Several longstanding Salesforce enterprise customers have recently noticed changes in Salesforce’s behavior and approach to their relationship. Even if your organization has not yet encountered these changes, chances are you will. Anticipating the actions of a strategic cloud vendor like Salesforce before being confronted with them gives you the opportunity to adequately prepare.
Pay close attention when approached with any of these three key Salesforce tactics:
Tactic #1: Prematurely Requesting Additional Spend
Like sales representatives at many of the major IT vendors (SAP, Oracle, Microsoft, ServiceNow, Workday, etc.), Salesforce sales reps feel the pressure of quarterly ends. If they aren’t on track to meet their goals, customers will feel the pressure, too. Sales reps have approached their longstanding enterprise customers asking them to pull in some additional spend before the quarter ends — even if the customer’s renewal is still months away and there may not actually be a known need. To help motivate these customers to pull spend in, Salesforce has offered meaningful concessions to be applied to the upcoming renewal terms and pricing.
If your organization already has demand, the offer they are putting on the table may be worth your consideration. However, you should proceed with caution if you have no immediate need. It is never good to start negotiating the larger deal (i.e., the upcoming renewal) before you get a complete set of commitments and ‘asks’ on the table. If you do elect to pull spend in to meet an actual need, it is extremely important that you make sure the order form is coterminous so that it will be part of the collective negotiation discussions come renewal time.
You should also consider everything you will want moving forward, so you can start conditioning your Salesforce reps into thinking in that direction. In other words, take advantage of the fact that Salesforce is coming to you for a favor, as they are more likely to be responsive and attentive to your needs at this time. Any promises they make should be in writing and used as the baseline for the renewal negotiation. Salesforce should understand that the complete renewal negotiation isn’t over because a limited set of concessions were achieved. They need to understand that this is just the new starting point.
Tactic #2: Making Changes to Standard Renewal Term Price Protections
Salesforce’s standard price protections have remained valid if the customer was able to maintain the current subscription volume at renewal, which includes products and users added during the term. But these conditions are starting to change and they instead require customers to maintain the total contract value at renewal. Salesforce will tell you that the change is favorable in that it is more flexible since you just need to maintain the spend (also known as the very valuable and reported annual “run-rate”) without having to worry about which products you include in your renewal order form.
While this change may provide some level of additional flexibility, the change also indicates Salesforce’s elevated level of comfort in making it clear to their base customers that contract value matters most to them. They are so comfortable that they are no longer disguising the fact and are even putting it in writing beyond their investor presentations. Rather than being a strategic partner focused on providing the products that will help you achieve your goals, Salesforce appears to care more about how much money their customer base is consistently spending with them.
If you restack your products at renewal to align more closely with your actual needs and the total spend is now lower than before, the new condition requires you to find a way to shape the products you are going to add to your renewal order form to meet a specific contract value which is transactional, not strategic.
This could also be Salesforce’s attempt to ensure go-forward revenue does not decrease as technology continuously improves and creates efficiencies that ultimately lower the need for user volume. Regardless of the reasoning behind the change, all customers should fully understand the conditions attached to their price protections as they could eliminate or at least significantly impact the protections previously thought to be in place.
Tactic #3: Staying Focused on Salesforce’s Needs and Wants
Salesforce has been preemptively approaching customers to discuss what matters most to both parties in preparation for the upcoming renewal. What clients find upsetting is the fact that the presentations Salesforce is bringing to these discussions are very much focused on what the customer can do to help Salesforce meet their goals, needs, and wants. On top of this, there are placeholder slides intended to address what matters most to the customer but they are often left blank. This raises a question in almost all customers’ minds: After having a relationship for at least the past three years, shouldn’t they know what matters to you or at least attempt to show that they do?
Regarding the slides that show what matters most to Salesforce, it is very clear that revenue matters most to them, but more importantly, it is the revenue they get from their customer base and where it comes from specifically. They understand that user growth and upgrades will be there but the ability to increase the go-forward annual spend depends on their ability to convince their customers to add new products.
Customers should keep Salesforce’s recent actions in mind as they prepare for their renewals. By anticipating these tactics, customers can shift the focus of these preemptive renewal conversations to what matters to them, the customer, and away from what matters most to Salesforce. Customers should set the agenda for these renewal discussions to ensure the conversation is productive and focused appropriately. The bottom line is these renewal discussions should be about the value your organization has received to date and will receive moving forward as well as whether you have the right products to help you achieve your goals and meet your requirements – not about the revenue or spend Salesforce is looking to get from you.
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