Salesforce Negotiation Best Practices

At a glance

  • 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 renewals.
  • 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.

Negotiation Best Practices when Purchasing Salesforce

We’ve organized these Salesforce negotiation best practices in line with our 3 phase Salesforce negotiation strategy. 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.


Salesforce Negotiation Planning Phase

  • The first Salesforce negotiation best practice is to assemble a cross functional negotiation team. You need representation and collaboration from the C-suite, business stakeholders, IT management, procurement staff and legal counsel. The diagram below shows how Salesforce will assemble its sales and negotiation resources
CRM Negotiation Teams
  • Establishing both timeline and timing is the next task. Timeline is the amount of time necessary to achieve a successful Salesforce contract. Most companies don't allow enough time which greatly reduces what can be negotiated. Creating a calendar of events will guide how much time is necessary. Timing is more about time of the year. Aligning your Salesforce purchase with the vendors quarterly or fiscal year-end may achieve additional bargaining power.

    The Salesforce seller will likely try to adjust your timeline to his or her fiscal or incentive timing. If you have allowed plenty of lead time and know what you want this may be an opportunity for increased value. Otherwise, invest the needed time to make the correct decisions. A rash decision is seldom a good decision.


Salesforce Negotiation Preparation Phase

  • Good negotiators understand each other’s motivations. The Salesforce sales rep is certain to ask about your budget, decision maker, decision criteria and competitors. In fact, they will ask these questions to several people in your company to validate the information.

    That opens the door for the company to ask them about their motivations. Who is the person empowered to make price or contract concessions (hint: it's somebody at the Salesforce Business Desk) and how are their incentives impacted for different products and other factors? Knowing which Salesforce products earn bigger incentives can help craft a better deal.

  • Gather Salesforce negotiation insights. For starters, recognize early that your sales rep has little decision-making authority. He or she is essentially the link between your company and the Salesforce Business Desk. The Business Desk is the price control group, the decision maker on deal terms and quite often the bad guy. That means any requests for contract, price or discount concessions must be delivered through the sales rep with clear logic and intent to make it to the Business Desk. Also recognize that if you purchase Salesforce you will probably go through many sales reps so over-relying on the salesperson relationship won't get you very far.
  • You need to create effective messaging for the Salesforce negotiation. That messaging should be built on measurable business value, and should link the Salesforce purchase to your slated business outcomes. Requests for concessions based on quantifiable business value are far more successful than just requests for concessions. The later are really just pleadings and will be dismissed. Once your messaging is developed it must be shared throughout the organization. Many negotiation leaders will create a communication plan or provide talking points to ensure consistent messaging internally and with Salesforce sellers.

Salesforce Negotiation Execution Phase

  • Once planning and preparation are complete it's time to begin the negotiation dialogue. But before you begin negotiating anything verify that vendor staff in your negotiating discussions have authority to make decisions and commitments. If you are in discussion with multiple people, ensure that you know who is the senior-most executive and focus your limited time with that person. Otherwise, you will incur gamesmanship that will burn cycles and elapsed time.
  • A common mistake to avoid in the initial Salesforce contract is over purchasing in order to get the maximum Salesforce discount. Too many companies procure unnecessary products or too many user licenses. Getting a bigger Salesforce discount on CRM software that nobody uses creates shelfware, not value. Also, recognize it is far easier to scale up your user count than to scale it down.
  • A big challenge is that Salesforce product complexity creates confusion and vendor reliance. Each successive Salesforce product edition increases the price by a multiple. But knowing what CRM software capabilities, functionality and feature sets are in each product edition can be challenging. Product details can be vague or missing, products frequently change names and SKUs, and new products retire existing products.There are also a lot of technical and licensing rules that if fully understood can deliver flexibility and benefits. For example, you cannot provision multiple product editions within a single tenant, but enterprise contracts can support operating multiple editions in separate tenants.Despite the challenge it is essential to align your CRM software requirements with the most efficient Salesforce product bill of materials. If you are a new customer this will likely require help from an independent Salesforce consultant. Purchasing a higher product edition or more products than are really needed is a common mistake that increases CRM software price by about 70 to 200 percent.
  • If you are midmarket or larger company explore Salesforce enterprise license agreements. These contracts are pushed by Salesforce to increase the CRM software footprint in your company. They increase the likelihood of over-purchasing (i.e., shelfware) and vendor lock-in but on the flip side they can be highly customized and result in significant CRM cost savings. These agreements shift the Salesforce pricing model, such as from per-user-per-month subscriptions to corporate metrics such as licensing based on number of employees. If you pursue this path ensure a specific bill of materials that can be tracked so you are able to measure what software is actually being used, and what software is unused or under-utilized.
  • Make sure you avoid unexpected fees during the contract period. For example, forecast your data storage requirements based on your user counts, transaction volumes and projected growth. Salesforce CRM provides a limited amount of storage and then tacks on additional fees for additional storage. While the concept is not unreasonable and the storage allotments are generally fair, the cost for additional storage is high. Determine in advance if you believe the storage allotment is insufficient, and if so, it's easy to negotiate a larger allotment or a reduced fee for excess storage. Other add-on fee examples include sandboxes and developer assets. Get a list of all potential ancillary charges and validate their applicability to your business.
  • When it comes to Salesforce CRM pricing make sure you lock in CRM software price caps at the Salesforce renewal. You will need to remove the "one-time pricing" phrase in the contract. Otherwise, you are very likely to find yourself locked into a significant price hike. Salesforce commonly agrees to price caps of 4 to 7 percent.
  • The importance of terms and conditions is quite often company specific. A legal review is needed to determine if additions or modifications are necessary. That said, some important provisions to consider are the ability to scale down user licenses or reduce product editions (i.e., move from Enterprise to Professional). And be aware that many Salesforce contracts allow users to scale down user licenses, but such an event cancels previously negotiated price reductions, including price caps at the renewal period. That creates the effect of raising the overall price if reducing users.

    Salesforce sellers sometimes try to shift from the option of product reductions to swap and transfer rights. Swap rights exchange unnecessary products for other products while transfer rights grant product usage to other parts of the business.