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15: How To Use Category Design Principles As A Solopreneur (Category Design Series)
67 Plays1 year ago
Nick Bennett helps us find answers to questions like: How does the overload of buying choices in 2024 cause you to be replaceable? Why doesn't brand building work for solopreneurs? Why should you charge for outcomes, not deliverables and time?
If you know you need to niche down, the principles we discuss here will help you clarify why.
Here's Nick's Linkedin: Nick Bennett | LinkedIn
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Transcript
Understanding Category Design
00:00:00
Speaker
Category design is essentially designing a new market for a solution to a problem, positioning yourself as the leader of this market. Because when you're the category king, you get the large majority of market share in profits. And when you're not the number one for a specific category, most buyers won't buy from you nor even remember you. That's because we live in an over communicated world. There's too many choices for services and products.
00:00:21
Speaker
too many advertisements and information. So this is a paraphrased claim coming from the godfathers of positioning in their book positioning the battle for the mind written in 1980. That's 44 years ago when digital marketing didn't even exist. So you can imagine how much more information there is now and how many more choices buyers have to deal with. How standing out and being different in this over communicated world has become ever more important.
00:00:45
Speaker
It's pretty easy to conclude the need to position ourselves as a leader for our very own market.
Category Design for Solopreneurs
00:00:51
Speaker
Now, that might sound like an impossible achievement if you're just a solopreneur or a small agency, which is why we're going to talk to Nick Bennett today, learning from category design principles and applying them for solopreneurs. Nick, as a solopreneur, what category design principles are most important to learn and apply? All of them. All 22. I would say,
00:01:14
Speaker
The most important one is as a solopreneur, most people end up really relying on brand building. And the role that category plays in helping you attract the right type of client is significantly more valuable and more important than most people give it credit for.
00:01:36
Speaker
But most people, most solopreneurs don't see, because most of us are in sales and marketing in some capacity, whether, and there's like the, there's the whole, even more specifically, most solopreneurs think in these like large market categories, they're fractional COOs, and there's a massive,
00:01:59
Speaker
category or there's thousands and thousands of people that are fractional COOs, fractional CMOs, even freelance marketers.
00:02:08
Speaker
across the board, just even marketing consultants, like all of these things are just super, super general. And what they don't realize that they're doing and why they're struggling is not so much that just they don't understand the problem, but that's like almost a tertiary. That's like a ramification of them not realizing the importance that category plays.
00:02:29
Speaker
because when they are a fractional COO or you are a fractional CMO or a freelance marketer, buyers just lump you into this one massive category. Like everyone is exactly the same. It's really hard to understand like why Dylan? What does Dylan know about operations that Nick doesn't?
00:02:52
Speaker
What is this person like how is it possible that you know something that someone else doesn't or and when this happens I have found that it's just You just you're you disappear. You're basically invisible. It's true for any category But for solos, it's like the stakes are so much higher because there's I think there's like 25 million soul printers now something crazy like that I haven't verified that number in a while, but When there's that many people
00:03:19
Speaker
trying to earn attention and consideration from buyers and they all look largely the same. The role of category is so much more important than I think most people are willing to give it credit for.
Positioning in an Over-Communicated Society
00:03:33
Speaker
I think one thing that has just really clicked for me learning about category design is the fact that it takes so much into consideration about the buyer's perspective
00:03:45
Speaker
and how they see the world. And I think that's what so many people lack. And so category design was basically based off of positioning by Jack Trout and Al Rees, right? And what they talk about in that book is that this is in 1980, talking about how it's an over communicated society, because there's just so much information, there's so many products, there's so many choices.
00:04:12
Speaker
And so from everyone's perspective, everything looks the same. And so that's something that everyone forgets. And so this is why we're all lumped up and seen as the same because there's just so many choices. Like you said, there's so many CMOs. To me, you're exactly the same as everyone else. It's why most branding people
00:04:33
Speaker
get so frustrated. Like this is like the most obvious example and one that I hear a lot. So there's like, there's brand strategists everywhere. They get really frustrated. And they'll go, everyone thinks branding is just colors and fonts and it's not colors and fonts. It's this, it's that, it's all these, it's this, it's then they rattle off their laundry list of things. And it's like, well, stop trying to redefine branding. Like everyone has this understanding of what branding is.
