SAAS NEGOTIATIONS OVERVIEW
SaaS suppliers, like Salesforce, ServiceNow, and Workday are particularly intransigent when it comes to negotiation. To achieve leverage, deal leaders must understand the risks and demands of cloud commitments and long-term subscription deal structures. They must commit to building — and aligning around — a strategic and comprehensive plan to build deal leverage, protect information, and deliver a cogent story to the sales rep. By following the Leverage Management Maturity Model (LM3) introduced in this document, buyers can approach their SaaS negotiations from a position of strength and achieve best-in-class results.
This SaaS negotiations report will focus on these key categories specific to SaaS deal execution to maximize leverage in your next SaaS deal:
1. Developing a Favorable SaaS Deal Timeline
The average SaaS deal requires 6-12 months of prep work in order to achieve a competitive outcome and price. This section details all the deal activities and best practices that need to be carried out to create and preserve negotiation leverage. With an organized strategy around each of these activities, buyers can approach SaaS negotiations from a position of power.
2. Creating SaaS Deal Options and Alternatives
There are many alternatives and deal options available for buyers aside from competition. We dive into all SaaS sales rep motivations and how each can be utilized by the buyer to improve their SaaS price. SaaS alternatives and options discussed in this section include:
Multi-year term lengths: What is the impact to the sales rep’s commission based on the length of your agreement? We detail how multi-year SaaS deals factor into compensation plans and how buyers can improve their negotiation position by playing with term lengths.
SaaS Product Growth: Sales reps will be motivated by different product growth options. Understand how multiple proposal options can put the customer in the driver’s seat when dictating SaaS pricing and cost.
High Profile Products: What SaaS products have a higher chance of motivating the sales rep to provide the best discounting? How do these SaaS products affect sales rep commission? We detail answers to these questions and how buyers can use these products as a bargaining chip to improve their price.
SaaS Deal Timing: SaaS is driven by key fiscal year dates. Learn how to manipulate SaaS deal timing through acceleration or deceleration of execution dates to motivate your sales rep to provide the best deal outcome for your organization.
SaaS Licensing Model Cost Allocation: Certain SaaS deal structures have a higher emphasis placed on them by sales reps due to commission and revenue allocation benefits. We detail what deal structures motivate sales reps and how you can leverage them to improve your SaaS pricing.
SaaS Competition Matrix: Competition is a useful negotiation tactic for new SaaS purchases. We detail competitive product offerings from the closest SaaS competitors across the CRM, Marketing, eCommerce, and Analytics product industries.
3. Controlling SaaS Deal Information
SaaS vendor sales teams are experts at obtaining information, which eliminates their uncertainty around the deal and destroys buyer leverage. The close relationship between the vendor and your internal business users can begin before your first purchase and strengthen over time. Information leaks can occur anywhere — on the phone, via email, in your office, at lunch or at flagship tech events or conferences. An aligned organization is necessary to minimize SaaS cost and continually control the tone of a SaaS negotiation. This section highlights how to proactively plan and raise awareness with business stakeholders on what information is important to protect in any SaaS deal.
4. SaaS Negotiation Messaging Development
In the last section of this SaaS Negotiations report, we detail the four key features found in effective SaaS negotiation messages. Sales reps are instructed to test the buyer’s story for potential inconsistencies up to the customer’s C-Suite. When in a SaaS negotiation, it’s important to present a unified message across any groups who interface with the sales team, and that message must be credible, be consistent, and positively impact your leverage in the SaaS deal. This section also includes popular tactics SaaS sales reps use to deflect common negotiation tactics and examples of messages that work effectively in a SaaS negotiation.
To achieve a competitive SaaS deal, you must align around a comprehensive plan to build deal leverage, protect information and deliver a credible story in the SaaS negotiation. By following the Leverage Management Maturity Model (LM3) introduced in this document, buyers can approach their SaaS negotiations from a position of strength and achieve best-in-class results. For additional assistance on your SaaS purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.