Sales Assumptions and Changes for Payroll Companies
Anthony Iannarino explains how payroll sales has shifted from feature pitches to "insight decks" that reshape how prospects think about labor costs. Modern deals require multiple stakeholders and frequent re-discovery cycles. He warns against competing on price alone, since lower rates mean hidden concessions that damage client experience.
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Welcome to Payrollin'. If you own, operate, or work for an independent payroll company, this is the show for you. We talk to the brightest minds to learn what people are doing to create payroll companies that matter and share those tips and best practices with you. I'm looking forward to learning alongside you and finding innovative ways that we can create the future of of independent payroll and HR companies. Thank you for joining us. I hope you enjoy the show. Anthony, thank you so much for joining me, man. I appreciate it. I was just telling Anthony, I had to hit record. I remember hearing this story once. I think it was Johnny Carson talked about, save it for the show, right? He would always have the pre-interview and people would start telling really good stories. And then he would say, okay, no, no, no, no, no, no, save it for the show. And so I just did that to Anthony right before hitting the record button. He was telling me some interesting things. And so we just went ahead and get started. Thank you so much for joining me. How are you doing today, Anthony?
I'm wonderful. But how old are you that you know who Johnny Carson is?
Like, I'm a dinosaur. I'm a dinosaur. Well, that's kind of— it's interesting. So, so we'll, uh, we'll get into a bunch of different things today. Anthony's a sales expert, so we're going to talk all things sales. He's got some history with the IPPA, so he knows our industries, owns a staffing agency, worked in that industry for a long time, and, and he's a sales guru. But, but to that point, I mean, that's one of the things I wanted to kind of start with because I, I was, you know, I was around carrying a quota back in the day for a long time. Obviously, I own a business I have to still carry a bag in some respects, but I want to kind of talk about the evolution of sales, particularly over the last 10 to 15 years and some of the things that have continued to evolve as we look at things, more things going digital and what stayed the same and what's evolved. But I'd love to just get your perspective on kind of what you've seen over the last 10 years in sales and how that's changed.
Yeah, basically for me it's about 20 years and I, I, I'm, I was a slow student, but I am a student. So eventually I start to, to learn. And what I tell people is Every day, I try to be slightly less dumb compared to how I was yesterday, like slightly less, not much less, but a little bit less. And when you think about how much there is to know, and just how ignorant you really are, like ignorant isn't a bad— it's not a negative thing. It's like you just don't know what you don't know. And you can't know all the things you don't know, because you don't have time to do that much work to even figure out what you don't know. But when I was selling You might recognize this story. So I realized my clients were not making good decisions, and I'm giving them the best advice that I can give them to get them the best result that they could get, and yet they don't want to do it. And I started to get frustrated with people because, you know, at that time I'm in like my 30s. Remember being in your 30s? And so you're in your— like, that's when you like, you're really, as a man, you're angry.
Like, the world does not conform to my view of what the world should look like.
And so you You find out that that reality is rather persistent and there's not a lot you can do about it. And eventually by like 40, you start to cave in and go like, all right, I can't do anything to help these people. But I was, I was charged with helping a client raise their pay rate. They really needed to raise their pay rate. They were very, very far behind. And I thought, okay, they're just stupid. And then the better part of me said, okay, they're not stupid.
They are ignorant.
Like they don't know anything. They know their business, but they don't really know anything. And at that point, I realized I have to teach them how to think about the decision they're making because they drop all the context. They just drop all the context around the decision. And I built this deck and it took me weeks to build it, but it was, I don't know, 100 and some slides, all data, 100% data, not beautiful. Hideous, in fact, just like screencaps of things, pictures I took of newspapers. I mean, hideous, hardly, hardly you could even look at them.
I mean, they weren't— they were hard to even read.
