Negotiating as a Customer Success Manager

blog-customer-success-negotiationEvery company I've worked for has offered a different mix of resources to support Customer Success Managers (CSMs) when it came time to negotiate with current customers.

At one startup, customers were mapped to an Account Executive, and CSMs would loop them into any contract discussions. In other organizations, I was the customer's sole point of contact as soon as they signed on the dotted line.

I also found myself in a position somewhere in between.

As the customer's primary point of contact, CSMs are never fully insulated from negotiations.

In his bestselling book, Daniel Pink argues "to sell is human," and perhaps an appropriate extension of this philosophy is "to negotiate is human."

"Anyone who has resorted to bartering with a child knows that negotiation and compromise are ingrained in the human psyche from an early age."

Although many CSMs would prefer to push the responsibility of negotiations to another team, this isn't always realistic.

Even if you have an Account Executive sell the initial deal, an Account Manager oversee expansion pricing, and a Renewal Manager handle contract renewals, CSMs will still face certain situations where they need to navigate negotiations with current customers.

Common examples I’ve encountered:

  • Negotiating a credit due to service disruption or critical bugs
  • Scoping and pricing a custom feature request
  • Offering a discount as part of an unofficial referral program

When you break the negotiation process into stages that align with the skills that CSMs already possess, Customer Success teams can confidently handle negotiations with current customers.

Let's dive into this process, starting with the hallmark of any good negotiator: preparation.


Start by researching the history of the account and their relationship with your company. Review relevant documentation such as a Sales to Customer Success knowledge transfer, information logged in tools that are shared with other teams, and reach out to internal teams to get additional insights.

"Prepare for negotiations the way you would for any customer conversation — by making sure you have the appropriate background and context."

For instance, if your Support team has noticed a spike in tickets from this customer, you'll want to see if this friction relates to the topic being negotiated. Knowing that the ticket volume has increased 70% month-over-month and that all these issues are connected to a bug, will be pertinent information heading into a conversation about a potential invoice credit.

If Finance is constantly chasing them down for past-due monthly invoices, you could incorporate an upfront annual payment into proposed expansion pricing.

Separate the People from the Problem

Negotiations can either build trust and understanding that positively impacts the relationship or result in rifts and frustrations. The relationship between the parties tends to become entangled with the problem being discussed, which is why the ultimate goal of any negotiation should be to improve your relationship in conjunction with any concessions you receive.

CSMs are used to having tough conversations with customers, and the resulting strain mirrors hostilities that can arise during negotiations.

When things get tense, remember that it's the problem that both parties are frustrated with, not each other. Disagreements are inevitable in any relationship, but it's important to work together to find a solution in a way that doesn't inflict long-term damage.

In my experience, CSMs tend to give in to customer requests too quickly during tense discussions, often because of a misguided effort to appear friendly and amenable. However, this isn't the best long-term solution for the customer.

Entering into terms you can't reasonably meet or that aren’t sustainable for your company isn't doing anyone a favor.

Uncover the Core Issue

What is it that you're actually negotiating?

It's a basic question, but you'd be surprised how two parties' answers differ. You could spend weeks arguing, expending goodwill, and getting internal approval — only to come to a resolution that doesn’t address the core issue. Core issues don’t just disappear, which means you will likely find yourself back at the negotiating table in short order.

Negotiations are an opportunity to apply the discovery process CSMs leverage daily.

"Negotiation is not an act of battle; it's a process of discovery. The goal is to uncover as much information as possible."
Never Split the Difference

We're constantly trying to define our customer's goals and objectives for our product, and during negotiations, we turn our inquisitive nature towards identifying the core issue that needs to be addressed. Don't commit to your assumptions about the core issue. Instead, view your assumptions as hypotheses and use the negotiation process to test them.

As with all customer interactions, negotiations require information gathering and careful listening.

Work Together to Find a Solution

People are more likely to commit to an agreement they have a stake in, so try to build a collaborative process where you and the customer work to find a solution together.

The skills needed to execute this strategy are identical to those leveraged to create a shared Success Plan. Essentially, you are seeking buy-in and agreement from the customer while getting your needs met.

Here are a few strategies for co-opting your customers into collaborating on a joint solution to a core issue:

Address Red Flags Early

There’s no use in letting potential barriers to an agreement remain unspoken. They won’t magically disappear and you'll run the risk that they will come back to haunt you in the final stages of the negotiation.

Ask "How" and "What" Questions

Frame problems in a way that encourages the other party to work towards solving the issue together.

Expand the Pie

Consider unequally valued items that can be offered as concessions to either side.

Define Success

Now that you've negotiated the terms, determine how you will measure and execute on this agreement. Success needs to be defined and measured, just like with any customer-facing project.

The final stage of the negotiation process is to decide how both parties will know if they're living up to their end of the agreement, and to determine what will happen if one party deviates. Establishing measurable standards and a framework for conflict resolution will reduce the need for future negotiations.

Negotiating with your customers doesn't have to be an anxiety-producing process that you dread.

CSMs already have the skills needed to manage negotiations: 1) careful preparation, 2) the ability to separate the people from the problem, 3) discovery questions that uncover core issues, 4) aptitude in working with customers on solutions, and 5) experience creating a framework to define success.

Data-driven Customer Success teams run on Natero. LEARN MORE