Salesforce Renewal Incentives

Salesforce Renewal Incentives

• Review your current usage to identify unused licenses.
• Compare offers from competitors for leverage.
• Ask for multi-year discounts to secure better rates.
• Request credits for future services or training.
• Negotiate bundled services to add value without increasing cost.

Salesforce Renewal Incentives

1. Salesforce’s Perspective

To negotiate effectively, you need to understand Salesforce’s motivations. Knowing why they might be willing to offer incentives can be a powerful tool in your negotiation toolkit.

Salesforce wants to achieve the following:

• Customer Retention: Salesforce costs money to lose customers. Retaining a customer is always more cost-effective than acquiring a new one.
• Multi-year Commitments: Salesforce prefers multi-year contracts to ensure predictable revenue streams.
• Upsell Opportunities: They often try to sell additional services or products during renewals.

If you understand these points, you can position your negotiation as a win-win—offering Salesforce something they want in exchange for better incentives for you.

2. Timing is Key

The timing of your renewal negotiations can significantly affect the deal you can get.

• End of Quarter or Fiscal Year: Salesforce sales reps are often under pressure to meet targets. Reaching out near the end of a quarter or fiscal year can work to your advantage.
• Start Early: Start renewal discussions at least 6-9 months before your contract expires. This gives you enough time to build leverage, evaluate alternatives, and avoid being rushed.
• Consider Salesforce’s Fiscal Calendar: Salesforce’s fiscal year ends in January. Pushing for deals in December or early January might help as sales reps look to close renewals.

Read on how to avoid unexpected Salesforce renewal costs.

3. Evaluate Your Current Usage and Requirements

Before you negotiate, assess how your company is currently using Salesforce. This will give you a clear picture of what you need and help you avoid paying for features or users you don’t use.

• User Analysis: Are all licenses being actively used? If not, this is an opportunity to negotiate a reduction.
• Product Analysis: Are there Salesforce products you’re paying for but not using to their full potential? Consider downsizing or consolidating to save costs.
• Future Requirements: Consider what your business will need in the next year or two. Would new Salesforce features or add-ons be helpful? This could be a point of negotiation.

4. Leverage Alternatives and Build Negotiating Power

Salesforce knows that switching platforms can be difficult once you’re integrated into their ecosystem. However, showing them you evaluate other solutions can significantly increase your leverage.

• Get Competitive Quotes: Consider alternative CRM platforms, such as Microsoft Dynamics, HubSpot, or Zoho CRM. Get quotes from these competitors and mention them during negotiations.
• Pilot Programs: You can launch small pilot programs to test alternative CRMs. This demonstrates seriousness and pressures Salesforce to offer competitive rates to keep your business.
• Internal Cost Analysis: Understand the cost and impact of moving to another CRM. Highlighting and comparing the switching cost with Salesforce’s renewal price can be a useful negotiation tactic.

5. Ask for Specific Incentives

When negotiating, be explicit about what you want. Here are some common incentives you can request during Salesforce renewals:

• Discounts on Licenses: If your usage hasn’t grown as expected, request a significant percentage reduction in your per-license cost.
• Bundled Products and Features: Negotiate for free add-ons or features you currently pay for.
• Tiered Pricing: If you plan to increase your licenses over time, ask for tiered pricing, which offers discounts as your usage grows.
• Training Credits: Ask for additional training credits to help your team make the most of Salesforce features.
• Premier Support: Push for upgraded support packages, including faster response times or access to premium features.
• Free Development Sandboxes: Development environments are often an additional cost. Ask Salesforce to include a few free sandboxes in your package.
• Price Cap on Future Increases: Get Salesforce to agree to a cap on future price increases, which can protect you from significant cost hikes when you renew again.

6. Build a Relationship with Your Salesforce Account Executive

A positive relationship with your Salesforce account executive (AE) can make all the difference during renewals. They can be your advocate within Salesforce and help get the approval for incentives.

• Keep Regular Contact: Don’t wait until renewal to connect with your AE. Build a consistent relationship with them throughout the year.
• Be Honest About Your Needs: Communicate your challenges, budget constraints, and needs. This will help your AE position a better offer for you.
• Leverage the AE’s Quota: Understand that AEs have quotas to meet. If you know when their sales quotas are due, you can negotiate at a time when they might be more flexible.
• Gain Insight from the AE: Ask the AE for insights about how other clients in similar industries use Salesforce effectively. Use this information to negotiate added value that aligns with industry standards.
• Involve the AE Early: Engage your AE early during renewals and other significant events like company IT strategy changes. Keeping them in the loop can work to your advantage during negotiations.

