Nice Deals!: Update # 2

This is my second update on this month's contracts.

So for the second contract, I had negotiated directly with the President of this company, who in turn put his attorney in touch with me. This attorney was lobbying hard for a 90 day out clause for convenience instead of an annual commitment.

At the end of the day, my company said no and I agreed with that.

A contract is just that: a commitment to buy over a period of time; in this case one year. There are no "outs" for convenience. For convenience means that if the client didn't like the color of our UI, he could terminate without cause. In every contract it is boiler plate to have an out for breach or material breach. This deal is still alive, but will take longer now due to the attorney now in the role of "middleman".

My point to you is this:

Never ever let an attorney or a PGP push you into an "out" for convenience. It is not how stable business is done and if it is, it isn't sustainable for the long term. Imagine if all a company had were customers with contracts that had convenience clauses in them. That company would have a long list of potential issues including but not limited to:

• Customer Churn
• Revenue Leak
• Low Valuation
• Low credibility depending on the industry targeted.
• Always being in customer acquisition mode versus building a sustainable model. ie: more going out than coming in.

Also remember that if you are working with a PGP that is non-committal or "circular" as some may say, chances are they will push for this clause. Know that up front and try to disqualify them by letting them know your terms are hard and fast according to the length of the contract.

Contract negotiation is one of the most important and integral pieces of the sales process as it directly correlates to your de-booking rate and your company's overall valuation.

We will have a section on contract negotiation sometime in the future. Stay tuned!

Have a Happy Thanksgiving!

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