Environmental consulting is a challenging profession. On any given day, a consultant might be called on to conduct site visits, assess data, identify contamination, interpret complex regulations, write reports or develop cleanup cost estimates. A qualified consultant has the technical expertise to perform such tasks well. But environmental consulting is also a business, and in today's market, it is an extremely competitive one. To be a good consultant and make money, contractors must also possess the ability to sell themselves and win projects. Unfortunately, for too many consultants, winning projects means lowering rates. Not only is this tactic unnecessary, the experts say it is also a terrible long-term business strategy because there will always be someone willing to work for less. Additionally, as the economy recovers, it will be extremely difficult to raise rates again. Here are tips to avoid playing the price game, and selling based on the true value of the services.

A better way to compete

According to a 2008 survey,^[1] two-thirds of professionals in architecture, engineering and construction industries discount their fees, at an average of 8.2 percent, to win business. Not only are these firms losing significant revenue by competing on price rather than value, they are also missing out on an opportunity to increase customer loyalty. To stop competing on price and win repeat business, consultants must sell value, and the key is to understand what motivates the clients. Not surprisingly, many consultants overlook this step. "Most companies jump right into sell mode and spend way too little time in 'learn and discovery' mode," said Dave Cooke, a sales expert and CEO of Strategic Resource Group in Phoenix. "When this happens, there is always a disconnect, and price becomes the reason – read: excuse – for why they didn't get the business."

When meeting with potential clients for a discussion about their needs, it is likely that they care about factors such as quality, reliability and service more than price, especially when their liability, environmental risk exposure and reputation is at stake. If not, the challenge for any environmental professional is to educate them. "Pricing pressures occur when consultants fail to ask the type of questions that identify a prospective client's compelling reasons to select them as their environmental professional, which naturally leads to discussions about their problems and the consequences of those problems," said Dave Kurlan.^[2]

What do buyers want?

"It's simple. Buyers will pay more if sellers do three things," said Mike Schultz, founder of RainToday.com, and president of Wellesley Hills Group. "Sellers must resonate, or sell something buyers want or need; they must differentiate, which means they've shown they're better than other options, and they must substantiate, which means they've made the buyer believe they can deliver on their promises." (see Figure 1)

For environmental consultants who often lament that their services have become mere commodities, differentiation offers the greatest opportunity to avoid playing the price game. Unfortunately, when it comes to standing apart from the competition, too many environmental consultants miss the mark. "The trouble with the environmental consulting and engineering profession is that so few firms have approached differentiation in a meaningful way now that it's too late, they're faced with dropping prices to get work," said Schultz.

To differentiate yourself, think about what makes your firm unique. Did the firm win an award for outstanding customer service? Is it known as a vapor intrusion expert? Was it ranked as one of the top firms by a local industry organization? The key to successful differentiation is to match the firm's interest and expertise with the problems, needs or challenges of a specific group of clients, said Susan Martin, a Brooklyn, N.Y.-based business coach who works with professional services providers. "Rather than targeting everyone, target those for whom you get the best results."

When networking, rethink the way the firm's services are described. "Experts say you should have an elevator pitch," said Jeff Mowatt, a customer service specialist based in Calgary, Alberta. "But the 30-second infomercial sounds so phony and contrived it usually turns potential clients off more than piques their interest." Try this: The next time a potential client is engaged, rather than rattle off a job description, describe the benefits provided by the firm. An environmental due diligence professional, for example, could say he helps people avoid costly liability. "Most of us automatically commoditize our job when we describe what we do," said Mowatt. "We say, 'I'm an insurance broker' or 'I'm a financial advisor.' But these words, 'I'm a,' imply there are other people who can do exactly what you do." By describing the benefits instead, it is more likely to stimulate a prospect's curiosity," said Mowatt. "Their next question naturally becomes, 'How do you do that?' You can then provide an example the customer can relate to."

Pricing

Before setting fees, make sure they are fair. Start by comparing your rates with the competitors' prices (see Figure 2) and by researching their position in the market. "By understanding what your competitors are known for and what they stand for in the eyes of their targets, a back story begins to form and the relationship between the value they are known for and the fees they charge becomes clear," said Martin.

