Three Ways To Make Contract Negotiations Easier

As a salesperson, contracts aren’t really my thing. If they were I’d have been a lawyer.

For most sales reps anything having to do with “paperwork” is not our main focus. But contract negotiation is an important part of the sales process.

First of all the contract is meant to limit liability…for both parties. In other words, your contract, if done correctly protects all parties involved from those small things you’d never think about.

Since it’s against the rules to talk about my company’s contract (for obvious reasons) we’ll talk about a make-believe agreement that you or anyone is likely to use. Hopefully while giving you an idea of the importance of knowing your contract and three ways to make negotiations easier.

Know The Most Common Redline Items

Whenever a contract is involved there are likely one or a few groups who will review it to ensure it is mutually beneficial.

For example, legal, business, and finance are all groups that might want to review the contract. And each of these departments will have their own specific items that peak their interest. And likely are consistently redlined or notated for amendments.

Finance may have issues with any yearly increases, legal may not like some force majeure clause, and business may not like the length of the agreement.

If you know in advance what departments are likely to review any new contract you can prepare with your own legal team to see what these common redline items are and how your company often responds to them.

Knowing what issues are common will also allow you to position yourself well before the conversation even gets to that point.You can prep your contact to expect those conversations.

This will put you in a better negotiating position because you are expressing those items as part of the deal, and if you are going to part with them then it’s reasonable that they will have to give some kind of bi-lateral concession to accommodate the change.

Know What You Can Not Negotiate

There are just certain things in a contract that your company or legal department is simply not willing to negotiate on.

This is something that could vary between companies, even within the same industry. But this is something you should know before going into any contract negotiation.

Often times this is a small number of things. In my experience, most everything is negotiable. I can’t speak to your specific company but you might be surprised.

In addition to knowing what is commonly redlined, if you know what cannot be negotiated you can set those expectations early.

Some words of wisdom. Don’t bring these items up unless the prospect does first. There is no reason to give them something to negotiate with themselves.

Know What You Can Negotiate 

This is where the real power in a negotiation is held. If you are aware of what you can negotiate on then you are able to save time and money when discussing contracts with a prospect.

For example, let’s say there is something they absolutely have to have changed in your contract. If you already know that it’s within your power to negotiate on that term, then you are in a great position because you will seem like their hero. Simply because you are giving them exactly what they want.

Often times during negotiations knowledge is power. If you arm yourself with knowledge beforehand, you will have the power when it really matters, during contract negotiations.

What are your thoughts? Is it important to know what is contained in your business contracts? Let me know what you think in the comments below.

~ Johnny Bravo