Are You Ready to Play Ball?
Come July 23rd, Major League Baseball is set to kick off a shortened, 60-game season.That’s only about one-third as long as usual, but for a starving sports fan like myself, I’ll take it. Of course, nobody is happier to see things resume than the players.
And even though they haven’t actually been on the field these past several months, you can bet they’ve been preparing: taking batting and fielding practice, building arm strength, running bases, optimizing nutrition, and studying opposing pitchers and teams.
The fact is, long before the umpire yells “Play ball!” later this month, quite a bit of work will have already taken place.
When it comes to effective negotiations, the same principle applies. Particularly given the uncertainties of the current pandemic, it’s more important than ever to be as prepared as possible by the time you “step on the field.”
Shake hands before the game begins.
When working with a new customer with whom you’ll be negotiating, get acquainted with the company’s counsel and/or procurement representative before delivering a written contract. This introductory meeting provides an opportunity to explain your business model, review how your product or service works, and answer any background questions that may arise. If possible, hold a Zoom meeting to solidify the personal connection.
The more proactive you are in explaining your business and building a relationship, the more effective your team will be at avoiding surprises that may crop up during negotiations.
Clear the playing field of obstacles.
Adversarial negotiations aren’t just tiring, they lengthen the contract process and decrease the likelihood of a mutually satisfying conclusion. So do your best to remove commonly encountered obstacles ahead of time.
Take time to revise your contract forms and templates to make them as customer friendly as possible, with the goal of finding the middle ground on terms that are common sticking points or are frequently conceded.
For example, in a number of negotiations, clients have preferred to put forth a one-sided contract – in the hope of “starting off strong” to counter anticipated demands of the other side. That strategy usually backfires and frequently results in the other side returning a contract heavily weighted in its favor.
Unfortunately, if that dynamic ensues, the two sides spend extra time (and often animus) clawing their way back to the middle. If, instead, you begin by offering “middle of the road” terms, you’ll likely end up in the same place, much more quickly.
Study the game film.
Your customer has established policies and procedures that can’t be ignored. Do your research to uncover the details of each internal process. What signoff steps are required? Is there a committee involved in vendor approvals? What does timing look like after the contract wording is finalized?
In one recent negotiation, the vendor amended its pricing to complete the deal before a key quarter-end (vendor) deadline, only to discover that the customer didn’t have enough time to obtain the necessary executive approvals. Had the vendor been aware of its customer’s strict internal requirements, the vendor could have started the process earlier and avoided concessions made solely for the purpose of getting the transaction closed on time.
Every company has unique ways of doing things. It’s incumbent upon you and your sales team to investigate and determine what these are.
Talk to the scouts.
By the time a contract is on the table, your sales and marketing people will be intimately familiar with the customer team.
At this point, they should understand the customer’s current needs and constraints (e.g., is the spend required prior to the upcoming fiscal year end?), potential management turbulence (e.g., does the CFO have one foot out the door, which could put a hold on everything?), and the customer’s changing marketplace (e.g., are its customers experiencing a market decline or changing business focus?).
Ultimately, any of these wildcards could slow things down or kill the deal entirely if not managed. Tap into the knowledge of your own people and encourage them to stay close to what’s happening on the other side.
An effective contract negotiation involves much more than the back and forth of words on a page. Done well, it consists of two parties reaching agreement without surprises, miscommunications or last-minute roadblocks — leading to a mutually beneficial and productive relationship going forward.
That type of smooth progression doesn’t happen by accident. Like a baseball player prepping for the big game, deal closers understand that most of the work happens long before opening day.