Embrace the Complexity of Business Relationships to Grow and Retain Your Most Valuable Customers In today’s environment, business relationships are necessarily varied and complex. Market conditions, customer needs, regulation, competition make them so. To succeed, organizations must learn to embrace this inherent complexity, grow and retain relationships based on concrete intelligence, then build competitive advantage from this more fully informed place. This educational white paper offers insight and strategies for building a best practice mindset of embracing and mastering relationship complexities. Check out the Competitive Advantage through Mastering Complexity chart on page 7 for a quick list of rich opportunities you could be missing out on.

1. Relationships are essential to any company’s
business success. Creating and growing relationships
with customers, of course, is at the core of every
company’s mission; in fact, this is why businesses
exist. Other relationships—with suppliers, for
example—can be just as critical.
In today’s environment, business relationships are
necessarily varied and complex. Market conditions,
customer needs, regulation, competition make
them so. To succeed, organizations must learn to
embrace this inherent complexity, grow and retain
relationships based on concrete intelligence, then
build competitive advantage from this more fully
informed place.
Contents
Complexity in customer relationships .................................................. 2
Complex forces constantly at work ....................................................... 3
Resistance is futile ........................................................................................ 4
Embracing complexity ................................................................................ 5
Mastering complexity .................................................................................. 6
Gaining competitive advantage ............................................................. 7
Embrace the Complexity
of Business Relationships
to Grow and Retain Your
Most Valuable Customers
© 2016 Pramata Corp. All rights reserved.

2. 2
Some companies have simple businesses, with just a few products and
only one way of doing things. Most companies today can’t afford to be
like that. As technology changes, markets fragment, and customer needs
evolve, successful businesses must respond; in doing so, they become
more varied and complex. Great businesses seize upon this growth to
gain competitive advantage.
Your customers want variety
Ignoring complex needs Dealing with complex needs
Ford (in the 1910s) – “Any color as
long as it’s black”
Folgers – Standard ground; decaf
ground
GM (in the 1920s) – “A car for every
purse and purpose”
Starbucks – Half-caff macchiato with
light foam
Yahoo search (in the ‘90s) –
Curate websites and catalog them
into fixed categories
Google search (in the ‘00s) –
Continuously crawl and index the
ever changing web
Complexity in customer relationships
Every large b-to-b company has a number of large, complex customer
relationships. Nearly every area of your organization —including sales,
contracts administration, customer support, and finance—exist to
find, start, build and maintain these relationships. The quality of these
relationships—and how well your organization manages them determines
revenue growth, costs, profitability, compliance risks and enterprise
value. But in many organizations, sales, finance and operations teams
alike can’t answer important questions, such as:
yy Which customers have bought which products?
yy How many customers are due for renewal next quarter? What is their
combined volume?
yy Which customers have most favored pricing?
yy What is the history of our largest relationship?
yy Who will be affected by a product’s planned end of life?
yy Which suppliers have changed their return policies?
It’s not surprising. Different customers buy different products
and services, at different times, at different prices and in different
circumstances. Also, your own business changes over time: products,
prices and support policies evolve; you expand into new markets and
new geographic regions; departments and teams reorganize.
Through it all, contracts are the most tangible source of insight into your
complex customer relationships. Key contract terms and conditions,
such as products, prices and expiration or renewal dates hold immense
importance, so gaining insight into this information holds the key to
growing and retaining strong, high value relationships.

