The Art of SaaS Negotiations- 3 Steps to Develop an Objection Handling Framework with PandaDoc

Um, yeah, so to start, I'm, uh, my name is Reed Anderson, work here at PandaDoc. I'm a senior account executive over on the enterprise side of things. I've been here 4 years and really excited to show you guys what we have today.

My name is Megan Conroy. I'm one of the account executives on the commercial team at PandaDoc. Prior to coming to PandaDoc, I worked in the realm of human capital management software and property management, so Both areas where negotiations have had to take place, and that'll actually be the topic of today's presentation, the art of SaaS negotiation. So, Fareed, we want to just hop right into it. So today's agenda, just on a high-level overview, is we're going to go over the objection handling framework, act out a scenario, a role play between Fareed and I, and then also discuss some different negotiation levers that can be used in your objection handling. And the whole agenda is there on the screen for you. I'm not going to read it word for word, but there you go. So with regards to objection handling framework, what we have on the screen here is two different situations. What happens now is how most people negotiate. So typically what happens is we get down to the end of the deal and our prospect asks for something and we give, and, and that's in the hopes of securing that deal and bringing that in. And then inevitably our prospect asks for more. I'm sure everyone in this room or on this webinar has been in that situation. And I know I personally have made the mistake of getting that, that sales breath, for lack of a better term, and giving more again in hopes of that deal coming across the finish line. Now, what we really want to do is move towards how PandaDoc handles negotiation. And that's what's highlighted here in under Perfect world where we've got our negotiation ask, and instead of just going ahead and just giving to them, we wanna take the time to understand that objection and respond accordingly. So the biggest difference between the two, um, is again, taking the time to acknowledge and understand your prospect and showing empathy and really just being aware of the, the prospect's, uh, objection and where they're coming from and their point of view. And so another really— another way to look at it is what needs to happen is there needs to be a mindset shift from overcoming to understanding. So again, as mentioned, the way most people look at objection handling is that they are viewing an objection as something that they need to overcome. Now, while that is true in a sense, this is actually harmful because this is telling your prospect that your objection is not true, and that it's not necessarily valid, at least in your eyes. Instead, the idea is that we need to be curious, double-click into what they're giving us, and, and really get to the root of that objection. So the idea is to use a method that, um, which we'll highlight here in another slide, is to use a method that allows that prospect to share their true thoughts. And then that said, sometimes you're going to get objections that are entirely valid and entirely real that cannot be overcome. However, the framework we're about to highlight will at least help you get to the true root cause on if that's actually the case or not. So objection handling steps. So what we've highlighted here are a couple of steps that you can use in your negotiations. Some of these items may be familiar to you from some of Chris Voss's trainings. That's definitely some of the ideology we follow here at PandaDoc. So your prospect gives you an objection. What you want to do is you want to take the time to pause. You want to mirror them. Again, empathize with them. Just being aware of that perspective. Isolate that objection. Bounce a couple ideas off of them. Reframe. And then a bucket tip. Now I see there's this list of objections here and a list of tips here. I think it's probably best highlighted in a role play. If Reed wouldn't mind pulling that one up and we'll, we'll run through that in real time.

Yeah, definitely.

Now, Reed, in this instance, would you mind being my prospect?

I'd be glad to. I'm not often on the other side of the table, so let's give it a shot. Megan, the price is too high.

The price is too high?

Yeah, I brought it to my boss, but they, I'm just gonna be honest, they shot it down immediately. After looking at that price tag.

Okay, fair enough. I mean, Reid, it sounds like a reasonable price is a top piece of criteria for you and your team when it comes down to making a comfortable decision.

That's, yeah, that's fair to say.

Okay, if we could somehow resolve your team's concerns over price, would we be moving forward today?

I would definitely have to bring it back, but it wouldn't hurt.

Well, in that case, would, would you mind if I bounce a couple ideas off of you?

Go right ahead. Hit me.

Okay. So Reed, just to be fully transparent with you, the price of our solution is the way it is because the market has determined it is worth that amount. We sell a very large percentage of our business off of the website at full price with absolutely no sales intervention. That being said, I also want to make sure that your team is comfortable with the price for the solution we are providing. Would it be worth determining together if your investment at this price would get you a positive return, and then work together on getting the best possible price for your team?

It's worth a try, certainly.

And with that being said, what else would we have to address before moving forward with the business case and final contract execution?

That would be the last item. I think we'd be ready to move forward then.