7. Use Internal Champions and Escalation

If negotiations stall, leverage internal champions and escalate the matter to higher Salesforce representatives.

• Internal Champions: If senior leaders in your organization believe in Salesforce and want to keep it, have them attend renewal meetings to strengthen your position.
• Escalate to Higher Authorities: If you’re not getting the desired results, escalate the matter to a Salesforce Regional Manager or higher. Higher-ups often have more authority to approve discounts or other benefits.
• Use Customer Success Managers (CSMs): CSMs can sometimes help bridge communication gaps or offer additional support during negotiations. They can also pressure the sales team to deliver better options.
• Reference Your Loyalty: Remind Salesforce of your company’s loyalty and tenure. Pointing out the length of your relationship with Salesforce can help your case for better incentives and discounts.

8. Multi-year Contracts and the Benefits They Offer

Salesforce loves multi-year agreements. They offer predictability, which is very attractive to their finance teams. You can use this preference to negotiate better incentives.

• Discounted Pricing: In exchange for committing to a multi-year deal, ask for a substantial discount.
• Price Locks: Secure a commitment that your pricing won’t increase year-over-year during the contract.
• Flexibility Clauses: Negotiate flexibility in the agreement to adjust user numbers, especially if your business scales up or down.
• Option for Early Termination: Request a clause that allows early termination under certain circumstances. This could be helpful in case your needs change dramatically.
• Annual Review Flexibility: Negotiate the ability to review and adjust your service annually rather than locking everything in for multiple years, providing some leeway for growth or reduction based on your needs.

9. Salesforce’s Pricing Structure

Salesforce’s pricing can be complex. To negotiate effectively, it’s crucial to understand the different components that make up your total cost.

• License Types: Salesforce offers various license types (e.g., Sales Cloud, Service Cloud, Platform-only licenses). Understand what each one covers and only pay for what you need.
• Add-ons and Features: Be clear on which add-ons you truly need and which are optional. Salesforce bundles many features, but not all may be essential for your organization.
• Support Costs: Salesforce’s support tiers (standard, premier, signature) come with different price tags. Evaluate what level of support your business truly needs.
• Capacity-Based Pricing: Salesforce sometimes charges based on storage or usage capacity. Ensure you’re not overprovisioned in these areas.
• API Call Limitations: Understand the API call limits in your package. If your business uses integrations heavily, these limits can lead to additional costs. Negotiate for higher API limits without extra fees.

10. Negotiation Tactics and Tips

Negotiation isn’t just about asking for a discount. It’s also about using the right tactics to improve your leverage.

• Anchor High: Start negotiations with a request for a higher discount than you realistically expect. This gives you room to move down to your actual target.
• Walk Away Power: Be willing to walk away if your demands aren’t met. Salesforce reps know that the risk of losing a client entirely often results in more favorable offers.
• Ask Open-ended Questions: Instead of asking yes/no questions, use open-ended questions to get more information and create room for negotiation.
  • Example: “What can we do to make this renewal more mutually beneficial?”
• Bundling for Savings: Offer to bundle multiple Salesforce products or features to achieve a broader discount. For example, adding Marketing Cloud while renewing Sales Cloud can sometimes lead to extra discounts.
• Use Competitor Names: Include competitor names in your negotiation discussions. Even if you have no intention of switching, letting Salesforce know that you are considering alternatives can make them more flexible.
• Highlight Business Risks: Emphasize any business risks associated with continuing at current prices. This could include mentioning budget restrictions or possibly scaling back operations if costs aren’t manageable.
• Utilize Usage Reports: Ask Salesforce to provide detailed usage reports. Use those reports to challenge any unnecessary components in the renewal offer. Highlight underutilized features and use them to reduce pricing.

11. Examples of Successful Negotiations

Hearing about what others have achieved can help you identify opportunities for yourself.

