How Your Contract Can Be A Sales Tool

[0:00] You know, fundamentally, business to business means we're dependent on each other. OK, one of you has the cash and the other one has the expertise.
But that's still a deal. Cash is no better than expertise.
We've just been taught that the person with the cash has the better hand.
And I don't think that's true. And I always say, you know, would you be happy to sign your own contracts as your own supplier?
And if not, maybe you're starting too far away from where you're going to end up.

[0:27] Music.

[0:32] Welcome to the Full Funnel Freedom Podcast. If you are listening to this, you are likely leading a team responsible for generating revenue.
Purpose of Full Funnel Freedom is to support people like yourself and keep your funnels consistently, reliably full.

[0:49] Welcome to the Full Funnel Freedom Podcast. I'm your host, Hamish Knox.
Today, I am delighted to have Sarah Fox as my guest today to talk about contracts.
Sarah is a recovering lawyer who advocates for short, simple contracts starting with 500 words.
She inspires industry leaders, salespeople, and their teams to streamline deals and enhance customer relations with contracts that represent their values, embed trust, and keep everyone protected.
Sarah, Sarah, welcome to Full Funnel Freedom. Well, I'm delighted to be here.
So I've given the audience the 30,000-foot view of who you are and what you do.
Take us down. Tell us the story of Sarah from where you started to where you are today and who you help.
Okay, so when I said I was a recovering lawyer, I've been a construction lawyer since about 25, 30 years.
I try not to tell people precisely how long because then they'll just be guessing my age. But I started doing construction projects because I just fell into construction law, loved it, loved the people in it. It's really practical.
They're really pragmatic.

[1:56] And they're so pragmatic, I was just shocked by the quality of the contracts they were signing.
And it was just churn, churn, churn, churn, churn. It became a kind of barrier to doing business, to getting on with the projects.
It often came too late after the project had started, sometimes even after the project had ended. did and it kind of struck me as really dysfunctional but it was same old same old nobody really wanted to rock the boat and say to do anything different.

[2:22] Then I got into training people on those contracts, and then it became really apparent that people didn't even understand the basics.
So I'd say, oh, you know, you've come on a training about this type of contract.
What can you tell me about it? And they'd kind of go, which bits?
I'd think, oh, hang on. There's a lot of words being wasted here that aren't actually changing behavior, driving the deal, doing anything useful.
It's kind of word soup for the sake of word soup. sleep.
So because of that feedback, I thought, I wonder if I can develop a tool that will help us to talk about what you really need in a contract to reflect the commercial deal.
And I was challenged by my sister to write a contract in 500 words.
And that kind of started a whole thing for me, which as you might imagine, for the fact my company's called 500 words, kind of kept going.

[3:12] I love it. I love it. And, you know, coming out of construction and, you know, having on the personal side, done home renovations and things like that.
The Byzantine is a cliche for a reason when it comes to agreement.
So this is something coming, you know, with my background in sales, we don't want to think about the agreement, right?
We want to do the handshake deal, which doesn't exist anymore.
And we just want to move on, you know, to the next one, support the client, et cetera, et cetera.
So as sales leaders in our audiences, sales leaders listening around the world, as a sales leader, where do we want to start thinking about the agreements that our sellers are going to be putting in front of their buyers?
What's like the real key thing that you impart to your clients when you're working with them?
Well, one of the things I say is you need to get in there early because if you do all the commercial bits of the deal and they go, oh, I'm just going to hand you over to my legal to tie off the loose ends.
Everyone knows that their face loses all color. They get sweaty palms.
They They think who they can palm it off on. You know, everyone's, you know, that lovely relationship that you'd built is kind of getting eroded very quickly.
And what you thought was a deal which was so close to the end of the line could get knocked back and knocked back and knocked back.
And before you know it, that deal just doesn't happen because, not because of you being a great salesperson, the deal isn't right or anything, just because the process gets really sticky.

[4:34] So I would say deal with it early. if you're really embarrassed by dealing with early because you think that might put you off then that's kind of a hint that maybe you need to look at the content but you know at least have the courage to put it on your website put your terms on your website because then it's like look if you'd like to do business with us this is what it sounds like this is what it feels like and you know the minute you start talking about you know what you're going to provide who you're going to provide it to all that kind of stuff say oh by the way these are our you know this is a small print I don't like calling it the small print.
I don't like using phrases like terms and conditions and all that kind of stuff because I think it has really negative connotations. I think it really damages the emotional connection that you've got.

