Increasing Your Marketing Agency’s Revenues by Saying "No" to Clients
[The following is part of the continuing series of advice for marketing agencies. Andy Beal offers various business coaching services]
I know what you’re thinking. You’ve read the title of this article and you think Andy Beal must have lost his mind. How in the world can you increase the size of your marketing firm by actually saying “no” to a client? Isn’t that counter-productive, you’re asking? Surely you need to find ways to say “yes” to your clients, so you can get their business and grow your agency. Well, spare me ten minutes of your time, and I’ll show you why saying “no” to a client is often good for business.
Not All “Yeses” are Created Equal
In the past seven years of growing search marketing firms, I’ve said “yes” to clients more often than I can remember. When you’re growing a business — especially if cash-flow is tight — agreeing to the requests, or demands, of a client appears to be the only way you’ll ever get to the “big bucks”. While early in my career, I made the mistake of saying yes too many times, over the past couple of years, I’ve learned that saying “no” is more lucrative.
Saying “No” to Prospective Clients
How excited do you get when you’re negotiating that final contract with a prospective client and you’re accountant is willing you on to get the business in the door and on the books? Just like animals can smell fear, prospective clients can smell your desperation to get their business.
Unless you’ve done a phenomenal job of building the value of your agency’s services, its expertise, and benefits to the prospective client, the chances are high that you’ll be asked for a discount or some additional services for free before the client signs. Argh! You’re so close, you’ve made the investment in trying to win this account — your time on the phone, the pretty proposal, the face-to-face meetings — and if you’ll just reduce the price of the campaign from $5,000 a month to $3,500 a month, the client will sign today. What to do?
Well, here’s what most agencies do. They cave in. They say “yes” to the discount, or say “yes” to the extra workload, at the same fee. What they didn’t do, and what will surely come back to haunt them, is they didn’t say “no”.
Now, I’m not advocating being rude or arrogant at this stage. There’s the right way and the wrong way to say no, but you shouldn’t necessarily say yes either. You see, by simply agreeing to the clients demands, you’ve handicapped your business in two ways:
- You’ve reduced the perceived value of your service. By dropping your fee from $5,000 to $3,500 a month, you’ve planted the seed in the client’s mind that your original price was inflated — perhaps they’ll think you were trying to gouge them.
- You’ve established to the client that everything else is negotiable. I’ve lost track of the number of times I’ve reduced the price of a campaign and then found that client to be the most demanding and the most difficult to work with. Everything becomes negotiable from that point on — deliverable schedules, reports, results — the client now knows you’re likely inflating everything from pricing to timelines and will be on the lookout for opportunities to get more from you.
Hopefully, the above is resonating with you thus far. But, you’re probably asking, “How do I say no without losing the deal?” Let’s take a look.
Tactics for Saying “No” During Negotiations
The key to saying “no” at the negotiation stage is to give the client what they want, without devaluing your service. There are many ways to do this — certainly not enough room to discuss them all here — but here’s the most effective technique any agency can use.
When a client asks for a reduction in the price, don’t give it to them without actually reducing the deliverables of the service. Explain to them that you can reduce the price, but would not be able to effectively deliver the same level of service without finding a way to reduce the deliverables. Work with them, ask them what’s important to them, and ask them what they can do without. Perhaps you’ll reduce the number of hours spent link-building, or maybe you’ll reduce the number of pages you’ll create content for.
The key is to reduce the deliverables, so that you’ll:
- Keep your profit margins healthy, by not stretching your employees for less money.
- Demonstrate to the prospective clients you’re worth every penny you’re quoting. Honestly, unless you’re way off in pricing your service, most clients won’t suspect your pricing is too high, unless you flinch and show that you’re not convinced you’re worth the fees either.
- Discover if price is indeed a true “client objection” or not. Many times clients — including me — will test the waters and request a discount, just to see if you’ll give it to them. If you stand firm, I’ll promise you that at least half of the clients that ask for one, will still do business with you, if you say “no”.
Saying No to Existing Clients
I’d expected to spend the majority of this article discussing existing clients, but the advice here is very similar to that when negotiating with a new client. However, there are some extra nuances to look at.
If you’ve had the opportunity to say no and negotiate with your client during the contract process, you’ll likely find clients will be a lot easier to work with and less inclined to push you for “freebies”. But, as you may already know with your business, there are always situations where a client pushes for more than they paid for. Let’s take a look at a typical scenario involving a client asking for more deliverables, in a short timeframe — a double whammy, for any agency.
I’ve had many situations where a client comes to me and asks, for example, if we can provide extra pages of optimized content this month, as they’d really like to get a new category of products launched. How most agencies handle this — and I admit to doing this a few years back — is they immediately agree to the request (wanting to keep the client happy) and then hang-up the phone and stress how they’re actually going to get the job done in time. Suddenly, everyone’s getting into the office at 6:00 am, and eating pizza at their desk way beyond 8:00 pm, just to meet the client’s request. Poof! There goes your profit on that client for the month. Worse, you’ve just created an environment where the client thinks it’s no problem to drop last-minute requests on your lap, without consequence!
A “No” is Often Just a Qualifying “Yes”
The methods for handling this type of situation are as numerous as the ways the client can cause havoc at your firm, but here are just a few options for saying “no” and keeping the client happy and your agency’s revenues growing.
- Never agree or disagree to a client’s request immediately. While you may feel their urgency, telling them you need to check with your team first and will call them back in thirty minutes, gives you some breathing room to formulate your response and lets the client know that you did in fact have other things to do, when they called with their bombshell of a request.
- Next, check with your manager, team, and peers and see if you do actually have the time and personnel to fulfill the client’s request. Maybe you can get some employees to work late; perhaps your team is in a quiet period and has the time anyway. However, if they don’t have the time, saying yes to a client — and not delivering — is worse than simply saying “no”.
- When you go back to the client, you’re not going to give them a flat-out “no”. Instead, you’re going to say no, by giving them a qualifying “yes”. There’s a few ways to do that but, here’s the most effective:
- “I’ve checked with the team, and we can get the extra work done for you this week. However, we’ll need to scale back on the [enter other deliverable here] that we had hoped to get to you this week, in order to meet this request.” – See how easy that was? You’ve told the client you can get the work done, but they’ll have to agree to amend the other deliverables, so you can re-allocate the team’s hours. This allows you to meet the client’s request, without running around like headless chickens for the next few days. It’s a compromise most clients are happy to make.
- “I’ve checked with the team, and we can get the extra work done for you this week. I know you don’t want us to reduce our efforts on the remainder of the campaign, so I’ve spoken to my [manager, team lead, owner, etc] and were going to work some extra hours to meet your deadline. We’ve calculated the additional fee and it will only be an extra $XXX on this month’s retainer.” Here’s the option for a client that’s indicated they don’t want to reduce the workload elsewhere, but still need something extra done. You’ve agreed to their request, but demonstrated the value in doing this at such short notice. If the client truly does need your firm to provide the extra deliverables, they should have no problem in paying the additional fee.
Saying No Is Good For Business
The “tip of the iceberg” is an understatement when it comes to this advice on saying “no” to a client. While it can feel awkward and counter-intuitive, it’s a vital practice to have in place, if you want to grow your business and keep your profit margins. There are, of course, many times that you’ll say “yes” to a client — great customer service is crucial — but there’s a fine line between being flexible and accommodating a client’s request, and agreeing to everything a client demands, in a misguided attempt to keep them happy.
You’re running a business, you’re clients are running a business too. They’ll push you every chance they get, the trick is to know when to say “no” and push back, even if it’s just a little.