Negotiating with Sales: A Guide for Product Managers "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs October 10 2020 True enterprise sales, feature factory, feature request, negotiation, Negotiator, Product Roadmap, roadmap, Sales, Mind the Product Mind the Product Ltd 3224 Photo by Headway on Unsplash Product Management 12.896

Negotiating with Sales: A Guide for Product Managers

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As a product leader, you’ve likely been in this situation. The sales team needs one specific feature to close a new opportunity with a large new prospect.

Your gut instinct tells you that you’ve done right through customer interviews and competitor research. You have a solid roadmap to execute, and you wonder if maybe the sales team is targeting a different user persona.

You realize the sales team is the closest to the customer and you are curious about what the prospect is asking for, so you agree to learn more. This article takes you through one example of negotiating with the sales team.

However, first, let’s define what we mean by negotiation:

Negotiation is a conversation between two or more people to reach a mutually beneficial agreement.

In this situation, think of the negotiation as a conversation between you and the sales team around roadmap development (Remember, sales should be a stakeholder on roadmap conversations anyway.) Generally speaking, a negotiation can be broken into three stages:

  1. Before
  2. During, and
  3. After

A negotiation can be a zoom call or an in-person meeting. While there are nuances to negotiating over a zoom call or in-person, for the purposes of this article we’ll focus on the actual negotiation itself.

This is a lengthy article, but we will establish the framework for a complete negotiation process. If necessary, you can skip to the part that feels most relevant to you, but the piece as a whole will give you the basic tools you need to reach successful negotiation outcomes, no matter who is at the table.

Before the meeting

Ask the sales team to send a written description of the feature the prospect is requesting. Ask for as much detail and clarity as possible, including what the prospect is looking to do, and how they are currently solving the challenge they are experiencing.

I would also strongly suggest that you ask to speak with someone who works for the prospect so you can better understand what the ask is. Offer to have someone from the sales team be present on the call, and assure the sales team that there will be no talk about the opportunity.

Understand the current and future relationship with the sales team

Experienced product managers know to build a positive relationship with the sales team. After all, they are closest to the customer and can bring in a wealth of knowledge, such as:

  • Visibility into the context of lost deals (features, pricing, or competition).
  • Information around customer questions and issues.
  • Access and warm introductions to prospects and customers.

At a macro level, provided you and the sales team are employed by the same company, there is already some inherent alignment. It’s also likely that you have worked with the sales team in the past, and you’ll likely work with the sales team again in the future on other opportunities.

However, Internal incentives are usually aligned differently for the product and sales team, so expect the possibility of some conflict.

For example, some potential areas of misalignment might be the sales team…

  • …Pushing anything that can help them close the deal.
  • …Oversharing the roadmap and / or promising features that are not on the roadmap.
  • …Focusing on large deals without evaluating the fit.

Understand your negotiating style

Before you negotiate (or persuade or influence, for that matter) I would suggest you self-evaluate. As humans, we all have a background, culture, and upbringing. No one subset is better than the other, but they do all bring a frame of reference. During a negotiation, it is important to be aware of your limitations, and your biases.

Negotiations can be scary and maybe that’s why product managers have not really gotten used to the idea that product managers negotiate every day.

While we have defined negotiation in terms of “a conversation”, conversations can occasionally get heated or difficult. Not often, but it’s possible. How do you handle a heated or difficult exchange?

Your personality obviously plays a big part in how you react or respond.

  • Are you proactive or reactive?
  • Are you a listener or a talker?

As you start to think about these things, these characteristics will become a part of your style. Understanding how you negotiate with people, and how other people negotiate with you, will help you find your strengths and capitalise on them.

Understanding the sales team’s goals

Shifting to the sales teams, they live and die by sales target numbers, quarter to quarter, year over year. Try to put yourself in the sales team’s shoes and take a look at this request from their perspective.

If the sales team is far from reaching their current sales targets, you might expect a bigger push from sales leadership to implement the requested feature. You may or may not have access to sales targets directly, but you can get a sense by looking at the total sales year to date, and year over year. Please note, under no circumstances should you outright ask the sales team if they’ve met their sales targets.

On the other hand, if the sales team has other similar opportunities in the pipeline, you might not expect a big push for this opportunity. Especially if the other opportunities do not require any development work.

Typically-speaking, sales teams are either hunters or farmers. Hunters look for net-new customers, and once the deal is signed the account ownership transfers to a farmer (who sometimes is referred to as an account manager or customer success manager.) The primary role of the sales team is to own the relationship with prospects/ customers, and generate revenue. In this example, the sales team needs one specific feature to close a large new prospect, so we can assume we will be negotiating with a hunter.

…Your goal is not to “beat” them, but rather to collaborate with them.

