In our ongoing review of new tactics that seem to arise as the marketplace as the recruiting industry goes through changes we had yet another interesting discussion with a client.
A note on this particular tactic, while our practice has been to offer packages to clients who are looking for us to take on project hires etc. we do not require a customer to commit to a certain number of hires to get a “better” price.
Last week I was discussing a search with a client and they mentioned that they had been contacted by a search firm, they weren’t familiar with them and I hadn’t heard of them either.
While they acknowledged the call started well, when they asked about rates things started to get a little weird.
The sales reps response was that rates are between 18-20%, when asked about the difference the rep replied depending on the level of position or if you commit to use us for substantial volume.
So my client being fairly outspoken asked about the volume discount? The rep responded that they require clients to commit, via contract, to hire at least five positions throughout the year from his firm to obtain preferred pricing.
My client’s response was “well what if after hiring one person we don’t think you’re the right fit for our company to use or didn’t like your service? Do we have to pay back the 2% or do we owe you for at least 4 more hires at an average salary? “At this point the rep had no answer and was dumbfounded by the question it seemed.
However to his credit received a very timely phone call and had to end the conversation with my client.
Our belief is that requiring a client to commit to using your service in order to obtain a discount is not doable in this industry given the variables that can accompany the hiring volume during the year.
A company should have a competitive well thought out pricing structure that makes sense not only to company but to the client as well, and be confident in the thought that they are offering real value to their clients for the price offered.
Which begs the question what extra value you’re getting for the 15-35% you are paying for recruiting services? Is there a specific offering? Are you required to sign a sole contractor agreement or commit to a certain amount of volume?
Our belief and driving force behind our business model is that the recruitment industry, similar to other long standing industries with large players, have a consensus about pricing structure that is accepted by the majority of firms who have structured their business model around this, other firms will not deviate for fear of retribution or the thought that it is a price accepted by the marketplace already, so why cut into potential margins.
What is lacking is a review of their services to substantiate what value they are offering to the clients that choose to do business with them, if they truly feel that they are offering value to their clients that substantiate fees of 15-20% they should be able to articulate it and have their clients be comfortable with their explanation….
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