 cents. And after I read that, I thought, you know, that’s interesting, because you can have an I talk to clients about this all the time, you’re going to have clients who spend 15 $100 a month, and they will bitch and moan and complain and run you ragged and make you do like $10,000 a month worth of services because they’re never happy. Or you can have a client who pays you $30,000 a month, has has invested enough money that they know they’ve hired an expert or a team of experts, and that they know how to do their job, and they trust you to do their job, your job, they’re not a squeaky wheel, you come to meetings prepared, you showcase results, and they’re happy. And I think about it from that perspective. And I think would you rather have the clients that are paying you pennies and complain all the time? Or would you rather have the clients who pay you what you’re worth, trust that you’re going to do a good job and get out of your way?

Chip Griffin 

Yeah, I think it’s a great subject for discussion. Because, I mean, we talk all the time about agencies having difficulty pricing and figuring out the right clients to work for. And this is certainly a piece of it. And I think there’s two ways to look at what I’m going to start calling the water bottle argument just to sort of simplify things for the rest of the show. So you know, there is comparing one agency to another, and you know what they charge for their water bottles. And then there’s also within your own agency, what you charge for your water bottle for different customers. And and, and so they’re not exactly the same thing. Because, you know, I know that people listening to this will immediately say, Well, you know, an agency that’s, you know, selling that bottle of water for $1.50 isn’t, isn’t delivering the same level of quality that I do when I charge $5 for the bottle of water, it really isn’t the same. If you will, then there’s there’s something to be said for that. I mean, you know, the, the PR work that you do is probably different, hopefully better than someone who’s who’s just starting out, right? No, I’m not, I’ve never hired you for PR Jenny. So I can’t say for sure. But I’m going to assume that that based on everything I hear out there, that you’re pretty good. Or at least not too bad. I mean, you know, anyway, so so that. So there is that way to compare from one agency to the next, I think it’s most important when you’re looking within your own agency, because there, your bottle of water really does cost the same, right? If I if I’ve got a client that’s paying me 1500 bucks a month for PR, or social media, those kinds of things, maybe it may take more time, but basically the quality of the water is the same, right? Because I get the same people working on it. It’s not like I have, you know, four seasons employees and convenience store employees and I just throw them all out there and say let’s have some fun. Presumably you’ve got some consistency of quality. And so that’s where this argument really I think plays strongly.

Gini Dietrich 

Yeah, I that’s a really good point. And I would also argue that and we’ve had this conversation before to that. Trying to decide, okay, let me preface this by saying I have not felt good all week, and I keep sticking my foot in my mouth. So I’m going to slow down

Chip Griffin 

where trouble here, folks. This may be the episode that never,

Gini Dietrich 

I got so mad at a client yesterday. And he just put his head down. And he goes, you’re mean when you don’t feel good? And I was like, well, that’s what you get for making me get on zoom. And he was like, it’s me. Anyway,

Chip Griffin 

I mean, in fairness, you can be mean, even when you’re not, yes, I’m extra mean, when I don’t.

Gini Dietrich 

Because I don’t feel good. So, anyway, um, when you look at your agency, and I think you’re right, like, you don’t have convenience store employees and forced for a season in place, but you do have a level of different levels of expertise. And so you, you, if, and I talk about this all the time, like, we charge a certain number for our today strategy session. It’s the same amount no matter what, unless you want me in the room. And if you want me in the room, it’s $10,000. More. Some clients are like, yeah, I, we were willing to pay that and we want you in the room. And some clients are like, no, we’re good. So you have to think about it from an internal perspective as well. That my, my bottle of water, it costs more than my young professionals. Sure numbers follow up water.

