Negotiating Contracts in a Competitive Landscape

A champion leaves. A competitor undercuts your price. Legal delays the contract. Most reps treat these as surprises. But the gangster reps already saw them coming. If you don't do this already, you should consider running "what-if" scenarios like you're a chess master. Here's how to approach it: 1. What if your champion leaves? Before it happens: - Map the full buying committee and build relationships across functions. - Ask your champion: "If you weren't here tomorrow, who would drive this decision forward?" - Document their specific language and priorities so you can replicate their influence. When it does happen: - Leverage the departed champion's credibility: "Sarah specifically mentioned this would solve your Q4 capacity issues." - Pivot to the technical buyer: "Sarah felt strongly that your engineering team needed to own the integration timeline." - Use internal references: "Sarah connected me with your VP of Operations because she knew he'd appreciate the automation benefits." 2. What if a competitor slashes pricing? Never compete on cost alone: - Pre-build ROI models showing 18-month payback vs. competitors' 36-month timeline. - Emphasize switching costs: "Moving from your current system will require 6 weeks of developer time. Our API integration takes 3 days." - Document proof points competitors can't match: "We're the only solution that integrates natively with Salesforce AND HubSpot." Build your "Why We Win" document with: - Specific customer success stories in their vertical. - Technical capabilities that require no workarounds. - Implementation timelines that beat industry standards. - Support SLAs that competitors don't offer. 3. What if a deal stalls in legal? Get ahead of contract negotiations: - Ask upfront: "What contract terms typically slow down your legal reviews?" - Bring your own legal counsel to prospect meetings: "Our legal team can address any redlines in real-time." - Provide template MSAs: "Here's our standard agreement. Your legal team can review this while we finalize technical requirements." Anticipate common sticking points: - Data processing agreements for compliance-sensitive industries. - Liability caps that match the customer's risk tolerance. - Termination clauses that protect both parties. - Service level guarantees that legal teams actually approve. 4. What if the budget gets cut? Build multiple buying scenarios: - Phase 1 implementation that shows immediate ROI. - Pilot programs that prove value before full rollout. - Consumption-based pricing that scales with usage. - Multi-year agreements with lower annual commitments. Prepare budget defense talking points: - "This pays for itself in 8 months through automation savings." - "Delaying costs you $50K per month in manual processes." - "The pilot requires zero upfront investment." Don't just forecast what will close. Forecast what could go wrong - and how to fix it before it breaks.

Ever had procurement bring up competitors in your negotiation? How you handle this can make or break the deal you worked so hard on: Procurement often mentions competitors to get you to panic and drop costs. But remember, they never play both sides equally. If you have run the sales process correctly, and the business has introduced you to procurement as the vendor they want to negotiate with, they have told procurement to get a deal done with YOU! You have already won! They've already chosen your solution! They are keeping the other vendor in the mix as a "stalking horse" to negotiate better terms. Here's how to handle this situation and stay focused on the value narrative: 1. Remove emotion: Don't let the competition rattle you. Maintain your confidence and keep the conversation focused on why the company picked you. Share the business case for this early and often. 2. Demonstrate side-by-side differentiators, and how your approach, service, and feature/function set drives a better solution with a stronger return. 3. Emphasize value: Don’t jump into a price war! Politely decline to match or decrease cost because a competitor is less expensive. Offer to remove pieces of the solution, and if you can't, simply explain that you are at your best cost, and going with anyone else won't drive the outcomes the business is looking for. This is why it is so important to align closely on decision criteria and competitive positioning with your client. They need to see contrast and feel like there are multiple vendor boxes and they'd rather play in your box vs. the other. You build your business case around this, each feature and function solves a unique problem, and each problem solved drives a piece of ROI. If you can get them to see that, removing things, or picking someone else exponentially lowers their return. But if you haven't done these things, it could be why your deals erode at the last minute, and this advice is moot because in the eyes of the business, you aren't different, and therefore it is all about cost. Lastly, remember, this is all a game. Procurement's job is to get the best deal possible, so don't take their tactics personally. See the matrix, know the chess moves being played, rise above them, and the emotion attached to them. If you run the sales process well, this is an easy thing to handle. If you miss the steps that give you this angle to play, button that up and watch your deal sizes and competitive win rates improve. If I can help you craft any of this, as always, let me know :)

I'm wrapping up another quarter negotiating SaaS deals, and for one deal, I was debating what term length to pursue. (Contract term length has become one of our most critical strategic decisions in procurement.) 🔹 The Current Landscape 🔹 The market has shifted dramatically. SaaS contract lengths plummeted in 2023 and have only slightly rebounded in 2024 (still averaging under 15 months). Meanwhile, price uplifts have soared to unprecedented levels. 3-15% is now standard, with some vendors pushing shocking increases (just heard from a fellow procurement leader facing a 200% increase on a multi-million dollar spend... ouch). 🔹 The Pendulum Swing 🔹 I'm seeing two distinct approaches emerge: Some companies have instituted strict policies capping contracts at 12 months (too many got burned in 2022 with oversized multi-year commitments). Others still pursue 3+ year terms to maximize discounts and shield themselves from those aggressive annual uplifts. 🔹 My Portfolio Breakdown 🔹 Looking at deals I've personally negotiated over the past few months: 1-year terms: 56% 2-year terms: 31% 3-year terms: 7% < 1-year terms: 6% > 3-year terms: 0% Surprisingly, 2-year deals weren't higher. For me, they often hit a sweet spot: enough leverage for better pricing, reasonable commitment timeframe, and price protection for 24 months without being locked in forever. 🔹 My Decision Framework 🔹 While every situation demands nuance, here's my general approach: 1-Year Terms When: 🔸 New vendor (even thorough due diligence has blind spots) 🔸Highly competitive market (optionality is a beautiful thing) 🔸Rapidly evolving space (avoid lock-in with outdated tech) 🔸Low switching costs (maybe we go in another direction). 🔸Current vendor with performance issues or pricing concerns (goal here is to start shopping alternatives) 2-Year Terms When: 🔸Stable, predictable growth projections for seats/usage 🔸Balanced need for pricing leverage vs. flexibility 🔸Vendor relationship is solid but not critical infrastructure 3-Year Terms When: 🔸Core enterprise systems (sticky, difficult to replace) 🔸Vendors with consistent, aggressive YoY increases that are hard to push back on (although sometimes we pivot to a 1 year deal to switch to someone else). 🔸 We've validated long-term fit and negotiated favorable terms (partnership). I know everyone loves a three year term but if it's pushed to hard (by either procurement or sales), it can hurt trust. The dataset isn't massive but interesting not the less. Anything surprise you here?