Ask the negotiator how to negotiate more profitable deals

By our News Team | 2021

How do you, as an agency, negotiate with a client that thinks you’re nothing more than a commoditised service provider?

Mike Lander, Chief Executive of negotiation skills training company Piscari and an ex-procurement director, has spent his career honing his negotiation skills when it comes to how to negotiate more profitable deals – especially with procurement. 

Here he adapts those skills to the marketing agency environment.

Calling something a commodity makes us all think of a race-to-the-bottom on pricing. It doesn’t have to be that way. Your job, Lander says, is to explain to the client – using data and insights – why it isn’t a commodity service.  

“I was talking to a client last week and they said to me: ‘We’ve got a significant problem negotiating a deal with one of our new clients; they’re treating us like a commodity supplier and discounting our price massively. Any suggestions?’”

Tips on how to avoid the commodity trap

Negotiating skills

Image by Shutterbug75 from Pixabay

So, as agencies, what can you learn from the IT sector to counter these ‘commodity’-type discussions/negotiations?

  • Map out the value chain of activities for your agency’s service. Do it end-to-end, from a customer’s perspective
  • Then identify the big pain-points for your customer and the estimated costs of that pain. Don’t break down your pricing into those value chain activities!
  • Start to build a total cost of ownership (TCO) model with your client by splitting all their costs into different buckets (you could present it as a waterfall diagram). This helps them build the business case to work with you. For example:
    • Associated people costs (theirs and yours)
    • Disruption/switching costs (downtime, loss of traffic, errors, relationship changes)
    • Training costs
    • Hardware/software/systems
    • Re-work costs
    • Educate your client about the supply market and associated risks with low-price providers – become the trusted adviser
    • Listen to their key criteria for supplier selection. What’s really important to them? What’s gone wrong in the past?
    • Offer to provide dashboard reporting FoC (full operational capability) for 12 months. If they want to keep it after 12 months, they pay a pre-agreed fee for a 36-month contract

Ultimately, your goal is to move the conversation away from commodity features into how you understand and solve their business problems in order to deliver outcomes/targets.


Source: Mike Lander, Chief Executive of Piscari 

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.