Chip Griffin 

Yes. And so that is that is one of the places where it can be differentiated. But I think, you know, when you look generally at your bottles of water, and this is where really, I probably I probably should have moved away from it. But now I’m stuck with I am going to beat this dead horse, as Brian person would say. So but but I think the key thing is that when you’re looking at the kinds of clients that you’re working with the the level of pain, the level of effort is not that different for your dollar 50 bottle of water versus your $5 bottle of water, right? It mean, yes, you do have to apply some more expertise, there’s probably some more time that goes into it. But at the end of the day, it is those little things around it, just as it is with the bottle of water, right, because the bottle water costs the same, but when you’re at the Four Seasons, you’re not paying just for the bottle of water, you’re paying for the level of service that comes with it. And and you know, at the grocery store, that convenience store, you have to go find the bottle of water, pull it off the shelf, you know, it was chucked up there, maybe you’ve got to, you know, peel open the plastic to get the bottle that you’re trying to get because, you know, right up there, because you’re too short to reach it like, right, yeah, at the Four Seasons, that bottle of water probably has been chilled. Yes, you know, it’s been any condensation is wiped off before it’s handed to you. It’s it is handed to you, you don’t have to go crystal. Maybe Yeah, but it’s so so. So you’re getting more out of the overall experience, because of those extras that are being given. And when you have your biggest client at the agency, you’re probably giving them a little bit more of that kind of treatment, then you’re giving to, you know, the the lowest paying client, right? And it’s just, it’s natural, right, we’ve because we sit there and, and if nothing else, as we’ve talked about on the show before, it’s the fear, oh my god, if I lose this client, it’s the end of the world. So I’m going to bend over backwards to do anything I want. But all in all, he would rather have those larger clients, because in my experience, the larger clients complain a whole lot less than those who are scrounging together together every little last bit of budget they can to hire you at your lowest possible rate.

Gini Dietrich 

Yeah, and I think that’s a, that’s a really good point is that the lower paying clients tend to be the squeakiest wheel. And you always end up over servicing them, and they’re never happy. And so when you think about how, and this is a really good time of year to start thinking about it, cuz you’ll start planning for 2022, which is insane. But here we are, um, it’s a really good time to start thinking about pricing and the way that you approach the market from that perspective, because you can and and I have one client, I say this to all the time, you can continue working for $2,000 a month, and you could have 60 clients if you want that sounds miserable. You’re miserable at 15 clients at $3,000 a month. So why don’t we increase your pricing a lot. And you can have less clients and do the kind of work that you want. But I think it’s a really hard. And I will admit I had to make this mindset shift to it’s a really hard mindset shift to make, especially when you’re young in your agency’s growth. And you’re at that point where you just need to generate revenue and not necessarily think about it strategically. So I would encourage you that no matter where you are in your agency’s lifecycle that you really think about pricing from that perspective.

Chip Griffin 

And you also need to be looking for the signs during the prospecting stage, right? You need to figure out if someone’s looking for the dollar 50 self service bottled water, or the four or $5 Yes, you know, four seasons of water. Yep, because there are things that you will pick up in those early conversations, if you’re looking for them, they will help you figure out if this really is a good fit for you and your agency in that prospecting discussion, they’re already starting to talk about, you know, nickel and diming. On budget. And can we get this for last? And you know, what, I’m not talking sort of the casual that a lot of people like to do? Well, you know, any chance we could do it for last kind of just the casual out there? I’m talking about the people were like, Ah, you know, I really think we ought to be able to do that for half the price, right? You start hearing that, we can take half the scope. And if they start asking a lot of questions, like, how many hours is taken to do this, or, you know, when you’ve got those clients who really want to dig in and try to understand how the sausage is being made, and not in a way that helps them understand is that sausage going to taste good? But you know, more is, are you really charging me a fair price, right? If you start hearing that kind of stuff, in the prospecting stage, run, don’t walk to the nearest exit.

