In my 18 years as VP EMEA Sales at Oracle, I was party to many successfully negotiated deals that delivered a Win:Win for both Oracle and the customer, very often leading to a highly valuable reference case.
On the other hand, some deals were a Win:Lose, where the customer felt railroaded into a deal that didn’t create enough value, with the result that they actively disliked doing business with Oracle!
Henry Kissinger once said "In a negotiation, you always meet the same the other side all the time. Even if you succeed in outsmarting or pressuring them, it only sets up a cycle in which they will try to get even"
With SaaS contracts, having an unhappy customer is almost worse than not having that customer at all, so always look for a Win:Win to increase the likelihood of renewals and upsell.
Negotiation is both an art and a science, so in this article we’ll look at some techniques that, if executed well, will deliver the former, a Win:Win and a happy, referenceable, customer.
BATNA (Best Alternative to a Negotiated Agreement - don’t we all love an acronym!?): Before entering into a negotiation, identify your BATNA – the best course of action you can take if an agreement cannot be reached. Knowing your BATNA gives you leverage and helps you make informed decisions during negotiations.
Anchoring: Set the initial terms or offer as an anchor point for the negotiation. This can influence the other party's perception of what is reasonable and shape the direction of the negotiation. Use anchoring strategically to your advantage.
Mirroring: This involves subtly reflecting the body language, tone, and speech patterns of the other party. Mirroring can help build rapport and establish a connection, making the other party feel more comfortable and cooperative during negotiations.
Silence: Silence can be a powerful negotiation tool. Use pauses strategically to allow the other party to respond or contemplate their position. Silence can create a gentle tension and encourage the other party to give concessions or reveal valuable information.
Negotiation Jujitsu: Instead of meeting resistance with resistance, use negotiation jujitsu to deflect and redirect the other party's objections or demands. Use active listening, acknowledge their concerns and then pivot the conversation towards common ground or alternative solutions.
Exploding Offers: This involves setting a deadline or time limit for accepting a proposal. This creates a sense of urgency and can prompt the other party to make a decision more quickly. Use exploding offers sparingly and ethically to avoid damaging relationships.
Framing: Always frame the negotiation in a way that emphasises the benefits and advantages of your proposal. Use language and framing techniques to shape the prospect’s perception of the negotiation and steer them towards accepting your terms.
Nibbling: Nibbling involves making small, last-minute concessions or requests after the main terms of the agreement have been agreed upon. Nibbling can help you gain additional value without significantly impacting the overall agreement. Typically, this involves conceding something that is of low value to you, but high value to the prospect - see “Concessions” below.
Limited Authority: Claiming limited authority can give you flexibility and leverage in negotiations. Indicate that you need to consult with a higher authority before making decisions or concessions. This can buy you time and has a positive side-effect of making the prospect feel really important. Don’t forget to close by asking “If I can arrange this for you, can we go ahead?”
Use your Coach: Using your coach can strengthen your negotiating position. Aligning interests and presenting a united front can increase your bargaining power and influence the outcome.
Concession Strategy: Use concessions strategically to move negotiations forward while still protecting your interests. Make concessions on less critical issues to gain concessions on more important ones. Avoid giving away too much too soon and maintain a balance between give and take. Have a list of low value concessions to hand before you start the negotiation!
Information Control: Control the flow of information during negotiations to your advantage. Disclose information selectively and strategically, revealing only what is necessary to advance your position. Limiting access to information can enhance your bargaining power and prevent the other party from exploiting weaknesses. I’ve seen too many sales people give everything away too soon, losing all power in the process.
Good Cop/Bad Cop: In a team negotiation, assign roles to team members to play the "good cop" and "bad cop." The "good cop" establishes rapport and builds trust, while the "bad cop" takes a more assertive stance to push for concessions. This dynamic can create psychological pressure and encourage the other party to make concessions. In my experience, this can be very effective indeed.
Non-Monetary Incentives: Offer non-monetary incentives or concessions to sweeten the deal and make it more appealing to the other party. Non-monetary incentives can include perks, additional services, or opportunities for collaboration that add value without increasing costs for either party.
Walkout Threat: Warning, use sparingly! Use the threat of walking out of negotiations as a tactic to break deadlock or prompt concessions. Expressing a willingness to walk away signals that you have alternatives and are not desperate for a deal, which can compel the prospect to reconsider their position. Never use this unless you really are ready to walk away from the deal!!
Posturing: Employ strategic posturing or framing to shape the perception of your position and influence the other party's behaviour. Use confident body language, assertive speech, and persuasive arguments to convey strength and credibility during negotiations.
So, always aim for a Win-Win where both you and the customer benefit from the outcome. Focus on creating value and finding solutions that meet the interests of all parties involved, which will more than likely result in SaaS renewals and expansion.
Good luck and please contact me if you’d like to know more.
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