And I came in and I started explaining to them, you're operating from two assumptions. You, you assume that labor is abundant and labor is cheap, and labor's scarce and it's expensive. And the reason you can't get the results you want is not because I'm not doing a good job for you, not because we don't try very hard, but you are paying under market. You believe that you should just be able to get another person tomorrow. And you believe that you can treat people any way you want to treat them and they're going to come back and they don't. And I said, so let me just tell you what the market looks like. And I started showing them there's a 3.1% unemployment rate. So 5% means everybody's got a job. And then I started showing them you're paying $9 an hour. You pay your internal people that you hire $14 an hour. So to get a person that you think is worth keeping, you pay $14 and I get to pay $9. Okay, so the reason that there's a gap here is because you can't get a $14 person for $9. Here's what your competitors pay. And I just went through this chapter and verse, uh, I went through every slide, and I never had this happen to me before until this day. So this day The senior leader in the room said, "Can I have that slide deck?" No one had ever asked me for my slide deck because my slide deck was all about my company, you know, and our processes and all these things. I said, "Why do you want the slide deck?" He said, "I've got a brief senior leadership later on this afternoon, and that deck would be really helpful for me." I said, "Okay, I'll give you the deck." And then he goes, would you mind taking your logo off of all those pages? And I was like, I just did this guy's homework for him. Like, I just did his work for him. And, uh, he took the deck, and that afternoon they went from $9 an hour to $12.50. They called me and said, we're raising our rate to $12.50 starting tomorrow. And I was like, wow, that was fast. And what I realized was that I had changed their assumptions. I changed their assumptions from labor is abundant and labor is cheap to labor is scarce and labor is expensive. And it moved them. And then from that point forward, I never carried my old deck with me anywhere ever again. I was just like, this deck's not useful. The deck that's useful is the one that teaches the client how to think about their decisions. So I'm not the one that— I didn't invent this or anything like this. Like, people were consultative long before I was consultative. But at that point, I got it and I realized the only way that you can help somebody change is by giving them the information that they need so that they can make sense of that decision and do something about it. And then from that point forward, I just carried an Insight Deck and I just started teaching people Insights. And then, so that's a huge change, like the change from I have a really good product, I have a really good service, good, congratulations, wonderful that you've got those things, to 'You need to change and here's why.' And it ended up being a lot more helpful for me. So, that's one of the tremendous changes. Like, nobody cares about your product, nobody cares about your service, nobody cares about how long you've been in business, they don't care about the logos you've already acquired, they don't care about any of that. They care about their business. So, you have to shift. And then the second thing I would tell you that's really changed, even in small deals now, there's a very high propensity that there's going to be a lot of people involved in the deal. So you're going to need consensus and you're going to have people that have different opinions and want different things from a solution. And the more that you can get into that conversation and bring more people into it, the easier it is to sell. And probably the biggest trend that I would say I, I spend most of my time sort of trying to help people with is it's not linear anymore. So you can have a nice process and say target, qualify, discovery, solution design, presentation, proposal, negotiation, acquisition, won, lost. Okay, but it's not going to go like that. It's going to go like discovery, wait, this guy has an opinion about this now, discovery, you're like, okay, well, let me show you the presentation, here's a presentation, 3 people are missing, they need to be brought up to speed, discovery, and you're like, why am I doing 3 discovery meetings with these people? Because some people weren't there, and some people have opinions, and you didn't have the executive sponsor in the room, and, and all these other things. So it just got much more complicated and much more difficult to manage. And so now you have to really think about what you're doing. And it's a different world that we live in.
We ask a question related to your first point, because I, as you're walking through that, I'm kind of mirroring it in my own career. And I'm wondering if that is an evolution of the salesperson, as in I continue to get more mature in my process. And then there comes a moment where I realize Oh, if I provide real value in a consultative format as a solution, put whatever terms you want on it that we use nowadays, solution-based selling, spin, get the challenger sale out, all that stuff. And I've always sort of pontificated that there haven't been any real monumental changes in selling ever, in that we're still talking about the same things that you would have read in a book from the early 1900s that we'll be talking about tomorrow, the sort of means that we get in front of people and the conversations that we have. But ultimately, I would I wonder, as you're saying that, because I'm watching, I'm kind of mirroring, walking in lockstep with you, when I started to be able to speak to people that way. And I would say even more now, my close rate, if you will, goes through the roof because I'm sitting down with small business owners. I empathize with their problems. I have really valuable information to share based on the thousands of companies I've worked with that I can rattle off at the drop of a hat. And to your point, when I was willing to put in the work— not willing, but when I did put in the work and put the sort of valuable insight in front of them, I started to see that shift in my ability to perform and execute. And I wonder, do you think that's an evolution of the sales process in general as it relates to society as a whole, or that's the evolution of an individual in a sales capacity?
