How to Build a Sustainable Coaching Business (And Double Your Rates in the Process)

How to Build a Sustainable Coaching Business (And Double Your Rates in the Process)

“So, what do you do?” – Random person at a friendly gathering.

“I run LivingforMonday.com where we do coaching and training for young professionals.” – Me

“Oh, so you must be in pretty good shape, huh?” – Same random person in complete confusion.

“Dammit.” – Me knowing that was coming.

That’s my typical conversation at a get-together where I’m not particularly keen on diving into the details of what it means to be in the business of helping people become great at what they do.

Which brings us back to you and I. As a reader of The Sparkline, I’ll bet you may have considered becoming a coach as a way of creating a revenue stream for your business.

The problem with coaching as a profession lies in our tendency to resort to it as the answer to turning any blog into a business or idea into revenue. Unfortunately, it’s not always that simple.

I’ve managed to increase my hourly coaching rate 444% over the past 12 months, create a steady income stream from coaching, and generate regular referrals from my existing clients. My goal with this post is to help you start on the same path with three steps:

  1. Have a well-defined target audience

  2. Creating a unique selling proposition

  3. Build social proof

Let’s get started.

Step 1: Have a well-defined target audience for your services

“You can be best in the world at whatever you want as long as you define world the right way.” – Seth Godin

To be the best in the world, you have to choose your definition of world, which starts with creating a crystal clear picture of your target audience.

Successfully defining your audience should provide answers to four key questions:

  1. Do you care deeply about your audience?

  2. Is your audience able to pay your rate?

  3. Can you produce 5-10x your coaching rate in value?

  4. Do you still care deeply about helping?

Do you care deeply about your audience?

I believe picking an audience you care about is the most important step you can take in building a successful business. Start by thinking back to your “best” clients (this is subjective), or brainstorm a list of the people in your life you would love to work with. Why were these people your best clients or why do you want to work with them? What do these people have in common? Or, in other words, why do you care?

For example, my best clients in the past have been young professionals who are business owners or co-founders, executives, or salespeople. I can relate to their challenges, their work ethic motivates me, and the right ones are willing to pay me what I’m worth. This group also allows me to see a variety of business challenges and opportunities, which satisfies my desire to work on multiple projects.

Pick an audience that you care about.

Is your audience able to pay your rate?

How much money does this audience make per year? Would the financial advisor of your ideal clients say they have the ability to pay you double your current rate (regardless of value provided)?

I initially coached college students and young professional employees. This was a bad decision because neither of these groups has the ability to pay my current rate for coaching services.

This realization led me to redefine my audience and focus on Under 30 CEOs, executives, and salespeople in Atlanta — they have the ability to pay my rates, I care about them, and I can reach them face to face (which is how I prefer to sell + coach).

Work with an audience that is able to pay your rates. If your audience doesn’t have this ability, start over, or reconsider individual coaching as a service.

Can you produce 5-10x your coaching rate in value?

The key to producing 5-10x returns from your coaching services is to understand your audience’s goals and challenges. People are willing to pay to reach goals and overcome challenges, but only if you get them right.

Most people make assumptions about their audience rather than do the hard work of actually sitting down with members of their audience, asking great questions, and listening for their true needs.

Take the time to have individual conversations with 10 – 25 of your target audience members. Ask great questions questions to pull out the thoughts they rarely share out loud. If you need a more specific framework for your questions, think in terms of the seven areas of life (ranked by ease of proving return on investment):

  1. Financial (think investment advice)

  2. Career (think job change or executive coaching)

  3. Travel & Adventure (think travel hacking)

  4. Physical (think Paleo or Crossfit)

  5. Learning (think reading or skill acquisition)

  6. Relationships (think family, friends and romance)

  7. Spiritual (think meditation or religion)

You should see patterns of similar goals or challenges emerge as you conduct interviews. You can consider diving deep in your area of expertise, but remember that your expertise may not match a real need.

People pay to reach their goals and solve challenges in their lives. Help them reach a goal or solve a challenge that produces 5-10x your coaching rate in value.

Do you still care deeply about helping?

Now, here’s the part where you have to be brutally honest with yourself. Given the audience you care about, their ability to pay, and the challenges or goals they have expressed to you, can you create a sustainable business? If so, do you still care enough to put in the work?

I’m not talking about, “Yeah, I could do that,” but, “F*%^ yeah, let’s do this.”

