Negotiation has gained a lot of attention in recent times. The most popular TV shows convince us that successful negotiations in contract negotiations involve shoving opponents to submit or even using blackmail to get the outcome you desire.
Contract negotiation in real life couldn’t have been more distinct. The best methods of negotiating contracts depend on empathy, imagination, and the capacity to hear, which is a vast difference from the scenes we watch on television.
But what exactly does the process of negotiating contracts effectively involve, and what negotiation strategies can help ensure everyone is on the same side? This article lists legal and business teams’ most effective contract negotiation strategies to generate revenues and safeguard your interests.
Effective Contract Negotiation Strategies
Contract negotiation strategies are a management method used in negotiations of legal contracts to secure the result you desire for yourself or your client. Unfortunately, there isn’t any one-size-fits-all to help you win each negotiation.
There are many different strategies that you can employ to give yourself the most effective chance. This is why we’ve put together an array of the top contract negotiation strategies to assist you in getting signatures faster on contracts and with the best conditions.
Begin with Drafts
Before you sign a formal contract to negotiate, be sure that both parties agree on the key elements of a contract. Utilize the best contract management softwareor just a simple term sheet. If it becomes complicated in this stage, you can go back to the beginning to begin with, new concepts.
Break It Up into Smaller Fragments
Achieving one side to sign broad portions of a contract won’t be possible. Break up the contract into smaller pieces that can be negotiated in separate agreements. The smaller deals will make the larger contract, which will help stay clear of taking the “all-or-nothing” approach to contract negotiations.
Find Out Who the Real Decision-Maker Is
The most frequent source of frustration during negotiations is getting resistance from the person in the negotiation with you. This isn’t because they don’t want to agree with your proposal, but because they lack the authority to negotiate.
One of the most effective ways to stop the exchange of information is to find out the person who the ultimate decision-maker is and then invite them to engage instead. It’s crucial to be courteous and not dismiss the person you’re dealing with.
This can be accomplished by setting up approval workflows that permit parties to add a series of approved parties to a contract.
This will allow for faster legal review without involving key contract stakeholders, as they will be automatically asked to sign off when workflows are created using the contract tool.
Be Sure to Keep Your First Terms Simple
Contracts that are complex with a lot of details and nuance can create a mess in negotiations. Begin with simple, clear terms that everyone can comprehend regardless of whether it eliminates sure of the nuanced benefits of contracts with complex clauses.
Do Your Research Pre-Negotiation
Research is crucial for each phase of the prospecting and selling process. Contract negotiations are not an exception.
For instance, if you’re selling a contract-management tool, you’ll gain insight into how long the contracting process is taking for the business, what expenses they’ve had to incur due to this, and how they’ll be able to scale as the company expands.
This kind of research can boost during negotiations and can assist in ensuring that you’re open to the other’s desires and concerns when you propose solutions.
Follow The Facts and Not Your Feelings
Attaching emotion to specific deals is not uncommon, particularly after you’ve nurtured these deals for an extended period.
It’s crucial that you don’t let feelings dominate when negotiating the terms of a contract. Instead of focusing on how some objections affect you instead, focus on the facts instead.
This is since emotions can hinder us from focusing on the most critical issues in the negotiation. They are a source of vulnerability to manipulation and can hinder our ability to reason. This can make it challenging to get what the business wants from the negotiation.
Include Additional Stakeholders If Needed
Negotiations on contracts can be slowed down at issue. When it comes to SaaS contracts, it could be because the buyer is concerned about certain technical or security features of the software, or perhaps they’re worried about whether the software will meet specific regulations.
The best option in this situation is to realize that there could be someone more qualified to address these technical, high-level questions than the sales staff.
If you are a potential customer concerned about the software’s quality for any reason, ask them to meet with one of the team members that can put their worries to rest. If the issue is related to compliance or legal concerns, it’s an ideal time to involve the legal team in negotiations.
Review The Previous Experiences in Negotiation
A common strategy for contract negotiations is to reflect and take lessons from previous experiences negotiating certain contracts. Maybe you’ve worked with a customer similar to yours or with a client with the same issues. How did you do it?
Reviewing past experiences during negotiations is an effective way to move beyond the stumbling blocks and make contracts more attainable for signing. It’s also an excellent way to learn about the things that haven’t worked before and the reasons.
This contract negotiation method is straightforward if you’re lucky to have a massive data-rich contract repository that can keep track of your contracts. Contracts saved in software can be searched in a matter of minutes and provide users with access to an abundance of contract information.
Have A Positive Attitude
Thank the other side for what you can learn from them. Find areas you can both be able to agree on. Establish the tone for a process of contract negotiation that is most beneficial for the interests of both parties.