Preparing for Salesforce Contract Renewal
- Review current usage and identify underutilized features
- Analyze spend vs. ROI to adjust contract terms
- Assess new features relevant to your business needs
- Discuss customizations and integrations for better alignment
- Evaluate support requirements and available packages
- Plan for negotiation with insights on usage and future needs
1. Start Early: Timing is Key
The earlier you start preparing for renewal, the better. Salesforce renewals often sneak up on businesses, leaving little room to strategize. A proactive approach gives you leverage in negotiations and helps prevent last-minute surprises.
Key points to start early:
- Preparation timeline: Begin assessing your Salesforce contract at least 6 months before the renewal date. This provides enough time to evaluate your current usage and needs.
- Gather key stakeholders: Ensure everyone involved in the decision-making process—such as IT, sales, finance, and legal teams—is aware of the renewal timeline.
- Document pain points: Take note of what worked and didn’t during the last contract period. This documentation will help you decide what changes you need during the renewal.
Example: Suppose your team found Salesforce’s Marketing Cloud underused compared to Sales Cloud. Noting this can guide adjustments or removal during renewal.
2. Evaluate Current Usage and Needs
Before diving into the renewal, it’s essential to understand how your company is using Salesforce today.
How to evaluate your current usage:
- Review feature utilization: Make a list of all Salesforce features and add-ons that you’re paying for. Then, see how much your team is using each one.
- Check seat licenses: Identify whether you have extra permits that aren’t being used. Salesforce licenses can be expensive, so eliminating unused ones could save money.
- Assess usage reports: Salesforce provides reports that show feature utilization. Use these reports to spot underutilized areas that you might want to renegotiate.
Example: You might discover that your customer support team isn’t fully using the Service Cloud licenses. By scaling back or reallocating these licenses, you could optimize your spending.
3. Benchmark Your Costs
Understanding how your current Salesforce pricing compares to the market is important. Benchmarking your costs allows you to see if you’re overpaying.
Steps to benchmark effectively:
- Gather competitive quotes: Research Salesforce costs online or consult with peers who use Salesforce. This will help you understand what others are paying for similar services.
- Look at industry standards: Costs often vary by industry and company size. Compare Salesforce’s cost structure with that of organizations similar to yours.
- Use third-party negotiators: Experts can sometimes provide cost benchmarks. Consider consulting a licensing advisor for a more in-depth analysis.
4. Set Clear Goals and Objectives
Before sitting at the negotiating table, be clear about what you want. Getting swept up in the conversation without well-defined goals is easy without gaining any real benefits.
Things to consider when setting goals:
- Cost Reduction: Are parts of your Salesforce package that don’t provide value? Perhaps you need a more favorable pricing structure.
- New Features or Add-ons: Would adding Salesforce CPQ or Marketing Cloud drive your business forward?
- Flexibility: Do you need more flexible terms regarding user licenses or payment plans?
Example Goals: Reduce your annual spending by 15%, get a more flexible license that allows seasonal expansion, or secure free training for new Salesforce features.
5. Understand Salesforce’s Sales Tactics
Salesforce sales teams are known for having specific tactics. Understanding these will help you stay ahead.
Common Salesforce tactics:
- End-of-quarter pressure: Salesforce tends to push renewals at the end of their fiscal quarters, often offering discounts to meet their internal sales goals.
- Bundling products: They may suggest bundling different Salesforce products at a discounted rate, which can sound appealing but may lead you to pay for things you don’t need.
- Urgency creation: Expect Salesforce to create a sense of urgency, indicating that discounts are temporary to pressure you into closing quickly.
Pro Tips to Navigate:
- Push back against end-of-quarter pressure if you’re not ready.
- Carefully evaluate the value of bundled products versus paying for them individually.
6. Prepare for Negotiation
Approaching the negotiation table without preparation is a recipe for spending more than you should. You need leverage and facts to secure the best deal.
