Salesforce Renewal Negotiation Checklist

Salesforce Renewal Negotiation Checklist

• Review current licenses and usage.
• Identify unused or underused licenses.
• Assess your company’s future needs.
• Gather alternative vendor pricing for leverage.
• Engage early with Salesforce account reps.
• Negotiate discounts for long-term contracts.
• Address upcoming Salesforce feature changes.
• Document all negotiated terms.

Salesforce Renewal Negotiation Checklist

1. Review Your Current Salesforce Usage

Before you start negotiating, it’s essential to have a deep understanding of your current Salesforce usage. This step involves examining your licenses, features, and actual consumption.

• Identify Unused Licenses: Check if there are any licenses you’re paying for but not using. Salesforce licensing can be costly, so unused licenses mean unnecessary expenses.
  • Example: Suppose your company purchased 200 Salesforce licenses, but only 160 are being actively used. This presents an opportunity to reduce the license count in your renewal.
• Assess Feature Usage: Look at all features included in your current plan. Are your teams making the most of these features, or are there functionalities that go untouched?
  • Example: If you have Salesforce Marketing Cloud but only use basic email features, you might consider downgrading or renegotiating for a lighter version.
• Document Your Current Costs: List all the costs related to your Salesforce plan, including licenses, add-ons, support fees, etc. Knowing your spending baseline gives you a starting point for negotiations.
• Data Usage Analysis: Check your data storage and API usage. Salesforce often has hidden costs related to data overages. Make sure you are not exceeding your storage limits or incurring additional fees.
  • Example: If your data usage is high, consider negotiating for increased storage limits at a reasonable price rather than paying unpredictable overage charges.

2. Define Your Future Requirements

Understanding where your business is headed helps you decide what you’ll need from Salesforce in the coming year or two.

• Anticipate Growth or Reduction: If your company plans to grow, you might need more licenses or upgraded features. Conversely, if downsizing is expected, you might reduce the number of licenses.
  • Example: A business planning to expand to new regions may need more Service Cloud licenses to support customer service needs.
• Evaluate Add-Ons: Salesforce offers various add-ons—like CPQ (Configure, Price, Quote) or Tableau—that can be included in your plan. Make a list of add-ons your business could benefit from in the future.
  • Example: If your sales team has struggled with manual quoting processes, it might be wise to include CPQ in the negotiation.
• User Feedback: Talk to your internal users. Are there features they love? Are there areas where Salesforce falls short? This feedback will be invaluable when negotiating for new features or support.
• Roadmap Alignment: Ensure your Salesforce solution aligns with your company’s roadmap and upcoming projects. Understanding your business’s upcoming product launches, geographic expansions, or new services can help you anticipate your needs.
  • Example: If your marketing department plans a significant campaign requiring better automation tools, consider negotiating for Marketing Cloud upgrades or related add-ons.

3. Know Your Renewal Timeline

Timing is crucial in Salesforce negotiations. To make the most of it:

• Start Early: Salesforce tends to push for renewals at the end of their fiscal year (usually January). Start negotiations at least 3-6 months before your contract expires.
  • Example: If your contract ends in March, start conversations in October. This gives you the leverage to push back and ensure Salesforce’s urgency doesn’t rush you into a bad deal.
• Set Internal Deadlines: Make sure your team is aligned on negotiation timelines. Set internal milestones for completing the evaluation, meeting with Salesforce, and finalizing negotiations.
• Renewal Notification Awareness: Salesforce usually provides a renewal notice 90 days before expiration. Use this notice as a signal to begin serious conversations.

4. Understand Salesforce’s Fiscal Year and Quota Pressures

Like many large vendors, Salesforce operates on a fiscal year where sales representatives must meet their quotas.

