Money June 1, 2020

How to prepare for my first enterprise sales negotiation?

Mark Mossberg @offlinemark

It's not technically real "enterprise" sales - but the (small) company I'm selling to would like a custom, bulk pricing plan.

They reached out to me expressing interest, verbally said they would be willing to pay for a subscription, and have been using a free trial. We have a follow up call to review how the trial went, and discuss next steps (a custom plan). I fully expect them to want to continue with a plan.

I've never done this and want to be well prepared. I'm anticipating the scope of discussion to cover pricing (incl. annual plans, discounts I can offer), features, support, and subscription term. Anything I'm missing? Things I should have up my sleeve?

Any advice on executing any part of this deal would be greatly appreciated :) (especially negotiation and legal stuff to be aware of... contract template recs anyone?)

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    Congrats!

    I would:
    1.) Have a feature roadmap so you can speak to upcoming improvements and can comment on delaying some features to specifically implement features they request/need.
    2.) Think though SLA (service level agreement), uptime, reliability, and any risks to their business by becoming reliant on your business. If you can help identify and mitigate risk it, hopefully, makes them more comfortable partnering with you.
    3.) Understand your fixed & variable overhead costs. Worst case scenario you could end up underpricing your product and actually lose money. Thankfully that's uncommon in the tech world since overhead costs are generally low. Knowing your costs and profit margin also helps you make a case for a fair price to allow you room to bring on additional resources to meet their needs.
    4.) Research their business, their pain points, and their competitors so you can speak to what others are doing, the pain your product relieves, and the competitive advantage your product gives them.
    5.) Look up their business leaders on LinkedIn. This shows you've done your research and will give you insight. For example, is the accountant familiar with their niche or is the accountant a "raw numbers person". That helps you tailor your message/story to the person you're speaking to.

    I'm currently (very slowly) reading SNAP Selling. You may not have time to read the entire book before speaking to the prospect but I think the concept of SNAP (Simple, iNvaluable, Aligned, and Priority) is worth thinking about: https://amorphousprojects.com/index.php/2020/02/09/snap-selling-the-scales-are-weighted-against-you/

    Finally, ask first if you can record the call for your own insights. Leave it a few days then go back and listen to the recording and make note of things you did right and wrong. Hopefully that'll help you build sales content that speaks to your users' real problems.

    Hope that helps and feel free to reach out if you want to bounce ideas around.

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      Thanks so much for the detailed response. I hadn't considered being prepared with risk management, roadmap, and being able to justify price with expenses.

      Thanks for the book recommendation, I'll check it out. I have 0 sales experience, so I'm definitely looking for learning resources.

      Re: asking to record the call - That makes me uncomfortable to ask, but it would be so useful. In your experience is that a standard practice?

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        @pmmjehan has been "coaching" me on user interviews. I've helped a few Indie Hackers over the last few months and all of them have asked to record the call. So I haven't seen/heard it on a sales call but I don't think it's unreasonable.

        The question is, IMO, is do you want to pretend to be big or be honest that this is your first "custom plan". My preference is the latter. Another way to frame it is "I want to be fully engaged and actually listen so if like to record the call instead of trying to take notes while we speak, that ensures I don't miss any requests or requirements you have".

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          I like that way of framing it, thank you.

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    Congrats on the progress! It's exciting to get the first deal. A lot of good advise here on product roadmap and how to think about pricing.

    I built enterprise SaaS business before with clients such as Viber, Mozilla, etc. and later sold it to Walmart labs. If you are looking for more tailored advice, happy to chat and jump on a zoom call if that's helpful. Email me at [email protected]

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      Thanks Kuldeep! I'll email you.

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    I feel like so many answers here are a complete overkill.

    Sales is about asking the right questions, rather than giving them answers about your roadmap, features etc.

    Definitely do some research on what they do and who they are. BUT! For the love of god before upselling them and pushing them a solution. Ask questions about how the trial went, what challenges are they facing as a business, some contextual questions (based off the industry of the solution like martech, legaltech, proptech etc.). This is how you arrive at a sale, by understanding their situation first and only then going into things like how can you actually improve it and if your solution is actually a fit.

    I always add that sales is successful with relevancy. If you have the right stakeholder and a fit to their problem, you are guaranteed to get a customer, you don't even have to try hard in 90% of the cases.