Okay, perfect. Thank you for that, Reed. So a few things that I do want to highlight here, um, and on this objection and role-play scenario, we do have the different steps highlighted in orange off of each. Uh, one thing, at least I know I personally, as I've learned this framework, is where, where we see this reframe, uh, oftentimes one's mind thinks we automatically need to jump into an ROI calculator or something that's going to immediately overcome that. And I know a question that comes up often is why are we doing this reframe before the bucket tip? Now, the reason we're doing this before the bucket tip is because we want to see if the idea of what we reframed and the idea that I presented actually landed with that individual. Because if it didn't land, they're going to give me another objection when I do that bucket tip and we're going to get to the root cause of, okay, well, what's the true objection here? Why, why are we not moving forward today? And then just making sure we are having everything out on the table so we can actually bring that deal in sooner rather than later.

Definitely. That's really well put, Megan. And I would just add one thing to this, this framework. It shouldn't— I don't think we should view it as a silver bullet to overcoming or dealing with an objection that you encounter. It's merely going to give you the best chance of doing that. And at the very least, like Megan had said, You're gonna know 100% where your, where your deal is. So, um, just keeping that in mind and really doubling down on the mindset part, not just reading through a talk track, but genuinely wanting to understand what the objection is, I think will, will help and help this talk track go a long way.

Absolutely. I couldn't agree more. Um, you wanna isolate, not just label. Exactly.

All right, so moving on. All right, so negotiating levers. We're gonna hopefully give you all some control back, uh, by sharing some, some levers that we use pretty common— commonly over at PandaDoc. And there are 5 of them. We'll hit on those. Number 1, we have just kind kind of standard, a lot of people will go to this, trading discounts on licenses. So you can trade for anything, anything that your manager would approve. So it might be limited in that respect, but 3 common things that we'll trade for, Megan and I, every single day is one, we wanna help our marketing team out. So we'll often trade a discount for say a case study or some kind of marketing collateral from them 6 months down the line. If they're still a happy customer, I'm perfectly happy giving them a discount out of the gate if they'll, you know, give us a kind of a case study down the line that we can then leverage on our website, for example. Another thing would be referrals. So you can just ask them if they have anyone in their network who could, you know, benefit similarly from whatever it is you're offering, and they can refer you to those people. Again, that's gonna boost your pipe in the way of like new leads and opportunities. So we're always willing to trade off a little bit in that way. And also reference calls, you can have something in your back pocket if there's a deal in the future and they need to call on a current client. You can have some of those in your back pocket so you're not having to scramble and try to, you know, find a reference call you know, if you only have a couple days, for example. So those are 3 things: case studies, referrals, and references. Lever number 2, you know, everyone— most people here, I'm assuming, are in SaaS, so it's a lot of subscriptions out there. I usually, when it comes to discounts, I'll try and discount any kind of one-time services first because that's not going to impact the recurring revenue, the MRR, the ARR. So we always sell onboarding with our packages. I'll typically try and shave off a little bit there before, you know, touching the licenses or any kind of referring, recurring fee, that is. Lever number 3 would be social proof with clients. So mentioned this in lever number 1, but this would be, you know, using a current client as a way of helping someone get to that point where they're more comfortable with your solution. And number 3, I think this is where understanding an objection becomes really important, because if you're just trying to overcome and you're at the finish line, you're trying to overcome something and you think it's a price issue, but really they just need that extra reassurance that you're the right solution, maybe, uh, just talking with a current client would suffice. And if you're trying to just shave off money or discounts, it's gonna, you know, fall on deaf ears and delay things at the best. Number 4, this is again along the theme of understanding an objection. If it is a price objection, it might not necessarily be the absolute price or the licenses. It could be the payment schedule. So it could be the terms of the payment. Maybe splitting those up into semi-annual or quarterly would actually be more friendly with their budget than, you know, giving a 30% discount. So you, again, that's where understanding becomes ultra important because otherwise you're going to be offering things that aren't going to help them. Lastly, lever 5, bringing in sales leadership. So this would be more of an appeal to authority. Bringing in your manager or director on a call to basically try to communicate, hey, the buck stops here. I've looped in my superiors. Let's try to work out a deal and try to minimize the amount of back and forth that's actually happening during the negotiation. So that's all 5 there. And Megan, I'd be curious to hear. I know which ones I typically go to. As far as the levers go. Do you, are you using one of these more than the others?

It really depends for me, Reed. I think the default for most reps is to trade a discount because it's, they hear price and that's, that's the objection. I think it's a really important note that you made where price may not be that absolute objection. It could be, hey, we don't have that in our budget this year. Well, great news, we're at the end of the year. We can maybe adjust our payment terms where You can now pull this out of next year's budget, yet still sign the contract today and move forward. And so at least at this point of the year, I find having an alternative payment schedule is definitely beneficial. And then I'm just, I love using social proof with clients and reference calls, both in the fact where if we are going for a discount, having my prospect commit to X number of reference calls down the road, because I know that's going to be benefiting me in deals beyond this one. As well as having someone, a success story being shared with this particular prospect, again, just to further drive the value. So we're not just getting into some kind of price war for sakes of me not having provided enough value during the sales process.

