The Top Line is All Important to Vendors - and You Can Use This to Your Advantage.

If there's one thing a sales professional wants to avoid at all costs is a decline in the revenue they're getting from a client. In fact, no one in any company wants to see revenue decline. I mean, obviously.

So how can you use this fact to your benefit in your vendor negotiations?

Start with the assumption that a revenue decline is a non-starter with your counterparty - he can't go back to management with a 10% reduction in spend.

What's more acceptable (but still unpalatable) is a decline in margin. A company, in my experience, is willing to take a margin hit before a revenue decline. Why? Because upon subsequent renewal the revenue number is the starting point for any renewal proposal. It acts as a presumptive statement of the value of the service. Vendors would all things being equal prefer to negotiate non-monetary concessions than hard dollar ones. And who can blame them?

What that leaves you with is ... lots of non-monetary concessions to work with. Some common ones:

• Additional seats or users 
• Additional service modules
• Analyst conference calls
• Passes to vendor conferences

Vendors may be particularly willing to make concessions on services with low variable costs like additional seats (conferences and analyst calls don't scale the way syndicated content does), so you may be surprised by how much negotiating leverage you have to increase your license size. 

A word of caution: be careful with concessions that expand the user footprint within your org. The more seats or licenses a vendor has within your company, the stickier the service becomes - which the vendor may in turn use against you when the next renewal negotiation comes up. You can always try to guard against this by having an internal usage monitoring program, but be prepared to counter the vendor on this point. 

No company wants to see their revenue decline. An information services vendor may well compromise on margin, particularly for goods with a low variable cost structure. Concede on revenue if the service is worth it, then use that concession to extract non-monetary add-ons that have the potential to increase your overall product ROI. 

- Kevan Huston