The Client Letter
August 9, 2011
Sedona Arizona
I used to be a pretty naive person.
You see, I had this nasty habit of actually believing what people tell me. Now as a personal quality, I imagine it’s not such a bad thing. But as a business skill, it can be a huge (and expensive) liability.
Here’s just one example…
It has to do with something I call, “The Promise.”
“The Promise” is the name I’ve given to those times when you discount your services in return for “the promise” of future business.
Your client says something like, “If this works out well, I have A LOT more work to send your way. Consider that when you send me your quote.”
So you offer a discount in exchange for the future work. You feel good. Your client gets what he wants. Everyone’s happy.
But here’s the real question:
What is the value of something that doesn’t yet exist?
Just how valuable IS the “future work” that you don’t have yet? The “future projects” that don’t exist?
Can you pay your bills with that?
Can you feed your children?
And what happens when that “future work” doesn’t show up for 9 months?
Sometimes it takes that long. And other times the future work just vanishes…
Frankly, the only reason I’ve ever discounted my services is because I was SCARED. Scared of losing the business. Or scared of what someone might think. And by doing that I violated a very important “rule of business” we’ll get to in just a moment.
But first, here’s the reason that “discounting” creates a problem that is actually much, much worse than the dollar value of your discount.
What might not be obvious is that along with your agreement to accept “the promise” and provide a discount, something else ALSO happened.
Here’s what happened:
You’ve been framed as a discounter. Deep in the dark corner of your client’s mind, their perception of you has forever shifted.
And whether or not you realize it, you’ve set the expectation in your client’s mind about what it means to do business with you.
You’ve planted the seed in their mind that discounts are possible. That it’s possible to have you give them “free money” without offering anything in return.
And the question they’ll be asking themselves from this point forward is, “Just how low will he go?”
Once you’ve been framed, it’s very difficult to alter that perception in your client’s mind.
Now let me be clear here…
It’s not really discounting that’s the problem. Discounting CAN be a very powerful tool in your business bag of tricks. You just have to use it in a smart way.
The problem though is that many times, independent professionals discount their services without getting anything CONCRETE in return. That shifts the scales and makes the overall value exchange completely lopsided. And when the value exchange is lopsided, you hurt your credibility, your bottom line and your prospects of future business.
You’re in effect moving BACKWARDS in your business.
How do you discount your services in a way that actually helps you?
So what do you do the next time your client says, “How about a discount?”
The first thing you do is wake-up and realize that there are more than two answers to this question. Yes or No are NOT your only options.
A better option is to use that question as YOUR cue to get creative.
If there is future work, how about offering a 25% discount in exchange for payment for the next project NOW?
That’s a real value exchange. The client gets their discount. You get a boost to your cashflow.
The bottom line is really very simple:
Never EVER screw up the value exchange in a business relationship. If you give something, ask for something. It doesn’t always have to be dollars and cents. It could be specific payment terms (upfront payment) or it could be something else.
Where you get into trouble is when you offer a concession to your client (lower price, etc.) WITHOUT receiving anything in return. As nice as that sounds, it’s a business killer.
Here are two mantras for EVERY client negotiation. Repeat these to yourself until you FEEL them.
1. I don’t need the business.
2. I don’t need the money.
I’m not playing make believe here and suggesting you go around chanting phrases like “I’m rich, unlimited money is flowing to me” even if you’re struggling to keep the lights on.
That’s crazy talk.
Simply use these two ideas to keep yourself from making stupid decisions when you’re talking with prospects.
If those two mantras are TRUE, would you EVER find it necessary to discount ANYTHING in return for the promise of future work?
No… there’d be no logical reason to. Unless you were making a deliberate choice to do it for no other reason than to be NICE.
Those two phrases will keep you out of trouble and they’ll keep your focus in business where it should be: on the exchange of REAL value between you and your clients.