It will be hard to help your audience solve their challenges or reach their goals. You’ll spend countless hours researching, pounding your head on the table, reading books, pacing your office, and suffering entrepreneurial insomnia as you think through ways to help.

Select an audience goal or challenge you care about enough to become an expert and they care enough about to pay you for. If you don’t care, or they don’t care, start over.

Step 2: Create a Unique Selling Proposition to Appeal to Your Target Audience

“Achieve more.” “Reach your potential.” “Make your dreams reality.”

These are phrases that appeal to no one by trying to appeal to everyone. And yet, the majority of coaches brand themselves this way.

You know your audience better than anyone else because you’ve done your homework and you’ve identified patterns, and your unique selling proposition, or USP, should reflect that.

You can think of your USP as filling in these blanks: “I help “audience” in “location/industry/area of focus” do/become/solve/overcome/achieve “challenge or aspiration.”

But, but, but, I’m on the INTERNET! The Four Hour Work Week said I could be a lifestyle designer and location independent!

Great. Maybe you’re right. But remember, you can be best in the world at whatever you want as long as you create a feasible definition of world to start with. If you can’t be best in the world of [insert hometown here], how can you be best in the entire world? I’m not saying you shouldn’t leverage the internet, but I am saying you should focus on a geographic area or area of expertise that allows you to build a sustainable business.

In my business, I have had to do the same thing. My USP for my coaching services is, “I help under-35 entrepreneurs, executives, and salespeople in Atlanta create systems to exceed your goals while holding you accountable to the projects that will most directly help you profitably achieve your vision.” The last four words can change based on sub-segments of my audience.

Create a USP that specifically identifies your audience and the goals or challenges you are solving for. +1 if you can do it in their own words. If you can’t, then it’s time to do more interviews.

Step 3: Build Social Proof for Your Services

Social proof convinces to skeptical audience members that you can do what you say you can do in your USP. Your job is to build enough social proof that it makes it easier for your audience to say yes to your services.

I use a list of experiences and a growing book of client testimonials to back my USP up. The experiences include working for Seth Godin, advising Coke’s Chief People Officer, and being a top performer at a well-known global consulting firm. I have past/existing clients write a “letter to a potential client” to build my book of proof.

I understand that you may not have the same background, but you can build social proof for your services even if you’ve never had a single client. Here’s how…

Pick 10 people you know and care about in your target audience. You may be able to look back at your interviews from your target audience research for good candidates. Offer each person a free 30 – 90 minute coaching session in exchange for being able to film/record the sessions and post them publicly. (This is exactly what Derek Halpern did with website conversion reviews when he was getting started at Social Triggers).

Side note: This post is not about how to become a great coach, but I hope it goes without saying that you have to actually be able to deliver value in order for this method to work for you. (If you have no coaching experience or training, start here, here, here, and here.)

Once you’ve recorded the 10 coaching sessions, hire a video editor to create a highlight reel of the most powerful moments from the sessions. Put your highlight reel on a landing page where you make the full video recordings available to your audience in exchange for an email.

Use the recordings to design an email funnel that slowly but surely builds trust, confidence, and expertise with your audience. At the end of your email series, offer a free 30 minute session for anyone that is interested in hiring you as a coach. This will allow your audience to transition from seeing others being coached to experiencing it for themselves.

The end of your 30 minute session is your chance to convert a prospective client into a paying client. Conversion methods are for another post, but the most important thing to do is to directly ask for the person’s business in a non-threatening way.

Something like, “Now that you’ve experienced my coaching, are you interested in becoming a coaching client? I have a 3-month starter package that would be perfect for you if you believe I can help you reach your goals.”

Some people will want to wait or think on the decision. That’s fine. Ask them how often they would be comfortable with you following up to see if there is anything you can do to help. Assure them you’ll never pressure for a sale. Make a calendar reminder to follow up accordingly.

Other people will want to hire you right then. You should have options available in case they want to sign up for more than 3 months. I suggest you create 3 month, 6 month, and 12 month contracts that will allow for flexibility. I don’t recommend starting with less than 3 months, because it is hard to achieve any kind of results in that amount of time in my experience.

Tell these people exactly how the process works and exactly what they need to do to get started. Your process should include: 1) An intake form that gathers information about them, their goals, and why they hired you. (Here’s mine.) 2) An initial session that revolves around building the relationship, establishing ground rules, and setting goals for your work together. 3) Any assessments you want to use. And 4) your process for when and how you get paid.