I'm going to tell you my, my view about evolution just generally is that it transcends and includes what came before it. So it's something more than it was before, but it doesn't get rid of what it was before. So you can go back to Consultative Selling by Mack Hannan in 1970. And read about PIPs, profit improvement programs that you would come in and teach your client to run so that they could buy what you sell and improve their profit margins by doing that. No one did that. I mean, in 1970, the only reason that he did that is because people were selling the car companies and needed to figure out a way to keep some of the money so they could stay in business. And Mack Hannon took care of that for them with his thing. But no one did that. That went a long time without people actually executing anything that looked like that. But I think that the evolution is what happens to us as salespeople is what happened to me, and it's probably happened to you, is you are charged with the problem of how do I help them change? And so then you start trying to figure out, like, how do I make them change? I'll tell them that this is the right answer. Doesn't work. All right. I'll tell them that other people think it's the right answer. They still— it still doesn't work. And then at some point you figure out, like, I've got to teach them a lot more about all the context around the decisions they're making or they can't make a good decision. Now, the reason I can tell them the good decision is like you, I've done it hundreds of times with hundreds of people. And so I know what the result is going to be like, but you don't. And so you're not sure. You're like, "You just want more money." No. Well, yes, but no, that's not why I'm telling you this. I'm telling you this because I'm trying to help you get the result that you need to get. And when you don't put the money in there, you're not going to get the result that you want. And I think it's part of us just responding to this. So I'm good friends with Brent Adamson, and I know the Challenger Sale. I was probably the first person to interview them and actually challenge them on the concept. And they know they didn't invent the Challenger Sale. That isn't something they invented. It was something that they ask sales managers what their good salespeople were doing. It turns out they were acting in a consultative way and providing insight based on their experience and their knowledge and outperforming people by being able to challenge their view of their business. I wouldn't have called it challenging their view of the business. I called it erasing their assumptions. Like, you have these assumptions, I got to get rid of those. Those are no good. Let me give you better assumptions. If they have better assumptions that they start from and they understand the context, they do a better job making decisions for their business. I think it's just our natural response as salespeople trying to solve a problem. I was doing this in 2001. I was doing it 19 years ago. Challenger Sales, 11 years old. I was doing it then just out of desperation to try to get people the help that they needed. What happens, I think, on the path to being consultative is you start off and the company that you're working with says, "You guys botched this up. You guys have this problem. You have that problem." When you sit down with someone and they're dissatisfied with their existing provider, you're thrilled. You're like, "They have all these problems. I can solve all these." But at some point, I figured out being truly consultative means I'm not broken, you're broken. The reason that I have so much trouble with you is the way that you operate. We have to change the way you operate to get rid of these problems that you really have. And that's a different conversation because they want it to be, well, it's my supplier, it's my partner, they're the problem. And then they switch and they get the same experience from the next partner. And then they get the same experience from the next partner until somebody says, it's not us, it's you. And you have to, of course, be diplomatic when you say something like that. When you say, "That is one ugly baby. My goodness, that's an ugly baby," you better have some rapport and you better have some better facts than just an opinion about how ugly their baby is.
Great point. I'd be curious to get your thoughts. One of the things I think that talking about the maturity as a rep, talking about the discipline is Too often, one of the things that used to drive me crazy when I worked with the young hungry folks that were out there is that just because I'm a hammer, everything looks like a nail. And so I come into a room and to your point, oh, you're so dumb. I'm educating you on the problem and I have the solution for you right here. Why on earth wouldn't you take this? Why on earth would you— but they're ignoring and not empathizing really, which is what you start to learn is that this is an empathy thing, is that you're not really empathizing with the individual across the table and saying, hey, look, It's not an adequate time for them to change. Maybe our solution is not the best solution for them. Maybe we're not the right provider. Maybe we don't have everything they need, and this is just a bad time, any of those things. And so too often people come in guns blazing and say, okay, hey, you've got a problem, I've got a solution. There's no other factors. We've got to make this work. And I'm curious to hear it. And often, and I guess to kind of put a little bit of a cap on that, interestingly enough, and I know this is a technique, I don't like it as a technique, but I do, I am curious curious about the sort of psychology behind it is that whenever I tell somebody, no, we are not a good fit for you, all it does is seem to increase their desire to want to do business with us, which is typically I'm not using it as a technique. I'm usually just genuinely saying like, hey, look, we're out. Yeah, we're out, right? First, we call it the first date, our first meeting with a new prospect. And, you know, usually after the first date, we can say, hey, I don't think we're going to get married. There's no sense in kind of going on a second date sort of a thing. And they they want to go on the second date. But I'm curious to hear your thoughts around that. And like I said, I know that there are some different philosophies out there on some of the A, when to just walk away, cut bait, B, when to admit you're not the right fit for somebody, and if you ever use that as part of your process.
