I remember when your word was your bond and was all that was needed to form an agreement. In the last 20 years, however, verbal contracts have all but disappeared within our litigious society and written contracts are the order of the day. Like all contracts, written or verbal, how well they work is up to you.
Everyone seems to have a story about a contract gone awry. My company faced a contract dispute when a customer made a management change and the new person in charge started buying from our competitor. To address the situation we took a copy of our contract to the new manager and asked him to reconsider his position. He would not and a letter from our attorney was sent to him. When the two lawyers (ours and theirs) got things straightened out, we had the business back. Three years later, we still serve that customer, the man who violated the original contract is gone, and a new agreement has been signed by his successor.
Here are 5 good reasons for writing contracts.
- As illustrated in the example above, a contract protects your business when companies make internal personnel changes. It also gives you time to build a relationship with new decision-makers.
- Contracts tend to keep competitors’ sales reps away. The words, “I have a contract,” have legal bearing and discourage the competition from repeat sales calls.
- Contracts protect you from the national account deals struck by “top management in faraway places,” people who may not understand the meaning or value of the service you provide locally.
- Contracts give you an anniversary date for a price increase reminder.
- Contracts give you a time advantage as you know when the contract is due for renewal and, in most cases, your competitor does not.
The use of effective contracting will let you sleep better at night knowing that when changes occur within your best accounts, you will not be left out in the cold. Today’s contracts guarantee a secure tomorrow, so be sure to take the time to strategize on how best to get and keep those documents in place.
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