How to Leverage Competitor Rates in Salesforce Renewals

How to Leverage Competitor Rates in Salesforce Renewals

• Research competitors’ pricing models through benchmarks.
• Present cost-saving examples to Salesforce during negotiations.
• Highlight alternative offers to build leverage.
• Emphasize potential migration plans to competitors as a tactic.
• Seek volume-based discounts by referencing competitor structures.

How to Leverage Competitor Rates in Salesforce Renewals

Why Competitor Rates Matter in Negotiations

Competitor rates are a valuable bargaining chip for several reasons:

• Salesforce knows the competition: Companies like Microsoft, HubSpot, and Oracle offer similar services, and Salesforce is well aware of their pricing and packages.
• The threat of switching: Simply showing that you are considering alternatives can push Salesforce to offer discounts or flexible terms.
• Salesforce’s market-driven approach: Salesforce often benchmarks its pricing against competitors to ensure it remains competitive, meaning that when you bring data on competitor rates, they must seriously consider it.

Step-by-Step Guide to Leveraging Competitor Rates

Below is a structured approach to effectively use competitor pricing during your Salesforce renewal process.

1. Research and Gather Competitor Information

Start by compiling relevant data about what competitors are offering. This will form the foundation of your negotiation.

• Identify Key Competitors: Focus on major Salesforce alternatives like Microsoft Dynamics 365, HubSpot, Oracle, or Zoho CRM. Knowing the most relevant alternatives will make your arguments more credible.
• Look for Comparable Packages: Make sure you compare apples to apples. Understand which packages or features from competitors closely match your current Salesforce setup. For example, Dynamics 365 offers packages with comparable features to Salesforce Sales Cloud—highlight these similarities.
• Gather Pricing Details: Get competitor pricing as precisely as possible. Competitor rate cards, publicly available pricing, or quotes from sales reps are all valuable sources. Note if competitors offer promotional discounts, extended free trials, or add-on incentives that Salesforce is not offering.
• Document Service Levels: It’s not just about price—document competitors’ service levels and SLAs. If Microsoft offers a 99.9% uptime guarantee compared to Salesforce’s 99.5%, it’s an essential factor.
• Research Customer Satisfaction: Investigate customer reviews and testimonials about the competitors. It strengthens your case if other clients are happy with the competitor’s pricing and support.

2. Build a Business Case

To effectively leverage competitor rates, you must build a strong business case internally and externally (with Salesforce).

• Internal Alignment: Ensure your internal stakeholders understand the potential cost savings and value of switching to a competitor. This will show Salesforce that your organization is serious.
  • Example: “If we switch to HubSpot, we estimate a 20% cost reduction in the first year, and HubSpot’s native integrations reduce our implementation costs by 15%.”
• Highlight Features: Identify features competitors have that Salesforce lacks or appears weaker in. For instance, if Microsoft Dynamics 365 offers a more flexible pricing model, highlight that as a key benefit.
• Calculate the Total Cost of Ownership (TCO): Understand Salesforce’s and competitors’ TCOs. Salesforce may be willing to reduce its price if it realizes its TCO is noticeably higher.
• Long-Term ROI Analysis: Present a long-term Return on Investment (ROI) analysis comparing Salesforce and its competitors. Highlight areas where you may save on maintenance costs, user training, or integration fees.
• Operational Impact: Discuss the operational impact of switching to a competitor. If a competitor promises better automation tools that can save your sales team 50 hours per month, make sure Salesforce knows that.

3. Present Competitor Rates in Discussions

How you present competitor information is crucial.

• Timing is Key: Present competitor rates when renewal discussions focus on pricing and terms. If done too early, it may seem unsubstantiated; too late, and you lose leverage.
• Be Transparent but Strategic: Share specific competitor names and pricing if Salesforce demands proof, but keep a few details vague to prevent them from discrediting your research. Instead of providing direct quotes, say something like:
  • “We’ve been offered a comparable package from Microsoft Dynamics at $X per user, which is significantly lower than our current rate.”
• Show Willingness to Walk Away: Don’t bluff if you have no intention of switching, but genuinely demonstrate that a competitor’s rate is attractive and consider that it can push Salesforce to counter-offer.
• Use Data Points and Metrics: When presenting competitor information, include data points like specific discount percentages, feature gaps, or cost per user. Providing detailed metrics demonstrates that your research is thorough and credible.
• Leverage Procurement Team: Involve your procurement team in these discussions to present competitor rates. Procurement professionals often have negotiation experience and can add credibility to your claims.