Oh yeah. I'm the wrong guy. If you want to learn how to be more transactional and use high-pressure tactics or things like that, I don't teach any of that. I'm the wrong guy. I've had people ask me to do it, I could do it. I mean, I know how to do a high-pressure scale and I can. I've seen it. I know how it works, but it's not anything I'm going to teach anybody. Like, I'm the wrong fit for you. And, you know, depending on what kind of industry they're in, I may or may not be the right fit. I'm out early. I mean, I'm out as early as I can be. If I'm not the right fit, my best thing to say, let me tell you, let me introduce you to somebody who is. And I know everybody in the space. So I'll give you somebody who can give you what you need. Because I'm not right for it. It does cause people to want you more because you told them no. But when I say no, it's— I'm not saying no tactically either. Like, if it's no for me, it's no, and I won't change my mind about it. Like, I'm not the right person for this. I don't want to do the work because I don't want to disappoint you. And I don't want you to go, well, we had Anthony, but he was terrible. He didn't get this thing done for us because we wanted something and he couldn't give it to us that way. So I'd rather be out early. I will tell you, though, early conversations and discovery, I think for young people, and I mean young people like me and you and even younger than us, so maybe much younger, you want to go fast. I mean, that's the thing when you're young and especially if you're a man and you want to go fast and that's what you think the right answer is. Let's go fast. I already know the answer. I can give it to them. They should buy it. Everybody will get better. In sales, fast is slow and slow is fast. So I may know what the right answer is. In fact, I do. I know the right answer. When you call me and you tell me you have this problem, I know what the right answer is. I know how to help you because I've done it for a long time. But you still need to see me watching you talk. You still need to see me taking notes. You still need to hear me asking you questions about this to deepen my understanding. Or you're not going to be comfortable. So the part where you decide that I'm going to try to rush forward with people, you're going faster than they can. So one of the things that I tried to explain in The Lost Art of Closing, my second book, was don't get so far out in front of them. If you're too far in front of them, they can't catch up. You have to go back and go nice and slow and try to keep it even the whole way up. And when people understand that process, they get a lot better at selling. Like, wait, I'm way ahead of them. Yeah, slow down and go back and get them because they can't catch up. You're skipping conversations that they need to have because you don't need to have them, but they still need to have them.
Yeah, it's interesting because I said we call our first prospect meeting a first date, and that's because we— you can make the dating analogies the whole way through, to your point, right? I mean, the desperation's a stinky cologne, and, you know, getting out, you know, if you're rushing out in front of somebody and you're ready to talking about moving in and they're, you know, still kind of back trying to decide if you're the right person for them, then that's not going to jive.
They're still trying to determine their coffee order. You're already a little bit ahead of them. I love you.
I love you. I just, I got to say it right now. It's funny you say, we say, you said slow is fast, fast is slow. We say, and this is an old military analogy, but slow is smooth, smooth is fast. And we use that internally for all different pieces of operations because We tend to see that a lot of our stuff is from a sense of rush, right? Yep, exactly.
Same, same concept. I mean, smooth means that we're together the whole way, we're not disconnected, it's not bumpy.
So we talk about the evolution of sales. I'm, I'm curious what you're seeing already as the, you know, I don't want to say post-COVID world because we're certainly not there today as we sit in December of 2020. I don't know why I'm checking the calendar like I need to know what day it is. It's 7 days away from Christmas. My kids remind me every 3 hours. So the, as we look at this post-COVID or even just the current environment we're in, I mean, I particularly, so the audience we're speaking to today, folks like myself, they own payroll and HR outsourcing companies. More often than not, we're local and/or regional providers that a big part of our value prop is, hey, I'm around the corner from you. So that's why we can defeat our national competitors because you know me, I know you, you can swing by the office, slap high fives. And, and, you know, that's part of our value prop. Is it a good value prop?
Is that a sales prop?
Eh, debatable, right? But it is a reason why a lot of companies partner with many of the firms that are listening right now, and whether they like to admit that or not. And so as we look at this sort of post-COVID world, and we've already seen some of the implications of that, I mean, first of all, how do you see the sales process changing, if at all, outside of the very obvious, you know, the Zoom meetings and things that are going to start to go more remote? I mean, what are some things you see already starting to change?
I'm going to tell you my opinion on things like this.
