Finding value through negotiation with martech vendors

The company experiences specialized leadership with hands-on marketing activities.

Many marketing teams are preparing to negotiate software contracts that expire on December 31, in an environment where marketers are looking for quick profits and, more than ever, with success and loyalty.

How should Martech’s purchasing teams negotiate the best deals?

1.Start from above

“We mainly worked with international companies in the 2000s and 99% of our subscribers think they are behind in technology; this position is important and desperation could start contractual negotiations with suppliers, “said Tony Byrne, founder of technology analytics company Real Story Group, which evaluates Martech and CX technologies.” This is not a new story, but it went much faster during the COVID period.

This desperation, shared by large portfolio companies, could lead to responses to higher price proposals, including dramatic increases in indirect prices and, in particular, in personnel costs.

“It’s important to make sure you get quarterly value from the different team roles assigned to your account and not just from a group of overvalued accounts,” Byrne said. Determine which criteria and criteria are the operating costs, regardless of the salesperson or the length of the relationship. Once you understand the vendor architecture that determines the costs, you understand the “what-if” scenarios and contact the salespeople, but you know you are doing your job.

2.Maximum costs

“Now is a good time to negotiate with major vendors such as Adobe, Salesforce, and Oracle as they plan to sign large multi-year contracts later this year to raise capital,” said Byrne. “We encourage our customers to negotiate hard and use a test-based selection method.”

The test-based selection method allows traders to test not only the product on the martech stack but also the integration and support functions. However, the test-based selection method is only the first step, as the long-term implementation and integration costs must be fully detailed before a contract can be signed. If neglected, the technical aspect of trading can end up costing more than investing in human capital.

Marketers must use their internal resources, including the IT department, to get a fresh and unbiased picture of what is needed, the value of the product and services received, and the exorbitant costs.

“Many large companies invest in an entrepreneur rather than solving specific problems,” said Byrne. “We think we are developing internal capabilities, including using internal resources to ensure a good crop without overload.” The recall clauses inform customers of future rate increases.

3.Experience is important

According to Byrne’s experience and client background, Martech’s primary contract negotiators are the marketing leaders who created RFQs and worked in day-to-day operations for at least five years before moving to management.

Experienced marketing leaders know how to use key internal stakeholders to objectively evaluate proposals and determine how they fit budgets and operations. It is recommended to manage the long-term roadmap and cost of the martech stack as much as possible in a rapidly changing business environment. Areas, where Byrne has spent a lot of money, include CDP and WCM licenses.

“Marketers who have been in the trenches for five or ten years can look at salespeople and know they can’t see anything with rose-colored glasses,” Byrne said.

4.View your budget request

If you’ve already started bidding with bidders in 2021, it’s never too late to correct mistakes that could lead to higher prices. Use competitive prices to influence current suppliers and, if necessary, shorten contracts to improve negotiations.

Byrne recommends getting bid prices from competitors first and then returning to current suppliers after having had the opportunity to negotiate. If possible, start at least six or nine months before the contract expires to find ways to reduce costs, including an early-renewal discount that can be spread over several years.

“It’s never too late to negotiate,” Byrne said. ‘In any case, you don’t raise a commission; let the salespeople take advantage of someone else. Marketers have many resources, so make sure to use them all to get the best price.

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