Hunters can view their opportunities as transactional, they work to find potential new prospects, to close the opportunity, and then hand over the account. Hence there is no expected future relationship between the hunter and the prospect. In some cases the hunter may stay on the account, but this is more common in service-based businesses than product-based ones.

Therefore, we can expect in this example that the sales team will value the stakes of closing this potential new prospect over any future relationships with them.

One final point to bear in mind is that sales teams are generally amazing storytellers, competitive in nature, problem solvers, do not run from a difficult conversation, and rarely do they compromise. Their job consists of negotiating deals, so your goal is not to “beat” them, but rather to collaborate with them.

During the meeting

As you might expect, while a successful negotiation requires work before the meeting, there is a lot of nuance that needs to be understood for the conversation itself. There are elements of personal rapport, factual understanding, and strategic positioning, and it’s important to understand how they all fit together.

Build rapport

The conversation most likely starts off with small talk, and it’s important not to skip this. Research has shown small talk can build rapport, which can ultimately lead to agreement.

Photo by Headway on Unsplash
Conversation & negotiation (Photo by Headway on Unsplash)

On the flip side, small talk is context-specific, and a very transactional-based negotiation may start with a straight question “When can we get this feature implemented?” In some cultures, people may just want to get down to business right away, and in others it’s customary to get to know the other person first. As mentioned earlier, try to understand the frame of reference of all parties at the table. Of course,starting with a question could also signal that one person feels they have leverage (which we’ll talk about shortly), or that they want to try and be intimidating.

The fundamental goal of building rapport is not to gain an advantage, but rather to acknowledge someone and communicate with them on a personal level.

The goal of small talk is to establish a rapport with the other person. Find something in common that you can connect with. A common interest, passion, or similarity in background which is not related to the topic in hand. Robert Cialdini (author of Influence. The psychology of persuasion) calls this the “liking rule” and, as Robert puts it “we most prefer to say yes to the requests of someone we know and like.” When we see similarities, also we tend to create some trust.

Of course, on the flip side, overly attempting to build rapport can be seen as a red flag that one person may be pushing for concessions or looking for a favor, and experience will help you gauge where that line is.

The fundamental goal of building rapport is not to gain an advantage, but rather to acknowledge someone and communicate with them on a personal level.

Ask questions and build detail

As the conversation moves forward, move towards understanding the feature being requested, and how it adds value to the prospect. Even if the sales team provided you with details in advance, it is a good idea to talk it through.

Learn to think on the fly and adjust questions based on responses the sales team provides, and to ask questions that go beyond a yes-or-no response. The point of asking questions is to test for understanding, and gather meaningful information that can be used in the decision-making process.

If you don’t already have answers to these questions, here are a few things to explore:

  • Who is the prospect?
  • What is the prospect’s buying process?
  • How urgent are the prospects’ needs?
  • What level of confidence does the sales team have that by implementing the requested feature the prospect will sign a deal?
  • What feature(s) are they requesting?
  • What is the prospect currently doing to solve their need?

The more time you spend preparing before the meeting, the better questions you’ll ask, and the sales team will notice.

The sales team will likely have questions for you as well. The questions will likely revolve around how long it might take for the feature to be implemented, and what assurances they can give to get the opportunity moving towards getting the deal signed.

Prioritize the interests and understand the trade-offs

By now you should have spoken with the prospect directly to understand what they are asking for and why. If this was not possible before the negotiation, you should let the sales team know that you’d like to arrange that conversation before you continue.

Once you have a good understanding of the request, evaluate the potential cost and benefit of implementing it. Hopefully you’ll have a provisional version of this ready before the meeting, using the information you already had. When sharing this information with the sales team, don’t go all technical about which prioritization frameworks you’ve used – it doesn’t move the conversation forward. Instead, focus on talking about the impact of prioritizing this specific request ahead of other customer requests, and explaining what is already on the roadmap.

Evaluate both the positive and negative impacts. The following questions come to mind:

  1. How badly does your company want this new prospect?
  2. How far is the leadership willing to go to close this new customer?
  3. How likely are other prospects likely to use the requested feature?
  4. Can the feature be monetized?
  5. If we add the feature to the roadmap, what (if anything) will need to be taken off?
  6. If we remove something from the roadmap, how does that impact our current customer base?
  7. Are there any roadmap items that current customers are actively waiting for?
  8. If so, and those items get delayed, what are the chances that those customers leave?
  9. Does this new feature align with the strategy currently in place?

Discuss the impact and trade-offs that might need to be made. If the conversation starts to derail into the sales team stating “I want” or “I need” (their position), bring back the conversation back to the objective of what the prospect is trying to achieve, and what the company is working towards.

Understanding leverage

Leverage is based on perception, so you can only use as much leverage as the other person acknowledges is real. In other words, who has the most to lose?

