Technology Service Provider
K&R’s client did not offer expensive guarantees and rebates as part of their services package. This will positively affect profitability as the agreement executes. The result was generated by carefully understanding client needs before offers were made.
Industry: Technology Service Provider
The transaction: Hardware maintenance contract
Revenue forecast before attending the K&R Workshop: Discounted to $2.3M with 97% uptime assurances and rebates to the client for any equipment downtime due to parts unavailability.
Expected transaction close timeframe before attending the K&R Workshop: Second Quarter
Narrative: The proposal was for equipment maintenance services in all of the client’s locations. We anticipated discounting our price to $2.3M assuring a 97% uptime and that we would provide pro-rated rebates to the client when equipment down-time was due to parts unavailability.
Actual results: $2.3M, 95% uptime assurance, and no rebates for down-time due to parts being unavailable.
Actual closing timeframe: June 22 (one week earlier than expected).
K&R Tools and Techniques: The K&R Workshop emphasized that “Preparation is Key to a Winning Negotiation” (one of the K&R Six Principles of Negotiation™). We spent time analyzing and comparing the various combinations of uptime assurances, rebates, and prices for our equipment maintenance services. We were patient, and listened (the first step in the K&R Leverage Circle™) to understand what was Mandatory, Important, and Desirable (from the K&R MID Chart™). The value of our services to the client was very high, and we realized that a 95% uptime assurance would meet the client’s objectives. We stock parts in a local warehouse, so there was a low likelihood that we would be waiting for parts in the event of an outage. We focused the client’s attention on the value of the services we would provide, and they accepted our offer of 95% uptime assurance. The subject of rebates in the event of parts not being available did not come up in the discussion, but we were prepared to address the issue if it did.