Jose Mourinho once said “football is a game about feelings and intelligence.” We believe negotiations aren’t that different.
Emotions and logic play integral roles in a negotiation. Emotions influence our perceptions, decisions, and behaviours, while logic helps us analyse information, evaluate options, and make rational decisions. Successful negotiations often involve understanding and managing both emotions and logic to achieve the most favourable outcome.
This blog sheds light on the sales tactics used in SaaS to manipulate a buyer’s emotions. Look out for these in your next negotiation, and use logic to effectively counter them.
Sales Tactics Used in SaaS Negotiations
Being presented with '3 Options'
Three-option selling, also known as a ‘trichotomous choice’, is a technique where a seller presents you with three options. Each will typically vary in features, benefits, and price.
This technique’s goal is guide a buyer towards a decision – subconsciously trying to influence them in a particular direction. It’s often effective because it offers multiple choices that cater to a buyer’s varying preferences and budget.
What they don’t want you to know…
Salespeople will strategically position three options in a way that anchors your perception to what they want you to see.
For example, one option might be wildly expensive to make the others look attractive, another might exclude the majority of need-to-have features. Both options have been created to influence perception rather than being viable candidates.
This phenomenon is known as the ‘decoy effect’, and often leads people towards the middle option. This is because it serves as a compromise between the extremes, and will be perceived as offering a balance between benefits and price.
It’s essential to note that decision-making processes can vary, and not all buyers will be influenced by the decoy effect in the same way. Nonetheless, it’s worth keeping this in mind for the next proposal you review and negotiate.
Being given the most expensive price first
A powerful tactic that sales professionals use is ‘anchoring‘. This refers to a cognitive bias that describes the tendency for individuals to rely heavily on the first piece of information they receive when making decisions.
Salespeople will leverage this psychological bias to their favour by presenting the most expensive option first so that the subsequent options may seem comparatively more affordable, even if they are still expensive. As a result, buyers may be more inclined to choosing a lower-priced option, even though they may have originally intended to spend less.
Additionally, by presenting the most expensive option first a salesperson can set a frame of reference for the buyer’s decision-making process. It establishes a higher price point as the norm, making it easier for them to upsell or cross-sell additional features or upgrades by comparison.
It’s a sales tactic designed to influence a buyer’s perception and guide them towards higher-priced options.
What they don’t want you to know…
Be mindful of this tactic going into a pricing discussion. One method of managing this is to be aware of the tactic. A simple way to counter it and give yourself the advantage is to set your own anchor from the very begin.
Using FOMO - The Fear Of Missing Out
Salespeople may attempt to create a sense of urgency to pressure buyers into making quicker decisions. This can often be the case when a buyer’s timeline isn’t clearly defined. The salesperson will try to use time-limited offers to drive a deadline and decision in their favour. Very often this is tied to the end of a quarter, or the end of a financial year. SaaS vendors will typically make their pricing quotes valid for up to 90 days to create this sense of urgency and scarcity.
What they don’t want you to know…
While there are truths to pricing not being valid after a certain date, what salespeople don’t want you to know is that these expiry dates are never truly set in stone. Ultimately, it all comes down to how you approach the situation once a price has expired. We see exceptions are granted frequently when buyers highlight that competitors are involved and that competing prices are the same (if not lower) than the expired price.
Keep in mind that sellers will try to hold their ground after an expiry to protect their integrity and credibility.
An alternative approach, and the one we recommend is that buyers take control and define their purchase deadline as best as possible. It is beneficial to clearly communicate this to the vendor from the outset. This will help avoid unnecessary surprises in your negotiation, and enable you to take control of the timeline. If any changes are made throughout the process, make sure to highlight this to the seller and confirm if it changes anything to their offer.
In conclusion, we have outlined some of the sales tactics to keep an eye out for when negotiating your SaaS contracts. And we also discussed methods to manage and counter these tactics to give yourself an advantage.
If you would like more information and insights, please Contact Us. Our team has +12 years of SaaS sales experience and has negotiated thousands of contracts from the other side of the table. We know what to negotiate and how.