Read the case study for Salesforce renewals.

4. Use Salesforce’s Own Sales Tactics Against Them

Remember, Salesforce employs several pricing tactics that you can turn to your advantage:

• End-of-Quarter Pressure: Salesforce’s sales teams have end-of-quarter or end-of-year quotas. Present competitor rates and hint at your willingness to switch as the quarter nears its close. This time pressure can often make Salesforce more inclined to provide discounts.
• Bundling Comparisons: Salesforce likes to bundle multiple services (e.g., Sales Cloud, Service Cloud, Marketing Cloud). If you see competitors offering lower prices with bundles, use this to negotiate a bundle price with Salesforce.
  • Example: “HubSpot offers a marketing and sales bundle at 30% less than we’re paying for Salesforce. We need something similar to justify sticking with Salesforce.”
• Highlight Overlapping Products: If Salesforce offers overlapping or redundant products, such as Pardot vs. Marketing Cloud, leverage the fact that competitors may offer more streamlined solutions at a lower cost. Push Salesforce to consolidate their offerings at a discount.
• Request Custom Discount Structures: If a competitor offers tiered pricing or growth-based discounts, request Salesforce match these pricing structures to better align with your business growth projections.

5. Focus on the Added Value

While pricing is important, focusing on value-added aspects can also work in your favor.

• Implementation Support: Many Salesforce competitors offer free implementation or substantial discounts on setup. Use these offers to push Salesforce to improve its implementation terms.
• Training and Support: If competitors provide extensive training and support, leverage that in discussions. Request that Salesforce offer additional training hours or improved customer support to match what others are giving.
• Flexible Terms: Competitors may have more flexible contractual terms (e.g., opt-out clauses, flexible payment schedules). These aspects can be used to negotiate less rigid contracts with Salesforce.
• Custom Development Credits: Ask Salesforce for custom development credits. If competitors offer customized integrations as part of the package, Salesforce may agree to provide development hours or consulting credits at no extra cost.
• Licensing Flexibility: Highlight the licensing flexibility that competitors offer. If Microsoft provides pay-as-you-go licenses, ask Salesforce to consider dynamic licenses that scale with your usage instead of flat-rate pricing.

6. The Power of Third-Party Tools

Utilizing third-party negotiation consultants or tools can give you more weight.

• Negotiation Consultants: Engaging a third-party consultant who understands Salesforce’s pricing structure can bring expert advice on leveraging competitor rates.
• Cost Analysis Tools: Tools like ClearEdge or Zylo specialize in SaaS cost analysis and negotiation. Using these can add credibility to your competitor analysis.
• Benchmarking Services: Use benchmarking services to understand the average market rates for CRM software. This ensures you aren’t just relying on competitor information and market standards.
• Spend Management Platforms: Platforms like Flexera can provide a detailed analysis of your current Salesforce usage to help identify where competitor solutions could be more efficient or cost-effective.

7. Show Salesforce You’re Testing the Market

Being transparent about evaluating competitors is often enough to get Salesforce to adjust their pricing.

• Get Multiple Quotes: Involve your procurement team in collecting quotes from competitors. This shows Salesforce that you’re in serious discussions.
• RFP Process: Initiate an RFP (Request for Proposal) to gather concrete competitor pricing and demonstrate your willingness to consider other options.
• Benchmarking: Show that you’re benchmarking Salesforce’s offering against others in the market to drive them to match or beat competitor rates.
• Engage Decision Makers: Ensure key decision-makers are involved in your Salesforce meetings. Their involvement and insights about competitor offerings underscores the seriousness of your market testing.
• Document Comparative Analysis: Present a comparative analysis document detailing all of Salesforce’s advantages and disadvantages compared to its competitors. This transparent approach often forces Salesforce to reevaluate its pricing.

Example Scenario: Leveraging Microsoft Dynamics 365 in Salesforce Negotiations

Imagine you’re using Salesforce for CRM but are exploring options for your upcoming renewal.

1. Step 1—Research: Microsoft Dynamics 365 offers a comparable package for 20% less, with slightly different feature sets but solid reviews.
2. Step 2—Build a Business Case: Create an internal report outlining the potential cost savings, pricing, and implementation costs. Highlight Microsoft’s flexibility in its billing model.
3. Step 3—Negotiation: At the first renewal meeting, you mention evaluating Microsoft Dynamics 365 due to its lower cost. Salesforce pushes back, asking for proof. You share general information but emphasize that Dynamics has similar capabilities at a lower price point.
4. Step 4—Pressure Point: The Salesforce renewal coincides with the end of the fiscal quarter. Use that timing to increase urgency, hinting that Microsoft offers a limited-time discount.
5. Outcome: Salesforce counters by providing a 10% discount, extended training sessions, and flexible payment terms to match Microsoft’s offer.