And then the part on doubling your rates.

At some point during your process, people will ask you about your rates. Your impulse reaction will be to tell them your old rates or, if you’re just getting started, a rate that doesn’t feel scary.

Your job is to resist the urge to sell yourself short and tell them your rate is double what it used to be, or twice what you think it should be if you’re just starting out. For a benchmark, look up the average coaching rate in your city or location.

In Atlanta, the average executive coaching rate at the time of this rating is about $300/hr. When I first started coaching, I felt that $75/hr was more than I was worth even though people would have easily paid $150/hr.

I eventually realized I was providing way more value than I was getting paid and that less than $300/hr is not sustainable for building a full-time coaching business. With every other new client I brought on, I simply doubled my rates when I was asked, all the way up to the average Atlanta coaching rate. Because I had a growing client base, it gave me more confidence in the value I was providing and put less pressure on me to bring in new clients, allowing me to increase my rates 444% in just one year.

The Key is Confidence + Results

It turns out that the single most important factor in raising your coaching rates is your own confidence in the value you provide. If you have done the work, the real work, as I have described it throughout this post, then you will be better than 80% of “coaches” in the world. You are committed to becoming an expert on helping your target audience achieve their goals and overcome their challenges. Your number one job after landing new clients at your new rate is to follow through on that commitment.

As your client base grows, so will your confidence in your coaching abilities. As your coaching abilities and client base grow, your schedule will begin to fill up. As your schedule fills up, you should continue to raise your rates for new clients. The more successful you are with a targeted group of clients, the more you will be able to expand to new groups of clients as your referrals and reputation allow.

What are you waiting on? Get going. Your coaching business is waiting.

Photo by Danka Peter

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  • http://www.michaelofei.com/ Michael Ofei

    Excellent post Barrett. Having a target audience and USP is key.

    Any suggestions of building social proof for a VA business as you’re just starting out?

    Michael

    • Barrett Brooks

      Thanks Michael. Social proof for a VA business can be done in much the same way. You could put together a video highlight reel of customer testimonials delivered via Skype. You could also put together case studies to reflect some of your greatest customer success stories — a great case study would include 1)Business context 2) Scope of work 3) Intended Outcomes and Timeline 4) Process 5) Results. A final idea would be to ask each of your satisfied customers to write a “letter to a potential customer” about why they value your service, what it’s done for them, and why they would recommend you. The growing book of testimonials becomes hard to ignore over time.

      • http://www.michaelofei.com/ Michael Ofei

        Hi Barrett, thank you for your detailed response! I can definitely see how all of your suggested strategies would be effective. Just to clarify though, I have literally just started (2 weeks in) and have my first two clients. Is there anyway I can build social proof right now or would I have to wait a little while until I show great value to my clients? If so, how early can I ask my clients for testimonials? I’m sure it depends on different factors but would be interested to hear your thoughts. Awesome stuff Barrett!

        • Barrett Brooks

          It will definitely take some time. Sometimes you just have to get through the dip with a bit of hustle. Your job now is to do things that don’t scale and to delight every single customer to the greatest extent possible.

          I think it’s appropriate to ask for a testimonial when the customer has expressed appreciation for your services. If you receive an email or a call from a customer who says,”Michael, your VA service has helped me x, y, and z,” then that’s the perfect time to respond with, “Thank you for the compliment — our goal is to delight our customers. Is there any chance you would be willing to write a testimonial so potential customers know what to expect?

          So between now and then, your goal is simply to be so awesome at what you do that your customers rave about the experience.

          • http://www.michaelofei.com/ Michael Ofei

            Excellent advice Barrett. I might check in with you in a few months to let you know how I go. I look forward to implementing your advice in this post. I’m actually about to start working with my first client now and I am super focused on delivering amazing service. Thanks again. Will connect with you on Twitter. Cheers Michael

  • http://www.suttonparks.com/ Sutton Parks

    Nice, very thorough! Thanks for ideas to find a target audience and build social proof. Also, I’ve often taken advantage of the $99 specials I’ve seen coaches put out. It was always a wise investment for me and many times I’ve told the coach to raise their rates because the value they gave me was tremendous. I plan on using these tips for some coaching I’m getting into. Thank you!

    • Barrett Brooks

      Glad you enjoyed it, Sutton. Be sure to let me and/or the Fizzle guys know how the advice works in practice.