[5:16] I think business is about relationships. So I think it needs to be much more relational, much more, this is how it's like to work with this.
This is what we expect from you. This is what you can expect from us.
This is what happens when circumstances change.
Yada, yada, yada, yada. And you can have all of the same content in, but you can write it more simply in a way which tells the story of you and your business and which embeds your values and your branding so that it's consistent, so that you're telling the same story, whether they look at your website first, they go to your terms page first, whether they look at your paperwork, whether they just meet one of your members of staff, your team.
So it's all consistent and it tells the right story and it's a good positive story about doing business with you.

[6:00] So, you know, get it in early, make it nice and keep it going.
And then when you've got all the commercial bits of the deal, it's a matter of simplicity to say, right, well, you've already seen our terms we've agreed all the rest of it done we just need to get that piece of pipe of that pdf adobe signed we're done we don't have the barriers now because we front-ended it i love that and that's ultimately one of the things that you know we the cliche of time kills all deals and that sometimes it's not the as you've talked about the relational part we've got the commercial stuff in place it's all those other things that happen on the back end and by the way the legal department the procurement team they're incentivized that's how they're incentivized is to go through that agreement sales leaders so understand the incentives and work with them to sarah's point so that they can get that part done faster so that when you get to the end of the finish line you can actually have that deal signed okay so sarah i love this idea consistent language that's something we coach our clients on is create this common language everyone's singing the same song et cetera, et cetera.
So the thing he's mentioned in your answer was if you're uncomfortable with that, Maybe that's a sign that something needs to be changed on your agreement side.
So give us some insight into some of the things that you have seen in your work, and you don't have to name names, and maybe you're not allowed to.

[7:25] Related to an agreement that was overwhelming initially that got worked down to something that was much more practical and usable for both the buyer and the seller.
Yeah, so one of the things we tend to see, and you probably see them in your agreements, We have got a big clauses, a marked boilerplate or miscellaneous or, you know, indemnity, things in block capitals, you know, red pen, whatever.
And I always say, what's it meant to do? You know, what is this actually meant to do?
Because if somebody can't tell me what it's meant to do, I know what it means, but I want to know what they think it does.
If they can't tell me, then often I say, well, do we really need it?
OK, yeah, a lawyer will probably tell you that one in a million times this will save you bacon. But let's deal with the fact that one in a million doesn't happen very often.
You know, so a lot of the time we look at process. We say, look, we've got this really long, quite complicated process.
What do you really need in order to get paid? Who do they need to send it to?
What format do you want it in? Let's make it really practical.
And so instead of kind of getting too, too much detail, we kind of just say, look, OK, If things change, rather than having a long list of reasons why we might be able to increase our prices, yadda, yadda, yadda, why don't we say, look, if things change, we'll sit down like the grown-up adults we are and we'll come to a new deal. And everyone goes, well, can we do that?

[8:49] Well, you're grown-up adults, aren't you? So I think you probably could.
And we know that what happened during the pandemic was that everyone was searching in their contracts for the clauses that would help them deal with this massively unexpected event.
And nobody could find them. And when they found them, they were written in language that nobody understood.
And they were kind of digging through dictionaries and law books.
And that's not a great place to be. We were already dealing with all the emotional impact of a pandemic.
We didn't need to deal with French language or whatever else at the same time.
This is not going to help anyone so i think you know i try and talk about balance in contracts because you know fundamentally business to business means we're dependent on each other okay one of you has the cash and the other one has the expertise but that's still a deal cash is no better than expertise we've just been taught that the person with the cash has the better hand.

[9:40] And i don't think that's true and i i always say you know let's if would you be happy to sign your own contracts as your own supplier and if not maybe you're starting too far away from where you're going to end up and if you always always negotiate a clause to a fairer position why don't we just start from the fair position and avoid all those negotiations so some of it is about really asking really good questions from the company and one of the really good examples I was dealing with a company was a cleaning company and they got a lot of work during the pandemic but one of their values as a business is to pay what's known in the uk as the real living wage so it's kind of a minimum wage standard and they said what you know how are you going to reflect that in your contract and they were kind of like well do we have to i said look you're the real living wage is going to go up every year so your prices are going to have to go up why don't we just be really open and say every single year we will increase our prices because we want to pay our staff the real living, rather than being apologetic and going we have a right to or we reserve the right to or we may, you know, they were just, there's too much hiding.

