You didn’t get into this business to spend your days arguing. Conflict resolution was certainly not in your job description when you started out as a designer, account manager, or copywriter. Instead, you daydream about quiet days agonizing over creative -- not being on stage in a courtroom.
But the reality is that you have to lead the charge for your agency, and that sometimes requires you to deal with hard-bargaining clients who want more work at less money.
The Value of Negotiation Skills
Without negotiation skills, you might simply give in or give away more than was necessary, causing your agency and staff to suffer the consequences of your being intimidated. By learning negotiation skills, you can ...
Gain a competitive advantage.
This isn’t about determining a loser and a winner. It’s about managing your agency’s interests with those of the client. If you have negotiation skills, you limit the inequalities between your agency and the client.
Increase your confidence in business deals.
It feels like the client has all the power once you send the contract or proposal over. You simply have to wait for a decision. When the client finally calls, you sound desperate. You want to win this account -- badly. It’s a blue chip brand that will push your creative limits. When the client starts asking you to cut this price or change this timeline, you do so because you don't want to lose the account. Ultimately, you get the account, but the love has soured into resentment because you feel taken advantage of. If you know where you real power lies in the relationship, you can negotiate and collaborate with the client.
Counter intimidation tactics.
How many times have you been afraid to tell a client that something is out of scope? You rationalize that you don’t want to ruin the relationship or seem like you are analyzing every line item. You’ll just take the hit on this one. This avoidance of the issue is causing your agency’s profitability to plummet. Remember that confidence breeds respect, and mutual respect means you have a partnership.
Preserve relationships by managing conflict.
Healthy relationships are give-and-take. But it is also about appearances. By understanding how to be an active listener, how to provide reassurance in a conversation, and other negotiations skills, you can manage your image and the response of clients during difficult conversations.
Negotiation is the act of balancing competition with cooperation to get a result where both parties are satisfied. And to do this, you need to know your client’s BATNA, or best alternative to a negotiated agreement.
Outlining the Client's BATNA
Defining your client’s BATNA (Best Alternative To a Negotiated Agreement) will help you determine what power you have in the negotiation, when the client would accept the negotiated contract, and when he would end negotiations.
It’s about what the client’s alternatives are. If the client fails to sign the contract because your agency won’t concede on a specific point, will the client fail to meet his quarterly goals? Will he have to start another three-month search for a new agency? Can he find another agency with your expertise and experience at the price he wants to pay?
You can also use this information when approaching a client about work that is out of scope. If the client doesn’t want to pay for out of scope work, what will he do? Will he fire your agency mid-contract? Will he concede and determine the out of scope work requested is not really necessary?
To determine the client’s BATNA in a contract situation, you should ask yourself:
- If the client doesn’t sign the contract because you failed to concede to his terms, what will he do?
- Figure out a list of possible options, and create reasonable responses or points to counter the client’s decision. If you understand all the options available to the client, you can better prepare yourself for negotiations and retain some perspective during conversations.
- What are your limits for the negotiation? Practice the same approach from the client's point of view. Define where you can compromise and what you ultimately want in the situation. Outline your alternatives. While it might seem like the only alternative is to lose the account, that's not the case. If the client doesn't become a client, what are your alternatives? One might be that you will continue to go after profitable accounts -- you won't lose money by accepting a client who can't pay your fees.
Clients have a lot of power. (Obviously ... they're the ones sending the check.) But if you want to be able to negotiate with any authority, you have to establish a position and stick with it.
7 Techniques for Negotiating Like a Pro
1) Practice being an active listener.
Listening is a key skill; one that requires you to hone your verbal and non-verbal communication skills. Your posture, facial expressions, and head movements all signal that you are -- or are not -- listening to the speaker. And during negotiations, the person on the opposite side of the table needs to feel that you are not only hearing but also understanding, what he is saying.
To be an active listener, you should maintain eye contact. When agreeing with points, acknowledge this with a “yes” or “I agree.” Don’t interrupt the speaker, but take the opportunity to paraphrase what the person has said, and repeat it to make sure you understand. Ask questions that prompt the speaker to clarify information.
2) Ask open-ended questions.
Consider these two questions:
- What price would work for you?
- Tell me: Why is this price seems too high? Is it because of the results you have seen in the past?
If you start with the second question, the dialogue about price becomes a way for you to emphasize the results your previous clients have seen.
3) Set high goals.
Researchers at DePaul University found that when negotiators set specific, challenging goals, they were able to secure better deals than those with undefined or lower goals. Even if you go into a negotiation with a client knowing you can reduce the final project cost by 20%, attempt to negotiate a higher price or negotiate a change in timeline as well as a price cut. Give yourself a goal.
4) Play to the client’s emotions.
People, for the most part, buy based on emotions. This is especially true when deciding between competing brands. (For example: "My mom used Tide, so I should buy Tide even though the next brand is on sale.")
The same applies to the professional services industry. Emphasize your existing relationship or the excitement of your team about working with the client. CMOs love to hear how their brand is inspiring a creative team.
5) Be confident that you are the best option.
If you did your job in qualifying the prospect, you know this client would benefit from working with your agency.
So if things broke down during the contract phase, and you are negotiating the terms, you can be assured that the client wants to work with you. It might just be a matter of securing his confidence. Emphasize that you understand the client’s marketing challenges, have the experience they are looking for, and even offered a plan that was better than your competitors.
6) Emphasize the urgency.
During the proposal phase, you found out what the cost to the client would be if he didn’t increase leads, drive sales by X percentage, and so on. You also should have determined how the timeline for the project would affect year-end or quarterly goals. Remind the client of the consequences of delaying the project.
7) Be gracious.
Hopefully, you and the prospect will get past this phase. Then, he will be a client -- someone you want to build a strong relationship with. That means you want the client to be satisfied with the results of the negotiation, which actually means you should seem not satisfied -- or not as satisfied as you might be -- with the results of negotiation. The client should feel that you both made concessions and are happy with the path forward, not that one party exploited the other.
The goal of negotiation is not to get everything you want. It's about how you communicate and cooperate with a client so that both groups enter a relationship on equal standing. The result is a stronger, more equal path to partnership.