Stage - Contracting

Definition The Contracting Stage is the phase in the sales pipeline where negotiations are nearing finalization (or finalized), and a formal agreement or contract is drafted, reviewed, and sent for signature. This stage comes into play once the prospect has been fully qualified, key stakeholders (i.e. decision maker(s)) have given you both “Product Yes” and “Commercial Yes” and you are actively working toward a deployment / go live timeline.

• Provide main POC (ideally senior leadership / decision maker) with an MSA overview highlighting general spirit of partnership and key terms
• Set expectations with POC on what can and can’t be agreed to (i.e. show stoppers in the contracting process e.g. uncapped liability, etc).
• Learn which terms and conditions are most frequently negotiated or cause concerns to game plan ahead of contracting process
• Understand what, if any influence, does your POC or business owners have on influencing the contracting process.
• Understand internal levers for negotiation - consult with leadership / counsel

• Learn about the steps and considerations legal / procurement teams need to go through in approving primary deal terms.
• Understand general timelines for this stage, what does the review process look like, how long does the approval process generally take, timelines for escalation, etc.
• Solicit feedback on legal / procurement’s understanding of “spirit of the deal. See below “What are we trying to show”.
• Identify areas of concern, red flags or blockers on the MSA to address in more detail on call / or follow-up call.

• Legal and Procurement teams are generally bought in at the last stage of the sales cycle. Before jumping into the MSA review and contracting, it’s important to ensure all sides understand the Gradient Metrics business, proposed scope, offering, way of interacting with team / collecting data, deliverables, etc. Ensuring this step is not skipped will save time and potential friction in the negotiation / redlining process.
• Provide a high level overview of the MSA and the “spirit” behind the partnership. If there are any areas that are particularly sensitive (as seen in the past ) proactively address them and walk through logic and reasoning for clause / wording.
• Line by line walk through of the MSA with open Q&A

• MSA quickly reviewed
• Minimal back and forth on redlines
• Timelines aligned upon for contracting process / redline drafting review and approval
• Pre-schedule recurring legal / procurement sync (as needed)
• Path to signature established

Some things to consider when approaching contracting and managing the redlines process below. This can be used as a playbook framework on how to set yourself up in the best way entering into this stage and how to manage the contracting process with as much control as possible.

1. Stage Qualification: Before entering the contracting stage you want to ensure you have not skipped/missed any steps in the sales process and the opportunity is fully qualified through your discovery/qualification framework of choice (e.g. BANT, MEDDICC, MEDPIC, SPICED). Some sales frameworks do not account for the papering process. It’s important heading into this stage to fully understand who is involved, what they are looking for, the general timelines, etc.
2. Define Success: Ensure your organization and sales team have a very clear outline of what a successful outcome looks like for your organization re: contracting, considering factors like contract length, marketing rights, renewal terms, etc. Your champion / advocates / decision makers should all be aware of your page 1 deal terms are and what you can and cannot accept.
3. Commercial Alignment: As mentioned before, you should not be entering into the contracting stage until you have aligned and received confirmation that all commercial terms have been agreed to by the decision maker(s). This will help you establish leverage when engaging with legal or any procurement teams. At this stage you want to have made sure you have confirmed you are a) their vendor of choice (i.e. you are at “product yes” b) they have agreed to all pertinent commercial terms (i.e.“commercial yes”). These terms include but are not limited to; pricing, payment terms, contract term, start dates, auto-renew language, opt-out clauses, etc.)
4. Procurement Awareness: With larger deals at the mid market to enterprise level you might also come up against procurement teams. These can be internal or external through firms like Vendr. Make sure you understand the potential level of involvement of procurement in the process and what specifically they are looking to protect and get out of the deal outside of rate concessions. With strongly established need and authority which you have built throughout the sales process you do have some influence, irrespective of what procurement tells you - Plan to USE IT!

