A Contract Call Worth Making
Last month, I offered some suggestions for getting your contracts signed more quickly. One of those — “Educate Before You Negotiate” — highlighted the value of helping those on the other side of the negotiation understand what you do and how you do it.
To accomplish that education, I recommend setting up a brief call (15-20 minutes or so) with the customer’s legal/procurement team. These are busy people, and they might not agree to the call, but it’s extremely helpful for all involved if you can make it happen.
Overall, this short interchange sets the stage for a positive negotiation. The call will demonstrate your desire to complete the contract as quickly and efficiently as possible, establish a relationship up front with the customer’s negotiation team, and avoid an overzealous markup as a result.
These calls prove to be most advantageous in the following two related, but not identical, scenarios:
- Before sending your template agreement to the customer for review.
- Before agreeing to use the customer’s “one size fits all” template agreement.
What to Discuss on the Pre-Call
It’s important to remember that, at this point, the customer’s negotiating team likely knows little about your company and its offerings, let alone the specifics of the proposed business arrangement. By discussing the items below, you can increase the likelihood that negotiations will move quickly and stay on track.
- Explain (at a high level) what your product or service does. Help the procurement rep or company counsel understand why the customer is making this purchase and what it will be used for.
- Explain that you have tailored your template agreement to address product-specific issues, while at the same time evenly balancing each side’s potential risks. Rather than a “one size fits all” contract that could cover anything from high level IT services to janitorial services, your contract addresses specific issues encountered in connection with the use of your offering. Additionally, point out that you’ve thoroughly considered each party’s interests and have been careful to address them in an evenhanded fashion.
- Walk through contract terms that may be unique to the use of your platform. These terms could include the type of data collected; how your company uses aggregate / anonymized data; or what role the customer plays in configuring various aspects of the product offering (such as end-user interface, data collection, data security, data retention). For example, if you inform the customer up front that no personal information will be collected, you can preclude needless discussions and negotiations.
- If your offering does collect, access, or use significant data, provide details regarding the extent of your security-related policies and procedures. Although a separate security review may be ongoing, this review often occurs apart from the legal process. The key is to convey that your company takes data security seriously and that your company continually strives to follow industry leading measures.
- Discuss your customer care and support process. Point out characteristics that may distinguish your ongoing service and support from others in the industry: dedicated reps will handle the account; the average seniority of your reps is more than five years; your average response time is less than two minutes; etc. Whatever the specifics, making clear that the customer will be in good hands throughout the relationship may forestall the customer’s counsel from inserting draconian, worst case scenario obligations.
- Explain where you may have some wiggle room in negotiations.Let’s face it, it’s unlikely the customer will accept all of your terms as drafted. It’s inevitable, therefore, that you’ll need to bend in some areas. Addressing this eventuality by pointing out (at a high level) where you have flexibility, directly demonstrates your willingness to meet in the middle — and close the contract as quickly as possible.
The more you do to set the stage before entering the contract negotiation phase itself, the smoother negotiations tend to go. Effectiveness and efficiency will prevail. In the long run, arranging a pre-call and covering the six essential items above will save time and improve outcomes for all!