Overcoming The “Your Competition is Cheaper” Objection
When recruiting, recruiters face a lot of opportunities to overcome objections. It’s what we do. We overcome objections during the sourcing process with nearly every cold call we make. We overcome objections when we are prescreening candidates that aren’t entirely sure they want to keep the door open to new opportunities. We overcome objections when we close candidates on our client’s openings, and often the client’s objections on the hiring the candidates.
One of the toughest objections to overcome, by far, is the “But your competition is cheaper” objection we face during the client acquisition process. Before we go any further, let’s really look at this objection. If you were shopping for a car, and the salesman at one dealership offered you the car of your dreams at $20,000 and the next dealership had what appeared to be the very same car, but priced at $30,000, which would you automatically pay more attention to?
Sure, we can tell potential clients that our services are better until we are blue in the face, but money is money, and in the case of fees, the difference between 15% and 30% can be a lot of money. Be sure to sell your services and accomplishments first, but sometimes it also pays to know some easy negotiation tactics. Try these tried and true methods that make your clients think twice about paying lower fees.
- Break it down. One of the best sales tactics ever, across all types of industries, is to break down the difference in fees to a very tiny amount. For example, if the decision maker tells you he pays a flat fee of $2,500, and your fee for the same service is $5,000, break it down to an amount that is beyond reasonable. In this case, if you break the $2,500 difference into a daily figure, it’s easier to swallow. Honestly, wouldn’t you pay a measly $6.85 cents a day, over the course of a year, to have the best possible employee that can be found for your opening?
- Be honest. Even if your rate is 25%, I bet you have one or two back-burner clients that are at 15%. You likely send your candidates that got rejected by your top paying clients over to the clients you have at this rate in hopes of bumping up your bottom line, right? Tell the decision maker this. Explain that you would be happy to sign a contract at 15%, and will gladly send their competition’s leftovers for them to meet. Of course, explain this is a polite way, but make sure they understand that this is most likely what their other recruiting firms are doing. Even if you don’t land the client on this call, you’ll put the thought in his or her head that when recruiting, recruiters will always send the top candidates to those with the higher fee. Check back often, as you may find a willing client after a few rounds of unsuccessful interviews with their current firm.
- Give up your retainer. Chances are, after explaining the above two details, you’ll have the potential client’s attention. If they are still on the fence, and you are confident you can out perform your competitors, give up the retainer. When you take away the risk, you’ll likely have the chance you need to prove yourself.
- Talk about your internal team. If you explain the set up of your internal recruiting team and personalize the experience of recruiting, your clients will find it easier to accept higher fees. You can tell your client that you can accept any fee percentage that they want, but the problem comes when trying to actually execute on that assignment. Explaining to your client that Bill and Tina who are your assigned recruiters, are some of the best recruiters in the area. Sure, you could go to them with a 15% fee, but they wouldn’t work on the assignment. If you deal with clients, part of your job is to motivate your own recruiting department (and, in a sense, yourself) to work on your assignments. Priority will of course be placed on higher percentage deals.
In the end, of course, the best recruiters can rely on their background and client referrals to demand higher fees. Higher fees tend to come about when you are coming from a position of strength (to really negotiate, you have to be willing to walk away from business.) If you can stomach losing 15% and 20% deals, negotiation is very easy – in fact, give them a list of your competitors and tell them that they might have some luck with these “cheaper” options. However, when you are trying to drum up business, it’s of course easier said than done.
It comes down to you – the best recruiters demand the best search assignments for themselves because they believe they are worth it. You have to believe at a very deep level that your service is worth premium fees. If you don’t, of course, all the negotiation tricks in the book won’t help you.