So I'm not a technology guy. I don't care about technology. I know there's a lot of technology that does a lot of cool things. I like technology. It's just not an area of concern for me. So I believe that you're going to see big deals have more face-to-face meetings because you need to. And I think you're going to see some meetings that would have caused you to travel go to Zoom, but not at the local area. Like if you're in the same city and you go, let's do a Zoom meeting. What you're saying to me is like, you're really not that important to me that I would drive across the city to meet you like that. So I would tell you, I have a lot of friends who like the idea of everything's going to be virtual. I had one client who told me on a phone call, "We're going to lower our total cost of expense and sales by just not having any more face-to-face meetings." I said, "You and I are both up for a $5 million, 5-year contract. I fly to New York and sit down with the head of the IT department and you don't, I'll kick your ass. You have no shot against me. You have zero shot against me. You cannot beat me if I'm face-to-face with them and you won't go." I said, "You need to think about What does it add when you show up and what does it subtract when you don't show up and someone else does? You have to think about this because we don't talk about this. I've only written 3 books. The 3rd book is called Eat Their Lunch and it's about competition. This is a competition. You are a competitor. You may not want to be a competitor. You may not like competing. You may not think that you should have to compete, but reality doesn't care about your feelings one way or the other. You're a competitor. So you have to think, "How do I get a competitive advantage that allows me to win this business over everyone else?" If you think, "I should try to lower the cost of what it costs me to sell," you're just being stupid. That's just stupid. Don't worry about how much it costs you. It's a $5 million, 5-year deal. Okay. So that's what you're playing for, $25 million. You won't get on a plane. That's not good thinking. I would worry more about my effectiveness than I would my efficiency. If I have to go slow and I win that account and I keep it for 5 years and renew it for another 5, I'm happy to make the investment. I always find, like right now, the Silicon Valley ethos that it's permeating the whole world is you should never have to do any real work. And everything should be automated and you don't need to call anybody because we could automate calls and we can automate full email sequences for you. I'm on the other side of every one of those arguments. I'm on the side of— well, the way that I've said this is that sexting will never replace actual sex. I have no interest in a robot girlfriend. I have no interest. I know there are guys in Silicon Valley working on robot girlfriends right now, I don't want one. I like the actual real woman. I have a wife and I like that. It's better. I just don't think that everything can be conflated to an automated sequence. What is there in that? I was listening to Peter Drucker this morning. How did he describe computers? He said they are a mechanical moron. The mechanical moron, it can only do what you've programmed it to do. It can't do anything else. It doesn't think. And he's right. But I'm on the other side of that argument. I think go back to getting face-to-face as early as you can. Spend time with people that you want as clients. Take good care of them. Be super personal. Execute a customer intimacy strategy. Know them. Know their people, know their business, make it easy to win. All this trying to make it easy by automating things makes it harder. So just do the work. I know I'm alone in this argument. I know everybody wants to automate all their sequences and all that. It's just not for me.
You're not alone, but you're hitting on something that I think is really important for everybody to understand. So to a lot of people out there listening going, well, I don't sell any $5 million deals, so I'm not getting on a plan. Which is totally fine.
But not with that attitude.
All right, listen, I'm just trying to pull us up out of the robot girlfriend piece here. So the— so, so I, I'll bring up— I'll get explicit here in the respect. People ask me all the time, how do you compete with Gusto? So Gusto is somebody in our industry— you talk about the general industry specifically— and they're a low-cost call center in, in the Bay, you know, hey, high-tech, set yourself up, you know, totally self-serve. There are a percentage of consumers that Gusto is the perfect fit for.
And then there are—
I tried to be one.
And then there are a percentage of customers that absolutely require me, the local guy, coming to their office, getting to know them, getting to know, you know, Olivia from our office, getting to know Jason. Heck, we just had a client, he would not do business with us until he could set foot in the office get to meet the people he was going to work with, and then, okay, cool, I'm comfortable now. I'm on my merry way. And that's our— once again, go back to it, like it or not, that's part of our competitive advantage when you look at a regional approach. Now, does our— do our clients in California have that same luxury with us? No. But you know what? They like us for a different reason. They like us for our expertise. They like it for this, that, or the other. But I think that's the thing that people get so hung up on. And I remember this when you start to look— you go back a few years in our industry and you had Zenefits come out of the gates hot. And I remember every benefits broker I talked to, everybody Everybody in the payroll industry wanted to talk about Zenefits and what are we doing to stave off people like that? I'm like, look, it's just a different market segment, right? They're not chasing the— like a prospect who's really interested in that model is not a good prospect for me. And I need to be savvy enough to understand, like, as much as I want to go bell for whistle with them all day, that's not my market. So I need to move on to the next consumer. And to your point, there's one guy who's got to have it totally automated and wants to do it technology. And there are people that want to be sold to that way. And that maybe that's their thing. Great. And they don't want you to come to their office. Okay. Anthony, right? But 9 times out of 10, to your point, most people will certainly appreciate the fact that you're able to give them a little bit more hands-on approach, whether that's on the sales side or the implementation or the support side. So kind of knowing your audience is the critical part too, right?
