A large software company was in renewal talks with their CRM provider and was confronted with a potential 7% increase over the existing fees. The company was also beginning to re-evaluate the value of certain modules of the CRM product as well as the platform as a whole. Once they decided they were not in a position to move away from the platform just yet, they decided to engage Seprio to help negotiate the renewal agreement.
Objective
Evaluate and document the Client’s priorities and negotiate a renewal agreement that better fits their needs and maximizes savings, while avoiding a large renewal price increase.
Approach
Once Seprio became involved in the project, discussions with the vendor were put on a temporary hold. The team recommended that prior to reengaging the vendor in renewal discussions, the Client should fully flesh out the needs and wants associated with the renewal, and determine what modules, if any, would be removed and/or added. The Client’s preference was to cut unused products now, but not include any new products until such time as Client had a definite need, with the caveat that Client wanted set pricing for those new modules. After determining the Client’s priorities, the vendor was re-engaged. The vendor proposed several packages but would only agree to discounts if additional modules were added, which was not consistent with the Client’s priorities. Fluctuating Client priorities and the vendor’s unwillingness to make concessions resulted in negotiations breaking down several times during the process, with the vendor suggesting that renewal would, therefore, occur “as-is” with a 7% increase in fees. A month before the renewal deadline, negotiations were re-started, and the vendor compromised on items they weren’t willing to compromise on 2 months earlier. Ultimately, a deal was struck which fit with the Client’s priorities and included growth projections so they could purchase additional modules, in the future, at stipulated discounted rates.
Results
The team collectively rallied to complete this renewal on a very tight timeline during the second round of negotiations and achieved significant saving of over $300K over the 3-year contract. The Client will also benefit from the locked-in discount for purchasing additional products to satisfy their future needs.
