I got an email this morning that asked the following question:

I read your article on Value Proposition and ROI. Your examples deal with physical products. I coach people in so-called ’soft skills’ - presentations, speaking and listening, enhancing imagination. I can detail many positive outcomes but do not know how to quantify the results of such training. Therefore I don’t know how to use the methods you suggest. Can you help me?

Since this is such an important question, I thought I’d post my response here:

I know it sounds unreasonable, but you’ve got to be able to put a number on it. The reason “soft skills” people tend to charge less, and earn less, is because they don’t go through the exercise of pinpointing the value.

If someone becomes a stronger speaker, how much will it impact their speaking fees? And if they don’t charge for speaking, what do they hope to get from that improved skill? What will the downstream effects be? Will they sell more, or perhaps gain support for important ideas or campaigns? Why do they want to be a stronger speaker, anyway? You must have an answer to the question, “why do it?”

At some point, if the “soft skill” doesn’t lead to an increase in productivity, and somehow profits – why are they trying to learn it? Why should the invest?

Let’s take the idea one step further to something as abstract as “enhanced imagination. “ Why should someone pay you for this? While it might seem obvious, you want to make sure what’s obvious to you is explicit for your potential client. The answer the comes to my mind is that enhanced imagination will lead to more effective product development, or stronger sales presentations — something like that. Which in turn will lead to something that either earns income or saves income. But that’s in my mind - what is in theirs?

You may think it is unreasonable - crass even - to try to reduce everything to dollars and cents, but if it doesn’t come down – in some way – to a return on investment, why should a business, or a business person, spend their money with you. If it’s not commercial– it’s not a business. It’s a hobby. An avocation. A pastime. But then you’re in a whole different kind of market, and a completely different selling proposition. Businesses are in business to make money, and if you’re soft skill doesn’t help them do it, they should spend their money on something else. When you can clarify how your services do that, the sky’s the limit.

Just saw that Internet Marketing education pioneer Ken McCarthy is doing something I think is unreasonable. Ken pretty much invented the internet marketing how-to seminar. Now, since Ken’s first The System seminar, prices on these confabs has gone from $500 a day to $5,000, but without any significant increase in value. Following Dan Kennedy’s lead, these events have been stuffed with “air” – worthless stuff that make the package seem bigger, but no real increase in the impact of what’s being delivered. McCarthy has kept the value strong. But talk about bucking the trend – not only has Ken kept the value strong, he’s actually lowering the price. See http://www.systemintensive.com/

Anyone who has read Be Unreasonable knows how I feel about price cutting and the best response to it, so I was happy (and surprised) to read McDonald’s founder Ray Kroc felt the same way.  In 1960, one of his Knoxville franchisee was being hammered by a competitor offering five hamburgers for thirty cents. Can you imagine, thirty cents! Even so, the customers still came over to McDonald’s for the fries and shakes. So the competitor hit harder - with a hamburger, milkshake and fries for ten cents.  The reasonable response would have been to cut prices and at least match the other guy’s offer  – following him down the road to pricing ruin. 

Ray’s response? 

“If we can’t do it by offering a better fifteen-cent hamburger, by being better merchandisers, by proving faster service and a cleaner place, then I would rather be broke tomorrow and start all over again in something else.”