Situation: This Global 300 multi-national telecommunications company had a $1.0 billion reciprocal business relationship with their incumbent carrier. The requirement to conduct a professional and sensitive, yet aggressive negotiation with this business partner was paramount to this client.
The client had completed the term of a three-year agreement and had already received through their own negotiation efforts the carrier’s “best and final” offer. Due to the contract having expired, the incumbent carrier was threatening their customer with reverting to tariff pricing if they did not immediately accept the current proposal. The amount of proposed annual savings was in the millions of dollars.
Negotiation: G2’s first step in this negotiation was to remove the incumbent carrier’s threat of implementing tariff pricing. Our insider knowledge of carrier practices and capabilities quickly eliminated the carrier’s argument and ability to leverage this common tactic. Also, the carrier executive sales management initially held the position that no additional savings could be obtained and that the customer had already received their best offer.
The carrier negotiation took place at the vice presidential level and above and also directly with the carrier special pricing and contract authorities. G2 developed a Carrier Requirements Letter to establish the necessary price points and expected terms and conditions. The negotiation had an additional element of complexity because the domestic vendor was initiating a major separation from their current global alliance partner.
Result: This client received an additional 200% savings over the amount already obtained through their own efforts. Millions of additional unfounded dollars were provided directly to the bottom-line of their business. In spite of the substantial reduction in expenditures, G2 also obtained a unique commitment structure that increased client flexibility and greatly improved leverage for any near-term subsequent negotiations. All other terms and conditions were improved across the board.
The customer-carrier reciprocal relationship was not affected and was in fact enhanced. The carrier now realizes their customer is educated to the leading-edge prices of the market and that the client has the resource to negotiate highly effectively. These strengths will ensure that more care and consideration will be given to improve and maintain future contract pricing and other important elements.
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