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Managing Contract Negotiations

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Managing Contract Negotiations

Sales contract negotiations stand as the last hurdle in getting customers onboard and paying for you product. Once you’ve jumped the hurdles of getting people into the sales funnel and demoing your product, if they are to continue you need to become an expert in managing contract negotiations.

At the end of your sales pipeline and probably at the end of quarter these negotiations not only determine the terms, conditions, and obligations for both parties involved but likely determine whether or not you hit your sales goals. Excelling in negotiations demands a delicate balance of negotiation strategy, communication prowess, and an acute understanding of the deal’s dynamics from both sides. Whether you’re a seasoned professional or just starting, here’s a comprehensive guide to navigating sales contract negotiations effectively.

For Managing Contract Negotiations Preparation is Key

Before stepping into negotiations, comprehensive preparation is non-negotiable, terrible pun intended. Begin by thoroughly understanding your product or service, its value proposition, and how it aligns with the client’s needs. Not only do you need to understand this but your sales team and your legal team need to know it too. At the same time you should be having your sales team bring use case and customer information with them to the negotiation.

The sales team should analyze the client’s background, industry trends, and their pain points. This groundwork lays the foundation for a tailored and persuasive negotiation strategy. It’s important that your sales team communication this to your legal team. A data-driven legal team will outperform a non-data driven legal team every day.

Define Clear Objectives Along With Clear Sales Targets

Set clear, realistic objectives that align with both your company’s goals and the client’s needs. Although you can’t always be sure what your customer has in mind you’ll be able to weigh up the likely outcomes from previous conversations. Are they risk adverse? Are they budget conscious? Communicating with the customer early on and feeling out these guidelines will allow you to understand their objectives as well as your own. Establishing these objectives serves as a compass throughout the negotiation process, ensuring you stay focused on the desired outcomes.

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Set Tasks, Negotiate Faster

Managing Contract Negotiations 101: Establish Relationships

People are more likely, much more likely, to sign on for a deal with a team that they have a relationship with. This isn’t just the job of the sales team anymore. This is the job of everyone in the company, the legal team included. Building a relationship for contracting with the other party fosters a positive environment for negotiations. Establishing trust and understanding can soften the edges during tough discussions and facilitate a more collaborative approach.

Active Listening and Communication – EQ Is Important

Listen actively to the client’s concerns, desires, and constraints. Actually, don’t just listen, but document. From the start of the sales funnel all of the way through. Effective communication is not only about conveying your points clearly but also about understanding the underlying motivations and concerns of the other party. Ask probing questions and seek clarification to ensure a mutual understanding.

A lot of sales people get taught these techniques but they should be something that gets taught to your legal team as well.

Flexibility and Adaptability

While having set objectives is crucial, being rigid can really slow down progress in closing deals which can kill your hopes to hit target in time. Stay flexible and keep in mind who you need to talk to in the organization (both yours and your customers) to get decisions made quickly. Be ready to adapt to unexpected scenarios or concessions. Know what concessions you can make yourself and what concessions need to be made by the leadership team. Being adaptable can often lead to more creative and mutually beneficial solutions.

Leverage Value, Not Price

Focus on highlighting the value your product or service brings rather than engaging in a race to the lowest price. Emphasize the unique benefits and ROI, showcasing how your offering stands out from competitors. This can come in a few different forms. It might take a focus on what features you offer or it might come in the form of assistance getting up and running on your product.

Negotiate with Win-Win In Mind

Everyone’s a winner! Or at least you should aim for that. At the end of the day business is about creating a relationship that benefit’s both parties. You should strive for a mutually beneficial agreement where both parties feel they have gained value. Aim for a solution where compromises are made without compromising core interests. This involves taking into account what the drivers of your customers decision making is and what their end goal is. Ultimately you want to help them achieve this and not just get them to pay you money.

Document Everything

Keep records of all discussions, agreements, and changes proposed during negotiations. And better yet, keep documentation of your contract versions and how they evolve over time. Having a comprehensive record minimizes misunderstandings and serves as a reference point in case of disputes or clarifications later. More importantly it can be used to understand the customers that your selling to and evolve your legal operations to get better.

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Know When to Walk Away

Understanding your walk-away point is important. Sometimes, despite the efforts, a deal may not align with your company’s values or objectives. Not all customers need to become customers. Knowing when to gracefully exit can save resources and energy for more fruitful opportunities. This could mean leaving money on the table but if it would

Seek Legal Guidance

Engage legal experts and find a legal team that’s familiar with your industries contracts. Work with them closely to review and advise on the contract terms. Legal counsel ensures compliance with regulations, mitigates risks, and safeguards your interests.

Managing Contract Negotiations: Post-Negotiation Follow-Up

After reaching an agreement, follow up promptly to finalize the contract details. Clarify any ambiguities, ensure both parties are in agreement, and move quickly to implementation. After this is one of the most forgotten things. That is to track the contract details of the contract you’ve just signed. You should be pulling this data out from your long form contracts and having this put into an easy to access contract data format. Otherwise you’ll forever be stuck in working through long form contracts to find the information that you need.

Continuous Learning and Improvement

Every negotiation will teach you something that can make your process better. Reflect on each negotiation, would it have gone faster if the legal teams had more product insight? Should we have gotten our contract in front of their legal team first so we didn’t start with their contract? Analyze what worked well and what could be improved. Continuous learning and refinement of negotiation skills are the only way to set yourself up for growth and mastering this art.

Sales contract negotiations demand a strategic blend of preparation, communication, flexibility, and a focus on mutual value creation. By embracing these principles and continuously honing your skills, you can navigate the intricate landscape of negotiations with confidence and finesse, securing successful deals that benefit all involved parties.


Contract Sent is not a law firm, this post and subsequent pages on this website do not constitute or contain legal advice. To understand whether or not the ideas and guidance on the Contract Sent website is applicable to your business, you should consult with a licensed attorney. The use and accessing of any resources contained within the Contract Sent site do not create an attorney-client relationship between the user and Contract Sent.

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