[10:46] And they got really positive responses who said, yeah, okay, now we understand why you're going to increase your prices. Yeah, we're good with that.
So instead of it being a little bit icky and a bit underhand, it was just open and transparent and it made sense.
And it made it much easier to get that term agreed on a regular basis.

[11:08] Well, what I'm hearing is you're bringing humanity back into something that has become a little bit inhumane.
And adding in these boilerplate clauses and these all-cap texts and these, you know, you need several law degrees to understand exactly what's going on to cover that one in a million possibility.
And I was just listening to a podcast where they talked about customer service.
Now, the humanity has been drained out of customer service because the system's been set up that if everything works perfectly, it'll happen.
And, of course, you and I both know that it never works perfectly, right? So what I'm hearing is from your side, it's that, yes, one in a million could happen, and let's focus on the other 999,999 times when that one thing isn't going to happen.
So in your work with your clients and you're bringing these ideas to them about, hey, maybe let's simplify.
Hey, would you be willing to sign your own agreement?

[12:03] And maybe if not, let's understand why. why, what's the tricky point for an organization?
Because this is a mindset shift that you're talking about. So what's the tricky point from an organization where you're going to the executive team and the sales leader and saying, hey, maybe we need to revise this.
Where do you get stuck initially?

[12:29] You get stuck because most people think contracts are about legal, and they're not. They're just about doing deals.
And as you said, very, very small number of contracts globally go anywhere near a lawyer once they've started.
So less than, I think it's 0.02% World Commerce and Contracting Data shows that many only go to be reviewed by a lawyer because something has happened.
So that means the massive, massive majority are meant to manage the project.
They don't. They've been over-engineered and over-lawyered, so they no longer reflect a project management tool.
They reflect a legal enforcement tool.
So just getting that mind shift and going, okay, instead of thinking about this contract as a legal enforcement tool, why don't we think about how we want to use it to drive business, to drive the relationship, to drive more business on the back of this, to show what's great about us.
And that's a massive kind of shift away from it being procurement and legal to it's to sales and ops so that we can actually get them to take ownership and go, actually, what would we like the contract to say?
What what's important for us for this relationship so that actually reflects.

[13:38] You know, consistency of voice across the business?
And you know the data shows that about 26 of any organization get involved in contracts whether that's reading them writing them negotiating or using them and operating them so we need these contracts to reflect that breadth of experience rather than being solely focused in that niche little legal team fair enough so how does that work because you know expansion if we're going to create full funnel freedom on a consistent basis selling more stuff to the people who already love us is obviously the easiest way to do that that's a cliche for a reason as well so how from your experience does making these agreements simpler create that ability to it to create more business from current clients well the first thing is it tends to convert more clients so because they can read it and they read it early and there's no pressure because it's not in the pressurized end of deal element you know they've they've read it nice and early they're kind of They're still feeling nice and warm.
They tend to say yes more often.
So that's already created a really good relationship. If you draft them well, it allows them to ask for more stuff.
And they know that they can ask under the same contract for more stuff from you.
Because they've read that bit about changes.
And they got it. They understood it. So you can get more work from the same clients under the same contracts.

[14:58] But all of that creates a really nice process that's seamless, that's smooth, that's focused on them.
That's not about internal governance and tick boxes and you know word soup it's about building relationships and we know that if you've got a good relationship.

[15:15] And you've got to the point where they're going to ring you up about something which you know isn't caught that contract but looks like you can do with it then you've got to the next level and I think all of that really helps you.

[15:29] Keep them on your side to show that you recognize your interdependence because you've not tried to bully them into signing a contract that just shows how paranoid you are because you've been you know caught before and you're trying to avoid it happening again and i think we've all read contracts where you can see almost the pain that that company has been in on previous occasions and they're treating us as if the same thing's going to happen and we're going to do it to them too.
And that's, you know, not a great reflection on how they looked at us as being unique or individuals or whatever.
So I think, you know, good process can help you to keep your clients closer, to sell more to them, to build better relationships, all of which kind of has a very subtle but important way of building your business.
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[16:53] I like that. And I'm thinking even in some of my agreements, it says, this is not a reflection on you.
This is past bad experiences or something like that.
And I still love that client and I still want to work with them.
And I also like to get paid. And in some cases, I haven't been paid in the past.
And that's what prompted putting in this certain process. So, Sarah, I love that idea that we start early.
This can create more rapport, more trust with a buyer because it's a simple language agreement.
And you touched on this a little bit. Let's get real specific for the sales leaders who are listening right now.

