As a Customer Success professional, you run into situations across the customer lifecycle that require you to negotiate, that aren’t just centered around contracts.
Regardless of if you’re responsible for renewals and expansion, negotiation is an invaluable and highly sought-after skill set for customer-facing roles – and everyday life.
The Success League joined us for a webinar to discuss how to drive win-win results for a range of negotiation scenarios. In the webinar, we cover:
- Basic negotiation approaches for CSMs
- Common objections and how to prevent them
- What to do if the other person won’t negotiate in a fair and open way
- How to escalate a negotiation for the best results
Q: What questions can you ask to get around budget objections?
A: One thing that I like to do is say, “Oh yeah, a lot of people are having challenges with their budgets right now.” That’s true all the time. But most of the time, when we hear that people are having a problem with their budget, there are also other little things that are bugging them. [Ask], “What else is begging you?” If you position it that way, you’re doing a couple of things. You’re softening it by saying, “Hey, lots of other companies are in your shoes right now and lots of other companies have told us that it’s not just the budget, it’s other things.” That makes it safe for the other person to answer more truthfully about what’s really going on.
Another thing that you can do, especially if you know the customer pretty well, is refer back to some of the things that may have been going wrong in the past and say, “Hey, is this really about the 20 tickets that you put in last month?” or “Hey, I know you’ve been waiting on a couple of features from us for a pretty long time. Is that weighing in on this as well?” You can fish for what else might be happening.
You can always ask what we call impact and value questions. Those are always amazing questions to ask. An impact question is “What impact is this having on your business?” If somebody gives you a budget objection, you might say, “How is that impacting the other solutions that you’re working with?” “What’s going to be the impact of this budget cut since it’s taking away our solution?” “How are you going to be dealing with getting your work done?” You can explore that with a customer and highlight for them that there’s a cost to not doing stuff too, but it’ll also give you more insight into what is really going on.
A value question is “If we could fix something for you, what would that do for your business?” You can ask those kinds of questions too, such as “If there wasn’t a budget issue, what would you be looking at that would make this better?” Their answer will give you insight into some of the other thinking that are probably going on behind the scenes. These things sound kind of tricky but they’re not. They’re really just you learning more about what’s going on in your customer’s head.
Q: How do you keep a decision maker engaged if they aren’t the user of your platform?
A: This has to start with expectation setting right at the beginning of the relationship. I realize most of you inherited a bunch of customers and didn’t have that opportunity, so I get it. Ideally, the sales rep who closes the deal introduces you (the CSM) to their buyer. You start having a conversation at or slightly before the point of sale. You keep that conversation strategic. It’s about things like setting goals for the relationship in the long term and handling the change management that’s going to come along with the implementation of the solution. Your buyer has an interest in those strategic-level things right at the beginning because they just bought something. They spent some of their precious, precious budget on your solution and they want to make sure that whatever happens, happens well. If you can grab them right at the beginning and hang on to them, and keep the conversation strategic, it helps to keep that relationship over the long run.
What you don’t want to do, especially if you have a lengthy onboarding process, is step in as the CSM at the end of the onboarding process. If your onboarding was one or two months, it’s already too late to hang onto that relationship and you’re going to have to rebuild it again from scratch which is harder.
If you’re in the position where you don’t have a decision maker relationship in an existing account because you weren’t there at the beginning or you inherited it (which is super common), what you can do to start to build that is identify who that person is and then to try to get an introduction through your main point of contact.
If that doesn’t work, one thing that I’ve seen work really well, and I’ve actually experienced this personally, is you can start to gently reach out to that decision maker with things that are of strategic value. What I mean by that is things that they’d be interested in as an executive.
Executives always have a pile of magazines. I have this pile of magazines on my desk. We all have it. We all think “Oh gosh, yes. I’m an executive and I’m going to spend a lot of time reading Harvard Business Review and it’s going to be amazing. I’m going to read all of these books that I’ve been given.” And I don’t. None of us do. None of the executives do this because we’re too busy.