00:05:02
Speaker
for good or bad, whatever. It just is what it is. And so instead of trying to rebuild the category of branding, which is going to be basically impossible, especially as a sole opener, call yourself something different. Just stop trying to convince people that branding is what you think it is, and just tell people it's something else, and you don't have to clear that hurdle anymore. It makes your life so much easier.
00:05:33
Speaker
And I don't know why more branding brand strategists and brand specialists don't see that. Cause it's probably the most common example that I see of all the solopreneurs that I speak with, like dozens of new solopreneurs to me every week. And the majority of them that are in branding say almost that to me in some way, shape or form.
00:05:57
Speaker
So speaking of branding, the big brand line is something that the category part talks about a lot. You talk a lot about personal branding and reputation, the difference between those two. What is the difference between those two? Because for so many entrepreneurs on LinkedIn, you see it every day, just build your personal brand is advice that is just in every other post, what is wrong with this kind of thinking?
00:06:27
Speaker
A few things, but before that, it's important to recognize that without understanding category brand has no context.
00:06:42
Speaker
Right. You talked about like positioning a second ago. Positioning like requires the category to give it context. Some people disagree with that. Some people think you, the position creates category. That's I, I believe that positioning requires the context of the category in order for it to be effective. And surprisingly you talk about rise and trout. They wrote a book called the 22 immutable laws of marketing. And one of them was the law of category.
00:07:12
Speaker
Because it exists. You need to address it. And I don't know why more people don't. But either way, without the category, you don't have a position and your brand is meaningless. Without running shoes, there is no Nike. Without wireless communications, there is no Verizon. All of these massive companies require the category in order for them to exist.
00:07:39
Speaker
I mean, even with, even within like the world of marketing agencies and solopreneurship and, and like these, this freelance marketers stuff, it's all the same thing. Without the category of marketing agency, the HubSpot agency program, the HubSpot partner directory and all those things have no context. They, they, they can't exist in because people don't know where to file them in their mind. So this is this, this is.
00:08:07
Speaker
I think kind of where the brand strategists tend to fall off because they neglect category for brand. And it's not an either or situation. It's just you use one to amplify the other.
The Role of Categories in Branding
00:08:20
Speaker
I think the important thing to note about category, like the word category, the reason it's created is because it's just literally how the brain works. Like categories are like files.
00:08:33
Speaker
The metaphor, you have the files on your computer. This way, you can be organized and search for a certain file. It's like you have these categories. I think the way that people think branding works is that you just have, there's no categories. It's just a long list of brands and it's like no, the brain doesn't work that way because you can't organize it that way. So the brain oversimplifies and creates these categories.
00:08:59
Speaker
We have these categories. We have CMO. You have Digital Consultant for X, whatever. You have all these different categories because it helps you remember things. The brain simply cannot
00:09:10
Speaker
comprehend all of these different brands and so that's why the category works. The category is not just something you created, it's just simply how the brain works and that's why this is so compelling is because it's going back to simple psychology. It is the filing system of the brain.
00:09:30
Speaker
What you said, because I've never heard someone explain it that way, but it's like, yes, I think there is this idea that there's a laundry list of just brands in people's heads. It's like Google, Facebook, Apple. And it's like, yeah, like they're gigantic companies, but without search, there is no Google. Without computing, there is no Apple. Without social networks, there is no Facebook.
00:09:54
Speaker
Like all, you need those things in order to provide context. So really when they're seeing this list of brands, all they're seeing is the biggest name on the bubble chart, right? Like if you zoom in, there's a bunch of smaller dots that say, whatever, equally sized, I don't know, LinkedIn and Instagram and YouTube and all of these things on the social media on, on search. Yeah, there's Bing and there's DuckDuckGo and there's Brave and there's all these other,
00:10:21
Speaker
Smaller search engines that exist that people probably don't use like but they're just seeing the biggest ones and they're thinking Oh, well they won because or they're like the most recognizable because they built a great brand I mean, I think it's pretty I don't think anyone could suggest that Google has built a good brand Google is the thing that they did well is they called it a thing that became a verb and
00:10:47
Speaker
Right. I feel like they stumbled into that one because they named it Google. It had something to do with the volume of results. Right. Because Google is like infinity or something and there's infinity results. Yeah, like a billion decimal points or some ridiculous thing.
00:11:03
Speaker
That's a gross exaggeration, but the point stands, right? That's why Google won is because they occupy the search space in your mind. It's like, it's not because they're the greatest brand. And you'll see people be like, I think there was like Seth Godin video where he was like, if Nike made a hotel, you would know exactly what that hotel would be like because Nike made a really great brand. I completely disagree.
