How to use shuttle diplomacy to negotiate better software deals

Negotiating any software contract — either as a first-time customer or as part of a renewal — can be a complex and cumbersome process. And is it any surprise, given that the average SaaS negotiation takes 21 days to finalize.

But time isn’t the only challenge though. Dealing with conflicting expectations and actually reaching the point where both parties are satisfied with the outcome can involve a lot of back and forth communications, often causing huge headaches.

Then, there’s the fact that buyers often have no frame of reference on what other companies are paying for their software — given that as many as 55% of vendors obscure their pricing — making it difficult to know if you’re getting a good deal, let alone the best possible deal.

So, what’s the solution? How can you ensure you’re getting the best terms on any contract?

In short, with the help of shuttle diplomacy.

In this article, we’ll explain what shuttle diplomacy is and how it can be applied to SaaS negotiations.

What is shuttle diplomacy and how does it apply to SaaS negotiations?

Shuttle diplomacy is a negotiation strategy that involves using an intermediary to act as a mediator between two parties — in this case you as the buyer and the software vendor as the seller.

Now while shuttle diplomacy is not exclusive to SaaS purchasing, it is useful when negotiating software contracts as it creates a sense of impartiality throughout the negotiations, helping both you and the vendor reach an agreement you’re both happy with.

Ultimately, a mediator acts as a go-between to communicate proposals, ask questions that bring up overlooked details, and facilitate discussions without you having to be directly involved. Mediators can also use their understanding of the situation to detect common ground and help craft an agreement that both sides will find acceptable.

According to Vertice’s Head of Buying, Nick Riley, shuttle diplomacy can also help to ensure that your own expectations aren’t totally unrealistic.

“When you’re emotionally invested in a negotiation, there’s the possibility that what you’re asking for is unachievable. Not only does this waste time, but it can also risk compromising your relationship with the vendor. By using an intermediary to negotiate on your behalf, you can ensure that you’re coming to a mutually beneficial agreement."

Benefits of using shuttle diplomacy in negotiations

Regardless of whether you have an in-house procurement team or not, there are many advantages to outsourcing procurement when it comes to buying or renewing software.

But, what exactly are the benefits of using shuttle diplomacy in SaaS negotiations?

It can help to address conflicting expectations

As the buyer, you want to secure the best price possible on any given contract. On the flip side, a vendor will want to achieve the best terms for them.

When both parties are in direct communication, there can be a lot of back and forth, and it can subsequently take time to reach a mutual agreement. An agreement that probably won’t work in your favor anyway.

Why?

Because in many SaaS negotiations the vendor has the upper hand. This is particularly true of vendors that obscure their pricing, leaving you with no frame of reference on cost and therefore very little purchasing power. Using an intermediary to negotiate on your behalf not only streamlines the process, saving you the time and hassle of dealing with renewals or first time purchases, but with the right provider, you can also be sure to achieve the best possible price and contract terms.

A better understanding of the terms of any SaaS contract

A third-party SaaS negotiator can help you gain a better understanding of the different terms and conditions within a SaaS contract. This can include things like the pricing structure, service level agreements, usage limits, early cancellation fees, auto renewal clauses, and legal implications, along with other specific details related to your agreement.

In fact, the more advanced procurement software providers will leverage automation, and even AI, to streamline the various stages within the procurement process.

See examples of how procurement teams are leveraging AI within their processes.

Substantial time savings

By outsourcing and therefore streamlining SaaS purchasing, your procurement process becomes a seamless workflow requiring minimum input from your side. This not only eliminates headaches, but also frees up your time to focus on more strategic priorities.

Greater buying power and leverage

Perhaps the biggest advantage of shuttle diplomacy is that it can help shift the balance of power in your favor during negotiations — at least it can when the chosen negotiator has the required intel.

Intel such as the prices that other similar companies are paying for the exact same subscription, and therefore intel that can give you the leverage you need in negotiations.

Still not convinced? Her are some more reasons why procurement teams often need expert support.

Get the best possible deal on every contract

At Vertice, we have this intel.

More specifically, we have access to a database of SaaS transactions from more than 16,000 vendors worldwide, providing us with pricing benchmarks that can help us secure the best possible price on any SaaS contract.

But it’s not just the price that we can negotiate on. It’s also the terms of any agreement.

In fact, our team of experienced negotiators know the intricacies of the purchasing process from either side of the deal, meaning we know exactly what to look out for in software contracts – including the hidden tactics many apply to drive up costs.

Not yet ready to work with an intermediary? Why not have a read of our dedicated guide to outsourcing procurement which will hopefully answer any specific questions you might have.

Alternatively, see how we helped one company reduce their annual software spend by 32%, while saving them more than $155,000 on a single contract.