Client Negotiation: ‘Professionals negotiate. Fools discount.’
It’s a shiny April morning, when I came to meet my interviewee – Ms. Mai Anh, activation manager of Masso Communication. With ten years of working in communication industry, she has many experiences in negotiating with both foreign and Vietnamese clients. Being asked to use one word to describe negotiation, she smiled ‘It is Art’.
Some people may find negotiation is not a tough thing to manage but for the others, it might be the ‘game’ that you’re reluctant to play and the reasons could be the fear of losing face or lacking of communication skills. However, no matter what the reasons are and how you scared, negotiation is unavoidable. Ms. Mai Anh told me that, in each 20 clients that she had worked with, negotiation happened with 19 of them; or in the recent article in Advertising Age (Webmaster 2012), ‘52% of marketers will ask agencies to lower their internal costs’. Thus, the sooner the better, you need to get yourself familiar with negotiation (Jimenez 2012).
Some agencies are so obsessed with the idea of keeping clients at any price, even by lowering their profit and giving discount. Agreement in doing the same work with less money is not negotiation, it’s discount and for me, discount is not a smart choice. It’s just the evidence showing that you did not dare to truly negotiate, to protect your work and your company (Newbusinessshawk 2011). ‘It’s not only about profit but also you and your agency’s reputation that you must think about before giving any discount,’ said Mai Anh. To let you understand more about her point, I will give you three reasons why agencies should not discount.
What is coming after discount? It’s ‘business killer’ (Gregory 2009). You may think that by lowering your rates (or Mai Anh calls it’s ‘margin’), you can keep clients and defeat your competitors. However, the fact is that undercharging or discount is the signals from you to your clients saying that your work is not important and they will expect the same thing happens in the future. How can you get out of that situation? Remember that there is always someone out there, who willing to charge less than you because his work is not good. Will you chase after them and end up working for free?
You might lose your motivation. ‘I have good news and bad news here’, Mai Anh explained this point to me with an example, ‘Good news is clients has accepted our proposal, and bad news is we will earn half of the normal salary this month to cover the discount. Will you still happy and feel inspired to work with 100% energy?’. Of course not, I could endure it one or two times, but more than that is totally a depression. ‘Work smarter, not harder’, you should respect yourself and get what you deserve.
‘You’ll attract wrong types of clients’ (Gregory 2009). Not all clients are good or suitable with your agency. If all the clients want is just to get the cheapest bargain, you should think back again. Do they care about the quality of your work and do they really understand your agency’s values?
So, how can we achieve the successful negotiation that could make both party satisfied without giving in by discounts? Here are some tips that you might want to think about. For me, ‘We are all negotiators’ (Shell 2006), but then some become master.
Aim to a win-win solution. If you want to have a long lasting relationship with your clients, aim to the mutual satisfaction goal in negotiation; and find out about the other party’s interests is important to achieve this goal. By looking at an iceberg, you can see that ‘interest’ is the large and invisible part, which is important but hard to know. I have heard that ‘why’ have five layers of meaning and if you stop at the first answer, all you have is the tip of an iceberg. By asking more questions to your clients, you have more chance to know their real interests. Besides that, Mai Anh suggested me to find this kind of information through the parties that previously worked with your clients (another agencies, suppliers, or even people working inside your client’s company).
Know your BATNA (Best Alternative To a Negotiated Agreement). It’s the common advice that you could find in lots of books, journals and articles (Doyle 2005). You must know your ‘walk-away point’ before the negotiation. Don’t just enter the ‘game’ without knowing what you want or what to avoid; or begin to negotiate with yourself when the other team offers anything; it’s not professional. Every agency has their own rate or ‘margin’ to calculate the profit and decide whether they will accept or decline a project. For example, because your agency’s margin is 20%, you tend not to accept any projects that the margin is lower than 20%. This is the interesting fact that I didn’t know until I ask Mai Anh.
‘Know the subject matter better than the other team’ (Doyle 2005). Which means that you have to research and review every aspect of the issues carefully, so that you can impress your clients and make them believe in the quality of your work.
Take time to educate. Mai Anh said that when she worked with Vietnamese clients, some of them didn’t know well about the requirements for time, efforts or money that you need, so take time to explain for them.
Flexibility. Give them 10 options and argue for the best. Explain to them that if they want that price, they will receive that quality.
A ‘haircut’, not a discount. If they are the big clients and you want to keep them, you can slightly change the price or using integrative bargaining type (using the profit of others small items to cover the reduced profit of the big one).
Avoid saying ‘No’ straightly. If you don’t agree with their offers, take note them and said that ‘Okay, we will think about it and answer you later’. ‘It makes clients believe that you’re actually listen and care about their interest’, Mai Anh said.
You won’t just only negotiate about profit, but also many other issues and the list for negotiation tips seems endlessly if you want to know all of them. However, some main points that I recommend to you, future master negotiators, include: avoid discount (undercharging your effort and reputation is a bad idea); know you BATNA (what you need); and know your client’s real interests (remember the iceberg, ask more ‘why’ and listen to them).
Ho Chi Minh City, 11 May 2012
Posted by Doan Thi Cam Nhung
Word count: 1095
About: Started to work for Masso Communication since 2005 in Account Executive position, Mai Anh (Mai Thi Kim Anh) has now promoted to be Associate Manager and Activation Manager now. With lots of knowledge and experiences in managing multiple marketing projects for the company, Mai Anh is now one of the core members of MASSO Communication. Masso Communication is one part of Masso Group, a marketing consultancy and service company for Vietnamese market establishing in 2000. Event Management, PR, Brand Activation, Integrated Communication and Investor Relations are the main services that Masso Communication will offer; and some of its clients are P&G, Castrol, Toyota, Nivea and Beeline.
Proof of life
Doyle, J 2005, ‘Agency-Client Negotiations: Trust, But (Please) Verify’, PR News, vol. 61, issue 34, p. 1.
Gregory, A 2009, ‘You want to pay me what? How lowering your rates can hurt your business’, Site Point, 12 August, viewed 1 May 2012, <http://www.sitepoint.com/how-lowering-your-rates-can-hurt-your-business/>.
iMedia Agency Summit 2008, Secrets to Client Negotiation, video recording, iMedia Connection, Austin, Texas, May, viewed 1 May 2012,.
Jimenez, C 2012, ’19 inspirational quotes on the art of negotiation’, AG Beat, 7 February, viewed 1 May 2012, <http://agbeat.com/entrepreneur/19-inspirational-quotes-on-the-art-of-negotiation/>.
Newbusinessshawk 2011, ‘Client negotiations: avoid discounting your services’, Sanders Consulting Group, 1 September, viewed 1 May 2012, <http://sandersconsulting.com/newbusinesshawk/client-negotiation-avoid-discounting-your-services>.
Newbusinessshawk 2011, ‘Negotiation: The one that got away’, Sanders Consulting Group, 29 August, viewed 1 May 2012, <http://sandersconsulting.com/newbusinesshawk/negotiation-the-one-that-got-away>.
Shell, R 2006, Bargaining for Advantage: Negotiation Strategies for Reasonable People, 1st edn, Penguin Group, New York.
Webmaster 2012, ‘52% Marketers will ask agencies to lower internal costs’, Masso Group, 17 April, viewed 1 May 2012,.