Client wants a discount? Don’t talk dollars, talk value

It’s a fact of recruiting life that clients will push you to negotiate your fees. And with so many recruiters quick to drop fee percentages to secure briefs, that can be a hard discussion to deal
with.

The starting point for successful fee negotiations is, strangely enough, to get the conversation off the fee percentage, and on to the question of what it is your fee is actually for.

And of course, bundled up in that conversation, is your ability to sell your differentiator. What have you got and what do you do that gives your client special value? That’s where you want to focus.

Short video on fee negotiation from Greg Savage

At Firebrand Talent Search we emphasize our niche focus, our unmatched access to creative, marketing and digital talent, our multiple branches in Asia Pacific and Europe, our specialist knowledge and understanding of clients needs, our proprietary testing software which means we know candidates have the design skills we say they do, and then we wrap all this up in 110% money
back guarantee.

But all recruiters will have differentiators, and it’s important you know how to articulate them.

So when a client does ask you to drop your fee, go through your entire recruitment process explaining all the things you do to secure the right person. Take your time. Start at the beginning and don’t miss
anything out.

Talk about your screening, your interviewing, your talent generation strategies such as social media and networking. Talk about your database and the fact you have several offices tapping into talent.Explain how you act as an advocate for the client, and how you will qualify each candidate in terms of fit, salary and skills. When you drill down on this, you find we do a lot!

That’s the point. Tell your client.

Then, and only then, ask the client why she feels a reduced fee is appropriate. This is important. Get the ball firmly into the client’s court. The client is asking for a discount. She should be squirming –
not you. When it comes to fee discounts you don’t have to justify why not – she has to justify why! It’s a shift in the dynamic and it’s very powerful indeed.

Its not as simple as this of course, many clients will continue to push for a fee discount regardless, and then you have to make a commercial decision. But the starting point is not to haggle over a
number. Get the attention of the service you provide.

Talk about what you do, explain your process and your insights and your connections and your value adds.

That’s a far better place to start a discussion on discounts!

Comment by C. B. Stalling!! on November 3, 2010 at 8:22am: Never Discount

Comment by Jerry Albright on November 3, 2010 at 8:26am: Hi Greg. I like a good conversation - and this a great place to have one. Thanks for the topic.

Most (99.9%) recruiters making the case for new business don't have offices strategically located across the globe. They don't test their candidates in any substantial way. They really don't offer a single thing different. Clients know this.

In most cases these clients are bombarded with call throughout the day. You've got very little time to make an impact. They need to hear something of value right off the bat or you're left with "Thanks for the call - but we're all set." The vast majority of hopeful recruiters bring nothing new to the table. Nothing at all.

Now in a few of these cases - playing the numbers game - you will stumble into a client who could use your help but in most cases you're left playing by their rules. What then? How does one differentiate himself from the others in order to justify a higher fee?

They've all heard recruiters grasping to command the latest in service statement buzzwords: value add, strategic partner, etc. etc. etc. but what they hear is "blah blah blah blah blah....."

The truth is - in my opinion - most recruiters don't stand out from the crowd. They are simply calling around (perhaps after seeing a job on Careerbuilder or LInkein) and asking if they can play. Not very powerful in my opinion. And if they do get the chance to play - the client is the one who outlines the rules of the game which include their standard (low) fee.

If you bring nothing new to your client - what makes you believe you should command a higher fee than the others who have agreed to lower their fee in order to get in the game?

Comment by Greg Savage on November 3, 2010 at 5:30pm: Totally agree with you Jerry. Most recruiters can only explain what they offer in terms of meaningless cliches. And I also agree that most actually do have nothing differentiated to offer. And when that happens the only item they can offer that's different...is a lower price.
However I see this as the opportunity in our industry. Work out what our clietst DO value/need and find a way to deliver it. No fee issues then

Comment by C. B. Stalling!! on November 3, 2010 at 10:24pm: I deliver to my client peace of mind. While they are running their business, they office their division. I am working 24 hrs a day to find them people that can help their business become better.

For that peace of mind they pay my invoice.

End of story. I alway tell my clients when they ask me about my fee. I always say I can higher it. We laugh and that is the end of story....

Comment by C. B. Stalling!! on November 4, 2010 at 9:18am: Hey Greg I hope recruiters continue using meaningless cliches. Soon they will be looking for another job. more business for me

Comment by Ambrish Kochikar on February 8, 2011 at 10:59am: Nice post. Couple of thoughts here. The starting point for this post was a client pushing the recruiter/agency for a lower fee. Even though everything is negotiable, it still begs asking, is the 'client' already a paying client you've done business with before or is it a new client (prospect)?

If it's an existing client, then you have a huge case for why your fees are justified. They've hired from you before. Talking about the process is ok, but kind of redundant at that point, as Jerry points out, they've seen and heard it all before and above all, they have seen what you can do.

If it's a prospect, then you're dealing with, again, how much of a relationship, if any, do you think this prospect has had a chance to develop with you before asking for that lower fee. It's a fact of life that they will ask.

You might make a call on how desperate you are for their money. You might consider they are a good prospect in other ways (easy to work with, respect your time and effort, keep their appointments, etc.). It's never always just the money. It's what you put in for that money and when you get paid that matters. It's the same for the client, but they need to go through that first hire before they can see that value.

Finally, after going into the entire process with your client, you have 'already' justified why you deserve the fee without giving a discount. I didn't follow the point about you not having to justify 'why not'.

Comment by Greg Savage on February 8, 2011 at 11:05am: Thanks Ambrish

I did not word that well I have to agree. What I was trying to convey was the power of switching the dialogue from "Why I should justify my fee" to " the client trying to justify why I should lower it". Its perhaps an esoteric point but I think it important because its a case of who has the high ground in the negotiation. Of course as you say, this should be a moot point because once you have done a great job of justifying your value, the client will -hopefully- not feel inclined to negotiate further.

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