Free' Is a Four-Letter Word for Channel Partners

Sales coach and trainer Gil Cargill says resellers need to stress the value-based services they provide and price accordingly. By Michael Siggins

Gil Cargill is founder and CEO of Cargill Consulting Group Inc., a B2B sales coaching and training consultancy based in Los Angeles. He spoke recently with ChannelPro-SMB Publisher Michael Siggins about how channel partners should sell value - and why “free” is a four-letter word.

ChannelPro-SMB: You say channel partners should not be uttering four-letter words. Can you explain?

Gil Cargill: The biggest misuse of a four-letter word in the channel is the word “free.” I see too many people doing their darnedest to give away free assessments, free products, free service, free trials, discounting their invoices or their quotes and proposals. They're confusing price with value. From the customer's point of view, price doesn't matter if he or she doesn't get the results they anticipate. So we are misconstruing the difference between value and price.

ChannelPro-SMB: Talk about price vs. value.

Cargill: When an MSP or an IT consultant discounts excessively and/or gives away free, they are losing time, which they can never recapture. People should price based on the value of the results they produce. [Making the server work or getting rid of viruses is] not a value. A value is what getting rid of the virus does for the customer. Making the server work could improve productivity. It could increase security. It could make them HIPAA compliant. It could protect them against lawsuits and fines. Those are valuable results. Making the server work at one level is what the customer expects. Customers look to MSPs and IT consultants to create that problem-free environment. Tragically we don't sell that as a promised result. We sell “we're faster to respond than the other guy.”

ChannelPro-SMB: How do you sell value?

Cargill: I'd like to see the channel sell higher price for the same service, but help the customer understand the value of those services. The easiest way to understand your value is to get your prospects to tell you what it would cost them to not have a relationship with you. What does it cost to turn the server off? How many more employees do they need to hire to get the same work done? How many more mistakes will they make that have to be remedied? How many customers will they lose if they can't satisfy customer requests quickly and accurately, and in a professional [and] succinct manner? Those are all issues that they aren't talking about.

So what does it cost someone to say no is the biggest question we should ask. When we're trying to get a monthly retainer, what does it cost them to say no? That's the homerun for us to put together for them.

ChannelPro-SMB: Is “free” an equally bad four-letter word when they're trying to retain a customer?

Cargill: If you have to give away free to retain them, you've dropped the ball a long time ago. The problem a lot of us have is we don't tell the customer how much work we do for them. The only thing the customer sees from us is an invoice, or when there's a problem they see us. I advocate sitting down with customers every 60 days to say, “Here's what we did for you in the last two months to protect from viruses and malware, and here are the alerts that we dealt with that you didn't even know about.” That builds value in the mind of the customer; so I don't think we should ever give away free to keep them.

When the customer knows that they rely on you for uptime, for productivity; that you fix problems they never knew about; that you replace parts before they fail, thus preventing downtime or loss of productivity - then the customer trusts you and they don't want to lose you. What we have to do in those planning review sessions is ask the customers, “Where are you going, and how can I help you get there?” The customer's business is changing every day, and we have to be ahead of the power curve to help them get to that level.

ChannelPro-SMB: What would you say is the most common thing you hear from your consulting customers?

Cargill: Every one of them has said that their problems are unique. If I had a dime for every time I've heard that I'd be flying my own jet. A lot of people don't have the DNA to be an entrepreneur; they may have hurt themselves when they said, “I can leave the corporate world and go do what I already know how to do and make a good living.” … And they didn't have business school training where they worked as a technician or an engineer, [and] didn't get much entrepreneurial training, so a lot of them are hurting themselves.

ChannelPro-SMB: Is there a lack of understanding about what it takes to go into business for yourself?

Cargill: I define a business as an entity that creates wealth for the owner, whether the owner works 24 hours a day or not. … Most owners have built a job; they haven't built a business, and the failure to build a business frustrates them, and the beat just keeps going on.

ChannelPro-SMB: If you could end with a final pearl, what would that be?

Cargill: It's not your people; it's your process. Fix the process and you'll fix the program - that's the key.

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