Articles on IT Acquisition and Doing Better Deals
Tips & Tactics
- Negotiations: Principled Concessions
- Financial Analysis — a Refresher
- Presenting vs. Positioning
- Even Pros Make Mistakes
- The Power of No
- The Dip
- Caveat Venditor
- Champagne and Scarcity
- Urgency—Guard it at All Costs
- They Know That You Know
- Why a Checklist
- Beyone the Handshake
- The Challenge with Buying Technology
- The “Try It, You’ll Like It” Ploy
- The “We Don’t Need To Write That Down, You Can Trust Me” Ploy
- The “Low Ball” and “When I Hit Your Hot Button, I Gotcha” Ploys
- The “Price Protection Contract” Ploy
- The “Form Contract” Ploy
- The “Solutions” Ploy
- The “We Can’t Do It For You Because We Would Be Setting A Precedent” Ploy
- The “Unfortunately, I’ll Have To Get Any Changes Approved By Corporate” Ploy
- The “Price Protection Contract” Ploy
- The “Tie-In” Ploy
- The “Fait Accompli” Ploy
- The “Price Increase is Coming” Ploy
- Table of contents
- “We Don’t Need To Write It Down. You Can Trust Me” And Other Grim Fairytales
- The Negotiations Agenda Part 1
- One Bite at a Time
- The Negotiations Agenda Part 2
- Don’t Let Vendors Hold You Hostage
- The Right Attitude
- Finding Responsibility
- A Fair Audit Clause
- Looking Beyond “Needs”
- Before Saying “I Do,” Think About Divorce
- A ‘Top-Down’ Look In Challenging Times
- Don’t Allow Vendor Disappearing Acts
- Vendor Short-listing: The Long and Short
- If a Vendor Offers the ‘Lunch’ Ploy, Don’t Bite
- Make Sure Consultants Will Keep Your Secrets
- Two Essential Parts for Service Contracts
- Keep Consultants Far From the Enemy
- Be Wary of Annual Revenue Commitment
- Leasing’s Different When It’s Laptops
- Two Truths Behind Securing Better Deals
- Not in the Contract, Not Part of the Deal
- Feeling Safe With IT Security
- Avoid Surprises in Subleasing Deals
- Insist on Language to Cover Billing
- Manage the Contract
- Clear Ordering Procedures
- Winning with Leases
- A Ploy that Didn’t Fly
The “We Don’t Need To Write That Down, You Can Trust Me” Ploy by Joe Auer
This ploy is built on the vendor first creating and later manipulating personal relationships between its marketing people and the customer’s staff to justify leaving important vendor commitments out of the written vendor/customer agreement. Through use of carefully nurtured personal relationships, the vendor’s marketer is able to convince the customer’s staff to rely upon oral promises and side letters to document various vendor obligations in lieu of firm contractual commitments.
The “R” Words
The vendor’s tools for this rather subtle ploy are the “three R’s” of selling: rapport, rationale and relationship. Vendors hire marketing people who can use these “R” tools very well, personnel who can create sufficient rapport to develop supposedly long-term personal relationships with the customer’s key managers.
Once this has been established, well-trained marketing personnel can easily establish a long-term business relationship with the customer. The key is helping the customer’s staff who now think they have become personal and professional friends of the vendor’s marketing personnel to rationalize how and why they should do business with the vendor.
Once personal relationships are established, normally very cautious executives will accept a local salesman’s oral assurances on a wide variety of technical and legal points. This may include why a particular system is needed to the reason a given point need not be included in the contract. In essence, the aura of “trust” that results from the personal relationship makes it much easier for all of the vendor’s ploys to succeed.
Once rapport, rationale, and relationship have been developed by well-trained marketing personnel, major equipment “negotiating” sessions are often filled with echoes of the industry’s favorite fairy tales: “Oh, don’t worry about writing that down, we’ll take care of it here at the local level,” or “We can’t put that in the contract because of government auditing problems; but don’t worry, we’ll honor our promise to take care of it.” The list goes on and on.