  • http://kimanziconstable.com/ kimanzi constable

    Excellent post. I started at the $99 range and got plenty of work, my clients got results and suggested I raise my rates. I did and got more business. It’s pretty cool to work with someone one on one and even cooler when they start to make that mindset shift.

    • Barrett Brooks

      Couldn’t agree more. So much of coaching really IS about the psychological aspect, despite the fact that no one wants to buy for that reason. Side note: it’s even cooler when your pricing and model are sustainable enough for you to make a living as well.

      • http://kimanziconstable.com/ kimanzi constable

        Coaching brings in a good part of my income but so does writing and speaking. Being location independent is amazing, our family is actually moving to Hawaii because of that very reason :)

  • Mia Sherwood Landau

    Truly actionable ideas, Barrett. I’m in the process of coaching certification and this post speaks directly to me right now. Thanks!

    • Barrett Brooks

      So glad you found it helpful, Mia. Check back in and let us know how things go as you move through your certification.

  • http://www.twitter.com/erikjfisher/ Erik Fisher

    Jeez. This was great. I just threw it into something where I can write my own notes on it after I reread it.

    • Barrett Brooks

      Aw shucks, Erik, thanks man.

  • Jason Connell

    Wow – what a valuable and generous article. Thanks, Barrett!

    • Barrett Brooks

      Thanks for reading, Jason. Glad you enjoyed it.

  • jeremymentz

    Great post! Actionable material… I loved the part about confidence. It’s scary to bump your number up but just do it!

    Also, the part at the beginning about when people ask what you do… I came across a great little format that works well for me.

    “you know how (insert target audience) struggle with (insert painful problem)?

    I solve that.

    I do it by (insert unique servive) because (insert reason why it works).”

    It helps give context, identify your solution and gives a reason why (a because).

    Keep up the great content! Just recently found you and am loving the podcasts :)

    • Barrett Brooks

      Great stuff, Jeremy. I think I first heard this approach from Book Yourself Solid, and with a bit of work it can work quite well. Thanks for sharing.

  • Recovery nutrition

    perfect. This came up as I was actually in the middle of developing my sales page for nutrition coaching. Thanks for the great info- Jamie

    • Barrett Brooks

      Glad it helped, Jamie. Let us know how the new offering goes.

  • http://www.earlyparenthoodsupport.com Jessica

    Great, clear, practical piece! Thanks! My work has no direct financial result so putting a $ on the value is hard, but I’ve been taking the “it’s worth a hell of a lot” approach.

    • Barrett Brooks

      That can always be a struggle, Jessica. Sometimes it’s more about the value your customers place on your services than the financial return. Thanks for reading.

  • http://www.prettyawesomefitness.com/ Aqilah Norazman

    Thanks for this Barrett. I’m in the middle of thinking about coaching services for my site and this came at perfect timing. Cheers!

    • Barrett Brooks

      Great, Aqilah. Glad to hear it came at the right time for you. Let us know how it helps.

  • http://www.mobilemixed.com/ Greg Hickman

    Great post brotha! timely for some things I’m working on.

  • http://makeextraincomeathome.com/ Felipe Kurpiel

    For me the first step about having a
    well-defined target audience for your services is the most important part of
    the entire strategy. If you cannot define your targets you cannot serve them
    the way you expect.
    Have a nice day everyone!

  • http://www.mynotetakingnerd.com/blog Lewis LaLanne – NoteTakingNerd

    I absolutely loved this nugget from this outstanding piece . . .

    “I have past/existing clients write a “letter to a potential client” to build my book of proof.”

    This is an awesome concept and the one thing I’ve had to become highly conscious of when asking my clients, the majority of whom do not see themselves as writers, is that asking them to write something that the public will see can be met with apprehension and perhaps fear.

    I believe this is why statistics show that less than 1% of a blog’s audience will make a comment on what they’ve just read. Even if they’re head over heels in love with it.

    So I had to get smart about getting social proof. I had to harness this reality. And I got help from a set of questions.

    We can all answer questions about our experience with a product or service quite easily. If the right questions are asked you end up something that reads like a narrative.

    Here are the questions . . .

    1. What happened?

    2. How are you feeling about it?

    3. What did you learn?

    4. What did you learn about yourself?

    5. How will this help you in the future?

    Another variation on this could address the human needs within those questions – How are you now more certain of yourself in the context of X? How are you now experiencing more variety in your life? How are you now feeling more significant? How are you now feeling higher levels of love and connection?