• Salesforce Fiscal Year End: Their fiscal year ends in January, which means that in Q4, Salesforce reps are more willing to offer discounts to close deals and meet their targets.
  • Tip: The best time to push for discounts is in Q4 when reps are often most willing to negotiate.
• Sales Reps’ Quota Pressures: Use this knowledge to your advantage. Ask your Salesforce account manager about ongoing promotions or discounts and understand what motivates them.
  • Example: If you’re negotiating in December, you might say, “We’re looking to renew, but we need better pricing to make it work for us this year.”
• Quota Adjustments for Big Clients: If your organization is a key account for Salesforce, there might be flexibility for quota adjustments or deals specially tailored to you. Make sure to emphasize your value as a long-term customer.

Read about Multi-year Renewals for Salesforce agreements.

5. Benchmark Pricing and Terms

Understanding the broader market will help you identify whether you’re being offered a competitive deal.

• Talk to Peers: Contact other companies that use Salesforce to learn about their pricing structure, any discounts they received, and how their contracts compare to yours.
• Hire a Consultant: If your Salesforce contract is large and complex, you might benefit from hiring a licensing consultant. They often know the ins and outs of Salesforce’s pricing and can help ensure you get the best deal.
• Use Pricing Tools: Some tools and websites provide estimated Salesforce pricing. Use these to understand if your quote aligns with market averages.
  • Tip: Consider using resources like “ClearEdge Partners” or “Gartner” for insight into average costs.
• Industry Benchmarking Reports: Make use of industry-specific benchmarking reports. These reports provide helpful data on how companies in your sector negotiate their Salesforce agreements.
  • Example: If companies in your industry typically secure a 20% discount, ensure you get at least the same benefit level.

6. Evaluate Contract Terms Beyond Price

Price is only one piece of the puzzle. Reviewing the contract terms is equally important.

• Flexibility: Consider flexible terms such as adding or removing licenses based on changing needs.
  • Example: If you have a seasonal workforce, negotiate for the flexibility to scale licenses up or down without a long-term commitment.
• Payment Terms: Can payments be spread out instead of being due upfront? Cash flow is important; you might negotiate to pay quarterly instead of annually.
• Termination Clauses: Understand the termination terms. Can you terminate the service without heavy penalties if it doesn’t meet your needs?
  • Example: Aim for a clause that allows for early termination if certain agreed-upon Service Levels (SLAs) are not met.
• License Mobility: Negotiate for license mobility, which allows you to reallocate licenses from one department or team to another without additional charges.
  • Example: If one team decreases in size but another expands, you should be able to move those licenses without penalty.
• Audit Rights: Understand Salesforce’s audit rights in your contract. Sometimes, Salesforce can audit your use, leading to unexpected costs. Negotiating audit parameters can prevent future surprises.

7. Explore Alternative Products

Salesforce isn’t the only CRM out there. Use this to your advantage.

• Identify Competitors: Alternatives like Microsoft Dynamics, HubSpot, or Zoho CRM could meet your needs. Even if you plan to stay with Salesforce, mentioning that you’re considering alternatives can give you leverage.
  • Example: During negotiation, say, “We’re comparing Salesforce to other CRMs to ensure we have the best solution and pricing.”
• Trial Competitor Products: A free trial of a competitor’s software gives you an honest comparison point and additional leverage in negotiation.
  • Tip: If a competitor offers a lower price or extra features, use this information when discussing price reductions with Salesforce.
• Get Competing Quotes: Obtain a quote from a competitor even if you don’t plan to switch. A real quote gives you a strong basis to ask Salesforce for lower rates.
  • Example: “We received a competitive quote from HubSpot that includes similar features at a 15% lower rate. We want Salesforce to match or beat this offer.”

8. Negotiate for Value Adds

Often, Salesforce reps can provide additional value beyond just cost reductions.

