It’s impossible to run a legal operations team alone. Inevitably, you’ll lean on vendors to help with things like contract management software, data security or digital marketing. Maybe you already use these services. If so, how did your contract negotiations go? Did you get the outcome you hoped for? Did you build a positive rapport to pave the way for a long-lasting partnership?
Vendor contract negotiations are a slippery slope. Both parties want a good deal, however, one party has a much bigger advantage – and that’s the vendor. Negotiation comes second-nature to them because it’s what they do day in, day out. They understand better than anyone at the table where they can cut corners and still come away with a profitable outcome.
We have three essential vendor contract negotiation tips to help you get the best deal without ruining the relationship.
Get in the right mindset
Before you start contacting vendors, it’s important to shift your mindset. Negotiation is just a means to an end, but not an end itself. Partnership conversations can be long and tedious, but through each interaction, there is an opportunity to lay the groundwork for a balanced and fruitful partnership. View vendors as collaborators. You both want a mutually agreeable outcome. It serves neither party to force a potential vendor to accept worse than they’re used to. Tip: a small way to build a positive feedback loop with vendors is to listen and repeat their main points. When you demonstrate that you understand their goals, you lay the groundwork for two-way appreciation and connection.
Research and prepare
This is crucial and where most people fall short. Put in the time to really understand your objectives. Don’t just concoct a few half-baked ideas at the tail-end of a meeting and casually drop by a colleague’s desk to get a ballpark budget before approaching a vendor. Put pen to paper and outline a true snapshot of what you want to achieve, your realistic budget and your working timeline.
This will help you articulate your bottom line – what you absolutely must have to make the deal work for your organization. Bonus: when you take the time to do this, you’ll already have collected the necessary information that will be drafted in the contract, statement of work or project plan.
Stick to your bottom line
Always establish a pre-drawn line in the sand to guide all discussions. This is your bottom line. You probably won’t come to an agreement after one meeting, so make sure you take notes and provide written summaries – or even quick bullet points – to ensure no loose and undefined ends exist. This will help keep the negotiations clear and organized. That being said, sometimes a resolution isn’t possible, so be prepared to walk. When you walk, you know you’ve come to a point where the negotiation no longer serves your organization – and that’s OK.
These vendor contract negotiation tips are simple in application but will make a big difference in your vendor discussions. Once you master them, you will save money, build fruitful partnerships and ultimately grow your business. Once you’re aligned on the partnership details, learn how to best move through the contract execution phase.
More about Ironclad
Ironclad is the leading digital contracting platform for legal teams. By streamlining contract workflows, from creation and approvals to compliance and insights, Ironclad frees legal to be the strategic advisors they’re meant to be. Ironclad is used by modern General Counsels and their teams at companies like Dropbox, AppDynamics and Fitbit to unlock the power of their contracts data. Ironclad was named one of the 20 Rising Stars as part of the Forbes 2019 Cloud 100 list, the definitive list of the top 100 private cloud companies in the world. The company is backed by investors like Accel, Sequoia, Y Combinator and Emergence Capital. To learn more, visit our homepage.
More stories from our team.