My podcast, Reading for Success, is a forcing function to get myself to read books that I know I should be reading. So, this is true of everybody. If you can curate something that’s specific to that customer’s business and get it in their hands, it keeps them from having to dig through their pile of magazines to find stuff. You can make a library of things that are interesting to your clients. They could either be about your industry or about business in general. Or they could be benchmarking studies that you’ve done across your customer base or a really interesting customer story where somebody’s doing something unique and innovative. All those strategic items are interesting to executives. If you can start feeding them that information over time, it can start to build that trusted advisor relationship without having too many conversations. Then, the next point where you’re like, “Hey, let’s have an executive business review,” because they’ve been hearing from you, they’ll be a lot more open to coming to that meeting, and then you can build from there.
Q: How should you respond if a customer says they can’t afford to continue with your service, especially if they’re financially struggling due to COVID-19?
A: First, make sure that it’s actually a budget objection. You can do that by just probing a little bit and making sure there’s nothing else going on. If it’s truly a budget objection, the reality is right now there are companies that are really struggling still. That’s why they’re doing the payroll protection program and extending that some more. In some cases, that’s true. What a lot of companies have done during this time, because there’s a lot of organizations that are having challenges financially, is extensions of contracts or they’re doing free contracts for a period of time with a commitment to come back at the end.
This is a bigger conversation for your organization, especially if it’s around COVID. We need to have some offers for clients. It’s better to keep a client, and help them through this period of time, than it is to lose them, and then try to get them back later. It’s hard to get a customer to come back. The companies that are going to be doing well coming out of COVID are the ones who have proactively thought about whether customers needed it and helped them out. Those customers are going to be loyal. That’s what we’re all looking for – loyal customers. That’s a conversation, if it’s coming up for you a lot right now, that you need to bring to your leadership team and have a plan for that so that it’s not just your whole team doing one-offs and dealing with it.
Some industries are more prone to budget issues than others. Government agencies get their budgets slashed. Schools fall in that category as well. Anything in the public space, there’s a lot more regulation around what they can and can’t do. In those cases, budget may be a bigger issue if that’s a big part of the vertical that you go after as a company. In that case, you need to have some plans for, even outside of COVID, how you’re going to deal with a company that needs to leave because of budget issues. There may be a couple of different options that you can throw out there that help them get value from your solution without leaving entirely.
Q: Have you experienced any nuances in negotiating over the phone or in person versus via email?
A: I personally don’t think you should try to negotiate over email. If you’ve hit a real negotiation, it needs to be happening live. There’s the back and forth and dialog that are so critical to a lot of the tactics that I talked about today. Being able to read body language and being able to understand a person’s real level of frustration or emotion around negotiation is a big piece of this. Those things get lost in chat and email. Let’s say this is like a pricing negotiation, you may kick that off by introducing the pricing that you want to set for your customer over email. If it starts to turn into a back and forth, you have to pull that off of email and have a face-to-face with your person.
Q: How do prepare for a churn call with a customer if you don’t know why they want to cancel?
A: You want to prepare for all your common reasons for churn. Ahead of time, go through and list all the reasons you hear your customers saying they want to churn.
Write down all the common objections you get during a churn call. Write down the questions that you should ask to understand things a little bit better. Write down the things that you want to make sure you share for each of the objections that you tend to get, and then you want to know if there are things that you can offer. Ideally, you want to come into those conversations with a couple of things that you could offer to help keep the client. In some cases, you might not have that. It depends on your company, but that’s sort of the ideal.
Do this exercise with your team and what you’ll find is that it helps you feel a lot more confident when you get blindsided by that customer that’s like “I’m leaving.” You can then go to your playbook on objections and be really prepared for that conversation.
Q: Should the sales team, onboarding team, or Customer Success Manager negotiate and upsell?
A: CSMs are perfectly capable of negotiating, just like I think they’re perfectly capable of selling. This comes from me being a sales rep in the past. It’s not rocket science. Negotiation is not rocket science. Anyone can learn to do this.
The best person to go into a negotiation is the person who has the relationship with the client. At different stages of the customer’s lifecycle that might be different people.