Overcoming objections

Even if the prices are fair and the potential client is convinced that the firm can meet their needs better than a competitor, there may be price objections. Do not take them personally. Instead:

• Focus on the client. "The best way to deal with a pricing objection is to help a potential client focus on the challenges you will help solve," said Wendy Weiss, a New York City-based sales trainer and author of The Sales Winner's Handbook. "You can counter pricing objections by asking, 'How will you handle it when ___ happens?" [Fill in the blank with a problem that might arise with the lowball bid, like a need for additional documentation or filling in gaps in an analysis.] "Keep in mind that lowball bids are rarely apples-to-apples comparisons."
• Do not backtrack. "I was playing golf with a bunch of friends last summer," said Schultz. "One attorney, without being asked, said, 'My fees are $300 per hour, but if you need me to, I'll work for less.' Here's an example of backtracking before even getting pushback!" Schultz said sellers are tempted to backtrack when buyers say they can get the service elsewhere for less. "At this point, many service providers indicate that they're willing to negotiate. Instead, acknowledge that other sellers' prices are indeed all over the map and leave it there. Buyers might walk; that's a risk you take. Many times, however, you'll simply set the foundation for continuing the business development process at your preferred fee level."
• Do not start talking cost structure. Some clients will ask how fees are set, especially for large projects. Schultz said what usually happens is the service provider will then pull out a sheet that shows that this person's rate is X, this person's rate is Y, and this cost that we have to pay every month is Z, so the fee is this. "Heading down this path is a slippery slope and leads to nickel and diming here, there and everywhere."
• Ask, "Which Part Don't You Want?" Service providers are often tempted to cut fees when they get pushback. "The logic goes like this," said Schultz. "'Well, it's a $120 k deal, but if we get it, we can get by with $110 k and be okay. That would be better than losing the whole thing.' So they cut fees. This is a bad precedent to set if repeat business is important to you. You'll always play the price-cut game at contract renewal time." Instead, ask which part of the project the prospect can live without. More often than not, they want the whole thing.
• Do not dismiss buyers who push back. "I often hear people say, 'If buyers push back, we don't want them,'" said Schultz. The logic is that pushing back on price indicates that a client will be high maintenance, but this is not necessarily true. "Buyers are taught to challenge prices. Just because they challenge you doesn't mean they are destined to be bad clients. It also doesn't mean they're challenging your value personally. Some providers discount, others don't. They're just asking. Hold your ground and treat them reasonably and they'll usually come around."

Overcoming hidden weaknesses

Many sellers succumb to pricing pressures not because they don't know how to close a deal, but because something in their own personalities prevents them from holding firm to their price. Sound familiar? Kurlan listed four common weaknesses.

1. Too Trusting – People who are too trusting take what their prospects say at face value. As a result, they won't question what prospects say, but questioning is the only way to consistently overcome pricing pressure.
2. Need for Approval – Consultants who need to be liked may place the need for approval over the need to close deals. These people would not ask difficult questions, push back or challenge their prospective clients, believing that it may damage the relationship.
3. Price Shopper – Consultants who themselves shop for the lowest price understand a prospective client's desire to get better pricing. Empathy prevents them from effectively overcoming the pressure.
4. Discomfort Talking About Money – Consultants who are not comfortable talking about money generally cannot overcome pricing pressures. By contrast, those who are confident talking about money have an easier time standing firm. Consider Barry Maher, a sales expert and best-selling author of No Lie: Truth Is the Ultimate Sales Tool. He said, "When someone asks me if my rates are expensive I answer, 'Absolutely!' Why do I charge so much? Because my clients are happy to pay for the results I generate. Can you find someone to do the job for less? Yes, I'll give you some phone numbers. Why do they charge less? I have no idea. I don't know a lot of companies that charge less if they can charge more but maybe they're humanitarians." The implication, said Maher – because you never denigrate the competition – is that they charge less because that is what their results are worth.

The takeaway

Amid all the grumbling about "commoditization" and lowball pricing in the environmental consulting industry, it is easy to lose sight of the fact that many companies manage to survive and even thrive in today's downturn. And guess what? They are not always low-cost providers; rather, they are the companies that have learned how to differentiate themselves, listen to clients' needs, and win projects by selling value– not by slashing prices. "Environmental consultants are no more likely to face pricing pressure than anyone else," said Kurlan. Remember this the next time you're up against pricing pressures. Try not to succumb, and you might just be pleasantly surprised to see you've gotten your asking fee – and maybe even some follow up work or a new loyal client. PE