Salesforce Negotiation Tactics


  • Salesforce software negotiation is about making the right investment for the right software and services. The CRM buyers goal is to lower total costs, mitigate project risk, increase benefits and maximize ROI. Salesforce negotiation tactics can be used to maximize CRM success, avoid surprises and lower cost, in that order. If the implementation or post-production system is not successful, it doesn't matter how much money you saved.
  • For most companies, the Salesforce CRM subscription is their single highest SaaS expense and one of the top three IT expenses. Any price reductions can deliver annually recurring cost savings and provide funds for other investments.
  • Negotiation without strategy or tactics is not really negotiation; it's wishful bargaining. Strategic negotiation applies creative solutioning, outcomes-based value creation and objective leverage that generally results in 20 to 55 percent CRM contract cost savings.

How to Negotiate a Better Deal with Salesforce

I don't know any software vendors that reduce their price or provide a better deal because you ask them to. Instead, I have found that applying measurable leverage in the forms of creative product solutioning, mutual outcomes and viable competitor alternatives gets the best deal because it's what is warranted based on the situation.

Salesforce is a mature and savvy sales organization. Trying to outsmart them, or worse trying to bluff them, to get a better CRM software deal is a fool's errand. A better approach is to adopt a CRM negotiation strategy built on mutual value creation and competitive market dynamics.

A negotiation strategy and supporting Salesforce negotiation tactics that we have used and refined with Salesforce contracts since 2004 consist of a three-phase sequence.

CRM Negotiation Strategy

Phase 1: Planning

The planning phase assembles a cross-functional negotiation team, gathers insights on Salesforce's pricing and negotiation strategy, and objectively measures Salesforce value to the company relative to competitor solutions.

A top challenge in CRM negotiation is having enough time. That's why planning starts with a calendar of events. Too little time results in short rift for negotiation events that create leverage and too few rounds of negotiation that advance your goals.

CRM Negotiation Schedule

Everyone knows that timing can impact CRM software discounts and that the fiscal year-end is the most advantageous timing. But to assume you are going to get a CRM discount by aligning with the January 31 fiscal year-end is presumptuous and not always true. Timing is helpful but by itself is insufficient for a material Salesforce discount.

Also, Salesforce fiscal year end is not a random date. They chose January 31 in part because it helps customers extract funds from multiple years budgets and they know most companies have the most budget in January which is the start of their new year. This can facilitate CRM purchases, but it doesn't change the value.

Phase 2: Preparation

The Preparation phase includes defining messaging and communication management, identifying your specific CRM software requirements, solidifying your negotiation strategy, and developing deal options and prioritized negotiation goals.

Clear and progressive messaging is needed to relay your position to the people empowered to grant increased value, price concessions or CRM discounts. Most initial CRM buyers don't recognize that their Salesforce Account Executive has little power for contract negotiation. This person is a conduit to the Salesforce Business Desk, which is the decision-making authority for meaningful CRM software discounts and pricing. You want to have a cooperative relationship with the sales rep but if you choose Salesforce CRM software you will soon learn that this role turns over so frequently that a long-term relationship is generally not practical.

Salesforce also applies a practice of engaging as many people in your company as possible in order to understand their competitive position, identify upsell opportunities and validate the company's negotiation points. Limiting Salesforce access to your staff and delivering consistent messaging are key to achieving your negotiation goals.

Identifying your specific CRM software requirements is critical to get what you need and prevent the all too common occurrence of overbuying. A CRM Solution Blueprint and road map align business requirements with specific Salesforce CRM software products and SKUs.

The Blueprint identifies what application software is needed by who and how business outcomes will be achieved with technology. It forecasts CRM software requirements for the duration of the contract. It schedules when user licenses, application components and support contracts are needed and should be procured.

Our CRM Blueprints are graphical diagrams with reference architectures, supporting footnotes for explanations and dynamic models that calculate budget, total cost of ownership (TCO) and ROI. We find this format is simple to understand and easy to update. The Blueprint will be used again at each subscription renewal.

