Online Agreements Accelerate Sales

By May 11, 2009blog

Don’t let your deals get old with physcial contracts.

Online agreements accelerate sales. Requiring customers to physically sign contracts SLOWS sales.

Believe it or not, a couple internet-related B2B companies with pay-as-you-go services, still have physical contracts. A couple beliefs on why that is:
1. A physical signature has more teeth and is a safer level of commitment
2. Investors and potential acquirers value #1 more highly
3. Competitors are less likely to mess with clients when there’s physical paperwork
4. It’s what they did before and it’s low on the priority list of things to change

At RegOnline we had physical agreements at first. I remember our salespeople waiting by the fax machine for their deals. When we went to an online “Terms of Service” check box, deals came in at a perceptively faster rate (I don’t have the actual stats – too long ago).

Here’s what happens in deals with physical signed agreements:
1. Buyer asks Boss for permission to go ahead with purchasing service, Boss says YES
2. Seller sends over physical agreement to be signed
3. Buyer puts agreement on Boss’ desk and waits
4. Boss procrastinates reading through multi-page legalese
5. Seller “checks-in” with Buyer several times. Buyer “checks-in” with Boss several times
6. Boss decides maybe the attorney should look at this first
7. Attorney takes some time to review and proposes questions and changes
8. Boss asks Buyer to get answers
9. Buyer gets feedback and agreement sits on Boss’ desk until they have time to talk to the attorney about the feedback
10. 3 months go buy and the Seller is still waiting by the fax for something that the Boss and Buyer said YES to months ago.

Here’s what happens with simple online agreements:
1. Buyer asks Boss for permission to go ahead with purchasing service, Boss says YES
2. Buyer goes online, opens an account, and agrees to the “Terms of Service” check box.
3. Seller gets more sales faster, Buyer gets the benefit of the service MUCH sooner.

Is there more risk in online agreements? Of thousands of customers who have agreed to our terms of service, we had contractual issues with only a handful. Of those handful, we NEVER had an issue with the online agreement being unenforceable or less enforceable.

Periodically we had atypical deals or deals that were different from the published rates (due to volumes) and we also had some goverment, academic, or large corporate entities that required physical contracting. Most of the time we just did physical addendums to our online agreements that described those changes and differences. Still making it a lot easier for them to get started.

Not only do companies delay sales but they also can see terms deteriorate as a result of physical agreements. When I signed the deal to get 50 SalesForce licenses two years ago, they gave me a physical agreement to sign. I didn’t sign the agreement for weeks. Everytime the salesperson called me back to “check-in”, I asked if there was anymore they could do for us. Each time the salesperson came back with more (the terms kept getting better as we got closer to the end of the quarter). It was a little experiment on my end to see how they structured their sales process, which ended up getting us a much better deal in the end. I have to admit, I don’t like to play games like this anymore. If we had just went online to agree to their terms of service, there would have been no more time to negotiate.

Don’t let your deals get old with physcial contracts.

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