00:11:31
Speaker
I have no idea what they would be like. I have no idea what the Nike Hotel would be like, and I actually don't really care. I would never, I probably would never go to a Nike Hotel because I'd be like, why is Nike, like I don't trust them to make my, to make the, to understand the mechanics of making sure that there are hundreds of rooms that have clean linens in them and all of the things that require to function that operation.
00:11:58
Speaker
versus like, well, if Hyatt made shoes, would you know what those shoes would look like? It's like, I also don't care what Hyatt shoes would look like. I would never consider that. This is this idea that branding allows you to leap from your category to another category.
00:12:16
Speaker
And it doesn't. People think, oh, well Nike went from shoes to now they make like sport watches or they did this collab with Apple and they have the Nike run, whatever. This isn't a categorical leap. This is adjacent category stuff. This is also zooming out. They went from running shoes to fitness. This isn't like they're expanding their category footprint.
00:12:44
Speaker
this isn't like a massive leap from shoes to hotels. And I think this is something that when we talk about branding that gets totally lost, like people forget that Microsoft tried to open stores the same way Apple did and they lost half a billion dollars or something crazy.
00:13:04
Speaker
when Google tried to join the social networking game, they lost a ton of money to Google. And what happened to Google Plus? Nobody knows. So like, we're off the we are off path from sole openership. But like, it's, it's much easier to get to make the point of like, the role that branding plays in your business.
00:13:26
Speaker
when you look at them from that, when they're that big versus trying to like zoom in on like your brand that have recorded or my brand that I'm building at Hardison home. Like it's just, it's, it's, it's much easier when you look at Google and you're like, Oh, like a very obvious example.
00:13:44
Speaker
Yeah. But to go back to solo printers, something that sticks out in my mind on LinkedIn, just because I want to speak it from my perspective so that anyone that might be in the general category of search engine optimization. So this is something I see all the time on LinkedIn. And there's all these consultants that do SEO.
00:14:10
Speaker
And they very clearly fall into this trap where they just try to slam it into everyone's brain. They do SEO. It's like SEO for SaaS, whatever.
00:14:24
Speaker
From my perspective, when you say SEO for SaaS, it's like, yes, you're being somewhat specific about the person that you serve and how you do it. But now, there's a hundred other people I know that do SEO for SaaS.
00:14:43
Speaker
Even though you might be better, you might think you're better, your content might be good and might have unified colors, whatever kind of branding you say you do, you're still interchangeable in my mind. I still see you as completely the same. This is why it's so important. It's important not just about you, it's about in the minds of other people.
00:15:07
Speaker
And so that's kind of the mistake that people are making as digital consultants for certain areas like SEO. I completely agree. I've been saying this for a while now that there's a lot of bad advice out there on like pick a vertical as just like that is the equivalent of a niche. And it is part of the process.
00:15:31
Speaker
Like you just said, if you go from SEO, you go from competing amongst how many thousands, hundreds of thousands of options out there to saying SEO for tech companies. Now you're just competing with less people, but still competing with thousands of people and products and all these other agencies, stuff like that. So it's a part of it, but you know, the more specific that you can get on
00:16:02
Speaker
not just the vertical, like the who, but the problem, the who, like the person and the process, the way that you solve it, that is where the great niches are born. Like that's how you're gonna get the most traction in doing category thinking as a soul opener.
Finding Your Niche as a Solopreneur
00:16:26
Speaker
You don't need to build a whole new market category. Like if you think people who build market categories are trying to go public and they have a ton of money to do it. I think of niche as the, like, how do you apply the principles of category design as a one person business? Well, this is like the strategy sweet spot, right? How do we find an existing market category and get so hyper specific that you can
00:16:56
Speaker
just pull in exactly who you need and repel everyone you don't. This is why so many sole openers will say things like, um, I take, I feel forced to take on bad fit clients. Well, cause no one knows who you're for. They end up buried in client work. Well, no one knows what you do or how you do it. So you do anything people want is it just be creates this vicious cycle. So.
00:17:23
Speaker
The more specific you can get, the easier it is to attract clients. Cause the reality is, is people like us, you don't need a million clients. You don't need to appeal to everybody, right? You need 10 to 20 clients. That's the realistic operational load for a sole opener. And if you can maintain that, you're good. You don't need to do much more than that.
