Negotiating a telecom contract takes a certain delicacy if you want to get the best deal without compromising your service. Although companies can take advantage of a competitive telecom market, it's important to read the fine print on contract clauses and other factors that influence price and quality. On the other hand, a well-negotiated telecom contract clearly states your services and expectations with unambiguous pricing models.
So, how do you come up with an agreement with your provider that works for you? With the right research and a little guidance, you can negotiate beneficial terms.
Here are seven tips to help your company get the service you need at a price you can afford:
Think Short Term
Planning for the short term goes against the grain for companies used to budgeting ahead for three to five years and coming up with long-term business goals. However, ever-changing technology and the mercurial nature of the telecom industry necessitate flexible contracts that you can negotiate on a regular basis. If your current provider has you locked into a contract lasting more than three years, you might be compromising your company's need to keep up with industry rivals.
Short-term contracts allow you to pivot quickly to take advantage of the following:
Discounts and price reductions
Better service level agreements
Latest managed services
Platform convergence of latest technology
Changing compliance or regulatory requirement
Taking a magnifying glass to your current contract and using a little finesse can help you maintain your service needs and budget.
Find the Right SLAs
When reviewing service level agreements (SLAs), keep in mind what your company needs not the limitations of your current provider. SLAs play a big factor in service quality, especially if you offer services that depend on telecom.
SLAs should define acceptable response and quality parameters, with penalties applicable if your telecom provider falls short of these goals. From service availability to notification windows, SLAs form the heart of what you can expect from your telecom provider.
Do the necessary research to come up with SLA parameters that benefit your company.
Consider Minimum Annual Revenue Commitments
MARCs Obligate your companies who pay a certain amount regardless of actual usage. These thresholds, listed on the master service agreement, penalize your company regardless of circumstances. Fortunately, MARCs are dwindling in popularity as competition increases. However, it's important to examine pricing schedules closely, particularly for smaller carriers that may be willing to negotiate to keep your business. in the best-case scenario, your contracts will have low or no minimum annual revenue commitments.
Aim for Maximum Scalability
Is your current contract flexible enough to adjust if your business expands quickly? Your telecom contract needs to account for upward or downward scalability. Competitive contracts are tiered to provide reduced rates for additional volume.
Instead of adding a location, you may need to close a warehouse and stop billing for a location with minimal penalties. Include precisely worded clauses that build flexibility into your agreement.
Utilize Terminate-for-cause Conditions
If your telecom provider fails to meet the parameters set forth in the contract, you want to reserve the right to fire them. However, in order to do so, you need to include a termination clause in your standard contracts.
Common conditions included in these clauses include the following:
Poor customer service
Consistent failures mean service level agreements
Multiple missed deadlines
If you're considering a new telecom provider, terminate for cause clauses can protect you if they don't live up to your expectations. Although it's tough to negotiate, you can try to put a probationary period into the contract that gives you an opportunity to pull out of an agreement with a new vendor.
Avoid Auto-renewals
Providers sometimes include enticing offers of discounted services if you build auto-renewal into the contract. Instead, opt for month-to-month contracts which allow you to renegotiate services and fees on an ongoing basis.
This flexibility makes it a little more challenging to track special promotions and account for price changes. Fortunately, there are Telecom Expense Management systems that make this process easier.
The worst auto-renewal clauses lock you into a contract for a year or longer at the end of your original contract. This prevents you from taking advantage of promotions and vetting out new providers if needed.
Include Contact Information in the Contract
Include specific names as well as titles in your contacts. This information is invaluable if you have a problem with your billing and need a consistent point of contact to advocate for your company. Of course, people can leave their jobs at any time. Therefore, it's equally important to update the contract to ensure that all the contact information you need is available.
Contact Valicom today if you have questions about your current providers and would like to discuss our telecom management services. We are well-versed in contract negotiations and invoice analysis. Let our telecom experts help you get the best possible contract terms for your company.
It’s a lot of work, but we are here for you.
Ready to outsource your telecom expense management projects?
Email us today at sales@valicomcorp.com
ABOUT THE AUTHOR: NANCY PECKHAM
Nancy Peckham is the Founder and President of Valicom Corporation, a leading telecom expense management and consulting firm in Madison, Wisconsin. Nancy launched the organization as one of the very few women in technology, seeing the gap in services and the opportunity to fulfill the client’s unique needs while leveling the telecom playing field. She has spearheaded Valicom’s evolving services, including a web-based TEM platform that tracks all IT assets and processes multi-level invoice approval for bill payment. To learn more, visit www.valicomcorp.com.