Yeah.
But I would tell you, if you want a competitive advantage in your space, I competed— there's some big payroll companies. There's Paycom, there's ADP. I mean, there's big ones. I had to compete against Adecco and Manpower and Spherion. When I had a $3 million business, I was taking business away from $7 billion companies. Why? Because they're telling you about their global footprint. Well, this guy needs forklift operators in Columbus. He doesn't really care about Switzerland. It's great that you guys are headquartered there, but it means nothing to me. I have found it easier to play a game that I would call high trust, high value, high caring. I just find that that gets rid of a lot of competitors right out of the gate. So your ADP, good company, does great work. You're going into their program, but they're not changing their program for you. This is what you get. There's no high trust. There's no high value. There's no high caring because you're just another client. Of 1 of 42,000. You're not 1 of 50 in that office. You're something else. I just find it easier because I do think that, again, I'm back to the Robot Girlfriend. We have been human now for 200,000 to 300,000 years. Before that, as hominids for maybe 2 million years. These things about us being a social animal, and living in tribes and having relationships is very, very old. So I never bet against anything that lasts for hundreds of thousands of years. I just don't bet against it. So I know we can just do this over Zoom. I still think we're going to go to dinner. We're going to have a steak together. We're going to talk about our kids because that's what we've been doing for a very, very long time.
Well, and I think right now when you do see people, once again, we're in December 2020, so a lot of folks have had to social distance, lockdown, all these different things. And when you see people, you get so excited, right? And so I think it speaks to the very obvious point that you're making of the value of in-person and real-life connection versus this technological connection, if you will, if that's a proper way of framing.
Video face-to-face is better than ear-to-ear. It's still better, but it's not the same as face-to-face. Face-to-face is the gold standard. That's where you want to play as much as you can. We'll be back there. There's vaccines out right now. There's 100 million, Trump bought 100 million more. They're saying by April, civilians are going to be able to get something and then I think after that, it's maybe, I think July, this is over. I mean, we'll get to herd immunity with a couple hundred million people. 100 million of us already have T cells. So 100 million of us can't get it. I'm hoping I'm in that group. I have no idea. I thought I had it and I got a blood test and I don't have the antibodies, so I didn't have it.
Well, that's good.
Yeah.
Let's, so you mentioned your 3 books and I am gonna link out to all those in the notes here. You talked about. So you've got one sort of book on the book of sales, you've got the book on closing, you've got the book on beating the competition. Let's talk about that, beating the competition, because one of the things I always say, and I apologize to the listeners that have heard me say this before, but if kind of like in your staffing field, I mean, I've always joked anywhere I stand in this city, I can throw a baseball and hit somebody that processes payroll. There's 16,000 payroll processors in America. You start to back into the math on that. And I mean, how many are in each city? And, you know, there's a lot, right? Whether that's Susie, doing books out of her attic and, you know, that does payroll on the side. We've got competition at every corner. You mentioned some of the nationals, you mentioned, you know, once again, the full gamut. And then there's guys like me, regional providers all over, all up and down the coast and all over the country. And so differentiation is hard. It's always hard. Talk to us a little bit about— the book is called Eat Their Lunch, right?
Yeah, that's right.
So how do I eat their lunch? You know, Anthony?