00:17:47
Speaker
So I want to kind of touch on outcomes. So outcomes is a very big part of category design. So you solve a specific problem with a specific solution to get a specific outcome. And you talk a lot about how a big problem that solopreneurs have is that they charge for their time and for deliverables and they should be charging by outcomes that they produce so that they can capture the value that they create
00:18:16
Speaker
Why is this so important? Why should solar printers be selling outcomes instead of time and deliverables? Because the potential is unlimited. When you sell time or deliverables, there's only so much time you can sit in front of a computer and write emails or write blogs or tinker with ad accounts or whatever the thing is that you're really good at.
00:18:43
Speaker
And if you're good, if you're really good, you can max out your time. There's a lot of solopreneurs who have hit the ceiling. They're like, based on what I charge per hour or per deliverable or the thing, I can't take on any more work. I'm working 70 hours a week. And they usually will tell me they're making somewhere between 20 and 40,000 a month, which is phenomenal money. There's nothing wrong with that.
00:19:07
Speaker
but you've sacrificed your time to do it. And most people don't want to give up that much of their life to do that stuff. And so it's, the question isn't, well, how do I incrementally raise my rates so that I can earn a little bit more and maybe work a little bit less, but I don't know anybody who is actually, I know one person.
00:19:31
Speaker
who sold out their time and then they were like, I'm not doing it anymore. They cut all their clients or they cut like half of their clients and they just, they weren't willing to sacrifice, make the sacrifice anymore. But everybody else, this was an anomaly. Everybody else I know, when people keep coming to them, they're like, I'll take the work. I'll take the work. I'll take the work. I'll find a way to make it work. We will do something to make this work because very few people are willing to turn down the money. So they end up just buried in client deliverables.
00:20:01
Speaker
in sacrificing time for money. So I am a firm believer of charging for outcomes because now it doesn't matter how much time you spend doing work, it matters what your work amounts to. So I'll give you a really tangible example. There was a woman who came to me recently and said, she's an email like response marketer for e-commerce businesses.
00:20:28
Speaker
She was like, I wrote an email sequence for one of my clients. She was working at an agency at this time, an e-commerce agency at the time. She was like, I wrote a sequence for one of my clients. It generated them 2x my salary in a week. I was like, how much did you get paid to write that? She's like, well, I was making like a hundred something thousand. You kind of divide it. I was like, kind of paid a few hundred bucks, right? The equivalent of her time to write that thing. It's like, well, how much was it worth?
00:20:59
Speaker
Is it worth 10%? Should you be able to charge or capture 10% of that revenue, 20%? Everyone's risk-reward profile is different. I can't tell you how much that email is worth in a matter of fact, but I can tell you that it's definitely worth more than the 300 bucks or something that she got paid for, considering it generated almost a quarter million dollars for this business.
00:21:27
Speaker
And that's when it clicked for her. And I think as I tell this story to other people, it clicks for, it really puts it into perspective, which is she didn't need to charge somebody 20 hours of her life to do that work.
Outcome-Based Pricing: A Case Study
00:21:42
Speaker
Cause it is irrelevant. It's completely irrelevant how much time it took her to write the emails. All that matters is that the emails generated financial value, economic value inside of the company that she gave them to.
00:21:58
Speaker
That's a huge, huge difference. So you don't need, and when you shift your lens from like, well, how do I write more emails like that? How do I get more clients so I can do that again? It doesn't really matter when you're selling your time, it doesn't matter what your work amounts to. You just need to sell more time. But when you shift your lens to outcomes based fee structures and pricing, now you don't need to sell out 80 hours worth of your life every week. What you can do is,
00:22:28
Speaker
write email sequences that generate quarter million dollars every week for a client. And now you have a phenomenal business, even if it was 5%. That's an insane amount of money for a few hours worth of work.
00:22:45
Speaker
So there might be some people out there that might say, all right, so it's 5%, that's thousands of dollars more priced to the client. How would you address that saying that it's beneficial for both people, this way of pricing, outcome-based? 100% incentive alignment. A lot of times,
00:23:15
Speaker
There's this like this split among sole openers. There's the cheapest rate. There's like, basically there's either the cheapest options or there's like the premium options. Both have their reasons for wanting to be one or the other.
00:23:33
Speaker
Either option is like the cheap one, well, it's a volume game and doesn't really matter what your work amounts to and the clients don't necessarily scrutinize that because you're the cheapest option. If you're the premium option, clients will scrutinize what the work amounts to, but to you, it still doesn't matter because you still need more clients in order to earn more money.
