How to Negotiate SaaS Sales

Tips to becoming the perfect negotiator.
saas sales rep cover photo
The art of negotiating can be a tricky one to master, especially in the SaaS sales landscape where not only are customers more informed and increasingly sophisticated, but they also have greater expectations when it comes to customer experience.

Knowing how to navigate these obstacles successfully can make all the difference in closing a deal at an optimal profit margin.

In this blog post, we'll explore how you can develop your negotiation style and work with customers on win-win deals that benefit both parties.

Read on for some tips!

What are SaaS Sales?

SaaS sales are sales focused on selling software-as-a-service products to customers.

People involved in SaaS sales aim to attract new customers and expand offerings to current customers. Depending on whether leads are generated internally or through outreach efforts via cold calls or cold emails, salespeople can concentrate on inbound or outbound sales.

Tips on Negotiating SaaS Sales

Start with a Strong Opening Offer
During a negotiation, it's common for a prospective client to request a concession, which may involve offering a discount, a free item, or more favorable terms. The key is to respond strategically by constantly asking for something in return if you plan to give something away.

This ensures that the negotiator sets the right tone already at the beginning of the relationship, showing that you are they are not a pushover and preventing future requests for discounted pricing.

For instance, if the prospect asks for a 10% discount on a six-month term, you've avoided any potential friction and arrived at a mutually satisfying outcome.
Build Long Term Relationships
Achieving win-win outcomes in negotiations may not always be possible, but it's the responsibility of a skilled negotiator to give it their best shot.

When aiming for favorable outcomes for both parties, considering long-term relationships can be a powerful tool at the negotiation table. Negotiations mark the start of a long-term business partnership, making it critical to maintain a fair and amicable approach, avoiding overly aggressive or one-sided strategies.

Initiating trust-building during negotiations can go a long way. Hence it's imperative to safeguard both parties' interests while finding a balanced solution. Clients can quickly tell when you're genuinely supportive of their interests, aiding in developing solid business relationships.

It's also worth noting that while granting concessions to prospects, it's critical to remember that this shouldn't be one-sided.

As a negotiator, you can ask for something valuable in return, implying that the given concession is practical and fair, leaving both parties satisfied.
Understand Your Prospects' Needs & Pain Points
To negotiate successfully, it's crucial to pinpoint the customer's pain points and position the product as the solution.

During the early stages of the negotiation, building a relationship with the lead and asking them targeted questions to learn more about their challenges is highly important for successful negotiations.

Top SaaS negotiators don't immediately extol their product's virtues; they take the time to listen to the buyer and understand their pain points.

This approach sets up future negotiations for success, allowing you to align your solution perfectly with their needs.
Listen More, Talk Less
Many seasoned negotiators believe active listening is the most crucial skill to successful negotiations. It can ease tensions, show respect towards the other party, ensure the exchange of all pertinent information, handle objections and overcome impasses.

By engaging in active listening, both sides can gain greater insight into the issue at hand, leading to stronger negotiating positions and higher chances of achieving desired outcomes.
Be Prepared to Walk Away
Before engaging in a negotiation, it's crucial to determine your bottom line. At what point would you decide the negotiation is no longer worthwhile? Although striving for a mutually beneficial outcome is desirable, it may not always be achievable.

Establishing a clear-cut limit for what you're willing to compromise can help avoid wasting effort and risking personal interests.
Create Urgency to Close the Deal
Sales professionals often use urgency as a persuasion technique to create the impression amongst potential customers that they must act immediately to acquire a product or obtain the best deal. This motivates customers to purchase on the spot rather than delay.

One common way to induce a sense of urgency is by placing a time limit on the availability of a product or reduced price. Indicate this deadline on your website, advertisements, or sales pitch.

For instance, you may limit your sale's availability to 72 hours and display a countdown clock to increase urgency. This communicates to the customer that they must act fast to avail themselves of the offer.

These techniques can nudge customers towards purchasing before the product runs out or the sale ends.
Work with a Sales Playbook
To enhance your chances of securing a sale, having a sales playbook with relevant resources to support negotiations is wise. This playbook can be crucial throughout the sales process and in future negotiations with potential SaaS clients.

A sales playbook consists of all relevant resources to address any questions or objections arising during negotiations and can prove highly valuable.

By leveraging statistics, data, examples, and case studies tailored to the specific prospect, the salesperson can be better prepared when interacting with prospects.

You can improve your close rate significantly by adequately preparing ahead of time. Rather than wasting time searching for information, the necessary materials are available to quickly address objections and answer questions, improving your sales process efficiency.

Similarly, analyzing these sales interactions can offer growth opportunities to refine your process continually.
Encourage Transparency in Your Team
Many assume that sales professionals are not above misleading prospects or outright lying to close a sale.

However, this shortsighted approach can significantly harm your reputation by inviting negative feedback, refund demands, or even worse.

In many situations, an honest human touch, emphasizing fairness, can help build excellent rapport with prospects. Employ a challenger sale technique to encourage prospects to reconsider their pain points and to foster an authentic human connection based on mutual interest and respect.

It is critical to be upfront regarding your terms, policies, features, benefits, and pricing, as this can help to secure a favorable outcome during negotiations. The goal is satisfied customers who make informed purchases for the right reasons.
Leverage Social Proof to Build Credibility
Using social proof can make people more open to what you share, and it can be implemented through testimonials, statements, sharing narratives, and so on.

An advantage of social proof is that it can establish credibility, a critical factor in successful negotiations. Demonstrating to potential customers that a business has numerous satisfied clients through testimonials and reviews enables building trust in its legitimacy and reliability.

When applying social proof, remember that similarity amplifies its influence. Therefore, it's best to share specific examples similar to those you're negotiating with, increasing the persuasive power and making it more compelling. This approach allows people to perceive what it's like to work with you in light of results achieved by people like them.
Talk to the Decision Maker
It's crucial to always deal with the person who has the power to make the final call, a fact so obvious it shouldn't need mentioning. Investing your precious time into reaching out to the wrong person would be counterproductive.

You've wrapped up your negotiations, ensuring to put into practice all the tips above, but then comes the awful phrase, "Sounds great, but I need to check with my manager, CFO, or director." Now the negotiation process can start all over again.

In the best case, you must redo some parts of the negotiation process. In the worst case, you'll receive a flat-out "no" from the decision-maker. Getting to the answer as soon as feasible will save time while decreasing the time spent cycling through sales.

Conclusion

Negotiating SaaS sales comes with its own set of obstacles and opportunities. However, by following the tips outlined in this article, you can be well on your way to becoming a master negotiator and closing that deal.

Start with your initial offer and understand your buyers' needs and pain points. Remember: Don't forget to listen more and talk less. Without proper preparation, you may need to walk away from the deal or, even worse - settle for an unfavorable agreement. By leveraging a sales playbook and working with a motivated team of salespeople, you can become more transparent, create urgency when closing deals, leverage social proof, and ultimately reach the right decision-maker.

If you need assistance structuring or tailoring your negotiating approach to work within your company goals, don't hesitate to outsource the best SDRs with SalesPipe. With these steps in mind, you will be ready for any SaaS negotiation challenge that comes your way!