4 Ways to Gain Leverage in a ServiceNow Deal
Without proper leverage organizations will not be able to effectively negotiate a good deal with any vendor including ServiceNow. ServiceNow's cloud solutions are used by businesses worldwide in areas like security operations, customer service management, HR, Facilities, etc. Similar to Salesforce, ServiceNow sales teams use the "land-and-expand" sales strategy. Their goal is to get a foot into an organization, spread across business units and gradually increase their footprint.
ClearEdge has developed a model called the Leverage Management Maturity Model (LM3), that helps organizations execute deals effectively. The model is based on the company's 10 year analysis of deal making. Read more about the Leverage Management Maturity Model (LM3 ). One of the key aspects of the LM3 model is effective messaging when negotiating with sales teams. To get the best deal organizations must tell a consistent story and control the narrative.
4 key features of well constructed messages:
- Motivation to Tell Our Story: Sales reps are only permitted to discount a deal so far. Does our message motivate them to sell up the chain of command to obtain approval for additional concessions?
- Fork in the Road: Gaining concessions from a sales team requires a choice to be made by sales executives. Are we presenting a clear path, such as a budgetary restriction, to guide ServiceNow towards our preferred outcome?
- Summary of Buyer’s Leverage: A strong message flexes one or more sources of leverage, including deal uncertainty or credible Plan B options. Can we prove to the vendor that our business needs to be fought for?
- Acceleration/Deceleration of Opportunity: Motivating a sales rep requires you to change perception of their forecast. Does the timing of the deal pressure the rep to make concessions to win the business?
The importance of making a business case
Effective messaging when negotiating with ServiceNow must relate to an actual business case. Without a business case to justify the request for concessions on pricing or terms, ServiceNow will provide several excuses as to why requests cannot be met. Common reasons given by ServiceNow when denying request are:
- Revenue recognition issues prevent us from providing a lower price
- Better pricing is reserved for higher volume commitments
- “your price increased because you lowered your volume
- All contract terms are standard and non-negotiable as directed by our legal department
By providing a concrete business case organizations are more likely to get better pricing and concessions on terms. Examples of viable business case messaging include budgetary restrictions, change in leadership or future plans, lack of adoption or usage of licenses, and the ability to grow the platform with ServiceNow within feasible cost levels. With any of these messages, it’s important to remain consistent across all points of contact in your organization and through all rounds of negotiation.
Download this white paper by ClearEdge for more information and tips on how to negotiate with ServiceNow and get the best deal for your organization.