CRM Negotiation Best Practices


  • Most companies are paying 15-35 percent more than they should for their CRM software subscriptions. They also fail to lock in favorable price caps for their CRM renewal.
  • CRM software negotiation is about ensuring success, avoiding surprises and lowering cost, in that order. If the implementation or post-production system is not successful, it doesn't matter how much money you saved.
  • CRM software negotiation is less about getting the lowest price and more about getting the fastest payback, lowest total cost of ownership and highest ROI.

According to Cleanshelf's Business Software as a Service (SaaS) Spend report, poorly negotiated software contracts, excess licensing and redundant services are the top three causes for wasted SaaS spend. These lessons clearly apply to Customer Relationship Management software.

In fact, when it comes to cloud CRM software we know from the CRM Software Negotiation Benchmarks research report that those CRM buyers who approach their CRM software negotiation strategically save an average of 15-35 percent more than those who do not. That's a big deal when you recognize those are annually recurring savings.

Average CRM software discount by vendor:

CRM Discounts by Vendor

Best Practices in CRM Software Negotiation

To assist your CRM purchase, consider these CRM negotiation best practices.

CRM Negotiation Planning Phase

  • First, adopt a structured CRM negotiation strategy. A CRM software purchase is a significant investment that will commit the company to future expense obligations. Attempting to wing this process or negotiate on the fly will not produce favorable results when dealing with the vendors CRM negotiation experts. Adopting a CRM negotiation strategy is critical as it provides a framework to methodically assess options, prioritize alternatives and design measurable value that creates real leverage. Negotiating without leverage is just pleading. The CRM negotiation best practices in this article are sequenced pursuant to our 3 phase CRM software negotiation strategy.
CRM Negotiation Strategy
  • It is most efficient to negotiate with only the preferred vendor. You can negotiate with two vendors simultaneously but it's a lot of work and will significantly increase the elapsed time. It's best to negotiate with one vendor but keep next in line vendors warm in case the first vendor cannot accommodate your goals. Also, when you notify next in line vendors that they are not the preferred vendor, they may come back with new value that shakes up your CRM evaluation and scoring result.
  • Allow enough time for the process. Gartner advises that 45 percent of negotiation time is spent in online and offline research. Most expert negotiators suggest that about three-quarters of negotiation time is spent in planning and preparation and before having the first negotiation conversation with the vendor.

CRM Negotiation Preparation Phase

  • Your success in reaching favorable concessions is directly proportional to the competitive landscape you created during the CRM software evaluation. Software vendors become far more flexible when there are credible competitors. There is no need to identify the alternative solutions, and CRM negotiation strategies suggests that you selectively share comparative points (i.e., fit, cost, risk, terms) without sharing competitor names.
  • Create communication messaging and ground rules. It is critical to craft your messaging based on business value and not cost. During the CRM software evaluation, the vendors likely responded to how they can achieve your goals, but those claims will quickly fall by the wayside unless you keep them front and center. Your messaging during the contracting process must be logical, consistent and outcomes-based in order to achieve a successful CRM software contract.

    Some CRM software sellers will navigate among your staff to test your messaging, look for inconsistencies and validate whether it's real or posturing. That's why it is a good idea to create an internal communication plan or deliver talking points among staff. Many expert negotiators also distribute "hush memos" to staff that designate a blackout period and advise the CRM vendors of a single point of contact during the CRM contract negotiation period.

  • Before you begin the contracting dialogue ensure you are negotiating with a decision maker. Verify the vendor resources have authority to make decisions and commitments before you begin negotiating anything.
  • Finally, some expert negotiators prefer to create favorable logistics. Face to face meetings on company premises can be helpful in picking up on in-person body language, navigating through tough points and achieving final agreements.

CRM Negotiation Execution Phase

  • Many times, the single biggest factor in getting the best CRM software deal is to ensure you are purchasing the most efficient products. When contracting with CRM vendors such as Microsoft Dynamics and Salesforce that offer multiple products and product editions, many CRM buyers over-purchase CRM software because they are not clear on the CRM software product specifics, or what precise capabilities exist in overlapping product editions, or how creative combinations of products can yield CRM cost savings.To avoid overspending and shelfware, know exactly what's in each CRM software product edition or subscription tier and procure a CRM software bill of materials that is directly aligned with your requirements. Because of the multiplier effect among successive CRM product editions, this CRM negotiation best practice can deliver 50 to 150 percent savings on your CRM software contract.
  • Don’t pay for software subscriptions, maintenance or support before you need it. For most companies, the CRM implementation will take between 3 and 12 months. Delay fees until they are needed, which is likely just before the go-live event.
  • CRM buyers lose negotiation leverage after the initial CRM contract is completed so it is important to lock-in renewal pricing during the initial agreement. A large CRM software discount becomes short lived if the renewal contract reverts to list price.
  • Consider getting a designated account representative. The vendor Account Representative is a central liaison between the customer and vendor and can quickly identify and solicit needed vendor resources, for things like product education or escalating open issues. A vendor liaison can significantly improve your professional life and enhance the overall relationship. But for this to work, the account rep must be knowledgeable and able to navigate the vendor's organizational maze to find the needed resources for any issue. Sometimes this role can be negotiated at little or no additional cost.Also, the liaison is not a salesperson for two reasons. First, CRM sellers are compensated for new sales and increasing the annual contract value (ACV), and not donating their time for helpful services. Second, they turn over so frequently it's nearly impossible to build a long-term relationship. In fact, many CRM vendors such as Microsoft Dynamics and Salesforce frequently change the sellers at the start of their new fiscal years.
  • Preferred customer status, sometimes called most favored nation (MFN) status is a key negotiating clause routinely inserted by large companies and experienced negotiators. The goal is to give yourself the maximum terms and benefits as offered to any other customer using the same or comparable solution. This includes future benefits granted to new customers after the time of your negotiation. The U.S. federal government made MFN provisions common place with their GSA schedules. In fact, if your CRM software vendor has a GSA schedule (and most of the popular vendors do), find out what pricing, terms and benefits are listed on the GSA schedule as these are likely to be the best terms the vendor will ever offer.
  • CRM buyers that may incur corporate changes should craft verbiage that allows for contingencies. For example, allowing the CRM software to accommodate new company divisions, acquisitions, mergers or joint ventures, or be transferable to a divested entity for a period of time. It's also important to understand the ability and financial impact of scaling up or down the user count.
  • Exchange concessions for concessions throughout the bargaining period. People will feel slighted if they give but don't get. Understanding the cost and value of concessions for the other party leads to the most successful outcomes. Many times, you can seek compromises that are low cost for the vendor but very valuable for the company. You may need to ask the vendor how they can help and evaluate services that you were not aware of. Track the concessions you give and get and ensure a balanced deal.
  • Know when to exit a negotiation and move to the next vendor. If a CRM publisher is not willing to demonstrate flexibility before you have purchased the software the situation will surely not get any better after you have purchased. The right vendor relationship may be more valuable than the small differences in product capabilities.
  • If you do not have internal CRM negotiation expertise, get professional help as it will improve the likelihood for success and probably pay for itself. If your company does not have procurement professionals, consider hiring an experienced CRM consultant who has done this multiple times over. CRM consultants often come with negotiation strategies and assets such as total cost of ownership (TCO) pricing models. They are especially useful in pointing out hidden costs or conditions to avoid future surprises. They also help you focus on the issues that are most influential to achieve a successful CRM operational outcome and avoid consuming time in trivial areas. We recommend CRM consultants do not negotiate on your behalf but instead advise you during the negotiation process.