Learn How to Re-Negotiate or Completely Terminate Your SaaS Contract. Save Money Instantly (And Never Overpay Again)
June 10, 2020 –
So you find yourself in a precarious situation where you want to dump your enterprise CRO SaaS contract. Even though you may have 8,000 valid reasons, it can be like any nasty breakup – messy, difficult, and costly.
If you are lucky, you’ve planned ahead and have a “get-out clause” that makes sense for your organization. If not, this article will give you a few tips on how to BREAK UP with your enterprise provider with minimum damage.
Unfortunately, this is not a 1-2-3 process. We would like to tell you it is as simple as picking up the phone and channeling your high school broken heart alter-ego, saying, “Hello customer service, your product sucks, so I don’t want it anymore.” But we know you are classy and would never do that.
But don’t give up, we still have a few suggestions for you.
The Convert Team is in a unique position because we interact with optimizers who are not happy with their current testing software and want to switch. They all want to know the same thing, “how do we shift to a better-fitted CRO experimentation software?”
Leaving is not all about price. Unfortunately, some companies take advantage of their customers because they know they are locked in. This may include:
- A degradation of service, where the original quality you experience declines.
- The provider may overhaul its product offering, which results in no longer serving your needs.
- Or worse, the provider increases the price knowing you are locked into an almost iron-clad contract. Unfortunately, clients of VWO and Optimizely have been victims of this practice.
- Another common issue is the lack of robust customer support.
- Misalignment of company cultures and values with SaaS provider. Often this is overlooked during the initiation of the contract, as people are focusing on “form and function” instead of “flow.” You just want to know that the software is going to perform and don’t think about how company cultures will influence interactions.
Dundas Lawyers, an Australian-based law firm that specializes in SaaS contracts, describes the key elements and consideration in this video:
Now that we’ve laid out a few reasons why you may want to cancel your Enterprise SaaS contract, let’s dive in. A few things we will examine include:
- Understanding your contract and its effects,
- How to enlist help,
- How to set your expectations.
What Makes It Messy?
Here’s what makes it messy: the fact that you have an enterprise software means you signed a contract. And a contract equates to one word – legal, which means you formally entered an agreement, and as long as you made it with consent and the terms don’t break any laws, it is binding.
In this way, the situation is unemotional. However, if you are experiencing any of the issues discussed above, emotions can quickly surface. No one likes to be taken advantage of or given less than they feel they deserve. Just like any break-up, when feelings get involved, matters get complicated.
Inspect your Contract
It is important to inspect your contract, which may be a challenge. Most contracts are loaded with legalese, making them difficult to digest. Shawn Beckett, Esq., attorney at Beckett Key Law Group, Mount Ephraim, New Jersey suggests when you are evaluating an existing contract or entering a new contract.
Think about how important the software is. What other options exist and does the cost correlate with an increase of profit that makes sense.
Here are a few questions you can ask as you evaluate your contract:
- Are you nearing the end of your contract?
It is much easier for both parties to walk away from a contract that has only a month left than one that is its infancy.
- What are the stipulations for cancellation or terms of your agreement? The clearer you are on these terms, the better position you will be in to make an empowered decision.
- Is your contract pre-paid?
It is common for enterprise SaaS contracts to be paid for a full year because it benefits both parties. But, when your SaaS company is already holding on to your money, it is not easy to get them to return it.
- What are the repercussions of breaching your contract? This is one of the most important things you want to know. What will happen if you break this contract? What will you lose? What will you be responsible for?
Similar to a cell phone contract. Have you ever jumped shipped from one cell phone carrier to another? If you were on a yearly or multi-year contract you know there was a cost associated with this cancellation. But sometimes, even with the enormous termination fee, moving carriers would still be a better option and save you money.
It is important to know that each SaaS company has different ways of offering its subscriptions and they will have different cancellation requirements, which will vary depending on the product and the customer tier. Since annual commitments greatly reduce the fees, they are currently the most used alternative or even a must for enterprise customers.
Lastly, don’t try to navigate this legalese jungle alone. Solicit help from other team members. Utilize the genius in your legal department. Make it a team effort. Someone may see something you missed, or have a rock-solid suggestion that will help you move forward.
You May Have to Give to Get
If you are looking to cancel or renegotiate your contract, you may have to give something in return. As stated above, some providers include an opt-out fee for multi-year contracts. Remember that divorce? You may have to pay for your freedom.
Becoming comfortable with that possibility up front prevents you from being shocked when you go to negotiate or cancel. It empowers you to plan and budget accordingly.
Now that you are comfortable with that idea, let’s look into your contract.
What to do if Cancellation is NOT an Option?
Start planning. The end date will come.
You want to have a solid plan. A step-by-step that lines out a solid transition into a new software like Convert, a software that is just as robust as your previous enterprise software without the steep price tag, poor or slow customer service, or underutilized services.
Once you cancel your contract with your enterprise software company, you will need a new partner to go steady with.
The good thing is, as bad as your experience was with your last SaaS company, that experience probably showed you exactly what you need and want in a CRO testing tool.
So let’s recap, here is a quick glance at the tips:
Get help, especially legal.
Look for a new provider earlier than you need to.
When you are sure you want to opt-out, start looking for new partners immediately. Moving to a new platform can take time, strategic planning, and precious resources, including manpower and $$$.
Calculate the numbers and ROI of your decision.
Every decision has a cost associated with it. Attorney Shawn Beckett offers the following approach to calculating the ROI of a software,
If you are selling a product and you have customers, you should be able to break down the cost of the software per customer. If you have 10 customers per month, and the software is $500/month the software costs $50/customer. If your LTV of a customer is below $50, then it is not a good deal.
The thought of renegotiating or canceling your enterprise contract with an A/B testing company can be a daunting task. However, with the right instructions, this process can be seamless.
As we are in this time of uncertainty, good business owners are reevaluating their numbers searching for areas where they can cut flub, excess, and extend cash reserves, all to prepare for the potential of extended market craziness.
Now that you have a template that walks you through how to approach the renegotiation or cancellation process with your Enterprise SaaS contractor, you can have a knowledgeable and empowered conversation within your company.
Cancellation may give you instant access to more funds that your organization can invest in other areas.
Now time to take action. Start by reviewing your current contract to see if it makes sense for you to enter a negotiation with your SaaS enterprise company.
When you are renegotiating your contract, here is a quick list of the dos and the don’ts:
- Don’t go in ignorant.
- Don’t be afraid to assert your position.
- Don’t ignore the numbers.
- Don’t base your decisions on emotions.
- Don’t let your investigation of new software rest on their features page. Go beyond and test the software.
- Do be forward and candid.
- Do be courteous and polite.
- Do understand the terms of your contract, what you can and cannot do.
- Do understand the financial implications of breaking your contract.
- Do get help.
- Do investigate other vendors, get trials, compare software in practice. For example, if you were canceling your contract with Optimizely you want to investigate a strong replacement software where you don’t lose any functionality like Convert.
Use these tips, strategies, to make an empowered decision about your current Enterprise SaaS provider and how you want to move forward.