Tips for Negotiating with Social CRM Vendors

By Barton Goldenberg

In my last post I discussed 12 key questions to ask potential vendors to help identify the most suitable Social CRM software for your organization. Once you’ve chosen your vendor, here are some tips for negotiating the optimum product/service agreement and price.

According to Gartner, up to 80% of consumers’ discretionary spending is influenced by Social Media, and this continues to attract new entrants into the growing Social CRM marketplace. This is good news for Social CRM software buyers, as competition strengthens the buyer’s position in a negotiation.  Many excellent Social CRM software vendors need business now and are willing to negotiate substantial discounts.

Here are 9 negotiating tips that I have found to work well in a buyers’ market:

1. Be sure to understand the business need for each optional software module being recommended by the vendor. Be particularly sensitive to the vendor’s desire to scale up its offering with optional features and functions. Make sure you are going to use all the capabilities you will be paying for.
2. Include as many of the vendor’s optional modules as possible into the base agreement. Lock in pricing in the initial negotiation regardless of when the modules will actually be put to use.
3. Ensure that the Agreement is as definitive as possible. All vendors are prepared to negotiate new clauses, modify existing clauses or even delete clauses in their standard agreement.
4. Spread payment for the software over the life of the agreement. Most vendors are prepared to do this to secure business.
5. If the vendor is also providing implementation services, list and define deliverables/acceptance criteria within the agreement. Be sure that these criteria have clearly defined metrics.
6. Negotiate a phased payment plan: For example, 20% upon signing the agreement, 20% on the successful accomplishment of an initial set of deliverables, an additional 20% progress payment, and the final 40% upon completion.
7. When using the vendor or one of their partners for implementation services, purchase a block of the vendor’s or the implementation consultants’ time. This will usually result in a better rate than a pay-as-you-go approach.
8. Consider requesting a site license for your organization instead of a per-user arrangement. When considering site-license pricing, determine both your expected initial number of users and expected additional users over time.
9. Be sure to negotiate maintenance and support charges up front. Insist that any percentage charges are calculated off of the net price rather than the list price.

The current buyer’s market will not last forever, but Social CRM software vendors will always welcome new business.  While limits exist to vendor discounts, and it is important to ensure a good spirit of partnership once negotiations have been completed, there is without a doubt plenty of room to negotiate a fair deal.

Once you have selected your Social CRM software vendor and negotiated an acceptable purchase agreement, the next step is implementation. That’s when the hardest and most important work begins.

In my next post, I will discuss ten crucial steps toward realizing a successful Social CRM implementation.

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Barton Goldenberg, is the founder and president of ISM Inc., customer-centric strategists/implementers serving best-in-class organizations globally. As a CRM leader for 30 years, he was among the first three inductees in the CRM Hall of Fame. Recognized as a leading “customer-focused” author, his latest book, The Definitive Guide to Social CRM, is hailed as the roadmap for Social CRM success. Barton is a popular speaker on “maximizing customer relationships to gain market insights, customers and profits”. He is a long-term columnist for CRM Magazine and speaker for CRMevolution and frequently quoted in the media.