What is amazing is not that the vendor’s personnel try to rationalize this approach to “contracting,” but that so many customers continue to accept the vendor’s position.
The Vendor Changeth
Customer staff personnel often ask why they should worry about reputable vendors failing to stand behind their casual oral representations. To the typical staff person, particularly one who has come to believe there is a personal relationship with the vendor’s representative, the vendor always has been an honorable company. Consequently, the vendor can be relied on to continue to meet its commitments, oral or written. The answer is painfully easy: conditions, and commitments, often change over time.
In many cases it will turn out the vendor’s local marketing representative never had the authority to make the commitment and the vendor management simply will not or cannot accept the economic or practical burden of fulfilling the promise. In other situations the vendor may change its original position to offset reduced earnings or to intimidate the customer into upgrading its system. Suggestions the installation may be considering buying used equipment from a broker often generate retaliation. In still other situations, it may turn out that the original oral understanding really was a misunderstanding and the vendor claims, quite legitimately, that it never agreed to take the requested action.
The absurdity of allowing personal relationships to influence a critical acquisition decision often, sadly, is demonstrated by the change in the relationship that occurs when either the vendor representative or the customer manager changes positions. The supposedly long-term personal relationship evaporates. The after-hours socializing stops, the friendship (to the extent it ever really existed) dwindles away, and the only remnant that survives is the vendor’s one-sided, standard form contract signed by the customer.
From a legal standpoint, the key rule in dealing with this vendor ploy is very simple: “If it’s not in the contract, it’s not part of the deal.” Business transactions involving hundreds of thousands, even millions, of dollars must be handled on a businesslike basis. The customer’s negotiators should draft a good contract. Then and only then should they worry about being “good guys” and maintaining a personal relationship. Too many customers forget that personal relationships and people come and go, particularly in the IT sales area. But as these personnel, and their relationships, rise and fall, the actual parties to the contract, the companies, remain legally obligated. Legal obligations are based upon the written agreement, not upon the oral assurances of the vendor’s former marketing representative.
The Rules of the Game
There are two related points to mention. First, the customer should never, ever, under any conditions, sign the vendor’s standard form agreement. Second, the customer should always involve its attorney and other professional advisors early enough in the negotiations to allow them to offer meaningful suggestions and help mold the transaction. These two points are so basic, so fundamental, they almost should not need to be mentioned. However, it is amazing how many large global, national and regional companies either sign the vendor’s standard form contract with no changes, or incorporate supposedly minor changes into the standard form without the advice of their attorney.
A pair of personal conduct rules are helpful in dealing with the “we don’t need to write it down” ploy. First, wherever possible customer management should avoid the establishment of any “personal relationships” between the vendor’s marketing personnel and the customer’s key staff people. Second, if it is impossible to avoid personal relationships, the customer should take additional, conscious steps to ensure objectivity in the decision-making process.
Avoiding Problem Relationships
The best possible approach is for the customer’s staff to come to recognize that their objectivity (and, consequently, their own career development) will best be served by maintaining professional rather than personal relationships with the vendor’s marketing representatives. Ideally, this rule need not preclude occasional after-work cocktails to discuss business matters nor even a social event from time to time.
What makes it difficult, however, is that once any of these quasi-social meetings occur, it is hard to draw the line. In reality, therefore, the safest and most professional approach is to eliminate the problem by eliminating the possibility. Business should be conducted in a business setting and other invitations should be politely refused. Where some social contact seems mandatory, the associated risks can, to some extent, be reduced by ensuring that a second or third staff person (who does not socialize with the vendor’s salesman) is involved in all decision-making evaluations and decisions.
These rules apply to virtually all levels within the customer’s organization. Although technical experts on the customer’s staff may actually not be the “decision-makers” in the customer’s next equipment acquisition, they are strong “influencers” because their analyses of specifications and performance often are critical to the customer’s decision. Since their recommendations may be colored if the vendor has successfully established the desired rapport and social relationship, they should be kept out of any socializing. The same risks exist at the line, staff, and executive management levels, all the way up through the chief executive officers of the respective organizations.