00:24:02
Speaker
If the emails generate a quarter million or they generate a quarter, it doesn't matter to you because you have no reason to make them good other than the fact that you're a good person and you want your clients to be successful. You want a reputation for helping your clients, but this idea of incentive alignment is extremely powerful, especially for solo printers because ask any business that hires solo printers or consultants or coaches or trainers and whatever they want, fractionals, whatever you want to call them.
00:24:32
Speaker
The majority of businesses will tell you that they have been burned by someone like us somewhere along the way because they went with the premium option and it amounted to nothing. And it's just, it just happens. And if you want to reduce drag on your sales process, align your incentives with your client. I'm going to work really, really hard for you to make sure that what we do here
00:24:59
Speaker
matters and it creates value inside your business. And if I do that, well, we're both going to win. So just to make, make this a little bit more concrete and tangible, how does, how does one do this? How do I know you talked about the four different outcomes or the four different factors that needs to be considered as a scalability, risk management, profitability, and growth. Well, I mean, those are just the four category of,
00:25:30
Speaker
of outcome or four categories of metrics that business owners care about. If they don't care about those things, they're probably not gonna be in business for very long, but those are really the four things that matter. And if you can tether what you're doing to one, two, three, or all four of those things, you're in pretty good shape to be able to demonstrate, like to create a tangible outcome for somebody
00:26:00
Speaker
and basically tethering the results to those one or more of those categories. But how do people do it? I mean, there's a lot of different ways to do it. I think the most solopreneurs that are on the tactical execution side of the business will spend all of their time in like output transaction mode. It's not a bad thing, but this is the whole hours for dollars thing.
00:26:28
Speaker
They charge for time or they'll charge for a batch of deliverables. You're gonna have three blog posts a week. Okay. Here are your blog posts. Like it's just very transactional. Versus when you build your... So there's that one actually. And then there's the consultant side of things. Consultants typically will live in theory and no execution.
00:26:54
Speaker
This is also problematic because there's only so much planning that you can do before you're forced to take action. And this is kind of where the wheels fall off for most consultants, like sole printers that are true consultants. There's a lot of people like us out there that call themselves consultants or fractional CMOs, but they're doing the execution and the tactical work.
00:27:18
Speaker
of like a freelance marketer or something like that. And so talking about someone who can help install strategies and utilize their expertise to teach clients and guide them through programs and guide them through whatever initiatives that they're hired to do, just as a point of clarification. So if you're a consultant,
00:27:42
Speaker
And you're stuck in planning for six, nine months where you're constantly redlining strategies and you're constantly trying to help people create redlining email templates or you're looking at documentation with people or you're helping them deal with like maybe problem of the day and you're not chipping away towards the greater goal here. It's very, your program can unravel pretty quick.
00:28:09
Speaker
because you're gonna just, you're gonna deviate from either the initial scope of work or the initial promise or the agreements will usually just end after like three or six months. They're gonna go through their strategy phase. They're gonna give it to the client and they're gonna say, good luck. I hope it works for you. I hope you like it.
00:28:27
Speaker
and they will move on to the next client. And then that's when you get clients that go, well, we've been burned by consultants because they gave us a strategy and we don't really know what to do with it. There's really not much we can do with it. So this is the incentive alignment thing. So once we align our incentives with the client,
00:28:50
Speaker
We realize very quickly that there's only so much time you can spend in planning before we need to move into execution. You're forced out of planning mode and you're forced to strip out all the nonsense that we typically stuff into the planning phase. That takes up a whole lot of time, but really is useless fluff. That doesn't mean much.
00:29:17
Speaker
It's not practical. So you're forced to strip all that out, get into execution mode, get into optimization mode, get into maximization mode. Taking someone through your program is the priority because if they're not successful working with you, they're not gonna make more money and you're not gonna make more money.
00:29:36
Speaker
What we've just discussed is the higher level thinking that solo printers should be doing. But just, again, to make things a little bit more tangible and more clear and concrete, I wanted to go over some of the frameworks that you have developed, because they've helped me simplifying things and seeing how it can actually be done.
00:29:56
Speaker
I really like how the first framework is for niche, so the problem plus the person plus the process, that is your niche. Could you walk me through this one here? Yeah, so one of the things, the breakdown for many solo printers is in communication.
