Discount! Did you say… discount?

Discount! Did you say… discount?

“So let me just clarify your position on this, Mr Client.

You spend 30 minutes telling me all the recruiters you have used so far are hopeless, they provide zero value, they can’t find the talent you want, their service is pathetic, and they do not understand your business.

Then, we spend hours going through your needs, you are excited because we really understand you and your role, and  you are confident we can access the skills you need…

Then after weeks of work, including search, social media, networking, interviewing, access to our database, screening, reference checking, and input from our global team… we do find that elusive talent…

And you review our shortlist and you are overjoyed at the quality. You are almost speechless at the prospect that finally a recruiter actually delivers.

Then you tell me you think our fee is too high because the other guys charge less!

FFS!

Can you actually hear yourself?”

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  • Posted by Greg Savage
  • On April 3, 2012
  • 30 Comments
Tags: Client management, Fee Negotiation

30 Comments

Heather Haines
I couldn't have said it better myself Mr Savage!!
Janine Birch
Brilliant! I need not say any more...
Ron
You think it is strange that someone wants to get better service for the same money... Do YOU actually hear yourself?
    Patrick
    You get what you pay for. This is called capitalism. If you want quality you will pay for it.
Nathan Reese
I am going to save a copy of this and the next time, I get asked for a discount I am going to say hang 2 there is an email in your inbox, let me know your thoughts :)
Rick Best
I have found that the best way to prevent this problem from biting you in the yoohoo, is to send the client a Fee Agreement that they must sign off on before you starting working on supplying any candidates. Client's are always trying to get the best deal so don't blame them. Make sure that the Hiring Authority you are working with has the actual ability to commit his company to paying the agreed upon terms. I am no longer surprised that their ego gets in the way of telling you that someone higher up has the ability to override anything they tell you.
ZC
A note in there could be to remind the team to discuss & confirm TOBs upfront
Doug Flatimus
This time, no argument. None at all.
Chris Heswall
Completely agree Greg. A classic fundamental lack of respect for a job well done and a step more than that, for our industry as a whole. Instead of rewarding for success, it's about being penalised for delivery! A classic scenario in the transactional world of contingency based recruitment. Some Clients feel they can take this attitude because they hold the "power stick" in the relationship. It's a "you need us more then we need you" or "if you don't discount I won't use you again" style of approach. We Recruiters need to be brave enough to value and respect our own worth and services to vote with their feet and walk away from "use and abuse" relationships. Concentrate instead on customers willing to pay fair fees for good value in a partnership and solutions based approach. The trade off in a super competitive and saturated Agency market where the threat "someone else will take your place" can make this a challenge and you may lose more business than you retain initially, but surely this has to be the bigger picture goal in order to earn more respect and recognition for what we do as a profession and to build a sustainable base of quality relationships.
Doug Flatimus
Ron, Ron, Ron: Have you ever engaged a plumber or electrician or mechamic and asked for the same service at a discount? What happened a few days later? Did a toilet block itself flood your hallway with excrement? Did a bunch of lightbulbs start popping? Did a wheel fall off your car a couple of days later? Do you actually recognise the connection between the two events? You get what you pay for. Screw a services business down on price and it is too easy to be bitten back unless you ride them every minute of the day, in which case what is YOUR day job?
Alan Allebone
I have told many a client, We do not need your business Mr Client
Kerry Kirwan
@Ron - it's not about getting better service for the same money, it's about unprofessional clients trying to renegotiate the agreed placement fee AFTER the work has been done. That's just unprofessional. If clients aren't happy with the fee, then they should be up front at the beginning of the process - that's the time to negotiate. That way the recruiter can choose whether they want to work with you at a reduced fee, or not. Based on Greg's scenario about superior service delivery and non-delivery by competitors - I say DON'T EVER NEGOTIATE, why would you? And contingency recruiters this is why you need to get those terms of business (fee agreement, or whatever you call it) signed before you do a thing! Here's a tip. If after you have explained your services and terms of business including outlining how hard you will be working to place the role, and you are asked whether you are negotiable on the fee, just say "no". Don't feel you have to follow it with a reason or explanation or apology. Just "no". Try it, it works!
Jean Fagan