[17:31] What do we want to make sure that we put in there? I've heard all the great things about like, you know, we're all adults and, you know, here's the broad strokes.
If we want to get real specific, whether we're in SaaS, construction, professional services, what do we absolutely want to make sure that we have in there so we are protecting ourselves while still and creating the rapport

[17:52] that you just talked about with the simplified agreement?
Okay, so there's, you know, there's a number of different things you can put them in, but let's put them into broad categories that it'll apply to more people so who's doing it what they're doing scope is really important and we're normally good at writing that but also saying what isn't included is a really good way to manage expectations so we don't get them the buyer thinking that we're providing one thing and us thinking we're providing another because that creates issues really good clear payment processes because payment is a major cause of friction really clear but simple change processes because Because, well, change happens. We know that. 2020 taught us that.
But also, how are you going to deal with it if things do go in ways which you might not expect?
I'm not going to say necessarily wrong, but things may come across.
Volcanic eruptions, wars, supply chain increases. How are you going to deal with that?
And then just finishing off with some, if we muck up, this is how we're going to resolve it. We might even pay you.
We might even compensate you for this sort of thing.

[18:55] And so that you've got a kind of a life cycle that reflects how flexible we need to be how quick we look at the client priorities one of the things i try and get people to put on is what is the client priority on this project is it time cost or quality on this one because it's not until you've got that in that you know how they will make decisions when things change i think the other thing is if you've got the objectives for the clients you know what are they trying to achieve, then you can get to the end and go you know in our contract that we wrote six months ago or nine months ago or whatever you said you wanted us to achieve this did we do it?
Because if we did can we get a testimonial to that effect?
Can we put on our client satisfaction so whatever you do to get your feedback because if you've written down precisely what they are wanting from you, you can go back and then say did we do it?
You get better feedback because even if it's a not quite, it could be Maybe that you wrote down the wrong objective or that priorities changed or whatever, but it's still a nice way to kind of do full circle and come back and make sure that you kept people happy.

[19:59] Yes, absolutely brilliant. And also that keeps that trust going, building, and it also supports us and our buyer.
So obviously, we've already touched on the like, don't put giant all caps, paragraphs and red lines and all that kind of other stuff.
But let's pretend that someone who's listening to this takes all that out.
They're like, okay, Sarah, that makes a ton of sense to me. I've taken all that out. What are some of the things that you have seen in more simplified agreements that still maybe damage rapport or create more friction for a buyer actually

[20:34] signing off that the listeners might want to avoid as well?
Out i think a lot of it is even in a simplified one that people are tempted to kind of put a bit of jargon in to make it sound more like a contract and i've done really simple contracts people and they said look we've had to we've had to add some stuff because people just didn't think it was serious enough without you know just a little bit of jargon or this and it's like man you really don't need it but you know i accept that maybe sometimes we have to put the lipstick on the pig in order to dress it up to make it look, you know, more like you're expecting.
But I think the temptation is constantly to keep putting stuff back in.

[21:13] You've got a nice simple agreement. You go, oh, but we don't seem to have anything on an indemnity. And we had one of those and we don't seem to have anything on this.
And my boss says we have to have this because he wants to watch the law program.
So he knows the law, you know, it's that temptation to take a slightly amateur approach to what needs to go in and just you know slowly but slowly inch a simple document back to a complicated less useful one but you know i take i take the what-if approach you know people kind of might want to think about putting risks in but if they do think about what the balance is how many risks should the other side be accepting do they know about them and risks are really important because if you only have them once the deal has been done that's a real problem because you're transferring risk to someone they weren't expecting and they've already agreed the price.

[22:04] I tell you, if you want me to accept risk, I want paying for it.
That's, you know, that's a common nature.
So I think there's a real temptation often to kind of just put the norm in or find some copy and paste text or transfer some risk and just slip it in, you know, put it right in the back or some legal jargon that they, you know, heard somewhere.
So I think even in simple deals, people tend to kind of get really uncomfortable with the simplicity of it and just want to kind of just zhuzh it a little bit to make it look a little bit more serious.
But all of that stuff, I just have to say, look, trust me on this one. Trust me on this one.
You know, I've been doing this for 15 years. I know what I'm doing.
Very fair. And, you know, sales leaders who are listening, you've heard me say no surprises in the funnel, right?
We don't want our sellers bringing deals in at the last minute, like, oh, I just fell out of the sky, boss.

