Academy

Cost Obsessives

Cost Obsessives

Financial Planners often ask me how best to handle fee objections – it’s probably one of the most common topics. So let’s talk about ‘cost obsessive’ clients – who they are and how to deal with them.

What do we mean by ‘cost obsessive’ clients?

Now, we’re not talking about clients who have questions and queries – like Brett Davidson says, that’s more of a hand to dance. Answer a query and the chances are your client will be more than satisfied and will happily move forward. If you get all defensive, then that’s a different story – but we’ll be covering that in a different blog!

Cost obsessives are clients who are literally obsessed with costs.

  • They always feel the need to negotiate.
  • They always push to pay less.
  • They are innate hagglers.

And they will haggle over anything and everything in their lives – it’s painful to watch. But that’s just them, they feel the need to save a few quid. I’m pretty sure we all know someone like that.

In fact, I’ve got a mate who always insists on being the last in line when it comes to buying a round of beers. Why? Because he’s worked out that, over the course of the night, we’re never going to have the same number of rounds – if he’s last in line, he might get away without having to buy a round at all. And he’s been doing it for 30 years!

So, how do we deal with a cost obsessive client?

Simply answering questions and queries isn’t going to make their obsession over costs disappear. That’s why they are called ‘obsessives’. So, we use a few different techniques. Let’s take a look at the ‘we’re not for you’ technique.

The “we’re not for you” technique

If you recognise that you have a cost obsessive in front of you, try saying this:

“If cost is your main driver, then we’re not for you. But, I can show you who is.”

That’s why it’s always important to have 3 or 4 different competitors in mind – know their costs and the services they offer. You can then give this information to your client. Without any fuss, simply say:

“You could go down the road to Bob & Co and they will do it for a lower cost because they don’t have a specialist. Or, you could try this national company – they have a call centre, so it won’t be face-to-face, but it’s cheaper.”

And what you’re doing is giving them an option that enables them to pay less. You’re essentially removing the argument.

The thing is, they might be saying, “I want to pay less,” but what they really mean is “I want what you do, but I don’t want to pay full price.” And that’s a little different.

You don’t need to justify anything

If you start trying to justify your service and your cost, you’ve moved onto their territory. Remember, they’re already happy with your service – they want what you do – they just want it for a cheaper price. So you absolutely don’t have to justify your service.

But by asking if cost is their main driver, it forces them to acknowledge whether it is or not (and the chances are, it isn’t). And by giving them options, you remove anything that they can fight against.

Be laid back

But be completely laid back when you ask them. Use a very matter of fact, casual tone. You’re not annoyed, you’re not disappointed. You’re simply giving them options. Practice saying this in exactly that tone:

“Okay. If cost is your main driver then we’re probably not for you. But I can recommend Bob & Co, down the road. They have some lesser-qualified people and are normally happy to work for half the rate – so that sounds like the ideal solution for you. Shall I give you their details, and we can call this meeting to a close?”

Never negotiate

I guarantee that, two minutes later, your cost obsessive client will still be sitting in front of you. Why? Because they’ve got nothing to push up against – you’ve given them the option to pay less.

They are now sitting there thinking, “okay, what really is most important to me? I really like the service that this guy is offering. Do I really want to go somewhere else and get a lesser service, just to save a few quid?”

Nine times out of ten, they will go with you and your service – and pay the fees that you declared at the start.

Never negotiate.

We’re going to be talking a lot more about this in a future blog because it’s something I’m asked about frequently. I’ll explain exactly why you should never negotiate and what the long-term costs are, if you do!

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