I love how you always put it so succinctly and the powerful use of FFS!! what is concerning me right now is finding solutions to the problem of clients driving pricing down across the board. Like any other firm, we don't want to compromise on quality, but we do need to cut the cloth and create efficiencies to reduce our costs. We continue to do that internally, but in the end, it also comes down to being very efficient about what we provide for the search fee. Up to now, it is a comprehensive service with senior consultants and par-consultants in retained executive search. But our clients are genuinely financially challenged, so we also have to adapt to their needs. In previous years we always took a view that things were cyclical and it would all return to how it was before. That isn't the case now. Technology alone has driven a permanent change, let alone other factors.
Dave Johnson
Best post i've read in ages. Could not agree more!
Angela Giacoumis
So true...well said!
GB
My approach to this request is to acknowledge that my client has done their job well by asking the question. I then professionally and politely refuse their request for a discount. Many are satisfied that they have secured my services for the best price possible. And the others...? Well I'm happy to walk away from those that don't value my time and expertise.
Steve Bleakley
I can understand most people feeling slighted by the mention of fee discounts. There are many, many recruiters out there that deserve every hard earned cent of the commission. These recruiters add incredible value to their clients by going into great detail regarding the company, role, team and position. They utilise their networks that have taken years to build, find great candidates, spend hours interviewing, complete detailed candidate summaries, manage the candidate and the client through the interview process and so much more in the process , as good recruiters will know. These recruiters, after they have proven their worth to a client, never need to talk about fee discounts to that client again. Unfortunately there are even more recruiters that that use the flick and stick approach. believing if they throw enough CVs eventually one will stick and they use many more poor recruiting practices. They are sales people that have no relevant experience in their clients domain. They will harass and almost intimidate clients, do the same to candidates as well as treat candidates with a compete lack of respect and Its these individuals that you can thank for the perception that recruiters are a commodity that add little value and as such are fair game for discounts. If this is what your client has experienced time after time when dealing with recruiters its no wonder they consider that we do bugger all, other than searching a database for a few CVs, and therefore our fees are exorbitant and need to be slashed. Don't complain about the client; complain about the fly by nighters in the recruitment industry. How many follow the ITCRA or RCSA code of conduct or contribute to the industry? The good ones do. Most will say if it doesn't generate revenue I don't wanna know about it. If you want to stop having these discount chats with clients, as an industry, it will take time, effort and industry participation to weed out the crap recruiters. Generally speaking, if as an industry we are valued there should be a lot less chats about discounting.
David Morgan
I used to use what I consider to be a great line when negotiating fees in my earlier recruitment days when we actually had the opportunity to sell, rather than being glorified resourcers dealing with RPOs who dictate fees to you. So here goes. " Our fees are X, you can afford that, can't you?".
Neil
It's about documenting and demonstrating economic value as well as social value. We tend not to spend enough time on the former and putting effective metrics to economic value
Sonia P.
I just went through this scenario last week. After weeks spent finding their perfect full time candidate, our fees contract was already signed, an offer was extended to our candidate who verbally accepted. Then the manager stated he would not pay our fee. We could have walked away for our company, but we would have cost a qualified candidate a job he strongly desired and deserved. We were held hostage by our personal/professional ethics, and had no recourse but to take a drastically reduced fee. I try to look at it from the angle that at least we did the right thing for our candidate and it was just one of those days. But it's hard to ignore that this probably occurred because of the generally poor reputation created by all of those "flick and stick" recruiting firms, making our jobs just that much harder.
Michael Phillips
I consider myself a good recruiter. I deal with good staff and I don't waste people's time. I research my market and my clients. This week, I obtained a new client, obtained their position, arranged an interview, the position was offered and the deal was closed within five working hours. I had a guy email me today disclosing his company turnover (more than £2m) and the position as an Operations Manager in their company stating salary etc, asking me if I had suitable CV's for their position. Then he "told" me in the email that, hold on, I'll copy and paste "we will not pay the usual recruitment fees". Firstly, thanks for the overwhelming information you've provided me with in order to do the best job I can for you. Appreciate it. In order to make things easier for myself, I was reasonable in my approach as a professional and I researched the geometries of space-time