QUESTION: I have made a number of placements with the same company. They have another opening. They are asking me for extended payment terms and a discount. I do not want to lose them as a client. What would you do? – Julie
ANSWER: I always find companies want extended payments and discounts. I never blame them for asking because they are really asking for two separate things. When faced with this situation, I would get back on the phone with the client and say, “Before I make a proposal, let me ask you. You said you wanted a discount and you want extended payment terms. Of those two, which one is most important to you and why?”
If they are asking for extended payment terms, then it could be a cashflow thing and that might be really short term on their mind a little bit more important. The reason I ask which request is more important is I want to know how to focus my proposal on the primary need. They could say that they are both truly important, which is where I ask if they can only pick one, which one would it be and why?
One, which is more important? I am always afraid of losing the client, so this is where I pause. They are calling you with another opening. You have already successfully placed candidates with them. Trust me, they have worked with dogs for recruiters who have sent crappy resumes and asked crappy questions. The only reason I know you are good, Julie, is they are calling you back for more. I cannot tell you how many recruiters make placements, and they never hear from that company again, because really what that company did was paid for a resume. Do not discount how valuable you are. You did not share what your fee is, but I would take off a percentage point or a percentage point and a half.
The discount you propose could look something like this, assuming your fees are 25%. I only want to have a discount for quantity. People always say, give me a quantity discount, and if I had a dime for every quantity discount I agreed to when I first got into the business that turned into multiple hires, I would have a dime – none of them. However, the formula I am going to propose has been a win-win in my firm.
You have already made some placements with this client, so you might want to offer to do the first two searches at 24%. The next two searches at 23.5%, and everything beyond four vacancies is at 23%. I am using the half a percentage point discount, you can use quarter percentage points.
Psychologically, it shows that you are really thinking it through. Maybe you can even go 24.25% or 23.75% for the first two. You see where I am going? It is not a huge money difference. However, psychologically, in negotiating it sends a very powerful message. The client thinks you went back and you rolled you sleeves up and did the math. They think the four placements you made, to some degree, is you emailed over some electronic documents. You did not even pay for a stamp. In return they sent you $25,000. The client is thinking that there has got to be some wiggle room there. That if they pay you half, you would be happy.
When they come back and they fight it, saying that is not a huge discount, this is where you example in great detail your process to fill that job order. You reiterate how hard the jobs are to fill. You example how you measure KPIs and know how many outbound calls, inbound call ratios, emails, and the hundreds of hours it takes to fill a search. This is especially if you have any knowledge on that particular role.
From here you ask about other recruiting firms they have worked with in the past. Bring up the frustrations that have shared in previous conversations. Then remind them that you process is how you prevent these frustrations and delays in filling the roll. Finally you ask them “The most important question I have is, what is more important to you? Saving a little bit of money on the front end or losing a lot of time on the back end and hiring someone who is cheap?” I use that word cheap, not inexpensive on purpose.
That would be how the conversation, if fee were the primary objective, and then I can layer that in with, with that small of an increase, I can say, extended terms. Never assume what they mean when they say the same. Always ask “What does extended terms mean to you, Mr. Employer or Ms. Employer? If we could spread this out over two months . . . l am thinking, oh my gosh, that is very easy.” Now I can justify not giving them a discount even. Again, ask them which is more important, a discount or the extended terms.
Let us say they want 90 days or 120 days to pay the invoice. I am not going to give a discount and finance the search for four months. Even if it is extended terms, it does not have to be equal payments. You can propose, 50% due within two weeks of the candidate starting, and then 25% net 45 days, 25% net 60 days. See here how I am spacing it out two weeks.
All of this is negotiable, but you must always define what their needs are first.
Julie, a phenomenal question.
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