How to Handle:
“We're locked into a contract”
Contract commitments are real obstacles, but they're also often not as rigid as prospects believe. Understanding the specifics of their contract situation opens multiple paths forward.
Why Prospects Say This
The prospect may be genuinely committed, using the contract as a polite way to end the conversation, or not fully aware of their options. Many contracts have termination clauses, often unused. Sometimes companies are unhappy enough that they'd pay to switch.
Best Responses
The Expiration Approach
“I understand - contracts are commitments. When does yours come up for renewal? Even if that's 12 months away, most companies start their evaluation 6-9 months before renewal. Would it make sense to get the research done now so you're prepared?”
Why It Works
Positions the conversation as future planning rather than immediate switching. Gets you in early for renewal conversations.
Best For
When renewal is approaching within 18 months
The Terms Investigation
“Before we write this off, do you know the specific terms for early termination or reduction? Many contracts have provisions that never get used. Would it be worth a 5-minute check to see what your options actually are?”
Why It Works
Challenges the assumption that contracts are immutable. Many have exit provisions that go unexplored.
Best For
When the prospect hasn't actually checked their contract
The Parallel Path
“Contracts often don't prevent you from adding solutions - just from replacing them entirely. Many of our customers start with us in one department or use case while their main contract runs its course. Could that approach work for you?”
Why It Works
Offers a path that doesn't require breaking the existing contract. Lands and expands.
Best For
When you can coexist with the competitor
The True Cost Question
“Sometimes staying in a bad contract costs more than breaking it. What are you losing by waiting - missed opportunities, inefficiency, team frustration? If we could show the ROI of switching now, would that change the calculation?”
Why It Works
Reframes the contract as a cost center rather than a barrier. Makes switching math explicit.
Best For
When the prospect is clearly frustrated with their current vendor
Do's and Don'ts
Do This
- Find out exactly when the contract expires
- Ask about termination clauses and provisions
- Explore parallel implementation options
- Calculate the cost of waiting versus switching
- Get on their calendar for renewal evaluation
Don't Do This
- Encourage them to break valid contracts unethically
- Give up as soon as they mention a contract
- Assume their contract is as ironclad as they believe
- Forget about them - set a reminder for renewal time
- Ignore the relationship they have with their current vendor
Follow-up Questions to Ask
“When specifically does your contract expire?”
“Have you looked at the early termination provisions in your agreement?”
“What would happen if you wanted to add a solution in a different department?”
“How happy are you with the current vendor overall - is this a relationship you want to renew?”
“What would it cost you in missed opportunities to wait for the contract to end?”
Industry-Specific Variations
“We signed a 3-year enterprise agreement six months ago”
“Enterprise agreements often have provisions for adding complementary solutions or pilots. More importantly, 2.5 years from now, you'll need to make a decision. Can we at least build the relationship now so you have a strong alternative when that time comes?”
“We're locked in with our core banking provider for 5 years”
“Core banking contracts are serious commitments. However, many institutions run parallel systems for innovation and specific use cases. We work alongside several core providers - could that work for a specific initiative you're pursuing?”
“Our EHR contract runs through 2027”
“EHR contracts are substantial. Many health systems use point solutions alongside their EHR for specific workflows. We integrate with [EHR name] and could potentially solve [specific problem] while you maintain your primary relationship.”
Pro Tips
- Build a spreadsheet tracking competitor contract renewals for your prospects
- Set calendar reminders for 6-9 months before renewal dates
- Learn the standard termination clauses for major competitors in your space
- Sometimes offering to cover termination fees can be worth the deal value
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