How to prepare:
- Identify Pain Points: Highlight any issues you’ve had, such as feature downtimes, support issues, or underutilized products. Bring these to the negotiation to justify your requests.
- Know Your Data: Gather usage data to demonstrate underutilization and push for cost reductions.
- Ask for Offers: Don’t wait for Salesforce to price you. Make the first move and ask for better offers. Be ready to walk away if the terms don’t align with your objectives.
Example: If your team experienced several Service Cloud downtimes last year, leverage this as a reason to request a discount or a longer renewal period without a price increase.
7. Know Your Options: Multi-Year vs. Annual Contracts
Salesforce may offer multi-year contracts at discounted rates. Knowing the pros and cons of locking in for a longer term is essential.
Multi-Year Contracts:
- Pros: Discounts can be substantial, and you lock in the pricing, which shields you from annual increases.
- Cons: Limits flexibility. If your business changes, you might get stuck with products you don’t need.
Annual Contracts:
- Pros: More flexibility. You can scale up or down as needed.
- Cons: Prices might increase yearly, and there’s no long-term discount.
Example: If your company is growing fast and may outgrow current products, an annual contract would allow you to make changes without being tied down.
8. Understand the Impact of New Features and Editions
Salesforce frequently updates its offerings and adds new features, often creating new editions. Understanding these changes can be advantageous.
Evaluate new editions:
- Understand what’s available: Salesforce often rolls out new editions or updates existing ones. Make sure you understand how these align with your needs.
- Push for add-ons: If valuable new features are available, ask for them to be included in your renewal at the same price.
Example: If Salesforce introduces a new AI-driven feature for lead scoring, evaluate whether it can help your sales team and attempt to include it in the renewal.
9. Consider Total Cost of Ownership (TCO)
Don’t just focus on the subscription price; consider the total cost you incur using Salesforce.
Key TCO elements to evaluate:
- Implementation and Customization Costs: How much does your company spend on consulting services and implementation each year?
- Training Costs: Are you paying for Salesforce training separately?
- Integration Fees: Does Salesforce integrate seamlessly with your other tools, or are you paying for third-party integrations?
- Maintenance and Support Costs: How much are you spending on ongoing internal and external support?
- User Productivity Costs: Measure the impact on user productivity, primarily if the system isn’t being fully utilized due to a lack of training or cumbersome workflows.
Tip: If your TCO is too high, address these points with Salesforce. You might negotiate free training sessions, reduced consulting services costs, or additional support as part of your renewal package.
Example: Suppose you spend significantly on external consultants supporting Salesforce maintenance. In this case, you could push for an extended support plan from Salesforce, lowering your external maintenance costs.
10. Involve Legal Early
The legal review of a Salesforce contract can take a long time. Involving your legal team early is essential to avoid delays at the final stage.
What to focus on legally:
- Termination Rights: Ensure your legal team checks the conditions under which you can terminate the contract.
- Data Privacy: Review how Salesforce handles your data, mainly if you operate in regions with strict data privacy laws.
- Payment Terms: Ensure payment terms align with your cash flow needs, and confirm if there are penalties for late payments.
- Service Level Agreements (SLAs): Ensure that SLAs for uptime, support response times, and other critical elements meet your needs.
- Data Ownership and Access: Confirm your rights over data if you end the partnership, including the right to retrieve your data without additional costs.
Example: If you’re in the EU, you’ll want your legal team to review Salesforce’s compliance with GDPR and how your company’s data will be handled. Additionally, you might want to confirm that, in the event of termination, Salesforce will provide all data in a usable format.
11. Build Relationships with Salesforce Reps
Good relationships can go a long way in getting you a better deal.
How to strengthen these relationships:
- Regular Check-ins: Connect with your account rep regularly, not just at renewal time. This builds a rapport that could work in your favor.
- Understand Their Goals: Salesforce reps have targets, and if you know what they need, you may find ways to create a win-win scenario.