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      Yes. Love this. The best salespeople listen better than they talk.

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        Thanks, @baird - its true, and the beauty of it is, that you realise how much power you get as a person/company by just changing the dynamic of customer communication to questions and not pushing a sale.

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      Love it. Thanks kirso, I'll make sure to keep this in mind.

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        Good luck and fingers crossed!

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    Hey Mark, good luck!

    If you're a podcast person, I've recorded a few interviews with founders where we go into detail on how they made their first sales.

    An episode that would be particularly useful for you ('small' enterprise, custom deal closing...) would be:

    Happy to answer any specific sales questions you have as well :)

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      Thanks so much Louis, this is exactly the kind of content I've been looking for as I scramble to learn sales 101 :)

  5. 2

    Hi Mark -

    A couple recommendations.

    Sales agreement from ycombinator is a good start.
    https://www.ycombinator.com/sales_agreement

    With respect to pricing and negotiation, I'm a big fan of Todd Caponi and we have been following his sales process for the last 6 months. Here is a recent youtube webcast he did: https://www.youtube.com/watch?v=QhVUaWKT6xg

    He has a nice system for using levers when you talk about pricing. Discounts have a cost. Could be a longer commitment, higher volume, payment upfront etc... but discounts are not free, they are paying for discounts using one of these levers which bring value to you as a business owner.

    Hope this helps.

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      Just watched the Todd Caponi video. And then the rest in that series. Thank you so much for sharing, I feel much more prepared now :)

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      Hey Johnny, thanks so much. I'll definitely watch that webcast.

      Some opinions I've seen on the YC template are that it's unnecessarily heavy. I'm inclined to agree.. we're two small businesses and we're not planning to transact enormous amounts of money, so I wonder if it causes more friction than necessary. What do you think?

      https://www.quora.com/What-are-the-legal-implications-in-Y-Combinators-Template-Sales-Agreement/answer/Jason-M.-Lemkin

      https://www.salescollider.com/blog/2018/5/25/get-it-right-the-first-time-saas-contract-best-practices-with-ben-oelsner

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        Got it. Looks like we were off on semantics a bit.

        The original message said "enterprise". I'm used to enterprise typically meaning larger companies (say 2000+ employees) or a bigger contract values, say 30K/per year.

        In my case, the YC template didn't have enough provisions and we needed an attorney to write a custom sales agreement which was much longer. We're also used to those requiring some back and forth redlining. That's usually going to happen with all enterprise sales. Sounds like you meant smaller scale customers.

        Definitely agree. If you are talking about transactions under $1000 per year, then that sales agreement might be too long. Let me know if you find something suitable. I've looked before and didn't find anything I loved.

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          Sorry about the confusion, I didn't know a better way to succinctly describe selling a custom pricing package to a customer whose needs exceed all of the standard tiers. What would you call it?

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            Re-read your message, you definitely said small. My brain immediately switches context when I hear enterprise. I think "custom plan" is the better terminology here. If the custom plan consists of just higher usage/volume, then the agreement can be pretty simple. If you are going to do any custom dev work, proceed with caution. I would avoid (if possible) any custom dev work baked into the contract and instead try to focus on higher usage limits.

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              I actually already did some custom dev work for them so their trial would be more representative of their real experience using it. Was it a mistake to do this so early? In retrospect, I suppose there was risk if the deal falls through, but the dev work was relatively mild.

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                It's hard to say because it's a new market and product. You are still learning where the value is.

                That said, It's important to think of this in terms of expectation setting.

                If you bend over backwards for the customer by doing custom code for them, it can turn into a bad cycle.

                I like to frame things like this: think in terms of a roadmap, your product roadmap. If someone wants a feature or need, you can charge them to accelerate the priority of that roadmap item, but you aren't building that item custom for them. This helps frame expectations better. Rather than them believing they are paying you for that code (and in some sense feel some ownership for how it's built), you are simply giving them the option to pay you to accelerate that feature... but it's a feature you own. You'll happily take their feedback, but you OWN it, it's your roadmap item on your product for ALL your (current and future) customers.

                Most customers don't understand product/code and the investment and liability it creates long term. Never give up that control, never bend so far backwards for a customer that they think they have some kind of creative ownership.

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                  I like the idea of paying to accelerate the roadmap vs paying for a feature, and I'll definitely keep expectations and framing in mind going forward. Thanks again.