00:30:16
Speaker
If you can clearly communicate the problem that you solve, like the very specific problem that you solve and the very specific person you solve that problem for and the very specific process that you use to solve it, you're ahead of like 99% of everybody else because it's very unclear. If you look around, you'll see it's pretty unclear what a lot of people do. And so this isn't my framework, but I have adapted it for my use case.
00:30:51
Speaker
We'll use your SEO example. Everyone will tell you we help you rank in Google. That's not a very specific problem.
00:31:09
Speaker
Then, everyone will say we help businesses ranking Google, what's not a very specific person. You could say you to your point, you're like well there's like tech companies well that's one version of tech companies but what's a more specific version of a tech company is it.
00:31:25
Speaker
Tech companies trying to get their seed funding, move from series A to series B. Tech companies trying to build a product-led growth motion. You can get really, really close to that person who needs SEO help. They need to rank higher on Google for a variety of reasons. So you can get closer to them in that way.
00:31:52
Speaker
And then the specific way that you solve it. There's a million tools that will help people do SEO better. There's a million people who will do it. Well, what do you know about SEO that other people don't? Or how do you apply what you know in a way that other people don't? Here's a really, really easy example. There's a guy named Brendan Hufford. He is the founder of a company called Growth Sprints.
00:32:21
Speaker
He on the surface, right? The highest level is an SEO guy for tech companies. But he, when you talk about like the specific way he solves this problem for tech companies is he has his growth sprints process.
00:32:40
Speaker
He goes through a few different things about the types of content that he creates with his growth sprints, frameworks and methodologies and things like that. But this is very different from someone who has access to SEMrush. Like maybe he uses SEMrush to help guide some of the strategic decisions he makes and the things that he'll advise people do.
00:33:03
Speaker
It's largely irrelevant. What people need to know is that he solves the I don't rank on Google problem for tech companies in a very different way. The more different you stack up amongst these things, amongst your problem, the person in the process, the more different you are. So you don't have to be radically different in all three areas, but it helps. If we talk about the problem and let's use growth sprints
00:33:34
Speaker
As the example, it's not about we help you rank number one on Google. Like his, his, the way he frames the problem is we help take SaaS companies from 10 million to a hundred million. That's a problem. Right. This is, and then within that is a very specific person.
00:33:59
Speaker
There's a very specific type of company that needs to do that thing, that needs to achieve that kind of outcome. And he has this very specific process front and center on his website. We use a SaaS growth sprints framework to increase revenue from Google through short focused marketing sprints. It doesn't get more specific or clear than that. It's a fantastic example, especially in the SEO field.
00:34:25
Speaker
And I think, correct me if I'm wrong, when you niche down like this for a specific problem, for a specific person in a specific way, you can get really, really good at producing the outcomes, because it's such a specific thing. And so when you do that, then the outcomes are much, much better. And then you can charge for those outcomes and get even more out of it. Instead of if you're just getting outcomes for a general person,
00:34:52
Speaker
the outcome might differ between the person or the problem that you solve because you're not specialized at that. 1000%. And it, there's a few different, you touch on a few different reasons why it's so powerful, right? It may work in SAS really, really well, but it probably doesn't work in home services as well. Maybe it does. Who knows?
00:35:15
Speaker
but it may or may not. So repeatability is huge on your ability to generate the outcomes.
Aligning Incentives for Success
00:35:24
Speaker
So when you sell time, this is one of the things that, there's an overlap here, right? If you're selling time and you're not selling the outcome and you're not really selling like your, you don't have like a codified system, like a process and how you solve the problem,
00:35:42
Speaker
you end up doing something different for everyone. And to your exact point, you can't get really, really good at it and improve repeatability and improve the likelihood of success and the likelihood of an exponential outcome if you're doing something different for everyone. And you're looking into
00:36:07
Speaker
several different industries, it's hard to find the through lines of all the things that do and don't work to amplify your process and speed it up. You don't want to take a year every time. The more you do it, you'll start, like I alluded to earlier, it's like you start trimming out all the things that you don't end up needing so that you can get to the result faster.
00:36:30
Speaker
All right. So I guess this is important to know because I'm sure that some people when thinking about, you know, being completely outcome based, it might sound like a big risk because you know what, if you don't produce the right outcome and you don't get paid. So this is even more important to do that. It's like when you niche down, you can generate, you can be a lot more sure that you're going to generate the outcome.