Gini Dietrich 

Yeah, for sure. And we’ve also talked about this before to have your list of red flag answers like and those are really good red flag answers, which are, you know, the things that people will say that make you go now. And there may you may have, you may say to yourself, okay, I’m okay with two or three red flags. But if it’s more than that, I’m not okay. Personally, I’m, I’m okay with zero red flags. But, you know, you can figure out what, what it is that you’re comfortable with, and that will change that will evolve as well. Um, you know, I used to completely ignore red flags. I’ve definitely matured from that perspective. Um, but just figure out what that is great, your list of questions, and then know what those and what what the red flag answers are that you’re looking for.

Chip Griffin 

Right? And and if death, I mean, you know, red flags, or something you should always be using to ask more questions. Yeah, either the prospect or yourself. Right. So there, I’m a big believer that there’s no set number of red flags. Sometimes it’s one, that’s enough to knock it out and say, forget about it. I’m walking away from this, because it’s that important red flag, and there’s really no other explanation or way around it. There are other times where you might accept three or four red flags, because as you look at it, you know, yes, they kind of just barely met the criteria to get into that red flag. But you know, it’s not, it’s really not when you look at it, as consequential as it might be for someone else who gave us somewhere. So there’s basically there’s, there’s black and white, and there’s gray, and there’s lots of great, it depends blah, blah, blah, for sure. Yeah.

Like, as you said to somebody in the Spin Sucks community? Well, it depends. Right?

Chip Griffin 

Well, and actually, that’s, that’s actually a good conversation to reference here, too. And we should have a more in depth episode about that at some point, too, because there was a discussion about cancellation policies. And and, and certainly, it’s worth having a probably an episode devoted to that, because it is an important thing. We’ve touched on it previously, when we talked about client contracts and things like that. But there’s, there’s a lot of big picture ideas that go into that conversation. But for this one, what I would say is, if someone is coming in from that prospecting stage, talking immediately about what your cancellation policies are, and being really fixated on those things, that is a giant red flag as well, because that suggests that it’s someone who is not really committed to the relationship. And you have to be careful because there are people, particularly if they’ve never worked with an agency before, if they’ve just gotten burned by an agency, right? They may, they may ask more questions about that. So that that would be one of those red flags, where if it comes out of the blue, okay, that’s something I’m worried about. If they say, hey, look, we just had this experience with this, you know, agency or vendor, and they raked over the coals with their contract terms. And, you know, there’s one particular company that I’m that I have in mind, as I’m, as I’m saying this that I know just does this to a lot of agencies. It’s not another agency, but it’s an agency service, right? And they do this kind of thing. And it leaves a real bitter taste in people’s mouth. So if someone said, you know, that’s why I’m focused on this. Okay, now that red flag is gone to maybe a yellow flag, right? Because more understandable, because it’s not that they’re so fixated on it, it’s that, you know, they touch that burner, their hand is still blistered read. And so they care about it.

Gini Dietrich 

Yeah. And I mean, yes, there are lots of what I would say read would would come up as red flags, and you make a really great point about using that to continue the conversation or ask deeper questions that you discover is because of that, they just got burned by another agency, or, I mean, from a PR perspective, I hear this constantly, you know, we paid our agency 10 grand a month, and they didn’t do anything like that. I hear that constantly. I’ve heard things like, you know, which

Chip Griffin 

drives me bonkers because most most agencies are not that unethical, irresponsible. There’s usually a whole lot more to that story. Now. There are bad apples out there in agency land. Yeah, absolutely. Nobody’s in business to take your 10 grand a month and just walk away with it. That’s not that’s not generally generally speaking. You’re correct. Yeah. I mean, and, and so, you know, when I hear that, I want to know more I want to understand, well, what what really happened and and most times, it’s a failure on both sides of the relationship. It is rare that an agency client relationship fails, simply because the client didn’t do what they were supposed to do, or the agency didn’t do what they were supposed to do. It’s usually a combination of the two,

Gini Dietrich 

for sure. And it’s things like, Well, I would say the biggest thing is that the client has unrealistic expectations of what here can do but

