Customer Success Managers negotiating contract pricing

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Brooke Carrie
Brooke Carrie Member Posts: 20 Thought Leader
edited October 2023 in CS Org Conversations
I feel like this topic may have been touched upon earlier but I can't find the exact thread I am looking for (maybe I am wrong and it hasn't) - so I apologize if this is a repeat. 

I am wondering how others handle contract negotiations. Not upsells or starting the discussion about the contract renewal, but rather negotiating the actual rate and/or terms associated to the renewal. 

I have always worked in organizations where the actual negotiation is handled by either a renewals team or an Account Manager. The CSM may start the conversation with the customer and/or may be a bystander to the conversation(s), but is left out of the actual negotiation. I am wondering if my past experience is unique and if other companies regularly have their CSM do the negotiations.
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  • Anna Alley
    Anna Alley Member, CS Leader Posts: 70 Expert
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    edited May 2021
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    I don't think your unique. My CS Team does not own the contract negotiation either. They'll bring in the existing sales team for any contract negotiations.

    I think there's still debate if that's the "right" model, but you are not alone!

    Thanks!
  • Matthew Ferguson
    Matthew Ferguson Member Posts: 7 Contributor
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    edited May 2021
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    Hi Brooke,

    I've worked at companies where the Customer Success Manager does indeed handle the renewal (and other commercials), and at companies where the renewals are handled separately by "Customer Growth". I think the approach will obviously depend on the product and preference of the business, but as long as each person's / team's responsibilities are clearly outlined, either approach can work.

    I do think there is value in involving the CSM though if the renewal is handled by another team. They hold the relationship and immense knowledge of the client's objectives and usage of the product, so I think they should always be included in the process and be visible during the negotiation. Surely that increases the chance of a successful renewal, and can help give the CSM valuable experience. I guess the consideration there is if the CSM is indeed involved, that role and level of involvement needs to be clearly defined.

    Fergie
  • Dan Balcauski
    Dan Balcauski Member Posts: 7 Contributor
    edited May 2021
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    Hi Brooke,

    I think Dave Kellogg put this best "When we put our farmers against their hunters, it's not going to end well for us." Account/relationship management is a very different skill set than procurement negotiation and you want to leverage the strengths you have in the building appropriately for this type of conversation.

    Best,
    Dan
  • david lapedis
    david lapedis Member Posts: 2 Navigator
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    edited May 2021
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    Hi Brooke, 

    At my organization, we CSMs (strategic partners) do the actual negotiation and terms for renewals. It was definitely something new, but it is now something we all thrive in and share best practices with each other. We incorporate this into our Success over the term of our contract. It is now part of QBR sequence so at the renewal we are showcasing all the value we've delivered which makes it easier to increase prices. 

    Most of us read "Never Split the Difference" and use their tactics in that book. 

    Warmly, 

    David Lapedis
    Senior Strategic Partner Manager
  • Brian Hartley
    Brian Hartley Member Posts: 184 Expert
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    edited May 2021
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    Hi, Brooke - our CSMs handle the renewal and terms associated with them.  Our sales team is all new logo biz.  I will often work with our CS team on one-off use cases.  We also have a very straightforward contract and ts and cs, so it doesn't take a lot of resource time.
  • Richard Brereton
    Richard Brereton Member Posts: 8 Contributor
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    edited May 2021
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    Hi Brooke,

    Our CS team handles the renewals conversations. We have a tiered pricing framework that is transparent to clients which the CSMs feel comfortable explaining to them. Most of our clients are on a 12 month rolling contract but we do have approved rates for shorter contracts. All CSMs have access to the alternative pricing options and can discuss the options with clients that would like to amend their subscription length.

    Last year due to covid we had a number of clients that had reduced cashflow or increased uncertainty so we put a playbook together for CSMs to have conversations with clients about putting renewals/contracts on hold or reducing the subscription term. 

    Any other abnormal discount requests or changes to terms from clients are passed to me and I have a conversation with the CSM about the client, their request and we come up with a strategy for the negotiation with that client. I report to the CEO so involve him in these discussions when they involve enterprise level clients.

    In general I would say try to have a framework for renewals negotiations that your CSMs can operate in. If there are common reasons for a client requesting a renegotiation it is sensible to develop a playbook for that scenario. This should give the CSMs more confidence to have these conversations.


    Richard


    Customer Success Lead

    Appraisd

  • Narjes Evennou
    Narjes Evennou Member Posts: 5 Navigator
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    @david lapedis Hi David,

    This conversation is a bit dated but still very interesting. 😃

    In your comment, you mentionned that you have good practices for managing and negotiating renewals. I would know more about your good practices and your process.

    Many thanks in advance

    Best regards

    Narjes