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May 21, 2012
Negotiating Tips for a Profitable Client/Agency Relationship
 


Step 1: Create a Virtuous Cycle.

 
By definition, a Virtuous Cycle is a series of events that results in a favorable outcome, time and again. For creative professionals, it means using your work and the insights gained from your experience to attract the attention of future clients.
 
The prospect’s interest means that they have accepted you as an expert. When that occurs, fees become “non-negotiable.” However, if you do respond to pressure to reduce fees, you will lose some of your negotiating power in the relationship.
 
A well-managed Virtuous Cycle negates the need to negotiate.
 
Step 2: Behave like an expert.
 
Experts:
  • Determine how to meet clients’ needs.
  • Ask questions and create plans.
  • Develop lists of deliverables required to achieve success.
  • Develop a budget to create the agreed-upon scope of work.
  • Do not cut fees to appease client demands. Cutting fees undermines the potential for success. 
Step 3: Do not accept the initial offer.
 
Always assume there is a larger budget available. Clients who present an initial budget expect you to ask for more, and if you do not, they will lose some respect for you. To maintain your expert position, define the scope required to meet the client’s need. That means you determine the budget, too.
 
Step 4: Ask questions; listen to their answers.
 
Listening is a powerful tool. Listen, take notes, read back what you wrote, and ask for clarification. You will learn what the client really wants, needs, and how it will shape the future of the company. The more you learn, the more precisely you’ll be able to define your response.
 
Step 5: Avoid talking too much.
 
Talking too much is a sign of discomfort and neediness. Do not do it. It is interpreted as a sign of nervous tension and insecurity at the bargaining table.
 
Step 6: Do not give the client anything for free.
 
If you do not value your work, clients will not either. Always get something in return for everything you provide to the client. In our market economy, everything of value is measured by money. If you do not ask for an appropriate fee, the client will not value the work.
 
Step 7: Separate your services from yourself.
 
When you’re at the bargaining table, train yourself to care, but not too much. When we care too much we lose perspective and sometimes our insecurities rise to the surface. If that happens, you must find an excuse to leave the bargaining table. (I know this is difficult for creative people; we are the product, and as a result it is difficult to not care too much.)
 
Step 8: Never cut deliverables to meet the client’s budget.
 
Cutting deliverables completely undermines your expert status. You have built the exact combination of deliverables to provide the best possible solution. If, under the pressure of bargaining, you cut them, it says you are, just like everyone else, desperate for the work. Cutting deliverables is epidemic in creative services. Do not do it.
 
Step 9: Never rush to close.
 
Recognize the negotiating stage as part of the creative process. Take the time you need to understand every step; every detail of the process. Be guided by the phrase, “I have all the time in the world.” Rushing to close is a classic sign of insecurity. (Often we are so uncomfortable negotiating that we just want to get through the bargaining so we can do the work. No surprise — the work is our first love.)
 
Step 10: Do not reveal your bottom line.
 
Often, in a misguided attempt to connect personally with the client, you feel the need to reveal more than is required. You never want the client to know how you compiled your costs or what your real bottom line is. Rest assured, the client will use it against you. Or worse, they will feel taken advantage of if they paid more than your bottom line.
 
Creative professionals have the power to improve the world. Unfortunately, they often do not get paid what they deserve for their services. My mission is to change that.

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Ted Leonhardt has provided management consulting and negotiation training exclusively to creative businesses since 2005. He cofounded the The Leonhardt Group, a brand design firm in 1985 and sold it in 1999. In 2001 and 2002 Ted served as Chief Creative Officer for Fitch Worldwide, out of London. In 2003 through early 2005 Ted was president of Anthem Worldwide, a brand packaging design group.     
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