Master the Art of Successful Sales Negotiation: Proven Strategies to Close Deals for SaaS Sellers
If you're a serious B2B SaaS seller, then successfully negotiating deals is an essential skill. Closing deals is what will help your business grow, so you need to make sure that you have the knowledge and resources necessary to become an expert negotiator.
Unfortunately, salespeople have a lot of skills they need to improve on it can be overwhelming.
In this blog post, we'll be going over proven strategies for masterful sales negotiation tactics that can get any deal from "maybe" to "sold" in no time at all.
Sales negotiation, if done incorrectly, can be a salesperson's worst nightmare. Many SaaS sellers have difficulty mastering the art of sales negotiation because it requires a unique combination of emotional intelligence, sales knowledge, and business acumen.
Often salespeople merely use price-cutting tactics to conclude the sales process and miss other important factors that are necessary for success such as understanding customer psyche or evaluating ongoing costs.
Additionally, salespeople who lack training or experience in sales negotiations won't know how to navigate complex conversations and modify their sales strategies based on customer feedback. It is no surprise that salespeople without these skills end up making poor decisions when it comes to sales negotiations.
4 REASONS WHY SALESPEOPLE DON'T NEGOTIATE WELL
Lack of confidence
Salespeople may be hesitant to negotiate for various reasons. One common issue is a lack of confidence in their ability to negotiate.
This may be due to several factors, such as inexperience, not having done enough research on the product or service they are selling, or feeling intimidated by the other party's negotiating style.
Confidence is essential when it comes to any negotiation, and without it, salespeople can often feel overwhelmed or ill-equipped to handle the situation.
Lack of guidance
Lack of guidance in negotiation can be a major issue for salespeople, as it leaves them struggling to know what is expected of them in a given situation.
Without the right guidance and preparation, salespeople may find themselves unable to effectively negotiate with prospects, resulting in missed opportunities or failed deals.
Salespeople need help developing their negotiation skills and should have access to the necessary resources to do so, like a sales coach and trainer, or ideally, a sales manager.
Additionally, they should be provided with clear guidelines on how to handle different scenarios that may arise during negotiations, such as addressing customer objections, proposing solutions, negotiating price points, etc.
With the right guidance in place, salespeople can feel better equipped to engage in successful negotiations that are mutually beneficial for both parties involved.
Lack of practice
B2B SaaS salespeople often don't negotiate well because they simply lack practice. Negotiation is a skill that must be honed and perfected with time, like any other skill. Without experience, most salespeople feel intimidated or unprepared when it comes to the negotiation process.
They may not be aware of the techniques and strategies involved in successful negotiations or understand how to manage their own emotions during tough conversations.
Additionally, they may feel overwhelmed by their lack of knowledge or confidence in their ability to close a deal. This can lead to challenging but meaningful discussions with prospects turning into difficult and unpleasant experiences for both parties involved. By investing time into honing their skills, salespeople can develop greater mastery over the art of negotiating and bring more value for themselves and their business partners through successful deals.
Lack of patience
Many salespeople lack the patience needed to succeed in negotiations. This is due to a number of factors, such as feeling a sense of urgency to close the sale, having an aggressive approach to sales, or simply being too eager to reach an agreement.
Without patience, salespeople (e.g. account executives) may become agitated during negotiations and jump to conclusions without considering all the facts. They may also be quick to reject counteroffers or compromise opportunities.
A lack of patience can lead to frustration and even anger that can make it difficult for salespeople to remain focused on their goals and objectives.
Salespeople should take breaks during negotiations if needed, and focus on remaining calm and composed despite any potential setbacks.
It's important for salespeople to recognize that successful negotiation takes time and shouldn’t be rushed - oftentimes the best deals are made after many rounds of back-and-forth discussion that allow both parties to feel like they have reached a mutually beneficial agreement. Taking extra time during negotiations can help salespeople make smart decisions while avoiding costly mistakes when dealing with customer demands.
But don't worry, you'll learn6 simple but effective ways you can improve negotiating overnight.
6 TACTICAL STEPS TO NEGOTIATE BETTER AND CLOSE MORE SAAS DEALS:
Step 1: Have a Starting Offer
If you can walk away with the best deal possible, what would that be? Go into negotiations with a starting offer that is the best one you want (you can always work your way down).
Starting negotiations with a strong offer is key to securing the best possible deal.
In order to begin the process, you must be willing to put forth your ideal outcome and highest offer. This will show the other party that you are confident in your proposal and are serious about getting what you want.
Taking this approach allows for more potential room for compromise during later negotiations.
Additionally, when approaching negotiations with a strong offer, can help set the tone of the negotiation in your favor. This can lead to a bargaining situation where you have more leeway in terms of concessions and rates without sacrificing too much of what you actually want.
Furthermore, starting negotiations with a strong offer sets expectations upfront as well as increases the likelihood of a successful negotiation since both parties have an understanding of what each side wants from the start.
Ultimately, having a well-thought-out plan with clear objectives is essential when attempting to secure a good deal on any agreement or contract.
