Chris Brogan - Anchoring and Social Proof - Influencing Your Audience

If you pay any attention to the social media space you probably have heard that Chris Brogan - Social Media Consultant and the face in front of (behind?) New Marketing Labs, talked about how much he charges for his services.

$22,000 per day.  

I'm guessing there were a few raised eyebrows when that number hit the interwebs but Chris does a great job of walking through the logic of his pricing on his post... 

"I charge that much because I don’t want hundreds of takers. I want 2-3 takers a month at that rate."

He then highlights the other ways you can get his thinking at different price points.  His day rate is for his undivided and focused attention on the client.  His day rate is designed to limit the number of takers. 

But this post isn't about pricing or even about consulting fees - it's about influence and how this little bit of information could (probably will) have an effect on the entire social media consulting space.  

And if you're smart - a lesson to be learned about setting goals and objectives within your performance programs.

Anchors

The rate Chris quoted puts a number out there for all to see.  It's now public.  In psychology-speak this is called an "anchor."  This means (given Chris's expertise, reputation and results) others who do the same "type" of work will probably see that number as the high end of the spectrum.  The "industry" now knows what the limit is.  I'm sure there are others, as even Chris points out in his post - Godin, Kawasaki - who may charge more, but we don't know their numbers exactly and it doesn't really matter.  We have Chris's number and he's a good point of reference for people at that level, in that space.

Now, assume you're a Social Media Consultant charging $20,000 per day but don't have the reputation and the history of success that Mr. Brogan has - your day rate just got lower.  Why would a client hire you for $20K when they can get the best for a few grand more?  Your services didn't change.  But the anchor for your services did.

 Now assume you are a very, very good social media consultant with great references (maybe even Chris himself) but you only charge $1,000 per day.  Congrats - you can probably give yourself a big raise.  Not that you're doing anything better - just that the anchor for the work you do is now known and you can point to it and say - "hey, I do similar work as Chris and I'm only $10K per day."  Your clients may now think your $10K rate looks like a bargain.

That's what anchors do.  They provide context for discussion and allow for comparisons.

Social Proof

The other thing this discussion does is create more business for Chris - and all other Social Media Consultants.  (This to me is the either the genius of Chris or the best lucky accident in the world.)

The mere fact that Chris sets the bar that high to LIMIT the number of takers communicates:

1. There are a lot of takers and he needs to limit them.  Potential clients are now going to think - "jeez... I better get in on this social media stuff 'cuz there are so many people out there who want this that Chris has to charge a huge number to keep it manageable."
    
2. There are a lot of people willing to spend $22k for this stuff so - "I'd better get ANYONE in here to talk about it - even if I can't afford the top guy - I'll take someone who knows something about it - and at $10K it's 50% cheaper."

As I mentioned in my money quotes slide preso in my review of the book Switch:

"In this entire book, you might not find a single statement that is so rigorously supported by empirical research as this one: You are doing things because you see your peers do them."

Chris single-handedly established the price point and the demand in one fell swoop.

Love it.

Your Performance Program

These concepts are important to your performance program and goal setting from this perspective:

1. The goals achieved in the past are your anchors.  Those are the points of reference for your people.  If you've set them too low, or too high, they will affect the results of your program.  They are either a positive anchor in that they communicate they are achievable or they are negative in that they aren't.  Only you know what is doable.
    
2. The goals other people have hit in the past show what is possible.  They are the social proof that these goals are doable.  Allowing others to see the performance spectrum eliminates any confusion on whether the goals are correct, attainable, etc.  People are influenced by what other people have done.  Your people, just knowing someone else is hitting those levels - will work harder to prove they are part of that club.

In Closing

If you're wondering.  No I didn't raise my rate.  No it isn't $22,000 per day.  

But then again - I'm no Chris Brogan.  As he says at the end of his post:

But are you measuring against me? Maybe not a good plan.

Word.

Comments

[Hinda Incentives]

Loved seeing Chris's post yesterday. It's insane that with just one blog post he set a pricing standard for an industry. That's influence. Really liked how you paralleled that motive with performance programs. Helps me look at the events of yesterday at another angle. Enjoyed the post!

[Paul Hebert]

That's my opinion - but I always think I'm right :)

I do think it sets an anchor so it will be interesting to see what really happens. Thanks for checking in and weighing in. Appreciate the viewer ship and engagement.

[Craig McGill]

But perhaps it is good to measure against Chris. Aim to be amongst the best, so you do your best.

[Alan Takushi]

Found you through Chris' tweet and he mentioned you had the smartest post about his pricing post. Had to check it out as well. :)

When I read about his price this morning, it really did blow my mind. If anything, it sets the bar for what is possible. Attainable for some? Sure. But, realistically... not a chance. Thanks for offering a great perspective and look forward to reading more of your stuff. Cheers!

[Paul Hebert]

Craig - you hit it brother. He does set the "gold standard" - and now you have a target. For those that were in the 20K range - they either step up performance to match the best and earn the 20K - or they adjust their pricing. But the concept is the same. The number sets the anchor for both pricing and performance.

[Paul Hebert]

Thanks for stopping by and engaging. Remember - what is possible is what ultimately becomes what is probable and then what is average. Nothing stays the same.

[AJBombers]

I landed here as a result of Chris' tweet as well and I'm quite glad that I did. I may have read through these points 5 times already. Thanks for sharing your view of this intriguing situation. I've bookmarked this post and intend to refer others to it often.

Hi, I'm your newest viewer/reader, and I'm happy to spend some time in your space. Well done Sir.

[Paul Hebert]

'ppreciate the nod and the following. Think about this in your own business - what would the "best" burger in the world cost? Should you have something on your menu with a ridiculous price - and then everything else lower? (actually that's the contrast principle - but it still needs and anchor!)

Bon Appetit

[AJBombers]

Utilize that principle often, thanks for shedding some light on it's relevance here too.

[Misslori]

Really excellent piece of writing. Influence is key. But your point about anchoring is stellar. I struggle to create my rate sheet for all that I do because not many people do the same thing, therefore I don't have a rate of reference. Though I am not a social media expert and author as Chris I do have an expertise, I do present. I am a "marketainer", specializing in a blend of entertainment and marketing. Having spent a little time with Chris personally and having just experienced him in action at The Disney Social Media Moms Conference, gives anchor for me too. And for that ma grateful. Because we all want to feel the ground under our feet. That way we know which direction we need to go to reach for the sky.

SMILE On!

ML
www.MissLori.TV
www.MissLorisCAMPUS.com

[Paul Hebert]

Your rate of reference is the problem you're solving for a client - bigger problem - bigger rate. I don't have a rate sheet 'cuz I don't know what the real problem is until we chat with the client.

I could solve a big problem with a flash of insight that only lasts a second - but I'm not going to charge a second of time or a flat rate for an "idea."

Reference points are in the clients mind - not yours. Find out what they pay for other advice in adjacent services - that is the clients anchor - and work from there.

Thanks for reading and commenting - appreciate the engagement.

[R. J. Morris]

Paul—

Great post on a timely topic. Too often managers set “stretch” goals for their people, thinking, “if I set the bar high, people will reach for it.” Perhaps a better edit of that thinking would be, “If I set the bar high and give the right people the resources and support they need, they will reach for it. And blow by it.

[Paul Hebert]

Very true. Now the key here is to make sure the bar isn't stupid high. What Chris did is communicate a very, very high bar - AND - communicated that it is possible (more then three a month possible) that is the key element. High target - proof it's possible - now go get it.

Like the 4-minute mile - impossible until possible - then broken on a "regular" basis.

Thanks for stopping by and engaging in the conversation.

