Negotiation tips

Now that you're familiar with the strategy for securing the best possible service and savings, remember to apply these key points whenever you negotiate with carriers.

1. Reprice your telecom contract at least every six to 12 months. For example, an $18 billion firm saved $10 million on its telecom contract by repricing, which translates into a 5% increase in profit.

2. Maintain flexibility. If you are overcommitted in certain aspects of a contract, you can often substitute other telecom services to meet a carrier's usage requirements.

3. Give your company at least eight to 12 months before your telecom contract ends to get through the request for proposal process and potentially switch to a new carrier.

4. Don't take cash upfront for contract extension offers without doing a full analysis of its impact over an extended period. Many experts predict dramatic shifts in pricing as local exchange carriers begin to compete in the long-distance markets, so a contract extension could cost you money in the long run.

5. Put a "stewardship" or a rate-review clause in the contract that gives your company the right to adjust your contract pricing so it's in line with current market prices.

6. Hire outside experts who are regularly involved in the telecom contract negotiation process rather than relying solely upon your internal department's limited frame of reference.

7. Don't agree to automatic minimum annual commitment increases.

8. Don't rule out second- and third-tier providers; these carriers have really improved the quality of their services.

9. Don't let your internal telecom team get caught up in justifying the current deal. Instead, reward the team for improving it.

Machtig is an executive vice president at Telwares, a Destin, Fla., telecom procurement and negotiation services firm. He has authored several best-selling books and special reports, including "How Fortune 500 Companies Can Improve Telecom Contract Prices and Terms." Machtig can be reached at machtig1@ aol.com or (612) 325-9999.

Additional articles in the series:

Knowledge is power

Milestone markers

RFP pointers

14 tips

Back to the intro
Includes links to additional resources on saving telecom money.