That's awesome. Yeah. I like with the, with the social proof, if you can get those reference calls as use that lever, and then you have those in the future, if you need to, you use that to close a deal. So you really just become almost self-sustaining at that point. Just keep getting more references, using them, and it's kind of a virtuous circle. So let's move on. We got some more stuff for everyone, some bonus.

Did we lose Reed there, Megan? Can you hear him?

I was about to say, Reed, you were frozen here.

So Give it a shot again, Reed. I think we can see you now.

Gotcha. Okay, you can hear me?

Good to go.

To your deals, and when it comes to negotiating, what you're doing here obviously is you're, you're trading a bigger discount or some kind of commitment on their end for a bigger commitment for them signing up for 2 or 3 years rather than one. So this right here is a talk track that our team has used to really good effect to introduce the idea of a 2-year, to understand if that would even be possible by— we go through the whole rigmarole of negotiating and working out price, so it'll save them that time in the future. And obviously everyone can screenshot this if you want to do it. I'm not going to run through the whole thing, but the first 2 questions are pretty critical. Are you looking for a long-term solution? And then if they are, they usually are, great. And you don't want to have to reevaluate all over again next year. This is a way of reframing that. They may not have thought about all the investment that they're going to have to do in 365 days. So bringing that up, you'd be surprised how many folks are actually willing to make that bigger commitment.

Something to add here, Reed, at least one thing that I found successful This very much varies from deal to deal and the level of software buyer that you are working with. But oftentimes, even just starting with that 2-year deal and saying, like, almost presenting that as the standard, as most, at least in my experience, most well-versed, educated, experienced software buyers are already looking at longer-term deals anyways, almost presenting this as the standard. And then when you are presenting that per se annual contract, that's actually something that they're like, oh, the price actually isn't so bad anymore, or I actually like these terms better, or at the end of the day you get a 2-year deal out of it.

That's a really good point. I think, yeah, if you present the pricing first, obviously it's going to be a much bigger price tag, potentially twice as much, so they get anchored to that and suddenly your 1 year doesn't look so bad anymore.

All right.

So next here we have, uh, so email overlays with, uh, with a manager. So this kind of jives with lever number 5, where we were, if you remember, bringing in some kind of authority figure like a manager, a director, a CFO. And when we do that here, it's not just on calls to have that authority figure there in the background or to be able to talk. We'll actually— and what I often do is I'll show my prospect or whoever I'm talking with what's going on behind the scenes when it comes to me getting approval for things. So this is an actual email chain with my sales director where I give him the full scope of things, what the situation is. And I say, you know, what can we do here in the way of pricing? And then I'll share this with my prospects. I'll either forward the email chain right before a meeting or take screenshots for that proof that, hey, you know, I went to bat for you, or this is, you know, where the buck stops. This is my sales director. This is what he said we could do to again try to minimize the amount of back and forth. And I think being working more enterprise-type deals, going upmarket, a lot of, you know, more back and forth usually happens. This is one way of curtailing that and really shortening your sales cycle. All right, so that's what we, that's what we have for you. Today's top takeaways, I'd say top 3. First, we want to understand objections. We don't want to overcome them because not all of them can be overcome. And, you know, a lot of the things that you say are probably going to fall on deaf ears, deaf ears, if that's your mentality. Number 2 was the framework for the talk track. And if we all can remember that, we've got all the letters here, but it was pause, mirror, empathize, Isolate, idea bounce, that's the B, reframe, and then the bucket tip to make sure you're actually addressing the correct objection. And number 3 is, is practice your levers to take control during negotiation. So you want to practice these things before you go live. We do a lot of role plays at Panadoc weekly, I mean, a daily basis, pretty much. So you really want to get those dry runs, the practice sessions in. Before talking to actual prospects.

Cool.

Great job, guys. Um, Travis over here from the PandaDoc team. I wanted to just jump in while we've got a minute or two left here and address one of the questions that came in through the chat. Uh, Teresa asked a great question. Any tips on overcoming timing objections, as in, we're interested in moving forward, but won't need this for a few months. Any good ways for getting someone to sign a contract to start later? Megan, I'll start with you. What are, what are your thoughts on that and how would you maybe handle that?

