No Free Gifts! And Other Negotiation Advice Designed to Keep Your Value High and Your Customers Happy

No Free Gifts! And Other Negotiation Advice Designed to Keep Your Value High and Your Customers Happy

Despite your best attempts to sell value and remain firm on your rate, some clients will press ahead with their request for a discount. After a solid attempt from you to reassure them that your rate is fair, if your prospect is still pushing for a discount, you have a choice. Walk away from the business because you want to maintain your rate or slowly start to give concessions in an attempt to win (or save) the business.

If you want to give concessions, following a simple system will ensure a profitable negotiation.

Your First Step

The first step, always, is to find something else to give up that doesn't reduce your rate. A free day, no-charge reporting, a client profile on your Web site. What you choose will be specific to your agency, your markets and your client base. The key is to have the list of things you're willing to offer prepared in advance, so you can draw on it during the negotiation.

It's hard to think creatively in the heat of a negotiation, so planning ahead can give you a ready-made solution that leaves both you and the client feeling satisfied with the transaction. Your goal is to maintain the rate integrity of your resources while delivering extra value to the customer with a service that does not cost you anything (or very little). For example, if the customer asks you for a discount consider offering them following instead:

1. An unconditional money back guarantee or perhaps extend the guarantee period by 30 days
2. Free day
3. Payment terms
4. Payment with credit card
5. Free staff training CD’s or in house training by you on hiring and retention practices
6. Access to a public seminar or trade show your company is sponsoring
7. Future discounts based on volume: the company will pay full rate today and receive a discount on a future order. You can also do this as a gift certificate for them to use later.
8. A loyalty rewards program. “Hire 10 get the 11th one free!”
9. Participation on your client advisory board or panel

About half the time, your customer will take you up on the offer to provide a “non monetary concession.” The other half will continue pressing for a rate discount because in today’s marketplace it has become all too common for one supplier to attempt to trump all others by lowering their rate and cutting their margin. In many cases, your clients are being trained by the competition and other vendors to demand lower pricing from you.  It’s a short term strategy, and it does little to benefit buyers but that doesn’t make it any easier to assure prospects they’ll get equal or better ROI by paying more. Sometimes, a prospect just wants you to lower your rate, and you (with your agency’s support) will need to consider doing it.

Your Second Step

If you feel you have to give up a discount in order to close the sale, do yourself a huge favor and always ask them one of the two following questions first:

"What is important to you about an x% discount?" or
"Why is an x% discount important to you?"

These questions will flush out any last details that could help you find a different way to structure the terms and pricing. This allows you to keep your rate while letting the customer walk away with their needs met as well. If, however, you ultimately do have to reduce your rate, make sure to follow these two rules:

1. Never reduce your rate without getting something in return. Getting something in exchange for a pricing concession is key to managing customer expectations that future discounts will not be easily dished out. As with the "no money" concessions above, what you get in return for a rate reduction will be unique to your business and markets. It could include references or case studies, a bigger order, introductions to senior level executives or cash up front, etc… Again, whatever you ask for, prepare the list in advance so you can respond quickly and smoothly.
2. Nothing is worse than coming to an agreement on rate (especially a reduced rate!) only to find out that your prospect is still looking for other concessions. Be sure to get a firm verbal agreement from the customer that this discount is all they will need to get the deal done. Try asking them something like "I'm not sure if I can get you this rate, but if I can, is it fair to say that we can go ahead?" or "I'm not sure I can get this discount for you. If I can, though, are you willing to ….?”

By asking them this last question, you can ensure you get all the issues on the table first, giving you the chance to deal with them fairly once and for all. So what goes after the “willing to”…. in that question? I believe that if you must, absolutely must reduce your rate to win the business NEVER let that rate drop without getting something in return. “No Free Gifts” my friend Steve Kraner taught me. Try some of these best practice ideas submitted from Engage recruiting clients for finishing the question…

"I'm not sure I can get this discount for you. If I can, though, are you willing to ….?

1. place your order today?         
2. provide full payment for he work term up front?
3. hire more employees with your agency?
4. provide me 3 qualified referrals / introductions?
5. give us a testimonial or case study?
6. allow us to sponsor the event you are organizing?
7. invite me to the event you are having for their clients?
8. provide me space in your newsletter for a monthly column?
9. provide my company an exclusive hiring arrangement?
10. introduce me to additional departments or internal decision makers?

This step is easy to do if you have conviction. The first step to finding better clients – ones that focus on value and not rate – is making sure you are 100% confident that you are delivering such a high value to the marketplace. Confident that all buyers will want to own it at full cost. When you do believe this, you will not have any trouble asking for something valuable in return for your rate discount.

Remember that what you ask for does not have too be of equal monetary value. In fact it can be free for the customer to provide as long as it has value for you. The goal is to employ reciprocity – you will gladly scratch the customers back as long as they are willing to scratch yours! Creating equality in your client relationships ensures that you will have a long lasting trust based relationship which reduces the amount of “shopping” the customer does each time they need to order. This increases your profits, decreases your sales cycle and encourages referrals.

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