- Invite to Company Events: If appropriate, inviting your Salesforce rep to company events can strengthen your connection and help you build a partnership that goes beyond simple transactional deals.
- Provide Feedback: Be proactive about providing feedback on the product. Showing that you are invested in making Salesforce work for your business can make your rep more eager to help during negotiations.
Example: If your Salesforce rep needs to hit a certain quota by the end of the quarter, you might negotiate a discount in exchange for an early commitment. Alternatively, you can give helpful product feedback to highlight the areas where the tool has supported your success.
12. Engage an Expert
If the Salesforce renewal process feels overwhelming, consider hiring an expert. Negotiation experts or third-party consultants can help you get the best deal, especially if your contract is complex.
Benefits of hiring an expert:
- Specialized knowledge: They understand Salesforce licensing in and out and know where the margins for negotiation are.
- Benchmarking expertise: They can provide insights into what similar companies are paying, which can help you determine whether you’re overpaying.
- Handling communication: Experts can communicate with Salesforce on your behalf, which can be particularly useful if you want to maintain a neutral relationship with your sales rep.
- Improving Efficiency: Consultants have streamlined approaches that ensure you follow all the steps, saving time and preventing potential renewal oversights.
Additional considerations for hiring experts:
- Fee Structure: Ensure you understand how consultants charge—whether a fixed fee, a percentage of your savings, or a combination of both.
- Success Stories: Ask for case studies or success stories to verify their track record. Consultants who have worked with similar organizations can leverage this experience to your benefit.
- Post-Renewal Support: Find out if the consultant will provide any support post-renewal to help you optimize usage or address any issues that arise.
Example: Hiring a consultant who recently negotiated a similar-sized Salesforce deal for another company in your industry can give you insights and leverage you otherwise wouldn’t have.
FAQ on Preparing for Salesforce Contract Renewal
What should I check before renewing my Salesforce contract?
Look at usage data, evaluate ROI, and identify necessary features or services that meet your business goals.
Why is it essential to review Salesforce contract terms?
Reviewing helps ensure that your contract aligns with current needs and you’re only paying for what you use.
How can I assess if I’m getting value from Salesforce?
Compare your spending against the ROI, considering whether Salesforce’s features contribute to your business goals.
Should I negotiate the Salesforce contract terms?
Yes, Salesforce often allows adjustments based on usage patterns, changing needs, and potential budget constraints.
What should I discuss with my Salesforce representative?
Discuss current usage, potential for feature adjustments, integrations, and support options that align with your goals.
Is it possible to customize Salesforce features?
Yes, Salesforce provides customization options to fit unique business processes and improve user experience.
How can I find out about new Salesforce features?
Regularly review Salesforce updates and consult your account representative for relevant new offerings or feature enhancements.
Should I consider third-party integrations for Salesforce?
Yes, integrating Salesforce with other tools can improve workflow. Identify critical integrations that fit your operations.
What kind of support packages does Salesforce offer?
Salesforce offers several support levels, from basic to premium. Based on your team’s experience and needs, choose a package.
How can I predict future Salesforce requirements?
Assess company growth, future projects, and planned expansions to estimate potential Salesforce needs for the upcoming term.
Why is user feedback important in contract renewal?
Feedback reveals feature usefulness, potential gaps, and areas where adjustments may improve employee experience and productivity.
Can unused Salesforce features be removed from the contract?
Yes, discuss removing underutilized features with Salesforce to reduce costs, focusing only on what your team needs.
What’s the best way to track Salesforce ROI?
Use Salesforce analytics or other tracking methods to measure its impact on revenue, efficiency, and overall customer satisfaction.
How often should I review my Salesforce contract?
A yearly review, aligned with renewal, helps keep the contract aligned with changing business requirements and goals.
Is there a benefit to committing to a longer Salesforce term?
Extended terms might secure lower pricing but should only be considered if Salesforce remains crucial to your long-term plans.
