The ultimate guide: How to successfully negotiate better terms with the bureaux

The data landscape has never been more competitive, making it crucial for organisations to explore all opportunities to find the best quality data options at the best possible price.

And this is where contract negotiation comes in. Contract negotiation is an opportunity to readdress your budget and data needs - and you can do this mid-term if your credit data contracts are no longer fit for purpose.

In this ultimate guide, we explore what successful negotiation with the bureaux looks like...

Two key outcomes of successful negotiation

These are two key benefits of successful contract negotiation and renegotiation:

1) Fuel credit risk programs with the best quality data

It’s increasingly difficult to achieve a reliable data set – and that could mean you can’t trust the information shared within your lending organisation. For credit risk in particular, maintaining a flow of high-quality, harmonised data is essential for accurate affordability assessments, AML6 and additional fraud checks, GDPR compliance and more.

2) Ensure you aren’t paying 25-40% more than your competitors

When it comes to price, procurement and credit risk teams are hit with another challenge.

There are many reasons for significant price variations (on average, we see them fluctuate by 25-40%) and these centre around a lack of transparency - credit data is a very niche and complicated market with no published pricing.

Whilst the bureaux can take advantage of this, they also try to increase customer lock-in through large and complex enterprise agreements that may, at first, appear to be heavily discounted. But without careful negotiation and planning, these agreements can easily become ineffective - particularly in these uncertain times.

👉 Read our ultimate guide to How to get the best-priced credit bureau data

Why credit data contract negotiation can be challenging

Procurement and credit risk teams face five common challenges when it comes to getting the best priced and quality credit risk data:

  • Lack of transparency - Very niche and complicated market with no published pricing.
  • Difficult to compare products - So many different products (including bespoke solutions) make it near impossible to compare like-for-like. Or, argue commodity pricing.
  • Often, only able to compete against their own previous years' quotes - And not what others are paying right now for the same package/footprint of data. So, if they paid 25-40% more than the market value in 2017, a 10% reduction in 2020 seems like a good deal.
  • Cost of change - It can be costly to switch credit bureau. This allows the CRA's to hold high pricing.
  • Strong internal stakeholder relationships with the bureau - Procurement may find it difficult when Risk Managers have strong relationships with the CRA’s and do not want to disturb the relationship. This can result in no leverage on pricing.

Often, contracts are based on the volume of searches needed so forecasting is essential. But more than ever, this model isn’t cost-efficient for the credit providers. Transparency and flexibility in contracts are key.

What you can do to negotiate the best price and quality data

There are several key things you can do right now:

  • See the whole picture by comparing your data quality and pricing against numerous peer-group types
  • See how your data pricing measures up against the rest of the market
  • Review data contracts mid-term
  • Renegotiate with your existing supplier
  • Consider alternative suppliers or moving to a dual bureau approach for added flexibility and create a champion challenger scenario

5 key elements of successful data contract negotiation

To put this into practical steps, we’ve created our top 5 tips to gain cost savings and better quality credit risk data:

  1. Prepare for a balance of power

    Information is power. Salespeople usually take much more time for preparation than procurement and tend to have a better knowledge of the market.

  2. Create leverage with benchmarks

    An effective data benchmarking exercise eliminates underspend, optimises cost savings, and provides access to new data sources. You can see how your pricing, quality, and accuracy differs across industries, sectors, and competitors. And clearly understand the difference between what you’re paying.

  3. Build alternatives

    The balance of power in negotiations always shifts when there are alternatives. By developing a shortlist of outside suppliers, you gain the power you need to walk away from an unappealing deal.

  4. Understand GDPR compliance

    With the ICO continuing its investigation into data brokers, compliance with GDPR is another key factor to consider. How confident are you that your data providers are GDPR compliant? And do you have access to strong alternatives should you need them?

    5. 📚 Further reading: Lenders: Do you trust your data sources?

  5. Careful negotiation

    Many vendors have been trying to increase customer lock-in through large and complex enterprise agreements that may, at first, appear to be heavily discounted. But without careful negotiation and planning, these agreements can easily become ineffective.

