Let’s say that on 68-95% of the days that you take your dog for a walk in winter, it rains.
You expect it to rain so you’ve got your response prepared. Just as I took a coat this morning when I walked our dog, expecting rain (as it turned out, it didn’t rain).
What about your contracts? What do you expect there, when it comes to contract negotiations? And are you prepared.
How the Empirical Rule (aka the 68-95-97.5 rule) applies to Contract Negotiation
For every contract that is sent out to customers, there will be a small number who just sign it. (Yes!) Statistically, this might be 2.5-16% or up to 2 customers out of every 10. There will be an equally small number who want changes to every provision. (Aargh!)
- Note 1: If more than about 2 out of 10 customers want to change your agreement a lot, maybe it’s time to change your base agreement.
- Note 2: We’re talking about agreements that do get negotiated here, not the type that customers must accept as is in order to use your service or the type that nobody reads.
How to identify Predictable Issues using your own contracts*
*if you receive and review agreements rather than using your own, that’s another story, and the topic of another article
Predictable Issues are the ones that are, well, predictable.
They might be predictable because with your experience you just know what things are likely to be a problem (and will need to be discussed) or they might be predictable because over time you’ve noticed that customers keep raising the same issues.
How many businesses collect and collate contract issues raised by their customers?
You’re right, you’re not alone. Few businesses, if any, do this. Despite many years using the same agreement and addressing the same issues over and over again, the vast majority of businesses do not collect this information and make use of it for the next negotiation.
Yet in so many other areas of business (and life) we prepare. We prepare for the expected and we have a response ready. By the way, with this approach of anticipating Predictable Issues and having an approved response ready, guess what? We can more easily delegate the contract negotiation task to avoid bottlenecks and we can ensure consistency. More on these areas in later articles.
And the net result to anticipating Predictable Issues and being prepared? Faster turnaround in contract negotiations and faster closing. Start providing service sooner and start getting paid earlier. Maintain momentum and keep teams focused. Need any more reasons…?
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Now, time for another walk. Where is my raincoat?