QUESTION: Mike, I have tried over the years to get a deposit of money up front, and it has not worked for me. Are there any alternatives to increase the client’s commitment?
Why Your Retainer “Pitch” Might Be Failing
One, if it is not working, if you have been trying for years, my experience is you might be doing too much of a “pitch”, meaning the reason I need a retainer is I need to be compensated for my time, I want to get paid for my work, I need to invest in the resources. All of those are true, but not relevant primarily to the person who would pay a retainer or a deposit.
You have to always come from the concept of why it is in their best interest. To do that, it requires you digging and uncovering why the position has remained open and the costs of the position, both financially and emotionally, to the hiring manager for that position remaining open.
Helping Clients Understand the Cost of a Vacant Role
Interestingly, most hiring managers do not know the cost of the position remaining open. Still, if you can keep them engaged on the phone long enough, they start to see that every position has an economic benefit to fill, even if it is an administrative position. Sometimes it is a compliance issue, or with engineering, it’s the launch of a project. Sales, it is obviously revenue. Any delay in hiring a person in the position, if deemed necessary, has an economic consequence, and one needs to come up with that.
Why Some Clients Still Won’t Pay a Retainer
But even if you do everything right, some companies have paid deposits and did not get the results because the firms did not produce. Some people just have never done it in certain position levels. If you get somebody who has an urgency, and maybe for whatever reason they cannot get the approval, or they cannot get it quickly, there is a concept I coined that I used a long time ago called getting a “reverse retainer.”
Getting a reverse retainer, what I typically do in that scenario is I say to the prospect, who probably, it looks like they want to work with you, they do not want to pay a retainer, I have said to them, “If I did everything I promised the way I promised to do it, and you knew that in advance, would you be comfortable paying a deposit in the future, if I proved that I could deliver?”
Introducing the Reverse Retainer Strategy
Often, they will say yes because one of the main hesitations in paying money up front is that they do not know you and whether you will perform for them. The way I got over that was if I could get them to say they would be open to that in the future, versus the person that goes, “Look, I am a contingency guy, I work contingency 100% of the time, and this is how you are going to do business with me if you want to do business.” One, you have a business decision to make.
Two, if they are sincere, say, “I have got an idea. I am going to do everything I promised you to do on retainer. I am going to put together a list of 60 to70 individuals, I am going to go through that list seven times, and I will be able to provide a minimum of three candidates within 30 days that have two criteria:
They are probably in the top 15% or 20% of their profession, and I have identified at least two areas where they would have motivation to make a move. If I do all of that, our fee is (blank). If you cancel the position or fill it internally, after I have done all that, you will pay me a consulting fee of $7,000. Is that fair?”
Using Deliverables to Justify Payment
What I found is that is a way to break into getting a deposit with some companies. I will say, I will do that on this one, and if at the end of the search, I did my job and we filled the openings, what I am going to ask is that we go to the money upfront because we have already proved the model. There will not be any urgency because after you fill this, there may not be an opening straightaway.
The worst case with one company, I remember I negotiated that on the front end of our relationship, and we did over $1 million in revenue with them over several years. They never paid us upfront, but if we did not fill the position, they paid us the deposit on the backend with the consulting fee.
That is an excellent idea as a happy medium for a deposit because you will get paid for your work as long as you produce the talent. I never had a company that kept its agreement with me and then refused to pay me the consulting fee. Usually, again, if you do a good job, the employer feels a little bit guilty anyway because they filled it internally, or if they cancelled it, they know all the work you went through.
Handling Objections in the Reverse Retainer Model
The only objection you will get in those situations sometimes is, “What if you send me three candidates and I want to see more?” I said, “Three candidates are a minimum guarantee. Let me ask you, if I only sent you three candidates, and I said, I have done my job, I am not going to send any more, how likely are you to use me in the future on any other openings?”
They go, “I would not.” I go, “I would not either. But I have to give you a minimum expectation of performance. I am going to work on this until it is filled. I will work on this until it is filled because we have a mutual commitment. We have a shared proposal in that you are guaranteeing me a consulting fee if I get you three candidates, and I am putting all of our profit on my ability to perform.” I found that with the people who are sincere in wanting to work with you on very good terms, that is a great segue.
P.S. Whenever you’re ready… here are ways I can help you grow your recruitment business:
1. Join the Recruiter Think Tank and connect with firm owners who are scaling, too. It’s our Facebook community where smart recruiters learn to make more money and get more freedom. https://www.facebook.com/groups/there…
2. Work with me and my team privately
And if you ever want to get some 1:1 help, we can jump on the phone for a quick call and brainstorm how to get you more leads, more placements, and more time. http://go.therecruiteru.com/audit
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