    What I’ve found is that giving people a blank page to fill out can freeze them. They know what they feel but they’re scared that they won’t organize their thoughts on the page in a way that makes them look cool.

    But if you simply ask them to answer some questions you could simply set this up as them being interviewed by you (in print/audio/video) and publish it as such.

    This concept also conquers the other impediment we run into when seeking testimonials/social proof from others – laziness. When we’re doing all the work of conducting the interview and publishing the results we lower the barrier for our clients to help us.

    The last thing we want is an empty testimonial that reads, “This guy is AWESOME! I love his stuff. He really helped me out a lot.” because endorsements don’t ring as true, nor as powerful as the person that lays down a case study of what specifically happened when they worked with you and what measurable and tangible results came about as the result of doing so.

    The best part of these questions is that they elicit a meaningful, matterful endorsement.

    And I thank you Barret for reminding me that this is what I need to be seeking when I gather social proof and I also appreciate the incredibly smooth design of this site. It was my first time here today but I know I’ll be back. :)

    • http://www.mynotetakingnerd.com/blog Lewis LaLanne – NoteTakingNerd

      PS. The bulleted list you find in this post here beautifully compliments the five questions above and jacks up their effectiveness and potentcy to LEVEL 11 . . .

      http://contentmarketinginstitute.com/2014/02/b2b-marketing-reviews-not-case-studies/

    • BarrettBrooks

      Lewis, great stuff. You added a blog posts’ worth of value in your comment, so thank you for that. I couldn’t agree more on your tips for getting great letters of recommendation from current or past clients.

  • Megan Pangan

    Excellent post, thank you. Question: Does that mean that you shouldn’t post concrete rates online? We do this in our photography biz to capture more inquires, but sometimes I feel we leave the net open to attract unworthy clients as well. Thoughts?

    • BarrettBrooks

      Personal opinion: posting your rates lets customers know whether they can realistically afford you or not. Some people prefer to keep their rates private to leave room for negotiation and decrease the chance for scaring prospects away, but I personally prefer to make rates public. It sets an expectation up front. Would love to hear Corbett, Chase, and Caleb weigh in on this one though.

  • BarrettBrooks

    Really happy to hear you enjoyed it Shane. Hope you can put some of the tactics into practice and let us know how it goes.

  • BarrettBrooks

    Good thoughts, Amber. Definitely agree that respecting a person’s journey is important and pushing someone beyond their ability to pay can be a tactic that lacks integrity. At the same time, you have to make sure your discounted services make financial sense for you — given the amount of time you have to invest and the return on time invested, will you be able to meet your financial goals? If so, carry on. If not, you’ll want to consider changing course while it’s easier to do so up front.

  • BarrettBrooks

    Thanks for the feedback, Jordan. Glad you enjoyed it.

  • BarrettBrooks

    There’s one way to know for sure, Marc… Round up meetings with 20-25 couple who fit your target market and ask questions that dig deep about their biggest areas of need. If you see a trend pop up that they need help with relationship-based conflict management, then dive in headfirst. If not, don’t waste your time solving a problem that’s not a real pain point.

  • BarrettBrooks

    Depends on your goals, Jada. There are an endless number of assessments out there that can deliver value. In my opinion, the best tactic is to know your target audience well enough to understand their true needs. Then find an assessment that is well-regarded, research-based, and will deliver value to your audience. Rather than have many assessments, dive deep on one assessment and learn how to truly maximize its potential for your clients. Read the base-level research that fueled the assessment, take trainings on the assessment, and really read through all of the possible results to understand the kind of feedback it will deliver to your clients. Like software products, assessments can deliver great value, but its all about how you use them.

  • Carolyn Mycue

    Hey Barrett, Very generous and helpful article. Thank you. I checked out LFM and the site is stunning. I signed up for the upcoming workshops. One thing from the article, I clicked on the link for the “uptake form” and it brought me to a dead end. Any chance you could repost the link here in the comments? Thanks again for the amazing resources!

  • Jenny Ragland

    Great. Thank you so much for sharing this

Up Next:

Setting Prices, Raising Rates & Getting Paid What You’re Worth (FS041)

You’d be amazed what I can pull out of Caleb whilst getting saucy about his wife’s flexible packages… There’s a lot to learn on the road from “that’s ok, you don’t have to pay me” to “I know what I’m worth and you can’t afford me.”

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