Well, the first chapter of the book talks about how your competitors are vulnerable. They're complacent. They're entitled. They think a contract's going to save them. They're never creating new value. They've just taken it as an annuity. Some of you listening to this, this is true about you with your own clients. That's how you start to lose it is you stop creating new value. It's kind of like I could call the florist and give them my credit card and tell them to send my wife flowers on her birthday and our anniversary. I don't think I get very many points for that. You're just checking the box, right? You need to give me new value. So we've been married for 25 years. So there needs to be some new value or else. I think that's the Stay Married plan, but it's true for clients too. What have you done? How have you evolved? How have you helped them get better results? What have you done specifically to help them improve what they're doing? So the first thing is there's a lot of people who are exposed. So that makes it a lot easier if they're already exposed. And then the second thing is there's a structure in that book that I call Level 4 Value Creation. So there's 4 levels of value. The first level is your product or service. "Great. I can cut your payroll for you." Congratulations, Matt. You and 16,000 other people can do that same thing for me. Congratulations. You offered me a conversation that absolutely proves to me that you're a commodity and that you have zero differentiation. Okay, so good. There's a good starting point. The second level of value is what's the experience like? Well, some people like Gusto. A lot of people like ADP apparently, right? They have a lot of big clients. Big clients need a big provider that can do some of the things that ADP can do for them. Okay, good. But that's a second level of value. It's not very compelling. So it's a good experience. Some people hate the experience with big companies. Like, I want something, I'm in the queue for 2 days. Okay, so I can't do that. I got people I got to pay. The third level of value is, can you cut these checks, pay the taxes, give me my 941 reports, like all of that stuff? Yeah. So you can do that. That's the third level. Okay, good. The fourth level is why am I doing this at all? Like, why am I doing this? So to give you an example, people are not hiring you to cut their paychecks. They're hiring you to be a partner, to handle a complex part of the business that they don't want to do because they want to do something else with their time and their money. So you have to figure out what is it that they want, what's strategic for them. The strategic is, are you close enough that I can know who your people are? Do you know who my people are? Are we going to be able— there's something else that they want. I'll give you an example from one client that I have. They're a marketing communications company. They could go to a chief marketing officer and say, I can print a sales letter for you. I can fold it in thirds. I can put it in an envelope. I can mail it to 18 to 32-year-old men in the southern half of the United States. Good for you, Johnny. Everybody else can do the exact same thing you did. But if I showed up there, I would say something that sounded like, you know how half your marketing dollars are wasted? I'll tell you which half. And then we'll send all of those, those mails to people who have a high propensity to buy. And what I'll help you do is I will help you have the lowest acquisition price for acquiring the highest lifetime value customers. Are you interested in having that conversation? Because the chief marketing officer is going to be fired in 18 months anyway. Why? Not getting enough of the highest lifetime value customers at the lowest acquisition cost. So that's how that goes. So you have to figure out how do you have that conversation? So what I would offer you is that instead of talking about you, instead of talking about your company, instead of talking about your solutions, Instead of talking about the logos that you've won, instead of talking about your team, you start with what does the client really want? What are they really trying to do? I'm trying to find a partner who can handle this for me as if they were part of my team so that I have somebody that I can trust with this and that I'm not going to pay penalties. I'm not going to have fees. I'm not going to miss payments and whatever else it is that you do that creates the strategic level of value. And when you start there, then you immediately differentiate yourself from everybody else who's going to come in and say, "Matt, here's the name of my company. We're ABC Payroll Company. We've been in business for 27 years. We have 4 offices in this." And they're like, "Thank you. All that you said was so interesting to me. Wake me up when you're done." There's no conversation there. So start the conversation at the highest level of value. That's the starting point for this. Then you have to think about, "Well, how do I get consensus?" Because their people are going to want to know who they're working with and why we chose these people. They want to see you nodding and taking notes on the things that they say that are important to them. That's stuff that Gusto can't do. They can't do that. That's a different model. That model is, "We'll do as little communicating with you as we can." That's the model. We have as few humans as possible here because we want the technology to do all the work. And then you're the opposite. We have humans and we don't have any technology. You're not going to get a chatbot because we don't have chatbots. You want to start with the fourth level of value and then you want to start thinking about what am I really solving for them? So what are the challenges that they're having that will cause them to do something? Why are they compelled to change if you're talking to them? And if they're not compelled, How do you compel them? But if you want to get the differentiation, you have to start by creating greater value. And how do you create greater value? You teach them. You have to show them, these are the things that you should care about. And here's how I'll tell you if I know you're truly consultative or not. Would I pay you for the conversation that we just had? Would I have learned enough that I would go like, "Matt, I feel like I owe you money for that. It was that good." And the second thing I would tell you is if the advice that you give is true, even if your competitor were to take the business instead of you, then I believe you're being consultative. If it's the right answer, even if they went with somebody else, I have a high likelihood to believe that you're actually being consultative. If your advice is, "Buy from me, I'm better, everybody else sucks," that's not really good advice. So the advice is, "Here's how you want to run this. Here's how you want to do it." And that's a different approach.
I probably confused Anthony when I was giving the snaps as he was talking about, "Would you pay for this meeting?" at the end. One of my old sales leaders said that to me as being the goal of leaving that that first meeting of, they should be willing to pay for that time. You should be so valuable to them. That has stuck with me for the last 10+ years. It is a hard thing to hold yourself accountable to, to be fair, and it is something that you have to really work at and understand. It's much easier to show up and throw up.
Well, let's make it easier. If they bought from you, that means they were willing to pay to keep that advice.
Fair.
Yeah. If they bought from you, you did that. They might not write you a check for your time, but they're writing you a check. I mean, they're like, "Yep, these are the kind of people I want to work with." So that's why you use that test. It's like, did it reach that level where they would say, "I want Matt on my team because he's taught us more. He shared more with us. I believe he's the right one to give this to." That's it. So that still has to happen.
