We tried to provide support to a major client in an area where we suck. We got burned as a result. But they were the ones who insisted on all or nothing. Any suggestions for next time?
Thoughts of the day: Major clients can be demanding. Reality check — what’s the overall picture of this client? Look for a partner to help you out. Put today’s sales efforts toward building negotiating strength next time around. Win-lose negotiations can be deadly.
Major clients are used to throwing their weight around and getting what they want. Most figure that’s the privilege that comes with getting to their size. Negotiate with the client in a way that’s productive for both of you.
Know your company’s strengths and weaknesses. Giving up huge profits to keep a big client is risky. It can land your company in a downward spiral. Figure out when it makes sense to do what the client wants. And at what point it’s better to cut and run.
Don’t assume they understand your business fully. Consider whether to educate them on what your company does well. Are they simply focused on solving their problems? Or asking you to take a role in doing the solving for them?
Are you making or losing money on the total picture? Sometimes one part of a contract that isn’t favorable is balanced by another piece that’s very juicy. And that makes the overall profits look quite healthy.
If the account overall is profitable, consider taking the work. Keep track of profits on the total client picture. But also start looking to replace the client. Or add additional high-profit services to the portfolio of what they buy.
Most major clients will look for some concession to improve their profits each time they negotiate. Have a new offer, something they’re looking for, for which you can make a better than average profit. That can allow you to offer the client a tantalizing reduction somewhere else in the contract.
Consider farming out work based on profit. If margins are tight, look for another vendor who can meet the work scope at a lower cost than you can. Whether it’s due to geography, access to supplies or a different way of producing and delivering, it’s possible that there is someone else out there who can produce a part of your contract for less that it costs you.
Keep control of all client contracts as you sub out work. Sign noncompete and nondisclosure agreements to keep the client and sub from cutting you out. Add value by managing the overall contract relationship and all negotiations.
Ever-changing customers
Play a long game. When is the next time this contract comes up for negotiation? How much additional business would you need to line up in order to walk away from this contract? Remember to add in a calculation for growth and other attrition. Do the math and get going on selling your way to a stronger negotiating position.
When negotiating, understand your client. What does the person across the table from you need? How can you help achieve that? It may be a big win in a negotiation, a reliable supplier, a single point of contact, or an R&D that can be applied to future growth and development.
Take your blinders off, and stop focusing on your company’s features and benefits. Get to know them. Listen carefully. Whatever the client needs, figure out what it is and then make sure to feature that as part of your negotiations.
Looking for a good book? Try “Extreme Salesmanship: How to Deal with Any Client” by Justin Cook.
