Sales and marketing

Contract Negotiation: The Good, The Bad and The Ugly

Business meeting

As a business owner, I spend considerable time evaluating vendor partners and negotiating contracts. I have had experiences that were well above average and some that have made me downright frustrated. 

To that end, here’s a listing of the good, the bad and the downright ugly of contract negotiation -- and how you can learn how to be a better partner.

Contract Negotiation: The Good

  •  Listen: Ask your prospect about their needs. Ask them what has worked for them in the past and why they chose to call you. Did they hear good things from others, did they find your website intriguing, did they get a special offer? Find out what makes the prospect tick, and what keeps them up at night.
  • Think: Think before you respond. You do not need to have all the answers in your first conversation. Feel comfortable taking some time to digest the prospect’s needs before you throw out a solution.
  • Respond: When you’ve had the time to put some thoughts on paper, set up a follow up meeting to review your solution. Go through the details -- let them know if there are up-charges for additional services; or if there are things they need that you cannot provide. Give your prospect a full view of your solution so they can make an educated decision about working with your company.

Contract Negotiation: The Bad

  • Don’t Listen: How many times have you been on a call with a vendor; they ask you what you need and then they offer you a standard package that has nothing to do with your discussion? (Just happened to me -- if I need four, please don’t sell try to sell me 15.) If this frustrates you, you can bet it will frustrate your prospect. Simple solution: Don’t do it.
  • Don’t Take Notes: There is nothing worse than a follow up call with a vendor who doesn’t remember what you discussed just last week. It’s embarrassing and unprofessional. And never, ever benefits you. Simple solution: Take notes.

Contract Negotiation: The Ugly

  • Change Terms Each Time You Talk: Oh my, what is worse than finally agreeing on a negotiated package/price and receiving a contract that does not reflect the negotiation? (See “don’t take notes”) Please, please, please -- pay attention to your conversations, agree on terms and then make sure those terms are in your contract. Don’t make your prospect have to do contract editing on your behalf.
  • Push Your Prospect into Making Poor Decisions: The worst issue, I fear - is strong arming your prospect into agreeing to terms that are unfair, services that they do not need and/or rushing them into a decision because it’s your month end and ‘your manager won’t hold the rates past Friday.’ Come on people - you are negotiating long term relationships. Be nice. Be thoughtful. Be generous. It pays in dividends….

Think Long-Term

Remember: It’s always better to work with your prospect for a winning outcome than push unnecessary products, services and losing terms to a prospect. They might buy once due to necessity. But trust me, during the contract terms, they will shop around for a better partner.

It's far easier to work with vendors who will listen to our corporate needs; recommend products or programs that will help us reach our goals; and work with us on things like billing terms, contract extensions and so forth. In other words: Align your solutions and services with the customer's needs. You'll build lasting relationships and circumvent fruitless negotiations.

Amy Katz is a technology entrepreneur who has launched, built and sold a range of IT media platforms. As president and CEO of After Nines Inc., she oversees business development, sales and finance for the overall company and ChannelE2E. Read her blogs here.

Amy Katz

Amy Katz is a technology entrepreneur who has launched, built and sold a range of IT media platforms. As president and CEO of After Nines Inc., she oversees business development, sales and finance for the overall company and ChannelE2E.