Unexpected fees are frustrating. Mention car dealer fees or the convenience fees associated with buying concert tickets online and a heated discussion on being “nickel and dimed” will likely arise.
Business owners everywhere need to be sensitive to the impact unexpected fees have on consumers. While entrepreneurs view them as necessary to recoup out-of-pocket expenses, clients may see them as a distasteful business practice. In the consumer world, these fees may be the difference between a customer returning or turning their back on the company for good.
So how should entrepreneurs effectively bill clients without it seeming as though they’re nickel and diming them for every single expense? Use the following tips as a guide.
Trust is everything
Every business / client relationship is built on trust. Customers trust companies to deliver their service or product at a reasonable price. When companies don’t honor this unspoken agreement and start sneaking unexpected fees into their invoices, the relationship can quickly turn sour. Suddenly, the client doesn’t feel valued and loses trust in the company.
This frequently happens with organizations that follow a billable hour business model – think law offices, public relations agencies, accounting firms, etc. Items clients would typically expect to be included in an hourly rate, such as a phone call, a long-distance fax or postage, are all itemized and listed individually on the monthly bill. While the business owner may think this is an effective way to communicate all of the services being rendered, it instead leaves a bad taste in clients’ mouths.
Need a simple solution? Lump administrative costs into a one-time fee or incorporate them into the hourly rate. Maintaining a client’s trust and keeping them from feeling as though they’re being nickel and dimed will be well worth it in the end.
Stand out from the crowd
It goes without saying that today’s marketplace is fiercely competitive. Companies are always looking for new and inventive ways to differentiate themselves from the competition and earn consumers’ business.
One company that is excelling in this area is Starbucks. It’s leap frogging the competition with its gift card sales. That’s because it has one of the few gift cards on the market that never expires or incurs dormancy fees due to not being used.
Starbucks choosing not to nickel and dime its customers out of a few gift card dollars is one of the many reasons why its brand remains popular today – consumers view the Seattle-based company as having their best interests at heart.
Want to drive business sales as well? Take a page out of Starbucks’ playbook. Evaluate the competition. Are they charging extra fees? If so, set a new standard in the industry, one that includes complete fee transparency or better yet, no fees, and watch as clients return time and time again.
Some things in life ARE free
Every parent has said it at some point to their child: “Nothing in life is ever free.” But what if businesses started flipping that old adage on its head? On occasion, this practice can be seen in the transportation industry, when an airline bumps a passenger flying coach to first class, or a rental car agency offers a free upgrade to a weary traveler.
In the professional space, indicate to clients what charges are NOT being billed. Lucrum feels this is just as important as the billable charges. For example, say a senior staff member sits in on a meeting with a junior staff member to ensure quality service and be available if there are any higher-level questions. But it’s not really the senior staff member’s engagement, nor did the client request the senior person sit in. Billing for his/her time might upset the client. But showing the client X hours of the senior person’s time at $0 rate demonstrates the value provided and the investment in the relationship.
These unexpected perks are what not only drive customer loyalty, but also repeat business – which is worth far more than some nickels and dimes in the grand scheme of things. Agreed?
If you need help evaluating how your business bills clients, please contact the Lucrum Consulting team for assistance at 704.927.0462.