• Additional Training: Ask for more training hours or extra support. This is especially important if your team is struggling to adopt Salesforce features.
  • Example: “We need our team to better understand Salesforce capabilities. Can we include additional training hours in the renewal package?”
• Support Level Upgrades: If you’ve experienced issues with essential support, negotiating a move to premium support without extra cost can be valuable.
• Include Sandbox Licenses: A sandbox can help test changes before going live if your team works on multiple projects. Request additional sandbox licenses at no extra cost.
• Dedicated Support Engineer: If your system is critical to daily operations, ask for a dedicated support engineer who can help troubleshoot complex issues quickly.
  • Example: “To ensure operational stability, we’d like to include a dedicated support resource familiar with our environment.”
• Adoption Services: Salesforce sometimes offers professional services to help with adoption. To improve user adoption rates, request that these services be included in your renewal at no additional cost.

9. Understand Your Leverage

• Contract Size: The larger the contract value, the more leverage you have. Salesforce will work hard to retain large accounts.
• Longevity: If you have been a loyal Salesforce customer for several years, use this as a point to push for better pricing.
  • Example: “We’ve been loyal Salesforce customers for 5 years, and we’d like to continue the relationship, but we need some financial adjustments to make it work.”
• Escalate if Needed: If you’re not getting anywhere with your current Salesforce representative, consider escalating to their manager. Managers are often willing to offer more concessions to keep the client happy.
• Bundle Negotiations: If your company uses other Salesforce products or subsidiaries, bundle them together in the negotiation. This can lead to better discounts and pricing packages.
  • Example: “We are also looking at renewing Tableau. Can we get a combined discount for Salesforce CRM and Tableau licenses?”

10. Practice Walking Away

Sometimes, the best negotiation tool is the willingness to walk away. Be prepared to:

• Set Your Limit: Before you negotiate, establish a maximum budget. If Salesforce won’t meet your budget, be prepared to consider alternatives.
• Leverage Internal Champions: If other stakeholders in your company want to stick with Salesforce, use their influence internally to oppose budget constraints.
  • Example: “We’re at our budget ceiling, and we have an executive alignment that we will consider other vendors if this pricing doesn’t work.”
• Evaluate Consequences: Understand the potential consequences of walking away from Salesforce, including integration issues, data migration challenges, and employee retraining. Having a contingency plan will give you confidence during negotiations.
  • Tip: Knowing you have a viable alternative can give you the upper hand.

11. Documentation and Legal Review

Once you’re at the final stages, ensure everything is documented.

• Document Concessions: Any promises made verbally during negotiation should be documented in the contract. Salesforce might promise flexibility or discounts, but they must be enforceable in writing.
• Legal Review: Have your legal team review all terms and conditions. Pay particular attention to auto-renewal clauses and termination fees.
  • Example: Contracts sometimes have auto-renewal clauses with a 7-10% price increase. Negotiate this clause to ensure there are no surprises at renewal.
• Master Service Agreement (MSA): Ensure the MSA reflects all negotiated terms and clearly defines renewals, licensing adjustments, and service expectations. This is your foundation for holding Salesforce accountable.
• Service Level Agreements (SLAs): Verify that SLAs are documented and enforceable. Strong SLAs help protect your organization if Salesforce does not meet performance expectations.

12. Final Negotiation Meeting

Schedule a final negotiation meeting with your Salesforce representative once you have all the information.

• Prepare a Counteroffer: Salesforce’s initial quote is rarely their best offer. Always prepare a lower counteroffer than you expect to end up paying.
• Include Stakeholders: Having stakeholders from finance, legal, and key departments in the meeting adds weight to your requests and gives you more power in negotiation.
  • Example: Bringing in your CFO to the final negotiation signals to Salesforce that pricing is a serious concern.
• Create a Negotiation Playbook: Develop a playbook that includes key terms, deal-breakers, and counterarguments. This will ensure consistency during discussions, especially if multiple people are involved.
• Use Silence Strategically: Don’t rush to fill silences. After making a request, stay quiet and let the Salesforce rep consider it. Strategic silence can sometimes lead to better offers as reps feel the need to fill the gap with concessions.

