Modern Negotiation Framework

I wanted to share a negotiation framework that, in my experience, has increased collaboration, sped up sales cycles, and increased ASP by 10-15% depending on product and segment. It still amazes me how few revenue orgs take this approach, so I would love your feedback.

Developing a clear sales negotiation framework is similar (in my opinion) to reverse engineering a product. You have to start with the ideal end state and work backward.

Using a SaaS company as an example:

1.) Define a Standard Deal - This can seem obvious at face value, but very few organizations clearly define and communicate what a standard deal is within their business and segmentation. Without a clear definition, sales can feel like they are winning a negotiation with concessions, while their sales manager/leadership can be disappointed with the same outcome.

A standard deal can be as simple as the following;

• Pricing - List pricing (no discount)
• Pricing Floors - Adhered to if applicable
• Payment Term: Due upon receipt
• Billing Term: Annual

&

• Multi-Year Contract: 3 years (company specific)

*Most businesses will have a second tier of deal terms that need to be addressed, such as pooled pricing, price protection, predictability, professional services requirements, opt-ins, and other commercial terms that are unique to the business.

*Note that legal redlines are not included in this framework. Although it is part of the negotiation, it should not be used as a way to benchmark sales performance. Selling to AWS is going to be significantly more onerous than an SMB or mid-market deal.

2.) Define acceptable deviations from the Standard Deal - Most businesses do this in part but rarely holistically. The obvious deviation people consider is discount thresholds, which are essential to the negotiation. But without a 360-degree view of the acceptable deviations, sales will default to discounting. Don't leave money on the table.

Acceptable deviations could be communicated like this;

Pricing Discount Thresholds

• 0-10% - Rep discretion
• 11-20% - Sales Manager approval
• 21-30% - Sales Director approval
• 30%+ - CRO etc

Payment Terms

• Due Upon Receipt - Approved
• Net 15 - Rep Discretion
• Net 30/45 - Sales Manager approval
• Net 90 - Sales Director approval

Billing Terms

• Annual - Approved
• Quarterly - Sales Manager approval
• Monthly - Sales Director approval
• BiAnnual - CRO approval, etc

*Repeat for all Standard Deal components.

3.) Score Deviations - This section deserves a whole thread on its own. TLDR - Defining a deal score and providing your sales team with a real-time look at their deals through the lens of a deal quality score creates an incredible culture of sales excellence. Not to mention, you can identify gaps in sales skills and implement sales training to combat those gaps.

I hope this was helpful, and I would love any feedback on this.

If anyone is interested in talking about this more, please feel free to reach out. I love talking about sales negotiations and deal efficiencies.