Dear Commercial Acuman...

Dear Commercial Acuman...
A client has told us off-the-record we've been awarded the business, but we need to have “a final chat with Procurement” before they can formalise it. What should we expect and how can we prepare?

Congratulations! There are many bits of good news here, but that doesn't necessarily stop some agencies from making schoolboy errors at this stage. Most concessions happen in the closing stages of a negotiation, so don’t get caught out.

The first piece of good news is that you've won the business, which is always a good position to be in. Second, the client has told you that you've won the business, so your negotiating position is stronger.

If it is a general truth that you can't win a negotiation that you are not prepared to walk away from, in this case you do not need to walk away because you’ve already won it.

You should have your own wishlist to trade for any concessions you might be asked for; it’s also worth thinking about how you can get procurement to take home a win without it costing you too much…

So get your game face on and go out to play the great game of negotiation with a smile.

Background and tactics

Procurement's job is generally to get marketing's preferred agency at the best price; they don't generally get to choose the agency. So they do not have the power to take the business away from you now, however much they might try to hint at it. At this point, your best bet is to resist any requests to reduce your fee that do not involve a corresponding reduction in scope or staffing.

What you should expect from procurement now is questions, challenges and requests for more. Why? Because that is their job and they would not be doing properly if they did not do so.

It is your job, however, to resist these and stand your ground, so you'll need to have a few answers up your sleeve. You also want to consider how you might “give them what they want on your terms” and make any last-minute concessions conditional on closing the deal. The good news is that 80% of professional buying is process and procurement professionals are often not all that good at round-the-table negotiating.

The best approach is always to be the one asking the questions, so aim to answer every question with a question; this puts you on the front foot and sends a signal that you are not going to give in easily. You also need to have good follow up questions.

Round-the-table negotiation is more about momentum and confidence than killer insights or factual proof, so you'll need to aim to take control of the conversation and always have a rebuttal, however tenuous or implausible you may fear it sounds.

Procurement are generally quick to sort the weak from the strong and will move on to someone else if they sense you will not give in.

Finally, always check “is there anything else you want to discuss?” to avoid them coming back for more.

Playing the game

You have several potential responses to each question:

  • Throw it back by questioning the question
  • Challenge the basis of the question and request proof of the assertion
  • Disprove the assertion
  • Change the game; refuse to accept the basis of the question

Here are some examples:

“This is a big fee”

  • Throw it back: why do you say that?
  • Challenge the basis: what proportion of your media spend / your total marketing budget does it represent?
  • Disprove the assertion: actually, it's quite small compared to what you are spending on media
  • Change the game: suggest setting up a 'way of working' workshop together with marketing and procurement to map out and agree how the teams work together to optimise workflows 

“Your rates are higher than our benchmark”

  • Throw it back: what are your benchmark rates?
  • Demand proof: who is your benchmark, how did you get to it?
  • Disprove the assertion: why do you think our rates should be in line with your benchmark? I can’t comment unless you give me complete transparency into how you derive the figures
  • Change the game: we don't aim to be the cheapest and we don't benchmark ourselves; we focus on delivering value to our clients

“Can you reduce your rates?”

  • Throw it back: why would I do that?
  • Demand proof: we already discounted our rates at an earlier stage
  • Disprove the assertion: we don't reduce our rates as a matter of principle, but I can reduce the overall fee if you can make a corresponding reduction in scope – do you want to talk to marketing about that and come back to me?
  • Change the game: our job is to do the best work possible for you and the rates quoted will allow us to do that

“Your costs are too high”

  • Throw it back: on what basis?
  • Demand proof: which costs? What are you comparing them against?
  • Disprove the assertion: our fees break down as x% on staff, y% on production and z% on talent which is about the right ratio for the project we've agreed
  • Change the game: we've been hired to do a job and the fees we've put in are what we reasonably think are needed to achieve that
Last updated 09/06/2016

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