How Long Should Carrier Negotiations Really Take?
Reality – 2017: Smartphones rule the enterprise communications space and users “must” have the latest device. Deciphering mobile telecom bills and utilization patterns seems like it requires a second college degree. To add to the challenge carrier rate plan models and “subsidized vs. unsubsidized” device purchasingoptions change monthly.
The thought of renegotiating mobile contracts, or any telecom contract, is daunting. You hear of price-compression occurring here and there, but where exactly is it happening? And typically, organizations expect their IT procurement folks to hold, or even lower the costs on the expense category while improving the service. Crazy waters to navigate! So when is the right time to take this all on and how long should the contract negotiations take?
Whether mobile or fixed communication contracts, the industry average to negotiate a new telecom carrier agreement is now about 5 to 7 months. Why? Because it’s complicated as ever, and that’s part of the carriers’ strategy: The longer they delay implementation of your new contract, the longer you’re paying higher rates. How long should it take to negotiate a new telecom contract? Six to 12 weeks, tops! That difference between three months and 12 months of negotiation can cost you – up to one-third of the savings opportunity you can realize from a properly negotiated new contract.
Properly armed with the right industry knowledge and the right negotiating tools, you can take control of the negotiating process itself and ensure you’re getting the best possible prices, terms, and conditions as quickly as possible.
Rate Effective Date
If your carrier wants to drag out negotiations, you can stymie their efforts by putting a rate effective date in place at the outset of negotiations. A rate effective date places a stake in the ground that says, ‘You can drag these talks out if you want to, but when the deal is agreed, those rates are effective retroactively to such-and-such a date.’ You’d be surprised at the incentive a rate effective date can be in getting a telecom carrier to move negotiations along.
Myth, Facts, and Making Deals
By incorporating myths into their presentations and injecting them into your negotiations, telecom carriers can make sure the focus is on anything but the facts. Your job is the opposite – using the facts you’ve armed yourself with to keep the talks on track.
This is why it’s so important to have all your documents and data at hand from the get-go. In a previous Insight (“Know Your Contracts and Invoices”) we discussed the importance of data collection ahead of talks with your telecom carrier.
When you have the facts – a complete, accurate “book of business” – the carrier’s myths are irrelevant. When you have them at the start of negotiations, no time is lost and you can capture every savings opportunity as quickly as possible.
Delay Is Your Enemy
The closer you get to the contract expiration date, the less time you have to migrate your operations to a new telecom carrier. The carriers know this; the less time you have to migrate, the more leverage they have, the less attractive the deals they will offer.
Benchmarking Is Your Friend
Smoke and mirrors, especially around industry benchmarks, only work to the carriers’ advantage. If you come to the negotiating table with full knowledge of the industry benchmarks you and the carrier both know the price points, terms, and conditions of what’s possible. There’s nowhere for the carrier to hide, one less roadblock that can be thrown in front of you getting a better deal.
Price and Terms Together
There is no rule, written or unwritten, that says you can’t negotiate pricing and terms and conditions in parallel. If you have unique legal points that you need to incorporate into the contract, put those on the negotiating table along with the pricing issues right up front. Your telecom carrier may tell you these need to be separated or you should take things one step at a time, but that’s just another way to delay the process, especially if you haven’t set a rate effective date at the outset of talks.
A Better Call
Negotiating with your telecom carrier without an understanding of what’s possible, what’s standard, and what’s in your best interest is like ordering a meal at a restaurant from a menu without prices. You have no idea what you should be paying and what’s the best value for your money. Make a better call, the best call, by arming yourself with all the information and data before you begin negotiating your contract to ensure you get the best deal for your business.