I’ve heard a lot of comments after I’ve presented an idea. This one is #10. Can I have that idea for less?
Experience has taught me to respond to this question in two ways.
1. Is the client asking the question because they simply want to negotiate?
2. Is the client asking the question because we didn’t explain the idea properly?
Negotiating or Haggling
It’s almost human nature to want something of value for less. If it ever went out of style, a recent article in the Washington Post suggests there’s a resurgence in haggling because of the recent recession.
For some people, negotiating is a game (me included, especially if it’s an antique). It’s actually invigorating to bargain, especially when you get a concession, however small. For other people, a price or an estimate is nothing more than a suggestion, a perceived indication of an item’s value. Negotiating is a way to find the balance between want and need. For others, negotiating is a fundamental part of their philosophy or values.
My first assignment at my first job was to get estimates from vendors. Before I began, the managing director sat me down and gave me her two cardinal rules.
- #1. Negotiating is good business. Therefore, never accept the first quote.
- #2. Because it’s business, don’t make negotiating personal.
She taught me to change my perception of negotiating. Think of it as an indication the other party wants to do business with you. It’s a complement, and treat it as such. Just don’t go soft on your principles. When negotiating over an idea, think about these points in advance.
- Know your bottom line. Specifically, know the precise value of the idea you’re offering. Don’t treat it as less.
- Expect to negotiate. If you had to give something up to make the client happy, what would you cut out? Which elements are vital, and which are ‘nice to haves.’ Or, think of it this way. Treat your client’s money as if it’s your own. If so, what would you think is unnecessary?
- If you have to reduce or adjust a cost or estimate, consider how you’re going to reduce part of the deliverable as well. Otherwise, you’ll look like your rates are inflated on purpose.
- Treat every negotiation as its own discussion. Otherwise, you set the precedent with your client that you’ll exponentially reduce or adjust your budget further next time. (That said, you may quickly realise that every discussion is a negotiation. Ok, now you know.) If you do agree on adjustments, put them in writing to the client. Be explicit, clear and transparent.
- Know when you’ll have to walk away from the negotiation. According to Getting to Yes (the definitive book on negotiation skills, and yes you should buy it), know your BATNA – your Best Alternative to a Negotiated Agreement. What’s your best alternative if you have to walk away, and can you live with it?
- The best negotiators turn every discussion into an opportunity to educate the other side – about the process, implementation, operations or resources. It’s very likely that you’ll improve your next negotiation if you can explain to your client why something is priced a particular way. If nothing else, you look organised. As my Grandma used to say, “Be a worthy adversary.”
- Remember too that sometimes you simply need to say ‘No.’ Plenty of times the client then said, “Ok,” and that was that.
Inadequate Explanations .. if not Preparations
Remember the phrase: An ounce of prevention is worth a pound of cure? That’s the point of this section.
A client will always, always, always ask about budget. That should never surprise you. The key to addressing this question is to get in front of it. Answer the question in the first place.
A few years ago, I was part of a team selling a detailed campaign idea to an internal client. At the end, she asked us where she might cut the cost by as much as 30%. When the team leader began to negotiate – then to fight with her – I realised we hadn’t properly organised or merchandised the idea in the right way. In other words, we didn’t have the right information from the beginning.
Proper strategising and brainstorming begins with accurate information. To get it, you need to have an honest, candid and constructive relationship with your external/internal client, or an interview style which not only asks the questions, but educates why you’re asking. To paraphrase the Sym’s slogan, an educated client is your best customer.
How you get that type of relationship is another topic, but for now, here’s some questions to start – perhaps as dialogue, perhaps as brainstorming to determine as the team how to get the information, perhaps to think of other questions which are specific to your situation or industry.
- What’s the specific business result you want this idea to (help) accomplish? How much of this is a moving target? Is it likely to change?
- What’s the deadline for you to reach this objective? How much of this idea (or campaign) will impact that objective? How much of this deadline is likely to change, and why? What might cause it to change, and will any of those factors influence this idea or campaign?
- Of the information you’re giving us, is there any part of it you aren’t 100% comfortable? Are their holes? Are there any assumptions? Can we help fine-tune, justify, clarify, counter any of that information so you feel 101% comfortable? Is some information better than others?
- Where and when could any part of this project go wrong, even slightly? What pot-holes are ahead? Are there any sensitive issues we should be aware? What might blow up in our faces?
- What expectations do you have of us? How much of this program do you want our team to implement, or do you have your own resources? How have you saved money in the past, and can we learn or incorporate those savings into this program?
- How much do you want to be part of developing this idea/campaign?
And finally, how much money do you really have?
- If you don’t want to tell me, that’s cool. I’m asking because I don’t want to waste your time, not yours.
- Maybe you can’t tell us, that’s cool too. If so, what would be the best way to present a budget to you? Do you – and you alone – want to get the budget? Would you like to see it in advance of the idea? *
- Do you want a flexible idea, with pieces that could be added or removed, sort of like a Chinese menu?
- Do you want a tiered idea? For example, we can give you three options: The Youth Hostel option (cheap and cheerful and you-get-what-you-pay-for), the Holiday Inn option (so middle-of-the-road, the idea will have a white line painted down the centre of its forehead), and the Ritz version (expensive but imagine the life-time of memories you’ll have when its over). Great! Now, what are the reasonable price ranges for each, so I have an indication of what’s most appropriate for you?
- Maybe it’s easier just to tell me what’s too cheap in your mind?
- Would it be OK if we brought back an idea which we test in one area or market? That way, we’d only need a fraction of what you’re thinking now. Once we implement small, we can test, refine and improve the idea. At that point, you’ll have a program with all of the bugs worked out, and will be virtually risk-free.
* I put in this option because sometimes you’ll have to give the budget prior to the idea. They’ll either be forthright to ask for it in advance, or worse, during the presentation, they’ll skip over everything and go immediately to the check-book. In almost 28 years, not one single client who consistently behaved this way – and I’ve had a number of them, trust me – were ever a good, productive/profitable or lasting client. They are short-term, short-sighted, and short-lived. I’d strongly suggest you put your resources against the considerable number of good clients who help your reputation, rather than detract from it.