[22:58] Same sort of thing Sarah's talking about here with agreements.
If the buyer doesn't know about it before they see the agreement, then our seller failed and we failed as leaders because we didn't coach them to do that.
So Sarah, I find, you know, agreements and I coach my clients to call them agreements because in Canada, at the very least, you know, no one likes contracts, right?
Your mobile phone contracts, no one likes, right?
So how do we get that friction down?
I could nerd out about this stuff with you all day long because I find it fascinating that how we can use our agreement as a sales tool.
And that's really, really brilliant. I do have a few questions for you before we wrap up today.
So I guess the first one being, if you could go back and coach a younger Sarah, go back as far as you like and say, hey, younger Sarah, fast forward, you're going to have this amazing company.
You're going to be working with all these great organizations on making their agreements simpler, et cetera, et cetera, you will also have a lot of bumps and bruises and scar tissue.

[23:53] What would you coach younger Sarah to say or do different to get to the same place, but with less scar tissue and maybe a couple less bumps and bruises?
I think I would have had more of the courage of my convictions.

[24:03] 25 years ago I said to a large law firm I said look why don't we try and make our contracts all a simpler language so that everyone understands them and they.

[24:11] Said our clients don't care about that stuff and I should have just said why have we asked them do we know that because there is a global movement towards plainer language contracts particularly for consumers but also that's going to feed into business and if I just had the courage to say no why don't we just test it why don't we just try it because i think we would have got amazing feedback and 25 years ago it would have been a complete game changer for a large law firm to do that with their clients so we would have got there quicker with a few of the bumps and bruises i love it thank you for sharing that with us uh now curious what have you read watched listened to whether it was recently or in the past that you would encourage the sales leaders listening to check out to further their own personal and professional development oh so i got really um interested in the seven habits of highly effective people and you know I know it's not new but I found there were so many parallels but the one book that I read that really changed my view about contracting was the speed of trust by Stephen Covey because you know that sang to me in so many different ways and I hadn't heard it put in that way and I've spoken some of the companies that have been in that book and their real life experience gave me courage that I was on the right track and it wasn't just a good idea whose day would never come but that it was a good idea whose day had already come and was being applied and you know i could feed more into that so i i found that a really fascinating book.

[25:38] Love it. Thank you very much for sharing that with us. We'll certainly put that link in the show notes.
So you've shared some incredible ideas, insights with us already on how to make our contract simpler, how to use them as a sales tool and lots of great ways of humanizing what has become an inhuman process.
What do you have for a closing bit of wisdom, a final thought or something to plug? The floor is yours.

[26:02] So I've got, there's loads of free stuff on my website. So I write a lot of checklists because I'm a bit of a nerd.
I want people to get the quick answers when they see a document, kind of check it out.
But I've been working with a company called TermScout to put together kind of a checklist that will then, you can insert your contract, we'll check them against the standards that we've set and tell you what's risky, what's unusual and all that kind of stuff.
And I'm particularly interested because I think a lot of contract management software is comparing bad, boring contracts against bad, boring contracts and going, yeah, looks okay.
It's like still a bad, boring contract, though.
Whereas this takes much more of a high-level approach and says you need parties, you need risk, you need time, you need quality.
Does it have a clause that deals with that? If so, we're probably good to go.

[26:51] So I'm quite interested in how AI and AI contract reviews is going to change.
And whether or not it will actually lead to better contracts. I hope it will.
I'm kind of afraid it's just going to be more of the same old, same old. Fair enough.
Well, fingers crossed. And Sarah, I've had a blast chatting with you before and today on the podcast.
And I certainly look forward to carrying our conversations on offline.
Thank you for being a guest on Full Funnel Freedom. It's been a privilege.

[27:18] Thanks for listening to today's episode of the Full Funnel Freedom podcast.
You can continue to support us by leaving us a review and a rating, sharing this episode with a couple of sales leaders in your network who you care about.
I'd love to connect with you. I'm easy to find Hamish Knox on LinkedIn.
Also, if you'd like a free 15 minute call with me, go to www.hamish.sandler.com forward slash how to Sandler.
Until we connect on the next episode, go create full funnel freedom.

[27:50] Music.