Are you the Good Cop or the Bad Cop?
Ian Motley provides advice on how to respond when potential clients use the 'good cop / bad cop' tactic during fee negotiations.
There are many negotiation tactics that clients use during design fee negotiations, but none are more notorious than ‘Good Cop, Bad Cop’. It’s a tactic that many clients adopt to try and save face while negotiating the best deal possible.
So how does it work?
Let’s imagine for a moment that you’ve just been invited to discuss your proposal for a new and exciting project. You arrive at the meeting, exchange pleasantries and sit down to begin talks. You try to avoid the subject of fees, instead attempting to focus the discussion on the project and the experience your firm brings to the table. Inevitably, however, the more you avoid discussing fees, the more the client wants to.
Eventually the client turns to you and says the words you so desperately wanted to evade: “Your fees are higher than the market will allow right now. The best we can do is offer you a fee of X dollars.” Sadly, this is about 25% less than the fee you had proposed.
You find yourself in a difficult and conflicting position: you’re very uncomfortable discussing fees or reducing your financial compensation, but you fear that not doing so will lose you the commission and the client. Having recently attended a negotiation course you realise the best approach is to exchange concessions, rather than simply giving them away.
So, tentatively, you agree to reduce your design fee in exchange for the client’s agreement to pay the project expense costs (costs typically associated with printing, postage, packaging, travel, visual material, models, etc.). For the benefit of this example, let’s say those expense costs amount to $20,000.
Now, when adopting the ‘Good Cop, Bad Cop’ negotiation tactic, the client will always respond to counter proposals in the same way. They’ll respond in a very positive … but noncommittal manner. They may say something like this:
“That’s great news regarding the fee. I’ll be seeing my business partner later today and there shouldn’t be any problems with your expense requirements either. While I’m here, let’s go through the rest of your proposal to see if we can reach agreement on those issues too.”
During fee negotiations people have a habit of only hearing what they want to hear; everyone likes to hear good news. This explains why many of us, when faced with this emotionally charged situation, will optimistically interpret the client’s response as an agreement to both issues. However, the client may have a very different idea in mind. So what happens next?
Well, later that week after having ‘spoken’ with his business partner, the client calls you with an update on the status of your proposal. During the conversation he confirms they’re pleased to be awarding your firm the project and you’ll be receiving two copies of the contract for signature very shortly.
Now, despite this good news, something doesn’t feel quite right. You can’t put your finger on it but you feel uneasy about the situation. Knowing that experienced negotiators always look for opportunities to open the dialogue, you decide to use this call as an opportunity to clarify a few issues, by saying: “Thank you very much for confirming this great news. While we’re on the phone, do you have a couple of minutes to discuss the contract?”
The client agrees, so you go on to say, “During our meeting we agreed to reduce the design fee by 25%. Is that reduction included in the contract?” The client wholeheartedly confirms and asks if there is anything else he can help with. Awkwardly you say: “Yes, there is one last question. During that same meeting we also agreed to expense costs in the amount of $20,000. Is that also included in the contract?”
“Ah,” says the client, “I’m glad you mentioned that. Now, you won’t believe this but when discussing the issue with my business partner he said that, given the current financial climate, there’s no way any client would pay $20,000 to cover expense costs. But don’t worry, I’ve had many conversations with him over the last week and he’s come around. He’s agreed to pay $5,000 to cover your expense-related issues, so I’ve included that in the contract”
So what just happened here? Well, unfortunately you’ve just fallen victim to the ‘Good Cop, Bad Cop’ negotiation tactic. By using his business partner as the ‘Bad Cop’, your client was able to save face while negotiating the best deal possible. So what can you do to avoid (or manage) this situation more effectively?
To avoid falling victim to this tactic, there is one simple question you should ask at the start of every negotiation meeting. That question is: “Does the person you’re negotiating with have the authority to negotiate a final deal?”
Now, you don’t always need to verbalise this question: sometimes you will be given visual cues to help you answer it. For example, you might be working on residential projects with a husband and wife team, and you organise a meeting to review your proposal. If, at the last minute, one of the team members fails to attend the meeting, then this is your visual cue to prepare yourself for tiered negotiation. Alternatively, when working with larger companies it may not be so obvious. You may need to ask about the structure of the company and the role of the shareholders, directors and/or business partners in relation to the contact.
If you’re unable to talk with the decision maker, don’t panic. This is not a deal breaker. However, it is your cue to recognise the situation and avoid giving everything away during the first meeting. Instead, hold something back in preparation for future negotiations – you won’t be disappointed!
You also want to make sure that during the meeting both parties are clear when an offer has been confirmed or declined. Don’t only listen to what your client is saying … but also listen to what they’re not saying.
Finally, don’t forget to allow yourself the opportunity to defer decision-making when appropriate. There are times when having a behind-the-scenes ‘Bad Cop’ on your team can also help you save face and maintain relations with new or existing clients. If you’re a sole practitioner this can be achieved by attributing unpopular financial and contractual decisions to a third party who is not present at the meeting (such as your accountant, business adviser, financial adviser or bookkeeper).
This is just one of the design fee negotiation tactics that design professionals need to recognise and understand before entering into a fee negotiation. If you’re going to be involved in fee negotiations, it’s hugely beneficial to learn as many of these tactics as you can: not so you can use them on your clients, but so you can recognise them and, perhaps more importantly, respond to them in a professional and productive manner.
Ian Motley is a design fee consultant at Blue Turtle Consulting. Blue Turtle provides a free video on fee negotiation.