“With a new year approaching, I need to negotiate some long standing client contracts. Do you have any success strategies on contract negotiations?"

December 02 2008 - Syracuse Post Standard

Tracy:
Contract negotiations are an integral part of business which requires forethought and knowledge. Before you approach a client about negotiating your contract, you must have a detailed explanation, and in some cases financial statistics, for why the change must occur. Remember to back up the explanation with examples of other “intangibles,” such as excellent customer service, business referrals or extra advertising opportunities that your company provides just because your client does business with you.
Also update your knowledge on your competition before entering negotiations. Understand what makes your company unique from other companies in the marketplace so your client is confident you are the best provider even when fees increase. You must convey your strengthens during negotiations so your customers don’t consider competitive bidding for the business.
In the end, know what value you place on maintaining the contract, many times it is more than money. You know which clients you want to keep and why their business is important to you.

Terre: Due to the state of the economy, this year's negotiations will differ from any other. Keep in mind that although your cost of doing business has risen, so has everyone else's. Your client's are finding ways to cut expenses, comparing vendor contracts and looking harder at costs than ever before.
Do not assume that you will be able to pass along your increased costs to your clients. Work hard at keeping your fees the same for 2009 and focusing on increasing customer service. Let your clients see that you are going to offer them more for their dollar, while still staying competitive in your field.
Focus on more palatable terms that you can negotiate; long term contracts or discounts for early payment. This way when they start making comparisons, you will not only be able to go head to head with your competition, you will be the preferred stand out.

Julie:
It’s not unreasonable to renegotiate contracts once a year, but Terre is right – this year is will be very tricky. We’ve increased some of our prices slightly to reflect the increase in many of our inventory items, but right now we’re focusing on decreasing our overhead in order to remain competitive. With the end of our lease approaching, we’ve begun looking for a more cost effective space, we’re switching from a bank to a credit union to eliminate the hefty fees we’re currently paying, and most importantly we’ve come up with a better way to utilize our staff over the busy Christmas season. We’ve put some systems into place to improve the customer experience – the “intangibles” that Tracy mentioned. We’ve always strived to provide an excellent experience, but in today’s economy it’s more important that ever to stand out from the crowd - especially at contract renegotiation time.