Situation: Under proper negotiation leadership an incumbent-only carrier negotiation can result in contract rates that will rival those obtained in a multiple carrier, highly competitive situation. This client negotiation was one such event. In all the sourcing areas under review where this client was seeking immediate savings, Long Distance telecommunications far surpassed the group in potential dollars.
The existing three-year contract had approximately 14 months remaining. Six months prior to engaging G2, the client chose to exercise a one-time rate revision contract clause that yielded an approximate 12% reduction in overall costs. As part of the forthcoming G2 negotiation, it was accepted that the incumbent carrier would require some amount of term extension. G2’s challenge was to acquire the identical rates that would be obtained if a multiple carrier RFP could occur immediately instead of over one year into the future. Receiving such savings before its time would recover for this company millions of unfounded dollars.
Negotiation: Initially, the incumbent carrier was reluctant to provide immediate contract concessions, despite their ability to gain additional term and the irrevocable harm in the customer relationship and goodwill that would ultimately result. G2’s creation of the proper leverage and negotiation strategy was paramount in leading this carrier to not only proceed with negotiations, but to provide the necessary market-leading rates, terms and conditions.
In conjunction with our professional negotiation leadership, G2’s Carrier Requirements Letter was invaluable in assuring that all savings goals were met. The credibility brought by outlining the specific market-leading price points led the incumbent carrier to a clear understanding of the seriousness of our endeavor and motivated them through the credibility established to respond accordingly and aggressively.
Result: The only reliable means to determine if the incumbent carrier proposed rates matched those possible in a RFP negotiation would be for G2 to compare the results to other recent and aggressive client contract engagements. The goal was met and this client received a total 19% reduction in expenditures across all domestic and international voice and data services. Based upon current usage volumes and the negotiated commitment structure, this client received only an effective one-year term extension over that of the previous existing agreement.
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