As you plan your budget for the next year, and allocate spend across marketing activities, you’ll come to realize that many of your marketing costs come from expensive external vendors.
However, you can reduce marketing costs without reducing the product and service support provided by vendors. It’s all in the art of negotiation.
Save money for your marketing team by honing your negotiating skills with these 10 tips.
10 negotiating tips to help you cut your marketing costs
1. Do your research.
It’s up to you to make sure the vendor you’re considering is qualified and effective. Look up their clients to find out how they have performed in the past.
It’s also a good idea to approach friendly peers in your industry who have used that vendor and ask them what their experience with that vendor was like, whether they would use them again, and a cost estimate.
The more information and data you can arm yourself with before starting negotiations, the better. Know your facts about the vendor, their pricing, and what kind of results you can expect to see from them. Knowledge is power!
2. Get them on your side.
Particularly when you first approach a vendor and begin negotiations, do your best to forge a connection with the your assigned sales representative. Be nice, but don’t come off as a pushover.
Make sure that you clearly communicate your goals, past pain points, and expectations up front. Not only will this prevent confusion further down the line, but telling your company’s story and relating your needs strengthens your relationship with that sales rep. You need the rep on your side to help you get the best deal possible from the vendor.
Sales reps can advocate for better incentives, price cuts, and more. You depend on them to get better deals from their superiors, but remember that they depend on you even more to make their quotas.
3. Have a second option ready and actively refer to it.
To adequately prepare for negotiations with a vendor, you need to research their competitors to get an idea of different services, prices, and capabilities offered across the board.
Once you have completed your research, keep a list of your preferred vendors along with key information about each, such as comparative pricing and incentives.
When negotiating with the current vendor, be ready to refer to your second best choice, especially if that second choice have a competitive advantage over the current vendor. Some vendors may offer to match a competitor’s price or add in extra incentives in order to win your business.
Being able to refer to a second vendor also puts you in a stronger negotiating position because it shows that you aren’t set on the current vendor. They still need to convince you to purchase their product or service. They need you as a customer, but you don’t necessarily need them — there are other fish in the sea.
4. Ask about incentives.
Ask the vendor about specials, sales, or incentives they can offer you and your company. These almost always exist, but may not be brought up unless you ask about them.
If they do bring up incentives, don’t just accept what they offer, and if you want something in particular, ask for it. If you want more support or professional consultations, wider bandwidth, a lower price, a longer free trial period, or more samples, then say so.
Just because they don’t offer you a particular incentive doesn’t mean they won’t give it to you, and you’ll never know unless you ask!
5. Take your time.
As the saying goes, never accept a first offer. Everything is negotiable. And don’t act overly eager. Power at the negotiating table usually goes to the party least invested in the outcome of the deal. Remember that this vendor is fighting their competitors for every customer, but you have many vendors to choose from and feel no such pressure. Show your confidence by taking your time with the negotiation process.
6. Use other stakeholders as a buffer.
Do not give yourself the final authority to approve a deal, even if you are the final authority. Using references to other stakeholders who have a say in the deal (whether real or made-up) can have a couple of benefits.
You can draw out the process and take more time to pressure the vendor into giving you a better deal by citing hesitations from higher-ups.
If you’re uncertain about the current conversation with the vendor or need time to think about their proposal, you can always say you’ll need to run it by your team or your supervisor first.
Nobody likes being told “no,” and to take the blame off yourself and forge a closer relationship with the rep, it’s a common tactic to blame other stakeholders for countering an offer, rather than blaming yourself. That way you can still show that you are on the sales rep’s side while also rejecting their initial offer.
7. Decide whether or not to play hardball.
Negotiations are not always just a matter of playing hardball. Consider whether or not you’ll have to continue to work with your current rep after negotiations are over.
If you’ll need their help in the long-run, it may be best to curtail a tougher approach in order to maintain a healthy and productive relationship. But if you’re sure you won’t need that relationship in the future, then business is business and you should feel free to take a strong stance that gets your company the best deal possible.
8. Stick to your budget.
When contracting a new vendor, whether it’s a service, software, or product, there is always some initial investment in on-boarding, whether it’s training, getting to know your company’s vision or even the time and resources that go into the current negotiations. All of these can add to marketing costs. Staying with the same vendor can save you time and money on that front, but also consider the long-run.
Don’t just think of this year. Research how the company’s prices have changed over the last several years, and ask how they are likely to change in the future. If they are thinking of increasing their prices dramatically, past an amount your company would want to afford, consider the time and money lost in the on-boarding should you need to cancel their services and find a new vendor.
9. Be willing to walk away.
The ultimate key to maintaining power in any negotiation is your willingness to walk away. Vendors need you more than you need them, and you want it to stay that way. To get the best deal, you want them to do everything in their power to get you to stay at the negotiating table, and eventually to sign the dotted line.
Practice really does make perfect. Set up a mock negotiation with a friend or colleague before meeting with a vendor. Or, even better, ask to sit in on a negotiations a coworker is leading, before leading them yourself.
Picking up the negotiating skills often comes with experience, but with these 10 tips for cutting marketing costs, you’ll already be ahead of the pack.