[Brian Ahearn]

Great article Paul. Different angle to consider - would the advice Chris gives be worth $22,000 IF you or I could give the same advice but charged significantly less? In other words, is it more valuable because it comes from him as opposed to me or you?
Example, years ago I shared some golf advice with my wife. It was sound advice based on psychology. Weeks later she read a quote from Corey Pavin that was almost exactly what I'd shared but for her it was more believable because it came from Corey. After all, he's an authority having won the '95 US Open. But that didn't change the fact that the advice was the same and should work as well whether he said it or I said it. Personally I think she'd have been foolish to pay him hundreds of dollars for the same sound bite she got from me for free.
Chris has set the bar but consumers have to really understand what they're getting. A fantastic book on this whole subject is "Priceless: The Myth of Fair Value and How to Take Advantage of It."

[Paul Hebert]

I hinted at the authority angle in the post when I mentioned Chris's history and results. Obviously, there will be times when a random (or not so random) consultant can provide exactly the same advice as some other higher-priced consultant. But in the long run - you'd probably agree that the advice from a veteran with a track record is worth some premium.

The question in my mind - would you be able to come up with more than one sound bite? Authority is earned in many respects and it comes with performing at a specific level on "average." I would bet Mr. Brogan is worth a premium. Only the market can determine that premium. Thanks Brian!

[Brian Ahearn]

Paul,
I'm actually rereading his book "Trust Agents" right now. Another interesting angle then becomes how people perceive the advice. Jane (wife) will work harder to apply Corey's advice than she would my advice and will be a better golfer for it. In the end she will convince herself his price was worth it. It kind of reminds me of the experiment that showed kids prefer food in McDonald's packaging and rate it better tasting than the same food in plain packaging. As a parent, if it makes them eat it then it's probably worth the extra money and fewer hassles. If a customer is gung ho about the advice Chris gives vs the same advice given by others then they'll work harder to apply it and benefit from it even more. At that point you could say it's worth it. I find it interesting to dig in and try to understand what's going on behind the scenes in the mind.

[Randymurrayonline]

Great post and discussion.

Pricing is always a very important consideration for consulting and other services. I have found that setting the price high guarantees that the client will pay attention. The lower you set your prices for a service, the more likely the customer is to waste the investment they made with you.

And if you charge enough so that they think seriously about what you're doing for them, I find that they're also likely to bring you back and spend more. More than money, clients HATE wasting their time. You pay more for an expert, someone that has evidence of doing it before, evidence of success, so you as a customer are likely to be successful, too. If they have to think seriously about the expense - good.

But how do you get the job in the first place? Ah, but doing a lot of work for very little. Pay your dues, build experience and contacts. No secret there.

There's a side benefit: clients learn quickly not to waste your time. Mine treat me like a lawyer - don't chit chat with him, he's charging $$$ per hour! Even when under project costs or retainer, they recognize the value of my time. I can be pleasant and friendly, but efficient is valued by all.

[Eric Means]

I really liked the post. It's amazing that Chris can get that kind of money. But maybe the ROI is a lot greater for the client? It would have to be to sustain those kind of rates. If you are the best at what you do then you can set the bar.

[Eric Means]

Great post. It's amazing how much of a ceiling he has set. If the ROI to a customer is more than the asking price though, then it is still considered a bargain to some. Not just anyone could charge that, but someone with a proven reputation with a long history of excellence.

[Paul Hebert]

Thanks Eric for commenting. I left both of these comments up since they are slightly different but I'm guessing you had a bit of glitch when posting - sometimes that happens with typepad.

ROI is the key - and the clients feel they are getting it with Chris.

That said, Social Media is still very new and I would guess over time the rates will drop - like anything else - but the market is speaking and saying - this is important and I need to do this now.

[Paul Hebert]

Randy - thanks for commenting. You're right - this kind of pricing does put pressure on the buyer to make sure they have their ducks in a row when Mr. Brogan stops by. He probably gets more done because of that than an equally smart person working with a disorganized and less than attentive client.