👉 Find out more here: Shifting the balance of power when negotiating data contracts

Why now is the time to renegotiate data contracts… Or, switch credit data suppliers

Since the pandemic began, changes to consumer borrowing behaviour, risk adversity, and economic uncertainty have led to a drop in account openings and new lending. The knock-on effect means some bureau contracts are no longer fit for purpose, leaving procurement teams struggling to adapt quickly.

Interestingly though, we are starting to see some bureaux offering forward-thinking contracts with future flexibility embedded from the start.

But, how can procurement teams benefit from these enhanced features in both existing contracts, and when negotiating new contracts now?

The key is ensuring you know what options are available and to negotiate the right price for modules, rather than discounts for volume – as this remains uncertain.

Therefore, we recommend preparation:

  • Be aware of your options. This knowledge puts procurement and credit risk teams in a position to negotiate and ask the current bureau to provide the flexibility they are offering their competitors. This is key to future-proofing the credit provider’s strategy and prevents vendor lock-in to historic systems and data sets.
  • Create modules of what you need. And use this to get the right prices for each module, rather than rely on discount for a maximum term and volume/spend commitment – which is where many credit providers are caught at present.

🔎 Top tip: Don’t be frightened to ask even though it’s mid-term. If usage is low because of lower enquiries and spend is being wasted (as you’ve signed up to minimum commitments which are not being used due to the unexpected climate) we’ve seen the bureaux help: refunds are available.

👉 See how Purplepatch compliments procurement teams.

Futureproof credit risk with flexibility

Over the last year, there’s been a huge reduction in searches and new account openings while people have saved money due to working from home and not being able to go out.

Uncertainty remains and so predicting volumes is risky.

Some risk models may not perform in the new world which means flexibility is key. Therefore, both forecasting and signing up for a usual length of term is a challenge. And, unless you have transparency on what flexibility in contracts others are getting, you may find yourself either having to commit to high volumes to get discounts or suffer high unnecessary pricing for lower volume commitments.

👉 Find out more about: How procurement and credit risk teams can embed future flexibility into data contracts

Case study: Data contract negotiation in action

Global bank’s need:

We recently engaged with a tier-one global banking group that intended to renew with their existing CRA but needed built-in flexibility and a multi-bureau approach - without it impacting pricing.

We conducted a thorough analysis of the renewal pricing offered, identifying areas of price inflation. This evidence and target pricing was shared with the procurement team to aid negotiation.

Successful contract negotiation result:

Substantial reductions were realised including reduced product rates and flexibility to adjust spend commitment on a quarterly basis.

It also enabled a multi-bureau approach, whilst still benefiting from higher discounts.

Redefining the credit provider/bureau relationship

Redefining relationships with suppliers has become imperative for companies to rebalance the power equation.

And you shouldn’t feel you need to wait for contract renewal to get a better deal. There are ways to successfully negotiate cost savings and get the quality data you need right now for your credit risk programs.

That’s why we recommend these five things to take back negotiating power: Prepare for a balance of power, see a benchmark of what you’re paying against industry norms, build a shortlist of alternatives, understand GDPR compliance, and above all, carefully negotiate.

Don’t struggle alone

Impartial and unbiased, we have worked with a wide range of customers and suppliers and negotiated hundreds of agreements. By overcoming many of the pitfalls that credit and procurement professionals have had to face, PurplePatch ensures relationships are underpinned by clear mutual benefit on both sides.

We are so confident that they will be able to save money, services are provided on a shared-savings approach.

👉 Read our flipbook: Key reasons to work with PurplePatch on your next data bureau contract negotiation.

Find out more about working with PurplePatch - for free - on your next contract negotiation

We ensure credit providers get the best data and for a fair price - on average, we save credit providers 25-40% on costs alone, equating to multi-millions.

Here’s how we support you:

  • Expertise to decipher the like-for-like competitor products, to aid the commodity argument and offer alternatives.
  • Ability to unbundle the pricing around product combinations.
  • FREE benchmarked-pricing data, comparing the current price against what they are charging others with the same footprint. This will identify areas of inflation or give confidence the rates are good.
  • A suite of tools for an informed and successful negotiation (even if staying with the same bureau) - So not to disturb relationships or incur costs associated with moving to a competitor.