Summary Checklist

Here’s a quick summary of your Salesforce renewal negotiation checklist:

• Review Usage: Identify unused licenses and assess feature usage.
• Future Requirements: Know your growth plans and add-on needs.
• Timeline: Start early and set internal deadlines.
• Leverage Salesforce Fiscal Pressures: Know when Salesforce is motivated to give discounts.
• Benchmark: Compare your pricing to others and consider consultants.
• Contract Terms: Consider flexibility, fair payment terms, and sensible termination clauses.
• Explore Alternatives: Use competitor products as leverage.
• Negotiate Value Adds: Ask for extra training, support, or sandbox licenses.
• Understand Leverage: Know your importance to Salesforce.
• Walk Away: Be willing to consider alternatives.
• Legal Review: Get everything in writing and have legal experts review it.
• Final Meeting: Prepare a counteroffer and involve stakeholders.

The key to successful Salesforce renewal negotiation is preparation and understanding what you need versus what you’re paying for. With this checklist, you’ll be well-equipped to enter negotiations confidently and get the best value for your investment.

FAQ: Salesforce Renewal Negotiation Checklist

What is the first step in preparing for a Salesforce renewal negotiation?
The first step is to review your current contract, licenses, and usage data. Understand what your team uses and identify unused or underused licenses that could be reduced or restructured during negotiations.

How do you determine if you’re overpaying for Salesforce?
Look at your usage reports and compare them to the number of licenses you’re paying for. For instance, if you have 100 permits but only 75 are active, you’re likely overspending and can negotiate adjustments.

When should renewal discussions with Salesforce begin?
Start discussions at least three to six months before your contract ends. This gives you ample time to review options, gather necessary data, and negotiate without feeling rushed.

What are some key factors to consider when negotiating a Salesforce renewal?
Consider your business’s future needs, current feature usage, and budget. Also, take note of any alternative solutions you’ve researched and Salesforce’s ability to meet your evolving requirements.

Can Salesforce pricing be negotiated?
Yes, Salesforce pricing is flexible. Discounts can be negotiated based on the length of your contract, additional purchases, or the size of your account. Always request better terms and push for value-added services.

How do you use alternative vendors as leverage in negotiations?
Research competing solutions like HubSpot or Microsoft Dynamics and gather quotes. Presenting these to Salesforce during discussions can pressure them to offer better pricing or terms to retain your business.

What is the significance of Salesforce’s feature roadmap in negotiations?
Understanding upcoming feature changes helps you assess if Salesforce will meet your needs in the long term. For example, if a critical feature is being retired, you may negotiate for replacements or cost reductions.

What should you ask Salesforce about contract flexibility?
Ask about the ability to adjust licenses or features mid-term. For example, negotiate terms allowing you to scale up or down based on business changes without penalties.

How can you address unused features in your Salesforce contract?
Unused features should be identified and removed to cut costs. For instance, if no team members use a premium tool like Salesforce CPQ, request its removal during renewal.

What role do multi-year contracts play in Salesforce renewals?
Multi-year contracts can offer better pricing but lock you in for longer. They are ideal if your business is stable and you are confident Salesforce will meet your needs during that period.

How do you ensure all negotiated terms are honored?
Document every term in the final contract, including discounts, additional services, or special clauses. Review the contract with your legal team or procurement experts to ensure nothing is missed.

What are the risks of not renewing a Salesforce contract on time?
Delaying renewal can result in service disruptions, reactivation fees, or losing negotiated pricing. Start early to avoid these complications and keep operations running smoothly.

Can Salesforce offer training as part of renewal negotiations?
Yes, training sessions can often be added to the deal, especially if you are onboarding new users. This ensures your team is equipped to maximize the platform’s value.

How do you handle dissatisfaction with Salesforce support?
If support has been subpar, bring this up during negotiations. Request improved service levels or additional support resources as part of the renewal agreement.

Why should you involve a Salesforce licensing consultant in negotiations?
Experienced consultants can analyze your usage, identify cost-saving opportunities, and guide you through negotiation. They ensure you secure terms that align with your business needs.