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When Value Becomes Cost
Invoices are a physical translation of value into cost. They signal a finished task or a delivered product. Invoices spell out terms, and often they convey subtle warnings about what will happen if the terms aren’t met.
An invoice is an important brand touchpoint. Yet, they’re rarely treated that way. Invoices usually focus on cost when what matters in retaining customers is a focus on value.
To understand the psychological impact of an invoice, it’s useful to turn the telescope around and ask yourself, from your own consumer point-of-view, “How do I feel about paying bills?� To shed a little light on the psychology of how people perceive bills, let me share a short story.
One of the things that I love about Southerners is their sense of humor about themselves, especially when it comes to poking fun at Southern stereotypes.
A good friend of mine recently sent me an amusing photo of mailboxes on a rural lane somewhere in the South. With one notable exception, all the mailboxes were lined up neatly on poles precisely at a height where the RFD mailman could deposit the mail in boxes reaching out through the window of the car. One of the mailboxes, however, had the word “Bills� stenciled on the side. That mailbox was perched, stilt-like, 15 feet up on the air. Maybe Paul Bunyan could leave or retrieve a bill from that mailbox, but nobody else could. That picture is worth a thousand invoices. Nobody likes bills.
If you’re in business, like I am, you probably don’t relish opening bills, either. But we all like to invoice. We may not like opening bills, but most of us enjoy receiving remittances.
Almost anyone can go into a business – and almost anyone has – but growing a healthy business depends on creating value for your customers. I believe that robust businesses differ from struggling ones in simple terms. Robust businesses create far more value than cost.
When customers are in the middle of experiencing value, they’re happy to pay and happy to keep on paying. We all love to get what we pay for, especially when we suspect we’re getting more value than we expected. How long that value halo lasts is variable, however. Sometimes, when the halo is gone, the cost remains. Further, sometimes the unit that’s doing the paying is not comprised of the same people who have derived the value. In this case, all that’s left is the wallet-numbing sensation of processing the payables.
In either case, we need to put strategies in place that continue to deliver on our value proposition. We need to create strategies that extend the time horizon of the value halo. We also need to manage evidence of having created value for those people (the accountants involved) who haven’t had direct experience of the value we’ve created.
Think about it for a moment. If you were an accounts payable staffer, wouldn’t you occasionally wonder – especially with bigger invoices – “What in the world did we get for all this money?�
I ask myself that question every time I pay bills and I’m usually directly involved in making purchasing decisions. It’s human nature.
As in every other brand touch-point I’ve encountered, efficiency is a seductive, yet destructive, process dynamic. It’s efficient and easy to send a one- or two-line invoice referencing a specific project, service, or product with a cost attached. However, efficiency doesn’t always convey value whereas it almost always conveys cost.
When I think about how it might be different, I imagine an account executive who has followed up with the client to ask about the results a specific product or service have created, even in the short term. I imagine an invoice with a reference to billing for the results that were created as opposed to the vehicle that created them.
My design partner, DOXA, recently designed a wonderful print-on-demand, four-color sales brochure for a seminar I presented for the Philadelphia Cultural Alliance. That seminar filled up completely. They also turned the whole product around in about a week from concept to copy to printing to delivery. Now, that’s service.
Is there a way to convey that kind of service and results in an invoice? Only if the invoicer cares enough to find out, describe, and convey what happened.
What’s true, but elusive, is that people don’t purchase processes. They purchase outcomes. By billing for outcomes as opposed to processes, the invoicer signals a partnership intent and interest that makes the relationship a lot like a Timex™ watch.
It just keeps on ticking.
Posted on March 10, 2006 11:54 AM | Permalink
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