Yeah, absolutely. I think that's a very common objection given the time of year right now with the holidays coming up and things like that. I know one of the items I spoke about earlier is alternative payment terms. So perhaps a delayed start date. Again, this will vary from org to org. I know with it, with PandaDoc, what our limitations are and how far out I can start my prospect with our service. So I always have that in the back of my head and have that available as a lever. But with regards to timing objections, one thing that I like to find is digging a bit deeper into that, because if I've done all of my discovery properly, And I'm truly double-clicking into that. It's not necessarily always an exact, just true timing objection. It may be that they have other projects going on. It may be that they're just worried about how long it's going to take to onboard an implementation or things like that. At some point, hopefully at the beginning of your sales conversations, they have shared with you kind of why you're speaking now. And if you're not digging into that now, I would highly recommend that. Because even if someone input, like puts a demo request in and you're wanting to meet with them, like there's a reason they did that today and not 2 weeks ago or 2 months from now. So digging deeper into that and then working backwards, I would ask them, what, what's your ideal start date? You say, we don't need this for a few months. So when would you need that? Have them give you that answer and then work backwards and almost create a timeline for them. So in the instance of the holidays and onboarding clients now and in Q1, a lot of teams are going to have their onboarding teams overloaded with training and implementing new clients. So realistically, they may not even be able to get a date for onboarding until Q2 and almost just drilling that into their heads by working backwards with that timeline. Any thoughts, Reed?

Yeah, I really like that. I agree with that wholeheartedly. I think just being— you definitely want to make sure you're on the same page of your, say, your finance team for what you guys can do with contract start dates and payment terms, and if it's net 14, 30, et cetera. So don't, don't get too creative there. You do want to get approval on all those things that you can do to try and be more flexible if that is the actual objection.

And one more question here, guys. Let's see. Do you view negotiation as a step in the process or something that needs to happen throughout the whole sales cycle? I'll let either one of you take a stab at that one.

Yeah, that's a really, that's a really good question. I think life is a negotiation when it comes down to it. So I think negotiation is there throughout the whole sales process. We do tend to focus towards the finish line when it's usually around pricing and the commercial side of things. But there is a lot of negotiation at the beginning, especially because, you know, in SaaS, this is something I used to not really understand as a concept, but a lot of people don't know how to buy. They've never purchased software before, and there is a good and a bad way, an effective and a not effective way of doing it. And every company is a little bit different, but I think there are oftentimes when you have to negotiate you know, how you're going to structure the evaluation because they not— they might not be familiar with how you typically, in a perfect world, how you would go about it, whether that's setting them up with a trial, setting up some kind of custom demo. So if they're— if they've never purchased software before, especially, you are going to have to negotiate a lot of things well before you're at the finish line, they have a proposal in hand, and you know, you're haggling over price.

I completely agree with that.

I was going to ask a question for you, Megan, and then for you, Reed, and then we'll wrap up here with just 1 or 2 minutes left. I think people can really learn best from when we make mistakes. So do you mind sharing like a story of where negotiation maybe went wrong or like a, maybe what you could have done instead? Because I think that's always helpful for me of like what not to do in a sense.

Yeah, absolutely. I think, and I've definitely made probably a lot more mistakes than some other people, especially being a bit earlier in my career than some of the others who may be on this call. One mistake that I would find is going in with my best offer discount every time. Now, I know that probably sounds so simple, but you need to know where your ceiling is and you need to know where your floor is. Inevitably, your prospect's probably gonna ask you to go somewhere even lower than that. And kind of knowing where those hard boundaries are. I've definitely made the mistake where, okay, I'm super excited about the deal. I feel excited about it. I need it to hit my quota that month or even for the year. And I go in with my best price and then I shoot myself in the foot because if discounts are the only things that we're talking about and I'm not taking advantage of some of my other negotiation levers, I've just shot myself in the foot and I've now made the mistake where I don't even have anything else to give even when there is that ask. And then I'm the one asking for things and not my prospect. So I've definitely made that mistake. On the other hand, I still remember one of the first times with, from a success story standpoint, having negotiating— it was an in-person deal, biggest deal in my career. And I had never seen what we call a TBI, a time-based incentive deployed. And I still remember sitting there and my manager was in the room with me and they're like, hey, can you meet us at this number? It's like, okay, we've proven all the value and now we're in this in-person negotiation. I don't really have time to think or ask a manager or anything like that. And we ended up knowing where that threshold was and what we could and couldn't do. Stepped out of the room to make a call and stepped back into the room and secured the deal right there on the spot. So I would just say know your price and know your floors and know your ceilings.

I love that.

Love the personal stories. I feel like it makes me feel human because I've also messed up negotiations. So it looks like I'm being tapped on time. If you want to connect with us offline, please do so. Reid and Megan can both be found on LinkedIn. Connect with me as well. Follow PandaDoc. Let's continue the conversation. We love nerding out on everything sales, sales negotiations, and just digital communication in general. So Megan, Reid, thank you both so much and for taking time out of your day. We'll let you get back to negotiating and selling some more PandaDoc.

Take it easy, guys.

Thanks for having us.

Have a good one.