A New Approach to Fee Discussions

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The following events were unconnected, but they led me to discover a new approach to fee discussions:

A Ferrari dealership opened in Naples, Florida, where I live; and

Having a low conversion rate in our digital marketing business has improved our bottom line.

Lessons from Ferrari

The Ferrari dealership is in an impressive, gleaming setting. But I rarely see much activity there when I pass by.

That’s not surprising.

According to the US Department of Energy, the majority of vehicles’ trips are less than six miles. Of all trips, 95% were 30 miles or less.

The average speed globally of automobiles is 18.6 mph.

The average price of new cars in in 2021 was almost $47,000.

The retail price of a Ferrari is only the starting point in discussions. They range from $218,670 for the Ferrari Roma to $625,000 for the Ferrari SF90 Stradale.

Top speeds for most Ferrari models are in the 200-mph range.

Since a far less expensive car is more than adequate to meet the needs of most people, why is there a market for Ferraris?

According to Refined Marques, which specializes in providing corporate service in the ultra-luxury market, there are many reasons for buying a Ferrari. They include:

Beauty;
Joining an elite club;
The thrill of driving one;
Reliability;
The ability to customize;
Variety of models; and
Earning respect from others.

What’s missing from this list is the most critical reason for making this purchase: Because you can.

I’m confident the Ferrari sales representatives are rarely asked these questions:

How do you justify the value of a Ferrari?

Why shouldn’t I purchase a much less expensive car?

Why should I purchase a car that can go 200 mph when I’ll never drive that fast?

A Ferrari isn’t right for everyone.

But for the 9,119 people who bought one globally in 2020, it’s perfect.

To put this number in perspective, almost 7.4 million mid-sized SUVs were sold globally in 2020.

Our low conversion rate

We receive many inquiries for our digital-marketing services. Most of them relate to website design and content.

We decided about 18 months ago to only design unique websites. We don’t use templates or themes. Each website is designed to the unique requirements of our clients.

I head up the team that writes content for the websites we design. All members of our team have a deep knowledge of evidence-based investing (which is the market we serve exclusively).

We made this decision for many reasons.

As a practical matter, we can’t compete on price with DIY websites or with bundled providers who churn out templated websites for the advisory niche market.

We were overwhelmed with business when we took shortcuts to meet price constraints. We felt we could improve the quality of the websites we designed by focusing on advisory firms that wanted to differentiate themselves with a uniquely designed website and were prepared to pay the fees associated with providing a high-end product.

More AUM. Better Relationships.

Guaranteed

My micro-learning course will increase your AUM and deepen your relationships.

If not, I’ll give you a 100% refund of the $29.95 cost.

Volume discounts are available.

More Information

Here’s what’s happened to our business since we made that decision:

Our conversion rate plummeted;
The number of new clients decreased;
Our profits increased; and
Our quality of life improved.

The takeaway

You are not a good fit for every prospect. If you are a Ferrari dealer, a client who drives a Kia is not your demographic.

If you are a low-cost advisor, a high-net worth client with complex investment and financial planning needs is not likely to be happy with your services.

Instead of trying to justify your fees, focus on the needs of the prospect. Work with them to determine what’s in their best interest. If it’s not your firm, refer them to a firm that meets their requirements.

Dan trains executives and employees in the lessons based on the research on his latest book, Ask: How to Relate to Anyone. His online course, Ask: Increase Your Sales. Deepen Your Relationships, is currently available.