SaaS Contract Negotiations Are Not All About the Software!

SaaS Contract Negotiations Are Not All About the Software!

saas negotiationsYea I know the $ and the functionality of the SaaS offering are important in any SaaS contract negotiations, but there is a lot more going in the mind of your buyers.

I think the best metaphor for this, is from the book “Switch. How to Change Things, When Things are Hard.”  Imagine a rider on an elephant. How do you get the elephant to go where you want it to go? The rider is the logical (aka rational) part of the process, and the elephant is the emotional part. Sorry to tell you, but if the elephant wants to go left and the rider wants to go right, the elephant is going left. You really need both working together to go where you want to go. In terms of SaaS contract negotiations, if a customer is making the decision regarding buying your SaaS service, you have to speak to their rider (the logical decision making process) AND their elephant (the emotional part of the process). Let’s go through some examples.

How to Influence the “Rider.” 

  • Cost
  • Functionality
  • ROI
  • Differentiation

HOW TO INFLUENCE THE “ELEPHANT.”

  • Negotiating to a Win/Win (i.e. care about their issues and not just your issues).  
  • Having an easy to understand Model and Pricing structure.
  • Communicate reasons why your customer should trust you with their precious data (yep, to them it is precious).
  • Having a transparent and simple Security, Privacy, Disaster Recovery and Data Breach Policies.
  • Posting support terms and your SLA on the web.
  • Providing a simple, transparent and streamlined SaaS agreement.
  • Building a Trust Site.
  • Being likable.

I have found (after doing 100’s…maybe 1,000’s…of deals representing SaaS companies) that if you think it only takes a good ROI and a demo to close a deal, then you are missing the boat.  There is a lot more going on in the psyche of the person (or groups) making the decision to purchase your SaaS service. So, make sure you are talking to their rider AND their elephant, as you really need both to get a deal done. Trust me on this one!

Resources:

Building a Trust Site.

Review of the book Switch

Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.

 

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