Guest Blog: How to Negotiate With Clients You Can’t Afford To Lose
By Nick Rojas
Every company has those few clients that we treat as high value accounts. You know you can’t lose them, and they know it too. Clients that know their value often ask for lower prices. They feel, and sometimes rightly so, that they have exceptional negotiating power. In fact, we’ll even say that high value accounts can play a significant role in stagnating revenue streams. In this blog post, I will discuss how to negotiate with clients you can’t afford to lose.
According to Richardson’s 2016 Selling Challenges Study, the most difficult aspect of sales negotiation is gaining higher prices. Survey respondents agreed that higher prices were harder to achieve than the previous year. With inflation ever increasing, profit margins shrink more and more without price increases. It creates a tough position to navigate.
Knowing effective negotiating techniques can help mitigate this problem. We’re going to break down the best way to negotiate with clients you can’t afford to lose.
It’s Not The What – But The Why
Negotiating based on what you want is a poor strategy, but it’s the one most people default to. Focusing in on your end goal is an easy mistake to make. After all, you’re ultimately negotiating to make your company more money. Who wouldn’t focus on a positive outcome? The problem with using the what as your strategy’s foundation is that it leaves out the purpose behind both your’s, and your client’s, negotiation.
Approach a negotiation with an understanding of why your companies work together. Try to dig deeper beyond “they’re a large client that makes us revenue, and they need our product.” Make a list of specific benefits that a contract with this client will offer both companies. For example, does the client offer room for future product expansion? Maybe you’re so invested in this contract because it could lead to future sales opportunities. Do you offer the best shipping times in the area? Maybe your client is trying to lock down a quick supply line at reasonable prices.
If you know what you’re after, and what they’re after, you can propose different offers that satisfy both of your needs. Always leave room for variables that can satisfy both parties.
Toe the Line Between Firm and Unreasonable
Ultimately, negotiating with a top priority client is about sealing the deal. They’re not considered top priority for nothing. So what happens when your client isn’t interested in discussing why you both need the contract?
High priority clients sometimes play hardball. They’re putting pressure on you because they know their business is important. Sometimes, they may as well have dollar signs for pupils. Unfortunately, this happens fairly often. But, they’re making the mistake of looking only at what you offer, and not why you’re offering it. This is something to capitalize on.
It’s important to stand firm in the face of aggressive negotiation. Remember, they’re talking to you because you have something they want.
Never make concessions you’re not comfortable making.
Figure out what variables you can bend on, and those that are steadfast. For example, price might be flexible, but delivery time is set in stone. These variables are different for each company.
In our opinion, price is one of the last things open for negotiation. Discounts for the sake of discounts only train the client to ask for lower prices after every contract. If price must come down, make the client offer a concession of their own. If the client won’t make any compromises, let them walk away. Have faith in your product’s quality to bring them back for another try at negotiating.
Facing an important negotiation with a client is difficult. The pressure is on to secure a good deal, and not to lose an important account. Having faith in your product, being firm but fair, and being open to your client’s needs as well as your own can help navigate you through a tense negotiation, and into a lucrative contract.
Remember, in the end, we’re all looking to make a deal.
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Nick Rojas is a small business consultant and business journalist, currently splitting time between Southern California and Chicago. He is an occasional contributor to our blog.