Are you regularly negotiating with clients over price?
After a recent event, I got the following email from an executive recruiter running his own staffing practice:
I was thinking about something you said on pricing.
Recruiting is commoditized and there’s a lot of competition. I often find clients will offer a 20 percent fee for an executive search — take it or leave it. Many of my competitors are willing to accept that rate, versus my standard fee of 25 to 30 percent. I know I can fill jobs with better people, faster, but most buyers will close the door strictly on price.
What are your thoughts?
Do you relate?
I do. Most products and services are getting commoditized in a similar way. My business is pretty similar. Someone will always speak or train for less (or even for free). And there are always clients that lead with price.
To elevate the conversation beyond on price and demonstrate your value, you need to consider three crucial elements: story, strategy and execution.
How Are You Telling Your Story?
The executive recruiter believes in what he does and that it’s clearly differentiated. That’s a great place to start.
“I know I can fill jobs with better people, faster, but most buyers will close the door strictly on price.”
I challenged him to consider these questions:
- How do you know you’re better and faster than your competition?
- Can you prove it?
- Do you have evidence?
- Is that evidence visible?
- Is it validated by someone other than you?
- Are you leveraging that proof of concept in a way that clients can quickly and simply understand?
- Is that resonating in a meaningful way with customers?
The answers to these questions will help develop and define his story — his value proposition.
A good value proposition is:
- authentic (you can deliver it consistently)
- differentiated (it clearly sets you apart from your competition), and
- compelling (strong enough to earn attention and convince clients to consider making a change and pay more for your work).
How Are You Delivering Your Story to the Marketplace?
Once you have your story down in a way that really resonates, the next step is considering strategy. How do you get your story to clients? How do you share your story with the marketplace? How do you earn attention?
In my business, blogging is an ideal way to share my ideas, contribute value and connect people to my work. This helps me earn attention and generate interest in our services. I know if I am not getting referred or found, I’m going to be left relying on traditional, interruption-based sales tactics that are both diminishing in effectiveness and would ultimately force me to compete solely on price. Our strategy includes working every single day on getting our story into the marketplace, constantly evaluating our efforts and looking for opportunities to improve.
Your strategy for getting your story to clients will be unique for your business. But when you’re always laying that groundwork and a client comes to you focused on results, it’s easy to elevate the conversation beyond price.
Are You Executing Consistently On Customer Experience?
Finally, think about execution. If you’re not delivering on your brand promise every single time, nothing else matters. You have to work hard and develop a process you can deliver consistently that turns customers into evangelists for your business.
It’s also worth considering: Are your own customers helping tell your story? When customers are in awe over what you deliver, it’s very likely they will become passionate advocates and help you elevate the conversation beyond price. You’ll get more when you demonstrate you give more, consistently!
If you can successfully craft your story, get it into the marketplace, and execute on your promises, you can remove price from the conversation.
Master the Art of Non-Negotiation
So when people ask me how to get better at negotiating price, this is the advice I give them. In my business, my goal isn’t to be a better at negotiating. My goal is to stop negotiating completely.
This didn’t happen overnight, but six years into this business, Lynn and I rarely negotiate anymore. We have a story that resonates, a solid strategy for delivering it to the marketplace and we obsess over executing on the promises we make. We have plenty of clients helping us tell that story, which has elevated demand. And the interest in our work has eclipsed our available inventory (specifically for live events). Quite simply, we no longer are in a position where we need to negotiate on price.
When you discount your product or service, you change the customer’s perception of value.
This Entrepreneur article, The Dark Side of Discounts, resonates:
To maintain higher prices, you have to instead be adept at selling value. Discounts erode your ability to do that. Any reduction in prices can damage your price integrity. Later, getting the same customer to stop thinking about price and re-focus on value can prove difficult.
Not only that, studies show that discounts actually reduce the effectiveness of whatever is being discounted. In a buyer’s mind, the discounted offering literally does not perform as well as it did at full price. That sounds impossible, but double-blind studies using prescription drugs and over-the-counter health products, cosmetics and other products have shown this to be true.
If you want to be a premium brand, offer a premium service, deliver value consistently and don’t back down on price.