3. 3
Contracts are numerous and varied. Over time, contracts multiply. This is
especially true of your oldest, biggest and most profitable relationships.
You may have multiple contracts with such customers, negotiated years
apart by different people, covering different products and services, etc.
Without ready access to detailed information buried in these contracts,
people in your organization may miss critical compliance deadlines,
fail to spot significant revenue or cost-saving opportunities or find
themselves working from outdated or incomplete customer data.
Complex forces constantly at work
Despite standardization, automation, product-line pruning, total quality,
business process re-engineering and any number of other attempts
to reduce confusion and simplify access to information, variation and
complexity continue to characterize the customer relationships of most
companies.
Product-line changes. It’s simply the nature of business that products
and service offerings expand and evolve over time. You add new
products to your product line and drop others; existing products are
revised and updated; or one product may be replaced with another
(probably with a different name and model number.) All these changes
affect contract language, such as product specifications, service level
guarantees, 4 warranties, disclaimers,and other terms. New customers
get the new terms, but longer-standing customers may receive
grandfathered terms during some defined transition period.
Price changes. Prices aren’t fixed forever: The price of a single product
may go up or down over time. And of course, price is seldom a single
number. You may have reseller and retail pricing, differing prices for
various geographies, volume discounts, product bundles and any number
of other complications. Your customers may have locked-in prices for
a certain length of time; some may have most-favored customer terms.
Changes to your product line (discussed above) often cause changes to
the price list.
Customer requirements. Let’s face it, you’re in the business of satisfying
your customers’ needs, and naturally those needs differ. Different
purchase quantities, different purchase times. Some can make long-term
commitments, while some only short-term. Customers vary in levels and
types of support. Even a single customer or partner has business needs
that change over time. Simply as a consequence of successfully serving
your customers, your relationships—and the contracts that underlie
them—become varied and complex.
Corporate M&A. Your firm may have acquired others. They may have
been competitors (horizontal expansion), suppliers or customers
(vertical integration) or providers of related or complementary products
and services (product line extension). In any case, you acquired not
just these companies, but also their business relationships and their
contracts. Over time you may be able to transition new relationships to
your way of doing business, but until that happens you have to make the
best of the situation you inherited.

4. 4
Likewise, your customers or other business partners may themselves
be acquired. Stable situations may suddenly be upended, leading to
renewed contract negotiations. You may need to agree to new terms to
keep the business of a customer that’s been acquired by a larger entity,
for example.
Reorganization. Shifts in organizational structure or even individual
personnel changes can lead to big changes in the way contracts are
written. A new VP of sales or a new general counsel may do things
differently from the prior one.
Regulatory change. Regulations change over time and vary by
jurisdiction. Consumer protection, tax collection and financial reporting
are just some areas of regulation that often need to be included in
contracts. As the regulations change, of course, so must the contracts.
Evolving case law may affect contract language as well, especially in
areas such as intellectual property.
Negotiation. Market conditions, competition and the varying amount of
leverage you have with different business partners all lead to difference
in how a contract may be negotiated. At the very start, you may need
to use the other party’s contract form as the basis for a negotiation.
Generally you’ll prefer to use your own. In any case, the “give and take”
of closing new business will create variation in the contracts you agree
to. Of course this applies not only to pricing, but also to delivery times,
return privileges, service obligations, marketing support and just about
anything else.
With all these factors contributing, it’s no wonder that your contracts and
the customer relationships they lay the foundation for are so complex.
Resistance is futile
Some businesses try to stamp out the variation in their relationships.
This is known as resisting the complexity, not embracing it. They think
complexity can be eliminated by standardizing all contract forms or
automating the approval process to allow zero changes. Or they create
longer processes, with separation of powers, multiple checkpoints and
6 more levels of review and approval. A third method is to limit the sales
department’s authority to negotiate deals—that is, try to keep them
inside narrow boundaries.
Such efforts can be misguided and have negative effects. More onerous
policies and processes just lengthen the time needed to close deals.
Taking away sales people’s flexibility weakens the people closest to the
customers, alienates them from the process, and demotivates them.
In any case, your company becomes less competitive on terms or just
harder to do business with than your competitors who are more willing
to deal. Even if successfully implemented, such approaches do nothing
to help untangle the existing body of contracts.

5. 5
Of course, some types of contracts can be standardized. Examples are
confidentiality agreements (NDAs), employment agreements, purchase
orders, and simple, low-value customer contracts. But this simply doesn’t
work for the contracts that establish bigger, more valuable relationships.
Another approach, known as contract lifecycle management, can help
shorten contract editing and approval processes, but does nothing to
help manage business relationships after agreements have been signed.
Embracing complexity
Business is ever more complex, and there’s a complex world in your
contracts. This world is real. The forces described above as the causes
of variation and complexity in business relationships are likewise real.
Denying them or fighting them is like swimming against the tide. You’re
going against the way business is really done—attempting to impose
order and uniformity on the real world, when the real world is complex.
Instead of fighting them, it’s better to accept them and use them to
advantage. Rather than trying to eliminate (or ignore) the inherent
complexity of business relationships, embrace the complexity and learn
to master it.
Another approach is clearly needed: a way to embrace the complexity
in business relationships, to master it, and to use it to drive value across
your organization. The philosophy does not advocate actively seeking
more risk. You need not lower your standards, defy policies, or abandon
normal review and approval processes. You needn’t try to change the
nature of business relationships or how contracts are written.
Two Approaches to Dealing with
Relationship Complexity
Resisting complexity means … Embracing complexity means …
... having an inward focus … having a customer centered focus
… being rigid … being flexible and responsive
... discouraging change … being innovative
… preventing things getting done … enabling new things getting done
The unavoidable truth is that most businesses already operate in the
danger zone. Risk naturally exists because contracts are complex.
And complex contracts exist because your company must respond to
changing technology, competitors, new customer needs and market
conditions. You need to reconcile to this. What we’re advocating is to
accept this reality and leverage it. Turn complexity into profitability.

