By now, it is clear that Salesforce is quickly becoming a lot like Microsoft. What I mean by this is that if your organization does not have this cloud-based software in use, it can be harder to attract well-qualified Sales candidates. Many of the best Sales candidates will have gone through hours of training and have honed their skills using Salesforce at prior companies. Those skills would be relatively useless at a company not using Salesforce.
The overwhelming need for this software, which Salesforce is very well aware of, can lead organizations into renewal negotiations feeling like they have limited leverage out of the gate. Salesforce has also been very smart (and intentional) in creating it as the solution of choice among the majority of the workforce. They have made their certifications and the Trailhead program readily accessible and even fun by promoting the benefits of being a Trailblazer.
The ultimate goal for Salesforce is to grow each customer’s annual run rate by increasing user counts and expanding the number of adopted products, even if the products or user quantities don’t align with your actual immediate needs. They are also focused on adding key strategic products like Tableau, Mulesoft, and Einstein into each customer’s portfolio, as well as more robust editions (like Unlimited Edition), where possible.
Generally, leverage against Salesforce is the same as it is with any other enterprise vendor like Microsoft, Oracle, SAP, ServiceNow, Workday, etc., and lies with adding new products, additional volume, or moving to more robust editions. This translates to spending more money with Salesforce and adopting more of their Customer 360. However, some organizations feel they run out of leverage in those areas if there is nothing on the roadmap that requires adding more net-new products.
Too many organizations accept Salesforce’s standard contractual and commercial terms, believing that they have limited leverage when negotiating with the cloud giant. Despite its leading position in the market and expertly crafted agreements designed to significantly increase your costs at each renewal, it is possible to negotiate more favorable terms that lay the groundwork for a strategic relationship with Salesforce that provides more long-term value.
Here are some additional carrots or “gives” that can certainly create leverage, even when it may feel like there are none. For even more depth, download The Ultimate Guide to Salesforce Renewal Negotiations.
Salesforce Price Negotiation Strategies
- Yearend negotiations. Salesforce’s yearend is always a simple place to start. Planning your renewal or go-forward Salesforce relationship around their yearend encourages your Salesforce reps to advocate internally for an enticing deal, which Salesforce wants to be able to report, or risk losing additional business at yearend. To be clear, this method generally works best when there is additional net-new spend. Salesforce also likes to get deals done in advance of Dreamforce as it is always beneficial for Benioff, Taylor or other product leaders at Salesforce to be able to call upon these recent wins.
- Extending term length. Going hand in glove with timing is term length. Of late, Salesforce has been keen to report during earnings calls, the increase in the number of deals that are greater than 36 months, however, they do not go so far as to specify how long the extensions are. Offering a go-forward term length beyond the usual or historical 36 months, could sweeten the pot more, in order to get additional discounting or various protections and levels of flexibility.
- Product workshops. Another carrot many organizations miss when it comes to leverage is product workshop engagement. By scheduling meetings or workshops with Salesforce to learn more about upcoming products that may be on the immediate or longer-term roadmap can increase leverage. This is especially true if there is genuine interest and participation includes both IT and line-of-business team members (where it makes sense, of course).
Through these workshops, organizations can discern if more is needed from Salesforce in terms of net-new product additions or more robust editions, or potentially less is needed, which would mean product take out, volume reduction, or even moving to a lower edition. Showing interest and participating in these workshops helps paint the picture of what ‘is’ and what ‘could be’ for Salesforce. These workshops also provide customers the opportunity to go to Salesforce during the renewal process with flushed out requirements and a clear vision of what is needed, as opposed to what Salesforce wants you to buy. And it doesn’t give Salesforce the right to not understand what and when the needs and requirements are when it comes time to putting a proposal in front of the customer.
- Testimonials. The final type of carrot to consider is under the umbrella of publicity. Should the opportunity be there, Salesforce certainly is interested in doing what they need to obtain the right to use the customers’ brand as part of marketing campaigns and public announcements. This can come in a variety of forms such as Dreamforce appearances, references, case studies, content on Salesforce+, tweets from Benioff, etc.
While it is important to keep in mind that none of these carrots individually will have an extreme impact on the deal itself, bringing them together along with a well-thought-out negotiation strategy as part of the overall negotiation preparation and execution effort can only benefit your organization leading up your inevitable renewal.