Short answer: no. SaaS contract negotiations are not just about price and functionality. You also have to win the buyer’s emotional side, trust, transparency, and likability, not only the logical side.
The dollars and functionality of the SaaS offering matter in any negotiation, but there is a lot more going on in the mind of your buyer.
The best metaphor is from the book Switch: How to Change Things When Change Is Hard. Picture a rider on an elephant. The rider is the logical part of the decision; the elephant is the emotional part. If the elephant wants to go left and the rider wants to go right, the elephant is going left. You need both working together. In a SaaS negotiation you have to speak to the buyer’s rider (the logical decision) and their elephant (the emotional one), because the elephant usually wins. This tracks what behavioral research, like Daniel Kahneman’s work on the two systems of thinking that the Harvard Program on Negotiation draws on, tells us about how people actually decide.
How to Influence the “Rider” (Logic).
- Cost
- Functionality
- ROI
- Differentiation
How to Influence the “Elephant” (Emotion).
- Negotiating to a win/win (care about their issues, not just yours)
- An easy-to-understand model and pricing structure
- Concrete reasons the customer should trust you with their data
- Transparent, simple security, privacy, disaster-recovery, and breach policies
- Support terms and an SLA posted on the web
- A simple, transparent, streamlined SaaS agreement
- A trust site
- Being likable
Frequently Asked Questions.
Isn’t a strong ROI and a good demo enough to close? No. Those speak to the logical “rider.” The emotional “elephant,” trust, clarity, and likability, often decides, so you have to address both.
What builds the emotional side of a SaaS deal? Transparency and trust: a clear model and pricing, plain security and privacy practices, a public trust site and SLA, a readable contract, and a likable, win/win posture.
Where does the contract fit in? A simple, transparent agreement is itself an emotional signal. A dense, one-sided contract spooks the elephant no matter how good the ROI looks to the rider.
If you think a good ROI and a demo close the deal, you are missing the boat. There is a lot more going on in the psyche of the person deciding. Talk to their rider and their elephant. I hope this helps.
For the broader playbook on managing customer expectations across the deal, see Contract or Policy? When Software Companies Should Use Each, and on saying no well, Do You Know How to Say No?
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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