6. 6
Mastering complexity
Mastering complexity is not technically simple. It can’t be done just with
a list, a spreadsheet or a document repository with text search. The
inherent complexity doesn’t reduce to a fixed number of columns or to a
small set of searchable key words. 8
There’s a complex world contained in your contracts. No automation
solution will make that go away. Think of Google for a moment: Google
doesn’t try to eliminate the richness and complexity of the Web; instead
it searches and analyzes the contents of the Web, structures and
stores certain key data, scores this data, and presents an easy to use
summary of what you’re looking for. Just as Google gives you a simple
way to navigate the complexity of web, Pramata gives you an easy way
to navigate the complexity of your contracts by adhering to four Key
Principles.
Four Key Principles for Mastering Complexity
Complete information Complex relationships are manifested in
agreements, exhibits, amendments, schedules,
work order and notices. The entire scope must
be consolidated and centralized. All key contract
provisions (such as products, prices, delivery
commitments, restrictions, dates and term) must
be available from a single, trusted source.
Current information Mastering complexity requires always having
the most upto- date intelligence of all aspects of
your critical business relationships. Relationships
change over time: contracts are renewed and
amended; ownership changes hands; key dates
move. Information in multiple documents must
be interpreted in their historical context; key
contract provisions may renew or expire, and be
renegotiated or reinterpreted
Actionable information Key contract provisions must be translated
into the business-related meaning that your
organization needs, so people can do their
jobs. Alerts are set for deadlines and other
critical dates. Contracts intelligence is used to
enable, rather than to prevent, innovation and
responsiveness.
Accessible information Contracts intelligence is provided to authorized
users across your entire organization. At the
same time, critical information is secured against
unauthorized access. Preconfigured reports
and ad hoc queries are supported. Contracts
intelligence is available in your CRM system and
integrated into sales, account management, and
customer support processes.

7. 7
Your ability to drive business value from your mastery of contract
complexity comes from having all contract information in one centralized
place, having it well organized especially for this purpose, ensuring it’s
9 accurate and up to date, and making it available to users who need it.
Most importantly, it must be in a form that supports action—that enables
rather than prevents innovation and responsiveness. It’s this combination
of all these attributes that we call Customer Relationship Intelligence
(CRI).
Gaining competitive advantage
Mastering the complexity of your business relationships with CRI leads to
clear competitive advantage in multiple ways. Your organization’s people
have immediate, digital customer insight in meaningful context for their
specific customer role.
Competitive Advantage through
Mastering Complexity
Sources of complexity Opportunities for competitive advantage
Product line changes Offer greater variety and choice to new
customers
Up-sell and cross-sell to existing customers
Retain existing customers through innovation
Price changes Compete more aggressively
Gain market share
Price appropriately for customer type,
geography, channel
Implement changes quickly or phase them in
Customer requirements Increase customer satisfaction, loyalty, and
renewal
Use your flexibility to capture more new
business
Corporate M&A Quickly integrate acquired lines of business
Easily consolidate information about
relationships that are common to both existing
and acquired businesses
Painlessly transition through changes to your
customers’ and partners’ corporate changes
Reorganization Quickly centralize and consolidate information
once held in different departments
Easily change relationship owners, to prevent
service gaps

8. 8
Regulatory change React quickly to mandated change
Manage change through phased transition
periods
Help customers & partners meet their regulatory
needs
Reliability report on compliance efforts & status
Negotiation Be able to “give” without creating
unmanageable contract administration issues
Meet the competition
Capture more business by being “easy to do
business with”
With instant insight into your complex customer relationships, your
company can capture revenue opportunities, improve customer
satisfaction and retention, improve efficiency, accelerate corporate
integration and manage risk.
CRI offers a level of flexibility and competitive advantage. You can
accept complexity and still manage it—even thrive in it—successfully.
Learn more about harnessing the value of complex contract data
through digitization at www.pramata.com.