• Case Study 1: A mid-sized company secured a 15% discount by starting negotiations early and highlighting its discussions with a Salesforce competitor.
• Case Study 2: A large enterprise obtained additional support features for free by agreeing to a three-year contract. They leveraged the company’s predictable growth to convince Salesforce that they would add more licenses over time.
• Case Study 3: Another customer negotiated a full year of Marketing Cloud for free because they showed Salesforce they were testing alternatives with similar capabilities.
• Case Study 4: A customer negotiated quarterly payments instead of annual fees to help with cash flow issues. This was possible because they highlighted the unpredictability of their revenue cycles.
• Case Study 5: A company secured free onboarding and training for new employees by demonstrating that user adoption was critical for the continued use of Salesforce. The argument was that better training would ultimately help both sides succeed.

12. Common Pitfalls and How to Avoid Them

• Starting Too Late: Many companies wait until the last moment to start renewal negotiations. Start early to give yourself enough room for back-and-forth discussions.
• Not Knowing Your Usage: If you don’t know precisely how to use Salesforce, you may overpay for unnecessary licenses. Always do a full audit.
• Failing to Escalate: If your account executive isn’t offering what you need, escalate to a higher authority. Regional managers often have more negotiation room.
• Ignoring Alternatives: Even if switching CRMs is daunting, ignoring competitors can hurt your leverage. Always be aware of what else is out there.
• Overcommitting on User Licenses: Avoid committing to a fixed number of user licenses without flexibility. Overcommitting can lead to paying for seats you don’t need. Negotiate the option to adjust user counts periodically.
• Lack of Internal Alignment: Before negotiations start, ensure all stakeholders within your company are aligned. Nothing weakens your position more than internal disagreements during renewal discussions.

FAQ: Salesforce Renewal Incentives: How to Negotiate for Better Benefits

What are Salesforce renewal incentives?
Salesforce renewal incentives are benefits offered during contract renewals. These may include discounts, additional features, free services like consulting or training, and more favorable terms to retain your business.

Can Salesforce contracts be negotiated?
Salesforce is open to negotiations, especially for large-scale or long-term clients. Negotiations can address pricing, service packages, or contract terms to better fit your needs.

When should I start renewal negotiations with Salesforce?
Begin at least six months before your contract ends. This allows time to analyze your current use, discuss changes, and consider other options.

How do I prepare for Salesforce renewal negotiations?
Start by reviewing your current Salesforce usage and identifying any gaps. Check for unused licenses or features—research competitive CRM options to strengthen your position and outline your goals for the negotiation.

What can I do with unused licenses?
Unused licenses can be a strong point in negotiations. You can request a reduction in license count, credits toward other Salesforce products, or additional services to maximize your investment.

Are multi-year contracts better for renewal?
Multi-year contracts often come with discounts but lock you into a longer commitment. They’re ideal if your business has stable CRM needs and values cost predictability.

Can I negotiate for additional services during renewal?
You can request services like additional training sessions, consulting hours, or improved support tiers. These extras can add value without increasing your budget.

How can competitors offer help in negotiation?
Presenting quotes or offers from other CRM providers can be a powerful tool. It shows Salesforce you’re evaluating alternatives, which may lead them to offer better discounts or terms.

Does Salesforce offer flexibility in pricing?
Salesforce can adjust pricing based on factors like contract length, product suite usage, or the size of your business. Negotiations can lead to more favorable terms tailored to your situation.

What role does my Account Manager play in negotiations?
Your Salesforce Account Manager is your primary advocate within the company. Building a good relationship with them can help you access better deals or escalate requests if needed.

What should I prioritize during negotiations?
Focus on aligning the contract with your actual needs. This may involve reducing unused licenses, securing discounts, or gaining access to new features that support your business goals.

How do I negotiate if Salesforce denies my requests?
Stay firm and escalate the issue to a higher-level representative or negotiation team—present data to support your case and remind Salesforce of your long-term value as a client.

Can I ask for trials of new features during renewal?
Yes, asking for trials of new features or products can help you test their suitability before committing. This is especially useful if you’re considering expanding your Salesforce usage.

What happens if I don’t negotiate my Salesforce renewal?
Without negotiation, you may overpay for licenses or services you don’t need. Contracts may auto-renew at standard rates, often higher than negotiated rates.

Should I involve a third-party consultant in the negotiation process?
Engaging a consultant with Salesforce expertise can provide valuable insights and strategies. They can help you identify negotiation areas and understand Salesforce’s pricing models.