• Additional Scenario: Suppose Zoho CRM is also under consideration. Present Zoho’s more flexible licensing terms and lower per-user costs. This forces Salesforce to consider reducing per-user fees and adding more flexibility to licensing terms.

Common Pitfalls to Avoid

While leveraging competitor rates can be a powerful strategy, there are a few pitfalls you should avoid:

• Bluffing Without Backup: Never bluff without having legitimate competitor data. Salesforce reps are skilled at probing the legitimacy of your claims.
• Ignoring Total Value: Focusing solely on price can be detrimental. Sometimes, the added value Salesforce offers in support and integration makes a higher price worthwhile.
• Missing the Timing: Introducing competitor rates too late in the negotiation process may mean you miss an opportunity to impact the renewal terms meaningfully.
• Focusing Only on Direct Costs: Avoid focusing solely on license costs. Competitors may offer value in reduced implementation times, better support, or enhanced features that must be considered holistically.
• Not Involving IT and End Users: Make sure your IT team and end users are involved in evaluating competitor products. Their insights could help validate or challenge competitor claims and add credibility to your discussions with Salesforce.

FAQ: How to Leverage Competitor Rates in Salesforce Renewals

What are competitor rates, and why are they useful in Salesforce negotiations?
Competitor rates are the pricing structures and discounts offered by alternative CRM vendors. They provide a reference point for evaluating Salesforce’s pricing, helping you determine if you’re getting value for your money and giving you leverage during renewal discussions.

How do I find reliable information on competitor rates?
You can research through vendor websites, industry publications, or analyst reports from Gartner. Networking with peers or using forums such as LinkedIn groups can also yield insights into real-world pricing scenarios.

Is it acceptable to mention competitor rates to Salesforce?
Yes, as long as the information is accurate and relevant. Present it as part of a broader conversation about aligning costs with your organization’s goals rather than as a direct challenge.

How can I use competitor rates to negotiate better terms?
Use competitor rates to request discounts, additional features, or better contract terms. For instance, if another vendor offers flexible user licenses, you can ask Salesforce to match this benefit.

What if Salesforce challenges the competitor rates I present?
Be prepared with detailed, credible sources. If Salesforce disputes the rates, ask them to justify their pricing and explain the additional value they provide over competitors.

Can competitor rates help me secure discounts beyond pricing?
Absolutely. They can be used to negotiate value-adds like extra support hours, advanced training, or extended payment terms.

How does timing impact the effectiveness of using competitor rates?
Timing your negotiation close to Salesforce’s fiscal year or quarter-end can increase your leverage. Sales teams are often more willing to negotiate to meet their targets during these periods.

What if I prefer not to switch vendors but still want better pricing?
You can emphasize your loyalty while presenting competitor rates as a benchmark. For example, let Salesforce know you’re committed but need pricing adjustments to justify continuing the partnership.

Do smaller businesses have the same leverage with competitor rates as larger ones?
Smaller businesses can still effectively use competitor rates by highlighting their long-term growth potential or the opportunity for Salesforce to establish a case study in their industry.

Can competitor rates impact long-term contract negotiations?
Yes, they can help secure fixed pricing for multi-year agreements, reducing uncertainty. Presenting competitor rates also demonstrates that you know market standards and expect similar value.

Should I involve a third-party consultant in negotiations?
A licensing consultant can validate competitor rates, identify hidden savings, and add credibility to your negotiation. This is particularly useful if you lack in-house expertise.

How do I address Salesforce’s unique features when comparing competitor rates?
Acknowledge Salesforce’s unique benefits and balance them with examples of competitors closing the gap. For instance, emphasize where competitors now provide similar functionality at a lower cost.

What role does usage data play when leveraging competitor rates?
Usage data helps you show Salesforce that their solution may be over-provisioned or underutilized. Combining this data with competitor rates can strengthen your case for a tailored pricing model.

Can competitor rates help in renegotiating terms mid-contract?
While challenging, it is possible to demonstrate a significant market shift or an apparent misalignment between Salesforce’s pricing and your evolving needs.

What risks should I be aware of when using competitor rates in negotiations?
Overstating competitor advantages or relying solely on pricing without addressing Salesforce’s value could harm your credibility. Always present a balanced view and back your claims with verifiable data.