Preserve Margin with Budget-Conscious Buyers through Value Negotiation
We’ve talked a lot in blogs and other content about the importance of negotiating early and often. Negotiation isn’t an event that happens with procurement at the end of a deal, but a process of establishing and validating the value of your solution throughout the life of a deal. How does that process change in today’s environment, where buyers are hyper-focused on cost and sales teams are struggling with reduced pipeline?
You don’t have to give away leverage and resort to discounting even with today’s economic factors. When you operate with an organization-wide negotiation strategy, you’ll reinforce your value and preserve margin. Force Management Senior Partner Tim Caito recently joined John Kaplan and John McMahon on the Revenue Builders Podcast for a conversation on what great negotiation looks like in a cautious economy.
Today, we’re breaking down what leaders can do to enable their sales force to navigate complex negotiations and preserve margin in a dynamic, changing market.
Set Up a Negotiation Process Framework
Negotiation is a vital sales process that needs to be managed like any other. You’ve meticulously outlined and defined your financial processes, client success and product development processes. It’s time to start thinking about negotiation the same way. The most successful sales organizations win consistently by treating negotiation as a fundamental, always-on business activity that is documented, trained and consistently monitored.
Start by answering a few questions to set your team up for success in negotiation:
- What’s the process framework? Like any process, successful organization-wide negotiation requires clearly outlined steps, when they happen, and who owns them.
- What role do leadership and management take in the negotiation process? Too often, negotiation is a topic that is considered to be between the seller and their prospect. As an organizational competency, negotiation should be invested in, coached and monitored by leadership.
- How do we measure if we are successful and in what cadence? Regular performance check-ins are crucial to developing a negotiation process that works for both you and your customers.
- When do other departments draft in and support the process? Cross-functional alignment and cooperation on negotiation can transform the potential of your deals. Get your legal, customer success, and marketing teams on board to support great negotiation.
Many leaders only get visibility into what’s being negotiated as the deal comes to a close. The seller is the only person who has visibility into that deal all the way through. An aligned internal process that opens up cross-functional visibility will not only help negotiations but enable a more consistent and accurate forecast.
Align on What a Great Deal Looks Like
Just as guidance is needed in the process of negotiation, it’s important to give guidance on what sellers should be negotiating for. What does a deal that supports your strategic priorities look like in terms of value, paperwork, timeline, and partnership? Many sales leaders view this as obvious - but if you ask every individual contributor, you may be surprised how many differing answers you hear.
Likewise, cross-functional alignment on deal expectations is crucial to successfully operate a company-wide negotiation strategy. Your sales team, legal team, customer success, and operations must have visibility into each other’s activities and goals. Otherwise, you’ll run into inconsistencies as your deal moves through your org and end up giving away value. The sales team will negotiate something that gets pushback from your legal team, or a discount will be given by one department without knowing the negotiations made by another.
How can you align your organization on what a great deal looks like? A qualification system like MEDDICC can empower sellers to seek answers to important buyer-alignment questions and facilitate early-stage negotiation in every deal. MEDDICC can help sellers identify and anchor on required capabilities earlier on, ensuring that they’re connecting to the priorities of the economic buyer and laying the groundwork for a high-value deal. This is especially valuable in the current economic environment, where buyers have price on the brain and will attempt to steer conversations toward cost from the beginning.
Aligning your organization on a functional, customized MEDDPICC framework will enable your teams to anchor the conversation on value drivers that support your strategic priorities at every level of the deal, consistently validating a premium price for your solution.
Enable Sellers to Minimize Risk for Champions
Buyers assess risk in every deal, but there’s no doubt that they are even more sensitive to potential risks in the ongoing environment of economic uncertainty. Now more than ever, it’s critical that sellers are able to predict potential objections from multiple buyer stakeholders and prepare to address them, or more likely, prepare their champion to address them internally. By anticipating and mitigating risk, sellers gain more power in the negotiation process.
Champions are key to gaining leverage with C-level leaders and procurement; not only do they have unique influence, but they will often get visibility into concerns and obstacles that would not normally be expressed directly to your sellers. To help sellers identify one or more champions that have the power to negotiate internally, provide them with tools to execute deep discovery and map the political landscape of the organization.
To successfully leverage them as an internal negotiator, it’s crucial to remove risk factors for the champion. This means preparing them with proof points and content, as well as appealing to their personal priorities. The champion will likely be in charge of implementation, so encourage sellers to introduce the details of implementation early on. Give them a template to lay out a post-sale plan, key success metrics and a QBR schedule to reassure the champion that you are invested in their success.
When sellers successfully create motivating value and remove risk for the champion, they’ll earn an internal ally that goes to war for your solution at full price with stakeholders and procurement, taking much of the legwork out of back-end negotiations.
Gain the Leverage Needed to Drive Your Revenue Goals
In today's price-conscious economy, successfully executing value negotiation in every deal can make all the difference for your revenue goals. Still, operationalizing a strategy for consistent value negotiation across your sales organization is no small task. You don't have to do it alone. Force Management has helped many sales organizations map out a value negotiation process that works for their customers and goals, resulting in record revenues, larger deals, and greater forecast accuracy. Wondering how a comprehensive value negotiation process can help your organization achieve growth goals? Start a conversation today.