Negotiate – After your telecom services RFP!
Whether you are new to procurement or can draft requests for proposals (RFPs) in your sleep, you may be making costly mistakes by not negotiating after obtaining proposals.
The purpose of a RFP is to outline your requirements for a product or service and solicit competitive offers. The process of generating an RFP and evaluating responses yields good results when properly executed.
However, negotiations just begin when the proposals arrive!
Mistake No. 1: Failing to secure major concessions after receiving RFP responses.
Don’t treat the RFP as the entire negotiation process – it’s just a starting point. Use competition as leverage in follow-up discussions with providers.
No provider will offer its absolute best deal in an RFP response. The most significant price and service concessions are often won later in the negotiations.
Mistake No. 2: Not fully selling your opportunity to providers.
If a provider is eager to have your organization as a prospective long-term customer, it will work harder to win your business. This factor is more important than your organization’s size or the nature and volume of your traffic. Use the RFP document and vendor meetings to market your organization and its telecom needs.
Selling points that will help generate an aggressive response include:
- rapid growth rate
- high mix of data or international services
- influence in your industry
- value-add services.
Moreover, don’t risk having a weak account representative promote the deal within the provider ranks. Ask to meet with sales VPs and get the team excited about the prospect of working with your organization.
Mistake No. 3: Focusing on the wrong thing at the wrong time.
Some buyers like to show their prowess by creating three-ring-binder RFPs containing exhaustive wish lists of everything they could ever want. These items may include performance specifications for data services, voice services, exacting details on billing preferences, penalties, and price adjustment provisions.
These documents look impressive, but the resulting clutter gets in the way of effective negotiations. With an unwieldy RFP, a provider may conclude that your account carries too much risk or that you will be a high-maintenance customer.
Minimize technical fluff. Concentrate on getting the best price with acceptable terms and conditions. After evaluating RFP responses and narrowing the list of contenders—is prime time for securing reasonable contract terms and service levels that are important to you.
Mistake No. 4: Letting relationships get in the way of business.
Get the best deal by putting professional relationships aside. Do not let them affect negotiations. Many IT executives are unwilling to push their current providers for fear of alienating a colleague, or are unwilling to entertain other providers because they do not personal relationships.
Consider bringing new faces into negotiations, such as IT folks in your organization who do not maintain regular contact with the provider. Or, working with a telecom consulting firm. Consultants can move the process forward more quickly because they handle these types of deals almost daily.
Once you begin negotiations with your selected candidates, many of these same firms or specialized legal firms can bring the needed muscle and knowledge to craft the final contract.
Also, be sure to work with the provider on a national level. The local account team does not always know what the provider has done in similar situations around the country. Reach out.
Providers prefer to send lower-level team members to negotiate because they lack authority to bind the provider and can easily say no. Eliminate this tactic by only negotiating with provider organization officers whom are empowered to make decisions.
Mistake No. 5: Pulling the plug on price negotiations too early.
Do not get too excited about savings a proposed deal will generate. The more important concern is how the deal compares with your peers.
Validate and benchmark how your deal stacks up against the best-in-class telecom deals and those of your competitors. This maximizes your savings and benefits.
Although there is a law of diminishing returns as negotiations take place, three rounds is a good model for most leveraged RFP procurements.
Call Keeling Law Offices for professional telecommunications negotiations support … 602.332.0341