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
“We Don’t Need To Write It Down. You Can Trust Me” And Other Grim Fairytales 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. The focus is to justify leaving important vendor commitments out of the written vendor/customer agreement. Using carefully nurtured personal relationships, the vendor’s marketer hopes 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” Tools
The vendor’s tools for this rather subtle ploy are the “three Rs” of sales: rapport, rationale and relationship. Vendors hire marketing people who can use these “R” tools well—people who can create sufficient rapport to develop supposedly long-term personal relationships with the customer’s key managers. Well-trained marketing personnel can easily establish a long-term business relationship with the customer. Once that relationship is established, the key is to help the customer’s staff rationalize how and why they should do business with the vendor.
When personal relationships have been established, normally cautious executives will accept a salesman’s oral assurances on a wide variety of technical and legal points. These may range from the justification of a particular system to the reason a specific 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 the vendor’s ploys to succeed.
Once rapport, rationale and relationship have been developed, so-called negotiating sessions for major equipment often sound like 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. Don’t worry, though. 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”—it is that so many customers continue to accept the vendor’s position.
The Potential of Change
Customer 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 believes there is a personal relationship with the vendor’s representative, the vendor is an honorable company. Consequently, it can be relied on to continue to meet its commitments, oral or written. However, a lesson painfully learned is that conditions and commitments often change over time.
For instance, the vendor’s local marketing rep may never have had the authority to make the commitment. Vendor management simply will not or cannot accept the economic or practical burden of fulfilling the promise. In another situation, the vendor may change its original position to offset reduced earnings or to intimidate the customer into upgrading its system. 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 influence a critical acquisition decision is often demonstrated when either a new vendor rep or customer manager takes over. The supposedly long-term personal relationship evaporates. After-hours socializing stops; the friendship—to the extent that it ever really existed—disappears, 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 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 must draft a good contract. Then—and only then—should they consider being “good guys” and establishing a personal relationship. Too many customers forget that people and relationships come and go, particularly in the equipment sales area, and relationships may rise and fall. But the actual parties to the contract—the companies—remain legally obligated. Legal obligations are based upon a written agreement, not upon oral assurances of the vendor’s former or current marketing rep.
There are two related points to consider. First, the customer should never, under any conditions, sign the vendor’s standard form agreement. Second, the customer should always involve an 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, that they almost need not be mentioned. However, it is amazing how many large, 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 attorneys.
Two personal conduct rules are helpful in dealing with the “we don’t need to write it down” ploy. First, as much as possible, customer staff and management should avoid establishing personal relationships with the vendor’s 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 recognize that objectivity (and, consequently, their career development) will best be served by maintaining professional rather than personal relationships with vendor reps. Ideally, this rule need not preclude an occasional after-work drink to discuss business, nor even a social event from time to time.
Once any of these quasi-social meetings occur, however, 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. A second or third staff person who does not socialize with the vendor’s people needs to be 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 next equipment acquisition, they are strong influencers. Since their recommendations can be colored by a relationship with the vendor, they should not socialize. The same risks exist at the line, staff and executive management levels. The best rule is for the customer’s people to socialize among themselves, not with the vendor’s representatives.