Going into a negotiation knowing what you want and what you can live without is a hallmark of a negotiation strategy. CRM negotiation is less about getting the lowest price and more about getting the fastest payback, lowest TCO and highest ROI.

The more time you spend up front, the more value you create and the more savings you unlock. CRM negotiation goals start with concessions that ensure success, avoid surprises and lower cost. Then they drill down to obtain CRM software and services that facilitate the company’s business and systems objectives.

Here are some sample CRM negotiation objectives:

  • Achieve a fair and discounted price, and secure vendor services that will most aid CRM implementation and operational success.
  • Achieve a predictable spend through the contract duration. This may include provisions to notify the customer when approaching any threshold limits that invoke price increases.
  • Lock in price caps so that the Salesforce renewal does not create a big price escalation. It is important to avoid unexpected and significant price increases after the company has invested in the platform.
  • Allow dynamic CRM licensing to accommodate changing business conditions. For example, if any part of the business should decline there should be an option to decrease user licenses or specific products. If declining usage reduces the CRM discount, then the same logic should apply to increase the discount for increased usage during the contract term.

Phase 3: Performance

This phase kicks off the CRM negotiation dialogue.

The discussions focus on mutual value, not just cost reductions. Veteran negotiators often pursue outcomes-based contracting. The customer knows its outcomes as they are documented in the prior phase negotiation goals. Outcomes for Salesforce may include new product additions, expansion opportunities, extended contract durations or even customer publicity such as case studies or press releases.

Some of the value drivers that can improve price or justify CRM discounts include the following.

  • Right product right price. Many customers increase the Salesforce software contact value in order to get a bigger discount. But over-buying CRM software that does not get used does not achieve any real savings. The single biggest CRM savings opportunity is getting the most efficient product edition or combination of product SKUs. However, unclear product specifications and shifting product names can make this a tough exercise. You may need to work with an independent Salesforce consultant who can align your application requirements with the many combinations of Salesforce SKUs and third-party products to get the most efficient bill of materials. As an example, we worked with a client who switched from Salesforce Marketing Cloud to Adobe Marketing Cloud and was thereby able to lower their product edition and save 55 percent on their annual CRM subscription.
  • New products better price. Salesforce often provides time sensitive SPFs, commission multipliers or special incentives for certain products. Many times, these are products that the company acquired (i.e. Mulesoft, Tableau, Slack). Understanding which products offer the highest incentive, and if and how those products may fit into your CRM Solution Blueprint can yield big savings.
  • Add-ons add up. There are several add-on charges that can quickly accumulate. For example, data storage or developer sandboxes can create unexpected cost obligations. Many times these ancillary fees can be bundled with other services.
  • Contract duration. Depending on the size of the deal, increasing contract duration can yield bigger Salesforce discounts. Account Executives can get bigger sales commissions for multiyear deals so they are incented to provide some concessions for longer term contracts. One caution though, you need to have confidence in your growth projections and negotiate a ramp up schedule to take advantage of longer-term deals.
  • Enterprise licensing. Large companies all-in on Salesforce may benefit from enterprise licensing. While these are not all you can consume agreements, they can be financially attractive. These agreements offer the upside of being customized to your needs but also have the downside of bundling products in a way that is difficult to see what is being paid for but not being used.
  • Purchase timing. As previously mentioned, aligning your Salesforce purchase to the company's quarter-end or fiscal year-end may provide additional incentive.
  • Terms and conditions. Contract terms and conditions are voluminous and require lead time. You will want to negotiate price caps for the Salesforce renewal, maybe modify the swap and transfer rights or permit software flexibility for planned or unplanned changes to your business such as growth, decline, acquisitions or divestitures. A legal review is necessary to identify acceptable or unacceptable terms or verbiage.

The above value drivers are all within the Salesforce deal structure. They create purchase optimization but fall short of creating deal leverage. CRM buyers that also include viable competitor alternatives in their buying decision achieve leverage and exponentially greater savings.

It should come as no surprise that Salesforce responds to competition and their flexibility is directly aligned with real competitive alternatives. CRM buyers willing and able to buy somewhere else are going to get the best deal.