This is follow-on support I delivered as a continuation of a previous engagement.
The Problem
The client forecasted 30% YoY growth of their service business for the next 5 years. I was asked to help the client renegotiate their performance-based agreement with its main customer who was a primary growth driver for the business.
My client’s customer was unhappy, despite my client’s successful delivery to the previous agreement. My client successfully delivered to the obligations of the previous performance-based agreement, but both parties captured a lesson learned in the initial period of performance – a disconnect existed between the outcome delivered and out desired by the end customer. The end customer was frustrated because they were forced to pay my client, but they did not get what they really wanted.
Task and Approach
My task included 1) continued assessment of my client’s ability to meet the performance levels demanded in this new agreement, 2) recommendations of “better” metrics that are likely to mutually satisfy my client and their customer, and 3) real-time negotiation support.
Research I conducted through problem discovery sessions, end customer feedback sessions, and client stakeholder interviews provided me with a robust understanding of the desire to evolve the performance-based agreement. I then conducted a deep quantitative analysis to assess the client’s ability to perform on the original metrics AND new metrics. This step included analysis of historical performance, statistical and simulation modeling of the client’s service process, and developing a model to translate performance metric outcomes into financial terms including incentives and margin. I then identified a set of industry-standard performance metrics that aligned to end customer requirements and my client’s ability to successfully deliver.
From there, I helped the client understand the story that the data was telling. I was again asked by the client to tell the same story to their customer at the negotiation.
Results
I fostered a collaborative negotiation that led to a satisfied end customer while my client achieved financial success on the contract.
- Expectations grounded in data: During the negotiation preparation phase, I help my client understand the value of each new metric both to the client and to the end customer.
- Data-driven negotiation: During the negotiation and with my real-time support, the client successfully negotiated service levels in the agreement that were achievable and fully controlled by my client.
- Financial success: During contract execution, the client achieved the desired financial outcomes of the contract.