and obtained a Masters in Physics and built, out of two see through straws, some disco lights and the bubble liquid from a few spirit levels and made myself a flux capacitor, went forward in time, discovered who would be your future Operations Manager and asked him what he does for a living. Now, this company can clearly afford my services (turnover of £2m) and clearly need them. On their website, every vacancy has (No Agencies Please) next to it. So, I'm guessing that we are really a last stitch effort to find the right person. Good. Fine. I fully support if you want to recruit directly and will even advise you on it! "We will not pay the usual recruitment fees". Oh really Peter Lynch, I take it you've conducted research in the cross section of the two recruitment companies you have bothered to phone and conducted statistical analysis resulting in the mean, median and mode of all the quotes you have been given and decided what the "usual recruitment fees" are. That's weird. I didn't even know the recruitment industry knew the "usual recruitment fees". Care to share your research? I emailed in response saying that I do have the right candidate. I do. He is in the process of getting me an updated CV. He is. That he's tendered for single projects worth more than your yearly turnover and that he's been an Operations Manager for about 5 years in your industry. He has. Thank you time travel! I enquired as to what fee they had in mind. Apparently, "another recruiter" has agreed to a sum (just over 5% of the salary). Ok. Mr. Client. What do you sell? Security Systems? Oh, well, it just so happens, I need a new one. But I'll not be paying "usual security system fees". I've done my research. I want a 40 zone networked intruder system with multiple PIR's, IP based PTZ CCTV, fully networked Access Control for 15 entry ways for a third of what you usually charge? If you want me to recruit for you, pay me to do so. It's that simple. I have lots and lots of other jobs I'm working on, don't be so megalomaniac-al and think that I won't tell you to stick it up your five percent.
Justin
I don't mind if this happens before I engage in any work - at least I can still walk away. But I agree there are situations where clients sign your TOB, you do all the hard work and they can still put a gun at your head. What do you do then?
Michael Carter
Enough said, Brilliant!!
Sharlene Savage
To avoid this question being asked from the outset, I make SURE that I reiterate our recruitment methodology. What we do (most clients don't actually know this!) every little step, our candidate attraction strategies, utilising of networks and resources, face to face screening, testing, referencing, every single little detail and so on....this is extremely effective. If they ask for a discount - I increase my value - reminding them yet again. (They forget pretty quickly!) If this doesn't work for whatever reason, I always ask for something in return for doing so, i.e. the next placement exclusive, or the next role full fee etc. I work far too hard to discount for the rest of my recruiting career!!!!
Alex Rawlings
Literally just read this after I put the phone down to a client who congratulated me on what a fantastic candidate I had found for them. However the client said, and my head dropped, your fee is too high as she will only be doing 1/2 a day a week as the candidate works faster than our initial thoughts and she can get 1 days work done in half a day. I then stated well then this candidate is perfect she’s not only saving you money but halving her own wage! Still not convinced i said if I purchased tooth whitening from your business and afterwards decided that I couldn’t afford it when you had done all the work would that be acceptable? Client: Other agencies are charging less than you? Consultant: Have they provided you with any candidates though? Client: No not one. Enough Said! Still in negotiations, fingers crossed! Beat the something for nothing attitude
Frank Morrisson
It's simple - get a signed agreement up front & this will never happen to you.
Ben
Sonia P - I could be wrong, but i would think that it would be illegal for a person to withdraw an already accepted offer for this reason. An employment lawyer would have a field day with that! Can you imagine your client actually standing up in a court of law and say that he decided to withdraw an accepted job offer because he didn't want to pay an agreed third party fee? It would seem that you played right into the clients hands by allowing them to get away with that - i personally would have put it back onto your client to personally go and withdraw the offer from that candidate - i would imagine that would never have happened.
Anthony Hesse
As always Greg, I find myself 100% agreeing with you. Would love some of my clients to read this so if you don't mind I'm going to Tweet this blog on the off chance!
Huw
I think when George North lifted Falau it was the highlight of the tour....oh, wrong blog. Great blog Greg, totally agree! Remember everyone, there are people trying to make a buck in all companies (as well as us suppliers) so just reiterate why you charge what you do, have confidence that you're charging a fair rate for services and stand your ground if you believe you're right. ps. unless you have a client that controls your entire companies fortunes then just sulk a little and agree! :)

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