1. Premature Contract Sending: Don’t send a contract without commercial alignment to avoid confusion and unnecessary back-and-forth with legal teams. Both sides should be aware of and have aligned that the next and penultimate phase in the process is around contracting before moving to signature.
2. Understand the process: As you kick-off contracting with your counterpart, make sure you understand who is going to be involved, what their roles will be, what they will be looking for, sign-off authority and what they will be looking for.
3. Separate Comms: Start a new “Contracting” thread. Avoid having everything in a single “deal” thread. Clean things up and make sure you have the right people on the thread from both sides (this includes PMs, decision makers, counsel, procurement and the relevant counterparts on your side.)
4. Bring folks up to speed: Before you start redlines and reviewing contract terms, make sure prospect’s legal / procurement teams understand your business, the product, how it integrates, what data if any it touches, etc. This will help avoid an ocean of red markups by legal teams that have not been briefed on what you do and how you do it. Especially important when interfacing / organizing/ manipulating any 1st party / client data.

1. Acknowledge Receipt: When receiving redlines from a prospect, confirm that all requested changes are included to avoid piecemeal negotiations. You want to have the full picture before you start marking things up. If any redlines are unclear to you, ask for more clarity to understand the “spirit” behind the redlines so you can have a productive conversation with you counsel and bring them up to speed on what the intention is for the markup.
2. Separate Commercial from Legal Terms: Identify and treat commercial or “business”, terms separately from legal terms during the negotiation process. Ideally commercial terms have already been aligned upon (per above) and should not be in question at this stage. Legal’s job is to mitigate and manage risk. If your contact is not confident to position why certain terms are in the agreement (auto-renews, price, marketing terms), and contextualized for their legal team that the risk has already been evaluated by “the business”, you will likely see broad stroke striking of terms that are important to your deal you will now need to manage through one at a time.
3. Quick Response: Respond promptly to redlines to set a pace and create leverage in the negotiation. Ex: If your team takes more than a day to compile feedback, give updates to your counter parts. If it takes days - a week, expect the counter part to now see this as an acceptable turn around time.
4. Summarize Changes: when sending back redlines made by your counsel, ensure that you call out the changes and spirit behind each change in the email. Transparency is key and make this collaborative and easy for your counterparts to understand what changed and why. Ex: “you will see we agreed to terms 1, 2, 3, we still have some space to discuss terms 4, 5, we need clarity on 6…”
5. Work async: Get legal teams to collaborate async in a word version of the MSA to speed things up. When asynchronous work is creating delays, push for “legal to legal syncs”.
6. Recurring Sync: for more complex contracts (generally at high ACV and at the enterprise) offer legal-to-legal syncs weekly. This will ensure you have a placeholder on the books to keep things moving.

1. Summarize Alignments: Clearly communicate areas of agreement and areas that still need discussion. Provide thoughtful reasoning for pushback where needed and help your counterpart understand why you are pushing back or can’t agree to something.
2. Use Hypotheticals: Discuss potential concessions and their implications with your commercial partner to gauge their reasonableness. You might get some crazy request from legal, challenge logic / reasoning and reality thoughtfully.
3. Off-the-Record Conversations: Use informal communication to explore paths to agreement and understand the counterparty’s flexibility. This is HUGE and an ace up your sleeve when you’ve built senior level relationship who can give you the real real on a deal and what needs to be done to find mutual alignment.

1. Comprehensive Value Assessment: Align on the value your solution brings and prepare for pricing or concession requests should Procurement be in the picture. If you’ve done your job you should have no problem articulating and positioning price in the context of value and ROI. Helpful to have a senior advocate on the call to push back internally if things spin out. Don’t be afraid to say NO.
2. Value Levers: Identify what you can offer in exchange for concessions, like marketing rights or featured case studies. It is important to know going into an agreement what you need to protect and what your prospect cares about so you pull the right levers to get the deal you want.
3. Legal-to-Legal Discussion: If there’s a deadlock on non-commercial legal terms, suggest a lawyer-to-lawyer discussion to find common ground.
4. Pivot Strategy: Have a strategy for maintaining key points during negotiation and be ready to pivot if needed to protect your interests.
5. Documenting Concessions: Keep a record of any concessions made and the reasons behind them for future reference and learning. If the negotion spins out / you loose control - always helpful to have the log of changes and reset on what where you started, what was agreed to, concessions made, etc. This can give you thoughtful push back on being “reasonable” and setting expectations on a NO given everything you have done to accommodate your prospects asks.
6. Leverage Timelines or Deployed Resources: Use the urgency of a compelling event, integration kicked off, onboarding kick-off, or month-end or quarter-end timelines to drive action and commitment.