Many companies mistake sales negotiation as a function conducted exclusively by sellers. We consider negotiation a team effort. In a complex B2B sales environment, it is rare for an individual seller to negotiate an entire deal on his/her own without the support, guidance and active participation from the rest of the organization.
There are multiple functions and teams involved in negotiation alongside the sales team. You would be doing a disservice to your company to only involve your sales team in the creation and execution of your negotiation strategy. Each function must have a clear understanding as to how negotiation is executed and agree upon what a great deal looks like.
When you think about it, negotiation is happening almost every day and at multiple touch points when managing ongoing customer relationships. It is important that you build alignment internally with anyone who could impact the overall customer negotiation strategy (at both the overall account and individual opportunity levels). If account teams are not on the same page, an individual who doesn’t know the play could radically alter the entire negotiation strategy. Ultimately, what gets agreed to in these daily negotiations influences what gets agreed to in the larger deal.
Here are some examples of how these functions, seemingly unrelated to a customer negotiation, can influence what ends up in a closed deal:
- Marketing: Most wouldn't consider marketing to be an influence in sales negotiation, but we argue negotiation starts at the beginning of the buying process and that often includes consuming marketing’s content. Marketing teams influence deals because their content convinces buyers to often consider their largest business issue from a different point of view. This team also shares emerging trends with the buyer and shapes conversations later in the customer engagement cycle.
- Business Development: The work of a business development function is to negotiate the value of an initial meeting and to craft that initial meeting agenda. This team influences how urgently the meeting should take place, who should be involved and what should be discussed to start the customer conversation down a compelling and differentiated path.
- Pre-Sales/Solution Architects: This team is responsible for negotiating and shaping the requirements for the solution and proof of concept. In many industries (e.g. high-tech) the negotiation of these P.O.C requirements is likely where a deal is won or lost. We need to ensure these solution architects are anchoring on the right technical differentiators and demonstrating the specific value of them to each unique customer.
- Consulting/Implementation: These teams negotiate Service Level Agreements (SLAs) and the implementation process, schedule and scope. They ask the questions: what is the schedule, what are the required SLAs, who is doing what and how are we tracking the implementation? They can anchor on what’s required to meet the deadline or how implementation will occur. They also frequently engage in daily negotiations to keep the implementation on track.
- Professional Services/Customer Success: Negotiates high leverage success activities and measurements. How is success measured? What positive business outcomes are we driving toward? What adjustments may be required to achieve them?
- Account Management: Account managers lead the negotiating when it comes to business impact, QBR’s and up-selling/cross-selling. These are the people who own the ongoing relationship and are responsible to negotiate when it is time to renew contracts.
- Legal: Each side is worried about protecting themselves in the business relationship. You want to ensure your legal team has an understanding of your overall negotiating strategy and perhaps more importantly, what you're trying to get in the final deal so your legal team is on the same page (business interests as well as legal interests). In addition, if you know legal is going to require specific components be in every deal, you can begin communicating about those factors early in the sales cycle so there are no customer surprises.
- Finance: Price is always going to be part of the equation. What margin, payment terms and pricing considerations does your finance team desire as part of the deal? Much like legal factors, you can communicate these early to prevent late-stage hiccups.
To ensure the company-wide strategic priorities are represented in the customer negotiation, functional leaders must: 1) provide the customer-facing team guidance on the specific interests they are looking to address in negotiated customer agreements, 2) help them determine the negotiation strategy to manage the various gives & gets to reach an agreement consistent with those priorities and 3) ultimately ensure negotiated agreements reflect where the selling organization is strategically headed (vs. extending priorities and concessions of the past). Examples may include:
- Transforming from on-premise to SaaS solutions
- Selling across the entire portfolio of legacy and newly acquired solutions
- Shift focus to selling services vs. products
- Driving sales/revenue through partners vs direct
Considering all of these factors, you can see how only aligning your sales team on a negotiation strategy is a missed opportunity and potentially a liability. All functional areas should be involved and aligned with building organizational negotiation competency and it matters that everyone is on board. What are you risking if they aren’t? Experienced buyers understand exactly how to identify and exploit lack of alignment across a selling organization to gain advantage in a negotiation. They are experts at playing naïve, unaligned customer-facing teams against each other to create leverage… including senior leadership! Remember, negotiation is an organizational competency, not just a sales skill.