Customer Paper Deals in SaaS: A Losing Game
If there is one thing my former sales colleagues know about me, it’s that I have an intense distaste for customer paper deals.
I could write multiple (very emotional) posts on this topic, but instead, I have gathered my thoughts and formulated something which I hope is useful.
A customer paper deal typically lands a few weeks before a tough quarter-end. It’s always a big-name customer and they tell you that you simply need to sign their standard IT services contract, with no changes, to close your deal in time.
And that contract:
is at least 8.5 times as long as your contract (a scientific fact)
has nothing to do with what you are selling
imposes terms which you could never accept
To be clear, this isn’t a “battle of the forms”, when both legal teams insist on using their NDA. This is a misguided attempt to jam your specific SaaS service into a generic contract that is not fit for purpose.
Every lawyer knows it - even the customer’s. But under heavy pressure, everyone presses ahead as if there were no other option. And the outcome? A guaranteed delay in getting the deal done, and frustration all around.
So, what do you do?
The first step is to get the right customer stakeholders involved - early.
Typically, they will be a mix of a) your champion (to lobby for your position internally), b) a senior person in procurement (or someone who can influence them) and c) a senior person in Legal.
Seniority matters here because you need people who can make a decision, not just follow a process (which is how you got into this position to begin with).
And what’s the message?
No need for dramatics or heroics. You just need to communicate these objective realities:
Your SaaS service follows a unique delivery model, and your MSA was designed to align with it.
Your MSA is significantly shorter and customer-friendly (if your lawyer did a good job).
Their MSA, by default, won’t align with your service and will require major revisions before you even start negotiations.
The overwhelming majority of your customers have recognised this and agreed to use your MSA (which will be true for any SaaS company).
This stance is not a show of strength - your MSA is just a much better starting point and you will of course happily consider any changes the customer may wish to make.
To dig a little deeper, most SaaS services are off-the-shelf solutions delivered identically to every customer and changing fundamental operations to accommodate a generic customer contract just isn’t an option. So why even consider using it when it guarantees months of significant and ultimately unnecessary back-and-forth?
This stance works - and it’s in everyone’s interest to make it work - but it requires:
A mature Sales team
Senior buy-in
Solid internal alignment
Clear and targeted messaging back to the customer.
Try it - you might just close that deal this quarter!
