You’ve probably heard stories about blind taste tests done with wine, where normal everyday people were presented with two glasses of wine to taste and were asked which was better. The tasters were told that the wine was from two different bottles priced at $5 and $50 a bottle. Unbeknownst to the tasters, the wine poured was from the exact same bottle. As a result, the study found that tasters almost always said the more expensive wine was better and some even went as far to say that the cheaper wine was undrinkable.
Payless Shoes did a marketing “prank” akin to the wine test, not too long before they went out of business. They invited high-end fashionistas to their posh Italian Designer footwear show and charged them $400-$600 per pair of shoes, which they happily paid. If you’ve never been to Payless, most shoes in their stores were under $30.
So what drives this behavior where price dictates how good or desirable something is?
There’s been a lot of research on this and it originated with Thorstein Veblen, an American Economist and Sociologist. He coined the term “Conspicuous Consumption,” during the second industrial revolution, where he observed a new buying behavior. People began to purchase goods or services to signify an “elite” status.
“Veblen Goods” as they became known as, are normal everyday products or services that have a lot of competition in the market place, but are highly sought after and coveted as a status symbol. They don’t follow a normal supply and demand curve. Unlike most supply and demand curves where supply goes up and demand goes down, a Veblen Good’s supply and demand curves keep pace with each other. This means a Veblen Good’s demand increases as a result of the price increasing. Many of Apple’s products frequent this category.
So what does all of this have to do with estate planning?
No, I’m not saying that estate planning is a luxury good or elite service that only the upper echelon of society deserves. Rather, an attorney’s fee is one of the main factors that a person will use to make an opinion about how good they are at what they do. What this means is that a client who was charged $2000 for an estate plan will not rank their attorney as highly as another client who was charged $5000, even if the two clients had the same exact attorney and experience. For a Veblen good like estate planning, the price defines the quality of the service.
The other component of a Veblen Good is that your service needs to “look the part” to become highly sought after and desirable.
Here are some quick reminders on how to be the attorney everyone wants to work with:
- Be well known in the community. Create a raving fan base of clients, prospects, and network contacts that will send you business regularly. If a prospect calls your office to schedule an appointment to meet with you, and they hear you have limited appointment availability, that will subconsciously signal to prospects that you’re in demand and they should hurry up and get in with you.
- Build a solid reputation. Veblen services are known for being the best. Your online reputation needs to be strong. If your neighbor gave you a recommendation for a restaurant and you looked them up online and saw subpar reviews, you’d question the recommendation you got from them. See this blog from Rita Chaires to learn how to manage your online reputation.
- Create an experience that’s worth talking about. Do a law firm audit to evaluate your client experience. If you started working with a realtor to buy a million dollar home and they showed up in a 10-year-old Honda Civic and jeans to take you to see a million dollar house, you might consciously or subconsciously ask yourself whether or not they are good at what they do and whether or not they are the realtor you thought they were. After all, if they were good at what they did, wouldn’t they be able to own a nicer car and better clothes? As much we like to think, “No, I would never be that superficial” we do it every day. We all make judgements and assumptions about everything because of inherent biases we carry. Just remember, prospects and clients will judge every component of their experience with your firm down to the type of pen and paper you use. In a sea of options, don’t be just another run of the mill service provider stuffing a completed estate plan in an envelope.
- Charge a premium for your services! Ok, ok, yes this is the second time fees are coming up. Hear me out. If you are going to the effort to create a “wow” experience, generate demand, and build your reputation, your fees need to play the part that wraps this altogether. When was the last time you saw rave reviews for a necklace that was made of the finest gold and rare jewels, but was bargain priced for $100? That’s right, you didn’t! If you did, it was either a scam or it was stolen. Solidify your worth and value by having strong fees that match all that you have to offer.
Hopefully, now you understand why we coach you about creating wow experiences and raising your fees. We do all this, because it’s more than a feeling (thank you Boston), there is some real science behind this.
Comment below to let us know what you are doing to become a Veblen Service provider.
Director of Member Services
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128