Southland

“Customers have been pre-conditioned to accept hourly rates from professional services firms.  Indeed, most people believe there is simply no alternative.  This means customers usually have no idea what outcomes they can expect or how much the work will cost until it is finished.  In stark contrast, virtually all of their other business decisions are based on the benefits or savings created.  In our experience, customers want certainty in price, certainty in service and certainty in outcomes,” says Brendon Harrex.

Brendon is the Director of Harrex Group - a professional services firm with a very different approach.  “We recognise that customers want to know about costs up front and understand the value of the services to their company.  It takes genuine faith in your business to let the customer determine the real value of your work.  Giving control of their revenue to customers is not a concept that most businesses are comfortable with,” says Brendon.

He quotes from Sam Walton, the founder of Wal-Mart:

“There is only one boss - the customer.  He can fire everybody in the company from the chairman on down simply by spending his money somewhere else.”

“One of the key features of being a firm of the future is that we operate without timesheets and no-one in our organisation has an hourly rate,” he says.

“Some years ago, I became aware that what accounting and professional services firms were selling was not actually what customers were buying.  As a profession, we hadn’t changed in 100 years.  Our customers were innovating, but we were still in the dark ages.  People did not want to purchase time or a cash flow forecast – they wanted peace of mind, security and a solution.  Above all, our customers wanted a business partner who was truly on their team,” he says.

“The hourly rate is a major barrier to creating a partnership with customers.  By charging by the hour, professionals instantly place themselves on the opposite team to the customer.  They are incentivised to increase the time on a job and, understandably, customers want to minimise this time.  I have seen customers too scared to call their advisor for fear of a $150 bill when the right advice could have saved them $10,000.  I knew there had to be a better way and, based on my reading of international material, knew that a pricing model based on value could work,” Brendon says.

”Most people have an understanding of value. They want to be sure that if they spend a dollar, they are getting at least $1.10 value – it is human nature.  That is why our value pricing system sees everything done up front – an agreed price for agreed services and unlimited access to our staff.  That access is critical. Customers really want to know that you care.  Not returning their phone calls does not create this impression,” he says.

“Obviously, there are times when the scope of the work expands.  A robust planning process will limit this happening but when it does occur, customers are informed and we come to a variation agreement.  There are no additional fees until we both agree.  We are looking to be very clear about what the customer wants and what value the customer places on the work.  It is subjective of course.  How do you place a dollar amount on keeping a business in the family or restructuring a company to allow the owner to attend their kid’s school concert for the first time in years?  Value pricing aligns customer need and business need,” Brendon says.

“Sure, it is risky.  Our model places our revenue in the hands of our customers.   Our success is determined entirely by our ability to help our customers become more successful.  The customer is at the top of our organisational chart,” Brendon says.

“Most traditional professional services firms do not understand this.  They cannot understand that we are more interested in our customers’ profit than our own.  We believe that if we can make our customers more profitable this will flow through to us in time.  In contrast, most firms focus on increasing their own profit independently of their customers,” he says.

“Some customers have trouble with the concept but most quickly warm to the idea.  We have a money back guarantee if people are not happy with the work done under the up-front agreement.  This guarantee has been running for over a year and no-one has taken it up.  People notice how they are being treated and respond accordingly,” Brendon says.

“Our staff love the business model because they don’t have to account for every 6 minutes of their day.  Most have come from organisations where the very clear message was, ‘sure we trust you, but make sure you record what you do every 6 minutes’.  We aim to coach and empower our staff to release them in their areas of strength.  They appreciate being treated as innovative and capable knowledge workers rather than merely an hourly rate number.  People want to work for us and we don’t have to advertise.  That’s unheard of in this tight labour market,” he says.

“By focussing on clear Key Predictive Indicators (KPI’s) for our staff and regular project reviews, we are able to get ahead of any performance problems.  Staff should never have to guess what managers are thinking – we want the managers to care enough to deal with issues quickly,” Brendon says.

“My job as a leader is to take people where they didn’t think they could go – to free people to be who they truly are.  Having created an environment for people to thrive, the challenge for leaders is to get themselves out of the way and focus on removing barriers which are hindering the team.  At the end of the day, we are all here to serve our customers to the best of our ability.  We have chosen to stay local so we can meet regularly with our customers face to face.  We have national and international networks, but our delivery is local and personal.  That approach cannot be replaced by technology.  It is about putting the customer at the forefront of your business,” he says.

Website: www.harrexgroup.co.nz