CREATIVITY IN NEGOTIATION

A service oriented national supplier had been a partner to our client for over a decade. Traditionally, the client had signed three-year agreements that included a six-figure signing bonus. A new agreement was desired by both parties, removing any contention related to pricing or terms. When the sales representation for the supplier presented the renewal to their upper management, the signing bonus was rejected. The reason for the rejection was that due to recent economic conditions, the supplier had experienced an unusually high number of defaults with customers of a similar size and industry. Our clients internal accounting practices required the agreement to be free of all language that would allow the supplier to recover a prorated portion of the signing bonus should the customer prematurely terminate the agreement. Both parties were at an impasse that would force our client to identify a new partner, thereby disrupting the business for several months with no guarantee of the service level and responsiveness enjoyed during the previous decade.

After escalating to the supplier’s executive leadership, a final appeal was presented. Were there any solutions, either internally or externally that they could employ, allowing the partnership to continue? Savings Realized suggested that there may be a third party, a smaller firm known to the supplier with a higher risk threshold that may be willing to act as the conduit between the parties. The third party would assume the risk of payment of the signing bonus while the supplier would maintain their role in the delivery of service. The third party would be compensated for their involvement with a fee that was easily absorbed by the growth of the business between the parties, with no degradation to signing bonus. The agreement with the third party was executed and the relationship between the client and the supplier is stronger than ever.

The expert application of proprietary negotiation techniques coupled with the introduction of the third party, delivered a final agreement that exceeded our clients’ savings expectations while mitigating risk to their business.