If the sales team believes they have a weak hand – for example, if this is the only opportunity in the sales pipeline – they might look to seek empathy. They may loop in executive sales leaders and emphasize how hard it is to bring new customers, or how difficult the current market is to operate in. Think of it as an appeal to minimize future financial risk.

On the flip side, if the sales team believes they have a strong hand – for example, if the CEO of the company has made it a priority to sign this prospect – then they will probably send a strong signal. Throughout the conversation, the sales team might behave as if the outcome is already determined, and refer to the fact that they want to close this opportunity as quickly as possible.

You need to understand how hard each side of this conversation is willing to push – how much leverage they feel they have.

Of course, the sales team may also choose to bluff and act as if they have a strong hand, when they really don’t (remember, they’re generally incentivised to bring in prospects and close deals, first and foremost). So it’s important that you do the work ahead of the meeting to understand as much as possible about their position. You need to understand how hard each side of this conversation is willing to push – how much leverage they feel they have.

Making the case for or against adding the feature to the roadmap

After you understand the prospect’s request, the sales team’s position, and you’ve spent some time prioritizing the interests and understood the tradeoffs, a decision needs to be made.

Will the requested feature make it into the roadmap or not? (and if so when?)

If the decision is yes, then follow-up with the sales team, advising them of the decision and expected next steps to facilitate closing the opportunity.

If the decision is no, does that mean “no, not yet”? Or “No, never”? Explain the logic and reasoning to the sales team, and brainstorm with the sales team what (if any) other options can be mobilized. One of the options might include:

  • Can we get our in-house professional services team to build it out as a custom build?
  • Can we get an external integrator to build it out as a microservice?
  • Can we buy some off-the-shelf software and connect it to our product?
  • Can an existing feature with a low code “hack” be used to satisfy the prospects needs?

From a product manager’s perspective, if you simply say no, then the next time you want some airtime with a prospect the answer will likely be something along the lines of the customer said no, the customer is busy right now, maybe the customer can’t do it for a few months, or some variation.

Remember the goal is to be as helpful to the sales team as possible. If additional sales training is required to help them succeed with future prospects, it’s a sensitive topic requiring tact on your part, but the sales team should be made aware. This will help the sales team identify and qualify prospects in the future.

Potential pitfalls and traps

If the sales team or prospect believes you are taking too long to make a decision, the following techniques may be used to speed up the process:

  1. The sales team or prospect imposes a deadline. This creates a sense that the prospect will go with a competitor hence our window of opportunity is running out.
  2. The prospect may say that a competitor who already has the feature in production is actively pursuing the prospect.

On the other hand, if you find it tough to say no, you may have an accommodating or compromising nature, and during this stage the anxiety may increase. Likewise, if you feel uncomfortable having difficult conversations, then this part of the negotiation is likely to be challenging for you

For the sales team, their competitive nature may start to take over. If they sense any reluctance on your part, there are other strategies they may use to influence the outcome:

  1. A “Good person / bad person” routine.
  2. A reciprocity trap, where they concede on a particular issue and expect you to also concede something – usually exceeding the actual or perceived value of their concession.
  3. A “last minute issue” based on information recently provided to the sales team by the prospect.

What to do if the conversation starts going poorly

If the sales team sense you may say “no” to adding the feature, the conversation has the potential to get heated or difficult. If this happens, there are a couple of strategies you can use to defuse the situation, and return the conversation to a constructive path:

  1. Focus on the prospect’s interests. Bring the direction of the conversation back to how we make the prospect successful.
  2. Do not defend yourself or your logic/ reasoning. Do not let your guard down, and do not get emotional.
  3. Stay quiet. Don’t start pushing back or making accusations. If all else fails and things start to get heated and or tense, take a break. Adjourn the call/ meeting for a 15 min break.

Create alignment and secure the commitment

In sales terms: Always be Closing. However, in product terms, what are the next steps to make this happen?

Think of it as a success plan, and get commitment, because just an initial agreement is not enough. If the feature can be incorporated, get commitment on how this information will be shared with the prospect, and the next steps to getting the opportunity signed, and the prospect onboarded.

If the feature cannot be incorporated into the roadmap, articulate very clearly why. Assure the sales team that you’ll continue to provide support to them during any upcoming sales activities.

The process to determine if the prospect’s request makes it into the roadmap should have created:

  1. A smart agreement that benefits the product and sales team.
  2. An efficient time duration to make the decision.
  3. A context that doesn’t damage relationships.

After the meeting

Time to execute on the committed success plan. While the decision part of the negotiation is over, the relationship you’ve established or enriched will continue. Your goal at this point is to ensure that there is a high degree of clear communication, building trust in the product team and their / your ability to deliver on whatever has been agreed.

Of course, things often change in the world of product, and that needs to be communicated and anticipated as well. If the committed success plan changes, simply go back and start at the preparation stage for another negotiation, but this time with more insight, better rapport, and the experience you need to reach a positive outcome for everyone involved.