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Negotiation tactics
Its likely that RBS will use your opening price offers as a basis for negotiating further. To counter this you will need a solid set of metrics, evidence and argument to say why your price represents good value, and an iron-will to defend your price.
Any methodology, resourcing or project management ideas that you want to introduce to deliver greater cost certainty and improved service to RBS can be skilfully introduced at this point as a way of demonstrating how you plan to enhance the service offered.
It is this combination of what you have proved already with your plans for the future that will differentiate your firm and enable you to hold margin.
Good luck! |
How we can help you
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| Greetings!
The fast-track tender process at RBS has set many pulses racing because they have laid down a challenge: reduce your prices. So the classic dilemma now exists - work at lower margins or lose a key income stream.
But wait a minute, do we really have to reduce our prices by 10% as has been suggested? Can we resist downward price pressure? Can we avoid lower margins? Is there a win-win situation scenario for bank and legal provider? |
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What does RBS value?
Before we consider price we must understand what pressures the bank is under and what would enhance their competitiveness. Has your RBS team identified features of your service that the bank values and quantified them - can you put a figure on how you manage their risk, enhance its cash-flow, reduce complexity, improve efficiency or solve their problems?
Telling them how you have added quantifiable value, evidenced with feedback from bankers and their in-house lawyers, will enable you to prove that you are a high-value supplier already. Not providing evidence, testimonial and figures will make your value statement seem bland, unsupported and undifferentiated.
Only by understanding, articulating, quantifying and evidencing value can you start the process of price setting. |
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Who are RBS comparing you to?
Whatever service you provide RBS, each decision-maker is likely to have a different perception of the value you provide them, so price setting is linked to the particular competitive box you are considered to sit in.
Your task is to accurately assess who each RBS decision-maker considers you compete with directly (and not who you think you compete with). Where you compete across a range of products, work complexities or regions you should consider a balanced average and then, most importantly, explain your reasons in the value statement. |
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Fee structuring
The three strands of inovative fee structuring are risk sharing, fee certainty and alternative resourcing. RBS are challenging you to deliver more for less and getting these three right will enhance your chances of getting the appropriate return you desire. However each strand represents a significant change in what many firms are prepared to do with their clients. Get them right and you will be seen as a high value supplier. |
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Changes in the value you offer
The pricing you agreed with RBS in 2006 was dependent on the value that you offered in 2006. Today you are percieved to offer a different value - some will offer more, some less. Don't confuse what YOU think you offer with what the RBS team think you offer.
It is through the demonstration that a change has occured which benefits RBS (or any other client) that will enable you to resist price pressure.
But you'll need to get cracking to gather, articulate, evidence and quantify the value you offer. | |
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