00:36:54
Speaker
Yes, and let's go into that real quick, because it's an important designation to make. Charging for outcomes doesn't mean you earn zero dollars until you achieve the outcome. It means you capture the majority, or you're able to capture the value that you create, especially at the later stages of your agreements. This is really what the
00:37:23
Speaker
The crux of it is, is like if you work with someone for three months or six months, you're probably not really able to make a huge impact on their business. Maybe, maybe not. But if you're working with someone for a year, 18 months, even two years, and your work is compounding over time, that's really when you're gonna start to see the snowball grow.
00:37:48
Speaker
That's the point here. No one is advocating to work for free or to discount your rates. Everything in this life is risk and reward. The question is who assumes more risk? You or the client? It is a very different conversation. And this is another reason why I think the category lens is so powerful, especially for sole openers. One of the things that I have found going through this myself and teaching it to my own clients is that
00:38:17
Speaker
When you tell, when you talk about pricing with your clients, what are they gonna do? They're gonna look at your price and they're gonna look at the other people they're considering.
00:38:28
Speaker
Well, there's this SEO person, they're gonna charge $10,000. Well, how do I give that context? Well, we're gonna get five articles, we're gonna get these reports, we're gonna get X, Y, and Z thing. Okay, for 10,000, we get this, from this other person, they're charging 15,000 for the same thing, from this other person, they're charging eight. And they're just, it's like spreadsheet, you're flipping back and forth between browser tabs, trying to understand who can give me more for less or who's the better value.
00:38:57
Speaker
the premium cheap spectrum becomes very visible. And it just overall, you rely on other people to give your pricing context. This is a very bad place to be. And I do not believe that as sole openers, we should ever rely on somebody else, really for any business, but especially as a sole opener, you should rely on someone else to give you context. So when you charge for outcomes,
00:39:24
Speaker
Now the conversation isn't, well, how does your price compare to these other things that I'm looking at? It's your price gives itself its own context. Because you show them the risk and reward profile of working with you. If you assume more of the risk, lower base fees, for example, then you capture more of the upside in the long term.
00:39:49
Speaker
Some companies look at that and they go, you're gonna knock this thing out of the park. I do not wanna give you as much of the upside. I'm gonna pay you more upfront and normalize the risk and reward for us both. Or some people are like, I don't wanna give up almost any of the upside and they're gonna pay you a full premium rate. Because they don't necessarily wanna give you as much of the upside that you create.
00:40:13
Speaker
Now they're negotiating with themselves in your context because it shows them the value that you can create. And they never consider how someone else is charging or they're not using someone else, someone else's number to understand your worth. Most of the time when people look at that pricing, they go, this makes total sense.
00:40:43
Speaker
I completely understand now that if the, where the risk and reward comes into play for us both, right? We are now aligned on, on this engagement and on this initiative together. We need to make this happen versus when someone's going to charge you $5,000 or $10,000 for the service. Like I said a hundred times, it doesn't matter what that amounts to. All they can do is look at what other people charge to try and understand
00:41:09
Speaker
the value of your value, but you can create that context for someone yourself. And when you do that, you see the light bulbs start flickering and it changes the conversation.
00:41:25
Speaker
I think it's a key category design principle there. Position yourself or be positioned. And so I think it's the same as with the pricing. Explain the value that you're creating or they will mistakenly assume the wrong thing about the value that you create.
Articulating Value Beyond Price
00:41:42
Speaker
They need to be told. That is one of the things that I learned very early on is people
00:41:49
Speaker
It's like, why is an iPhone worth so much money? It's because people are told that the iPhone is positioned as a premium product. There's no other way for you to know that it's worth or that you could think it's worth what it's worth. And you know that because they told you. You have to tell people you're worth and showing them this difference.
00:42:12
Speaker
shows, puts into perspective, and gives them the context that they need to understand why you charge, what you charge, versus using someone else to say, hmm, they charge me a little more, they might charge a little less. Shifting the conversation from who can give me more for less, back to who can help me solve my problem.
00:42:32
Speaker
I hope this episode helped you understand how to use category design principles as a solopreneur or agency founder to differentiate yourself, capture the value you create from pricing based on outcomes, and earning a reputation for these outcomes instead of just posting selfies on LinkedIn to be remembered as much as possible. A big shout out to Nick for joining me today. If you're a solopreneur and you struggle to increase your recurring monthly revenue, send him a message on LinkedIn. Hope to see you all next episode.