Preston Pysh: Totally fair. For those of you out there that are, when I hit your homepage or when I get your automated email from some bot that say, "You're going to save me 20% to 30% on my payroll." I'll just tell you, I had a conversation with the CEO of one of our clients last week. They're a 120-man organization, $5 million plus, at least $5, $10 million company, whatever it might be, I'm not sure. He says, "Matt, these companies call me every week and they talk to me about saving me 20% or 30% on payroll." He's like, "I don't know what on earth we pay you guys for payroll. What is it, a few hundred bucks? They're talking about saving me a couple hundred bucks a month. Do you think that's even on my radar as the CEO of a company?" So when Anthony tells you here about bringing value and about talking about what sort of market conditions are out there, what sort of changes you're going to help them to create, where you can help them to navigate real business problems, his real business problem is not, "Can I save $100 a month on my payroll provider?" That's not a real business problem, people. That might be for your 5-man company that is struggling to get by. And guess what though? If you're going to save them $100 on payroll, well, it's a race to the bottom. And there's a lot of these online providers that are going to beat you there.
If $100 a week is going to change that company's trajectory, you may not want to take them at all. That's right. I'd be a little bit careful. Like, you don't have a hundo. I'm going to spend that on dinner here in a few minutes. That's not enough money. I think that that's right. Whenever somebody offers to save you money, like I'm taking my wife to Kitchen Social. It's here in Westerville, Ohio. I'll probably get a ribeye. She'll probably get a filet. We know the owners. They're a new restaurant. We frequent them every week, try to keep them open during a pandemic, which we and a bunch of other people have helped them do because the food's really good. And I'll spend $100 on that. That's where it is. Could I get her a cheaper dinner? I could take her to Burger King. There's a Burger King right on the road, same road. I could take her 2 more blocks. It's not going to be the same thing though. And here's what you need to know. When somebody tries to compete by having a lower price, They've made all kinds of concessions that they then transfer to their clients. So I made these concessions. So I don't have Olivia. Olivia, I don't have an Olivia because I can't afford an Olivia. So you don't get an Olivia. That's what you're giving up for your $100. And somebody's like, that Olivia is worth way more than $100 to me. She's the only thing that makes this whole thing work for me. Like, what are you talking about getting rid of an Olivia? Who's going to do this? "Wow, we got Jimmy. Jimmy's been around for a little while. He kind of knows how things work." And you're like, "Jimmy? I don't trust Jimmy just on his face. You just said Jimmy. I don't even want to work with a guy named Jimmy. For $100, I'll pass." So, there's always a concession and the concession always ends up being pushed off onto the customer. That's how this works. You can go to Walmart, it's going to be cheap, but you're going to a dirty warehouse to get your stuff. That's the thing, the concession you made. "We don't have time to sweep the floor. It's dirty in here. It's a warehouse. What did you want? You wanted 50-gallon ketchup for $19. That's what you got. So take it and put it on your little forklift and get it out of here. That's how it works, right? It's not going to be a good experience." Target, they're not going to be the cheapest, but big aisles, it's light, it's clean, it's modern. Yeah, it's choices that we make. I would never worry about somebody with a lower price. I worry about somebody with a higher price. The higher price generally means we're going to be able to create more value because I got the money to invest in getting more value. So you don't want to ever be the cheapest. That's a terrible thing to be.
It's hard to— Absolutely.
Absolutely. Most people can't do it because you have to cut so much. It's hard to be good.
Well, you don't want to work with Jimmy anyway because he's got a robot girlfriend.
Jimmy does have a robot girlfriend. I can totally tell.
I can totally tell. All right, so, uh, we got a couple more minutes here and then I'll let you get on with your day. Uh, I want to hear a little bit— so to I— anybody who's listening to this, I'll apologize again because I hit the same themes with anybody who's on here that is a content creator that I see them consistently out in front leading, get— putting content out that is driving people back to their other things, right? So you've got books, you've got your blog, you've got your podcast, you've got your websites, you've got multiple businesses. Talk to me about the value of content creation, how you view that as your marketing and sales tools go.
First, I just have to correct you. So don't apologize for repeating yourself. Say, and I'm going to keep repeating myself until you guys start doing this. I'm going to continue to have people come on and tell you to do it until you do it.
Oh wait, let me, let me hit one more thing before I forget. This is my, uh, not only for those of you not watching the video component, not only do Anthony and I share the same haircut, but we also share the same exact dinner order, man. I get the ribeye, she gets the filet every time.
So yeah, that's how it works.
