Deal Shaping

Deal shaping refers to the process of structuring the terms & conditions of an order strategically, to align with both the vendor’s and customer’s objectives. Proper deal shaping can significantly improve your company’s deal closure rate, can assure a mutually beneficial agreement, and encourages a long-term partnership with your customer.

Here are several best practices to follow when building your orders:

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Commercial Terms

Clear, well-defined commercial terms help customize the agreement with a specific customer, reduce friction during negotiations, and improve the chances of closing the deal.

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Termination Clause

Adding a termination for convenience clause to the commercial terms gives both parties clarity and flexibility regarding contract exit points. This could help customers feel more comfortable signing the deal.

• Termination for Convenience:

  You grant the customer some flexibility by allowing them to terminate the agreement at their discretion.

  • Best practices:

    • Under your company settings, upload a commercial terms document with the termination for convenience clause. This ensures that the clause applies to all orders by default.
    • Customize the clause at the order level if you need it for specific customers.
    • In your commercial terms, specify an opt-out period during which the customer can cancel the contract without any penalty.

  • Example: “The customer may cancel the Order Form at any time before or on the 90th day from the start date mentioned in this Order Form (‘Cancellable Period’). Any fees paid for the period between the Start Date and the termination date (‘Cancel Date’) are non-refundable. Unpaid invoices are still due and must be settled.”

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Price Lock Clause

Offering a price lock clause can help customers feel secure in predicting their budget for the duration of the contract.

• Best practices:

  • Offer a price lock for a fixed period (e.g. 12 or 24 months).

  • Define whether this price lock applies to all products and services, or just specific components.

  • Clarify what happens after the price lock period ends (e.g. a capped price increase).

  • Example: “Customer pricing is locked for 24 months from the contract start date. After this period, pricing may be subject to an annual adjustment not exceeding 5%.”

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Marketing Clause

It’s a common practice to include a marketing clause in agreements. This allows the vendor to leverage the customer’s brand and reputation for marketing purposes, while also benefiting the customer by boosting their own visibility.

• Best practices:

  • Ask for permission to use the customer’s logo, name, or quotes in your marketing materials.

  • Offer options for video testimonials or case studies to build stronger social proof.

  • Specify the types of materials (e.g. website, brochures, videos) where the customer’s brand may be used.

  • Example: “Customer agrees to provide Vendor the right to use Customer’s name, logo, and any testimonials or quotes for promotional purposes, including on Vendor’s website, case studies, and other marketing materials.”

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Customization and Flexibility

Customization is a key factor when shaping a deal. Vendors that can tailor their agreements and offerings to meet unique customer needs have a higher chance of securing a deal.

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Custom Terms for Specific Deals

While it’s important to have default clauses, customizing certain terms for high-value or strategic clients can show flexibility and increase customer satisfaction. For example:

• Add customer-specific renewal terms based on their growth or budget constraints.
• Introduce custom discount structures for multi-year commitments.

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Additional Considerations

When shaping a deal, it’s important to consider the following:

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Simplified Pricing Structures

Complex pricing models may deter potential customers from signing contracts. Keep pricing clear, easy to understand, and flexible enough to meet a variety of customer needs.

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Flexible Contract Lengths

Offering customers flexible contract lengths (monthly, quarterly, or annually) can increase the likelihood of closing deals. Consider offering incentives for longer commitments, such as additional discounts or locked-in pricing.

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Renewal Terms

Ensure that renewal terms are transparent. Clearly communicate the conditions under which the contract renews, the notice period required for termination, and any price adjustments that may occur during renewal.