Early in the customer’s lifecycle, the sales rep might have the stronger relationship with the buyer, and so they may be the right person to have that conversation. Later in the customer’s lifecycle, let’s say during onboarding, the onboarding specialist might be the right person to have the conversation. Then later, it might be the CSM.
I hate to waffle on my answer, but I’m going to say it depends. The framework is to think about who has the relationship, because that person’s going to be able to do what I talked about on the slide below.
Because they know the most about that customer, so they’re going to know all the different options, and they’re the one that’s going to be able to be most creative in the negotiation and come up with something that works for both parties.
Q: What should you do if a customer verbally agrees to a contract but keeps delaying signing the contract?
A: This one sounds like it’s very specifically about contracts. One important thing to always have that’s a part of your contract is a deadline. This prevents this problem from happening in the first place. You can say, “We’re giving you a contract. This deal is good through X date.” You may have to negotiate that date as a part of the negotiation, but it’s so important to have a deadline date on your contracts. Otherwise, it could go on forever.
If you can’t have a date, or for whatever reason the customer’s blowing by the date that you’ve given them, you really need to go back into the conversation and understand what the hitch is. Delays typically happen when somebody has an objection that’s going on behind the scenes and you don’t have visibility into. You need to get visibility into the objection. Sometimes, they’re actually pricing you out against a competitor, and if you don’t have any visibility into what’s really going on, you’ll never know that and you can lose deals that way.
I hate to say go back to the drawing board, but you need to go back to the conversation where you’re asking questions and really understanding what the customer values. That stuff that helps to prevent objections can really help you get a better understanding of why things are stuck.
Q: How should you follow up with a customer who shows interest in an upsell and is supplied with further information, but then never follows up?
A: When you’re having the conversation, and the customer says, “Hey, can you send me some info?” you should always say, “Absolutely. When would be the best time for me to follow back up with you?” Then, put it on your calendar and do it. Or set a meeting, even better. If you can, while you have them on the phone, say, “I’m going to send you information. Can we set up a follow-up call while I have you here?” That will help set the expectation for both of you that you’ll be following up and give you a deadline. That’s one thing you can do to make sure they get back to you.
The other thing you could do is – I think in “Never Split the Difference,” the author calls it a “takeaway” – send them a note if it’s been a while and you keep reaching out and they keep not getting back to you. Say, “Hey, it sounds like this isn’t really interesting to you. I’m not going to bug you about it anymore, but if you could confirm that this isn’t something you want to work on going forward, I would really appreciate it.”
You’re taking away that thing that you gave them. It’s so incredibly effective at getting customers to get back to you, because no one wants to have anything taken away. No one wants to be off your radar.
You might also be making some assumptions too about why it is that you’re not on their radar. They might have just gone on vacation and not had time to get back to you.
But when you do that in an email, you want to make it gentle but firm where you’re like, “I’m not going to bug you anymore” then that kind of pulls it back to the customer’s court. They’ll almost always respond to that one way or another, usually like “Oh no, we’re just still kicking it around on our team.” You’ll at least get some information out of it.
Q: Should you offer discounts to customers who participate in a customer reference program or case study?
A: You can use anything creative like that. If you’re giving away money, you want to be careful that it’s not eroding the value that your customer sees in your solution. Those kinds of discounts should be pretty minimal. I’m not a huge fan of discounting. I’d rather add something that the customer gets than take away from my price because in a lot of people’s minds, price equals value. The higher your price, the more your customer values your service. You have to be a little careful about discounts. You can be really clever about the kinds of things that are meaningful to you that also give value to your customers. If you think that you’d get enough value out of trading some dollars for having someone be a reference for you, go for it.
Q: What books and resources do you recommend for handling objections or negotiations?
A: These are the two on negotiation that I would recommend:
- Getting to Yes (more of a business style book)
- Never Split the Difference (more of a research-based book)
To learn more about how to prevent common objections and negotiation strategies, watch the webinar.
Update: Kristen has extended the Q&A to address the questions we weren’t able to get to during the live webinar. Check out the extended Q&A here on The Success League blog.
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