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Lessons Learned - CRM Software Negotiation

The Seven Deadly Sins of CRM Software Negotiation

  1. Viewing the process as adversarial
    Most experienced negotiators recognize that negotiation is about making compromises and each side of the negotiation getting some, most or all of what is most important to them. Believing that you are going to ask for significant variations and get all that you ask is likely not going to be well received and very likely to alienate the vendor to the point of departure. Similarly, believing that the process should be adversarial or one where each party is to take a pound of flesh from the other or somehow out-negotiate the other is a recipe for a frustrating exercise and post-negotiation alienation. Nowhere more than negotiation does the concept of "win-win" apply. Having said that, there are clearly some SaaS CRM vendors who make negotiation a salesmanship contest. These vendors often use an entire hierarchy of required sales approval stages (e.g. get approval from the sales executives boss, and then later his boss, and then ever later her boss, etc., etc.) and stall tactics to simply outlast a sales prospect who is seemingly very motivated to end what has been a tiresome software selection project.
  2. Not prioritizing business requirements
    Too many times buyers create an exhaustive list of system requirements without regard to prioritization. It's difficult to believe that the requirement of "increasing customer share" achieves the same weighted relevance as "ability to send email in HTML format" or that "ease of use" should be equated to "ability to copy contacts", however, when buyers fail to weight requirements and simply sum to a total score, the more meaningful criteria become diluted and lose relevance.
  3. Bypassing the CRM Software RFP
    Skipping the RFP (Request For Proposal) and failing to understand the measurable fit for each potential solution prior to a software demonstration causes two potentially dangerous conditions. First, this practice misses the opportunity to understand precisely what elements the software product does not achieve for your business and then explore those issues - as well as potential work-arounds or customization alternatives - during the software demonstration. Second, not objectively recognizing what the software does not do for your business places an increased decision making influence on product presentation instead of product fit.
  4. Permitting dog and pony show demos
    In order to achieve a meaningful and apples-to-apples product comparison, all vendors must demonstrate those factors most important to your CRM objectives. From the weighted RFP requirements, key objectives should be identified and incorporated into software demonstration scripts and provided to vendors in advance of the demonstrations. Recognize some CRM vendors loathe demonstration scripts and insist upon doing their standard software demonstration which achieves nothing more than highlighting their strengths and burying their product weaknesses. This demonstration practice, if permitted, will likely have little relevance to your organization's most important CRM requirements and will fail to flush out what the product doesn't do until after the procurement has been made and the implementation begun.
  5. Not calculating TCO
    With a software-as-a-service (SaaS) delivery model, many organizations fail to recognize there may be material costs beyond the software subscription that need to be considered in total cost of ownership (TCO) analysis. The most mistaken area in terms of cost estimating is unquestionably software customization. Many times, buying prospects review CRM software vendor's customization toolkits and do not really understand the level of technical skills required for their use. While some tools are graphically based and intended for power users or business analysts, others include syntax programming and will require a programmer or similar resource.
  6. Putting up with salesmanship games
    The CRM buying experience can be dramatically influenced for the good or the bad by the vendor's sales executives and the CRM company's sales approach. We've all incurred the well-dressed and flashy sales executives who have little time to understand your requirements, profess their market superiority as a response to your requirements, use the same software demonstration for every prospect and who do not correlate their sales commissions with your implementation success. The SaaS CRM industry has at least one major player known as a "drive by sales organization." This type of salesmanship will fail to achieve either a meaningful evaluation or secure any type of vendor commitment following the sale. If you incur this type of sales gamesmanship, refute it immediately. Insist upon truly professional sales executives who listen first and propose later.
  7. Failing to achieve CRM vendor commitment
    Don't expect to secure a software vendor's commitment to your implementation success following the purchase decision. The majority of the popular online CRM vendors do not have the resourcing nor interest to dedicate to individual customers. However, if such dedication is required to earn the sale, it can be negotiated and documented in a purchase agreement. This type of vendor commitment goes a very long way in securing the vendor's more experienced consulting staff, support staff and management attention.
Bypass these seven deadly sins and you will be on the path to a successful software negotiation and the achievement of your CRM objectives. Provide Your Feedback