Chip Griffin 

but except that that’s something you need to clear up in the prospecting stage, right? I mean, this is, this is where to get back to the bottle of water, you know, you don’t convince someone that they’re getting the Four Seasons experience in your convenience store, because they’re gonna be disappointed, right? If they think that they’re coming into your convenience store, and they’re going to get a chilled bottle with the condensation wiped off and handed to you personally, here you go Miss Diedrich. I mean, that’s just not going to happen. Right. So you need to make sure that you’re being clear with those expectations. And when you hear the prospect, say something that implies that their expectations are too high, don’t just blow right through that stop sign. Don’t let them keep having that impression, because that’s what’s gonna happen. They’re gonna say, I gave you $10,000, and you didn’t do anything. Because you never had a meeting of the minds on what you could actually accomplish.

Gini Dietrich 

And I would say if they have that perception in the prospecting meeting, and you you don’t blow through that you have the conversation you have when they become a client, you have to continually educate, continue. Absolutely. And I, I am constantly I bet I want to wear a shirt that says this, just because I repeat myself so often. You cannot measure all of PR. I say this all the time. Some of it is brand awareness, some of it can be measured. Can I tell you? It’s 5050? No, can I tell you what 7030? No, I can tell you, some of it is attributed to brand awareness. And some of it is attributed to results. I have that conversation with the top executives of our clients all the time, constantly. And it’s if we go back and forth all the time, okay, well, what about this? And what about that? And I’m like, okay, like, I just had this conversation last night, we’ve got this huge satellite media tour that we’re doing with TV and radio, they want to know how much traffic is going to come to the website? I can’t tell you that, because it’s on TV and on the radio, which means there’s no link that people are clicking? I don’t know. Right?

Chip Griffin 

Well, and the reality is, I have spent a lot of my career on the measurement side of the industry. And the problem, oftentimes is you can’t get the data that you need from the client. So even if it is theoretically possible to measure something, you often can’t access the data from the client themselves, in order to accomplish it. And by the way, this is not a problem for agencies or vendors. This is a problem internally, a lot of times, the communications team at the client can’t even get it from their colleagues in other departments where they need it, in part, because it may not be as easy to access, right? I mean, it may not be as simple as Oh, yeah, I’ll just generate a report for you. Right? I mean, it’s a lot of times, the systems aren’t set up for that. But a lot of times it’s that there’s not a there’s there is no tracking code, there is no link, there is nothing that that your sales team, your product team can give you that concretely says this is what happened. And guess what, most web analytics people can’t even tell you, where a click ultimately came from, particularly these days with so much data being you know, obfuscated, not retained, all that kind of stuff. You know, is it is it is it first touch, last touch. I mean, there’s so many things that go into it. And, you know, the larger the sale, the harder it is to track and all that kind of stuff, but back to our cheapo bottle of water. Because that’s, that’s really, so focus,

Gini Dietrich 

right? Focus on the experience that you’re giving clients charge for that experience. When you’re, when you’re in new business meetings, ask the questions that raise red flags. So you can continue to ask questions and dig deeper into that. And then once they become a client, the conversation and the education never ends. It’s a constant discussion that you have to have over and over and over again,

Chip Griffin 

and ultimately decide what kind of bottle of water you’re selling. Yeah, right. Are you selling the dollar 50 bottle of water, that’s fine. Are you selling the $4 bottle of water a $5 bottle, right so and then get clients that are happy to pay for that price of bottled water. Don’t try to mix and match Don’t try to service the Four Seasons client in the convenience store client from the same agency from the same team. It’s just not going to work out well or it won’t work. You need to have some consistency about the bottle water that you’re selling and what pricing you have for it. 100% and with that, you know, time for me to have a sip of water here from my water. didn’t cost me anything. That was tasty. This was this was filtered from my tap. So in any case that will bring to an end this episode of the Agency Leadership Podcast, hopefully, you know, you’ve hydrated during it and enjoyed the conversation. With that. I’m Chip Griffin

Gini Dietrich 

and I’m Gini Dietrich,

Chip Griffin 

 and it depends.

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