Tip One: Start early!
Convincing a long-term client that they need to give up some of their advantageous terms can take a little while, so ensure the conversation begins way before the renewal date – 6 months or more, if we’re talking large, slow-moving organisations with multi-layered procurement teams.
Tip Two: Don’t reinvent the wheel
Unless things have changed massively, starting with the current form of agreement (which for most big customers would be on their paperwork) will make things as smooth as possible – incremental change may be easier to get through than, say, switching wholesale onto your new standard MSA. And, as long as things have worked well so far, this ensures general continuity of administration and process, which will be gratefully received by your own team, as well as the other party’s lawyers. If signing a whole new MSA or framework is too much to accept for the client, try and use the renewal or new SOW to incorporate amendments to the agreement. Squeezing a couple of concessions on each renewal could make a real difference over two or three years.
Tip Three: Pick your battles
Discuss within your teams what the major risk elements are under the current agreement. Pricing may be important but look at things like overly-generous service levels, or broad indemnities and one-sided liability clauses. Does the IP clause still reflect how you’ve developed your product offering? Do the data protection clauses stand up to scrutiny? Some changes will be uncontroversial, but some are likely to get significant pushback – so work out which changes really matter and which are ‘nice to haves’, and make sure you’ve got a good argument lined up to get your ‘must-haves’ over the line. Be aware of your increased leverage – if a customer has been using your services for three or four years, switching provider is likely to be a big upheaval, so the trick is to make it easier to accommodate your changes than to find a new supplier.
Tip Four: Sugar the Pill
Sugar the pill. If you’re able to give something in return for obtaining some concessions from the client, this will make life much easier in negotiations. As you’ve grown, it’s often the case that you’ll have improved things like your support services, or your security standards and disaster recovery/backup procedures. Offering higher-level commitments in these areas than you were able to provide to customers as a startup business can be an easy give, and can demonstrate that you are a lower-risk proposition – meaning that, for example, accepting amended indemnity or liability provisions is an easier ask.
Hopefully, these are some useful starting points for approaching renegotiations with long-term clients. We’d love to hear any strategies that have worked for you!