For example, I have a student (an account executive) in FDTCU who has the authority to discount onboarding to close the deal. I asked them what the best deal for them looks like, and they said, "getting the prospect to sign up for the premium plan at full price as well as getting them to pay the onboarding fee without a discount."
I told them that they should go into the call intending to close the prospect without waiving onboarding (because they'll have a higher commission).
Takeaway: Start with your highest offer.
Step 2: List Potential Objections
So many SaaS salespeople go wrong here. They try to close a prospect but are caught off guard when the prospect has objections. The biggest mistake you can make is not anticipating objections your prospect will have.
Having a list of these possible objections will help ensure that you are better able to address any uncertainty on the part of the customer.
One way to do this is by reviewing your call notes and recording sales calls to identify any potential red flags or concerns they shared in prior conversations. For example, if your initial offer includes a high onboard fee, and you know that a prospect is sensitive to onboarding fees, be prepared for that objection.
I have another student that wants to close more customers on the yearly plan because they'll get a bonus if they do, and it prevents churn. They listed out some objections they think the prospect will have, one of which was having to commit to a yearly plan.
Takeaway: Anticipate objections
Step 3: List Your Counter Offers
When preparing for negotiations, especially in B2B SaaS sales, it is important to practice responding to various objections so that you can come up with tactics on how best to counter them when discussing your offer with the customer. Having a list of counteroffers helps ensure that you are prepared when negotiating in any situation. It is also helpful to understand the other party’s goals and interests so that you can tailor your counteroffers to meet those needs.
This can help convince them to accept your offers. Additionally, you should strive to create a “win-win” situation – one where both parties feel as though they have made a favorable deal.
For example, my student that wanted to sign up more customers on the yearly plan made a list of counter offers. One of those counter offers was to give the prospect a free trial for 14 days to get them more comfortable with the software before deciding to pay yearly.
Takeaway: Plan your responses
Step 4: List Bonus Offers
When negotiating with prospects, it is important to remember that the goal should be for them to feel in control and as if they have won something.
One way to do this is by having a few extra bonus offers that can sweeten the deal and make them feel like they are getting more than what was originally offered.
This could include additional services or complimentary items, waiving of onboarding or data migration, or even extra training sessions. Giving prospects options creates a sense of choice and allows them to choose what they think works best for them instead of simply accepting whatever you give them.
It's also important to remember that when negotiating, it's not just about getting to the best agreement possible - it's also about creating a strong relationship that lasts beyond the present moment.
Having things such as bonuses or special offers in place gives prospects a sense of value, which helps foster positive relationships between parties involved so that negotiations continue smoothly and both sides benefit from the arrangement.
Using the example in step 3, the AE and I came up with a bonus offer to seal the deal by offering to waive data migration for the customer if they sign up (which is uncommon in the space they're in).
Takeaway: Plan your "giveaways"
Step 5: Have a Floor
The secret to negotiating well is knowing what you're willing to walk away from.
his means having a clear understanding of the bottom line, which should include both financial and non-financial considerations. You should be prepared to walk away if the other party's offer does not meet your needs or expectations.
Additionally, it is important to understand how valuable the deal is to each side and use that knowledge as leverage in negotiations. When considering walking away from a deal, you should also consider how much time and effort you have already put into negotiations and whether that outweighs any potential gains of completing the deal.
Before entering into negotiations, take some time to really think through your limits so that you can remain firm when offers start coming in. Additionally, be aware of any concessions you may be willing to make—negotiations involve trade-offs after all—but make sure not to give too much away for too little in return.
Of course, walking away from negotiations doesn’t mean that the relationship between parties has ended; there may still be opportunities for further collaboration down the road. By going into a negotiation with a clear understanding of what you need and why, you can protect yourself against offers that don't adequately serve your interests or align with your goals, thus setting yourself up for better negotiations in the future.
For example, when I launched my business I said to myself that I am not willing to work with a B2B SaaS company if they don't sign up for a minimum of 3 months.
Takeaway: Have a MAO (Minimum Acceptable Offer)
Step 6: Put up a fight
Bad negotiations is when you make it too easy for the prospect to get what they want. Haggling is an important part of negotiating, and it involves standing firm in the face of a potential compromise from the other party.
The idea behind haggling is to make sure that both parties are getting what they want without either one feeling as though they are being taken advantage of.
When haggling, it's important to remember that you should never accept the first offer made by the other party.
By phrasing your counter-offer in terms that are still beneficial to them and making it clear why you think it would be better for both parties, you can often get them to agree to terms more amenable than what was originally offered.
Remember, buyers need to feel like they're winning so be ready to resist a little bit before you give in.
Takeaway: Stand your ground before you negotiate more
The best negotiators come prepared and don't wing it.
The next time you find yourself in a negotiation, remember these three tips to help you get what you want. Do your homework and come into the negotiation prepared with a clear idea of what you want and what you’re willing to walk away from. And finally, be aware of the other person’s perspective and anticipate their objections. With these tools in your arsenal, you’ll be able to negotiate like a pro. Have you tried any of these techniques? Let us know how they worked for you in the comments below!
Whenever you're ready, there are 3 ways FDTC can help: