Salesforce Renewal Case Study

Salesforce Renewal Case Study

• Challenge: The company faced high renewal costs with unused features.
• Solution: Analyzed usage data to identify underutilized services.
• Negotiation: Presented data to secure discounts and remove unnecessary features.
• Outcome: Achieved 20% cost savings and aligned services with business needs.
• Lesson: Leveraging data and early negotiation leads to significant savings.

Salesforce Renewal Case Study

Salesforce renewals aren’t just about keeping the exact services you already have. Instead, they’re opportunities to reassess your current setup and make strategic changes that benefit your organization.

Key points to consider during the renewal process:

• Review Current Usage: Are you utilizing all the licenses and features you’re paying for?
• Assess Organizational Changes: Has your company’s structure or needs evolved since your last contract?
• Identify Opportunities for Cost Savings: Are there areas where you could negotiate better terms or reduce costs?

An effective Salesforce renewal starts with these questions and builds from a place of knowledge and preparation.

Case Study Overview

Look at a fictional mid-sized company, TechFirm, facing an upcoming Salesforce renewal. Like many organizations, TechFirm was concerned about potential price increases and wanted to optimize its Salesforce spending.

Here’s how it approached the situation and achieved a successful outcome.

1. Thorough Pre-Renewal Assessment

TechFirm’s first step was to conduct a detailed review of its Salesforce usage. They gathered a team of IT specialists, department leads, and procurement experts to analyze its current contracts.

Actions they took:

• Reviewed License Utilization: They found that around 20% of their licenses were not being actively used, providing an opportunity for optimization.
• Feature Utilization Check: They identified that certain features, like Pardot and advanced analytics, were underutilized by specific teams.
• Stakeholder Input: By involving multiple departments, TechFirm ensured they understood which tools were critical and which could be scaled back.

This approach allowed TechFirm to go into renewal negotiations with a clear picture of what was working and what wasn’t. It also identified areas where they could reduce costs by eliminating unused features.

2. Leveraging Internal Data for Negotiation

Having a complete understanding of their Salesforce utilization, TechFirm decided to take a proactive approach to the negotiations. Instead of waiting for the renewal quote, they started preparing early.

Key strategies they employed:

• Usage Reports as Leverage: They created detailed reports on feature utilization and requested reductions for the underutilized features.
• Competitive Analysis: TechFirm analyzed competitors in the market, including alternative CRM options, to gather pricing comparisons. This gave them leverage to counter Salesforce’s initial renewal offer.
• Defined Objectives: The negotiation team set clear goals, such as reducing their overall spending by 10% and securing an extension on promotional pricing they had benefited from in the previous contract.

By coming to the negotiation table armed with concrete data and well-defined goals, TechFirm effectively positioned itself to counter Salesforce’s initial pricing.

3. Engaging a Third-Party Advisor

TechFirm brought in a third-party advisor with expertise in Salesforce licensing and negotiations to ensure they were fully prepared.

Benefits of using an advisor included:

• Industry Insights: The advisor provided information on the latest trends in Salesforce pricing and discounts being offered to similar companies.
• Negotiation Experience: Having handled multiple similar negotiations, the advisor helped TechFirm navigate common Salesforce tactics, like the pressure to close before the end of the fiscal quarter.
• Challenging Salesforce’s Proposals: The advisor challenged Salesforce’s proposed increases, resulting in a 5% reduction on the original renewal price.

Third-party advisors can add value by providing external insights and negotiation expertise that can lead to better outcomes.

4. Timing and Creating Leverage

One of TechFirm’s most effective strategies was timing the negotiation carefully. Salesforce operates on a quarterly sales cycle, so sales teams are often pressured to meet quarterly targets.

TechFirm timed its negotiations to align with Salesforce’s end-of-quarter deadline, ensuring its account manager was motivated to make concessions.

Timing tactics used included:

• Early Engagement: They began discussions six months before the renewal date, providing ample time for back-and-forth.
• End-of-Quarter Push: They strategically delayed some conversations until the end of Salesforce’s fiscal quarter, leveraging the sales representative’s need to close deals.

By understanding Salesforce’s internal cycles, TechFirm was able to create leverage and secure additional discounts.

5. Bundle and Feature Optimization

TechFirm also considered bundling options to optimize costs. While reviewing their current setup, they realized they were paying for multiple Salesforce add-ons that could be included in a bundle for a lower overall cost.

Steps they took:

• Evaluate Bundles vs. Standalone Pricing: They worked with Salesforce to compare their current licensing structure with available bundles.
• Negotiated Customized Bundles: TechFirm negotiated a custom bundle that included core CRM, analytics, and marketing tools. This reduced their overall spending while retaining the tools needed by each department.
• Scaling Back on Non-Essential Add-Ons: Features like advanced support, which were rarely used, were scaled back in favor of savings.

By bundling and reassessing which add-ons were critical, TechFirm achieved significant cost savings while maintaining the tools that added value.

6. Stakeholder Alignment and Sign-off

To finalize the renewal, TechFirm ensured all critical stakeholders aligned on the terms and Salesforce’s final offer.

How they achieved alignment:

• Regular Updates: Throughout the negotiation process, the renewal team regularly updates executives and department leads to maintain alignment.
• Approval of Final Offer: Once a final offer was on the table, they met with all stakeholders to review the proposal and gain acceptance.
• Highlighting Cost Savings: They highlighted the savings and improvements made during the negotiation to demonstrate value.

Stakeholder alignment helped TechFirm ensure no last-minute surprises and that all relevant parties supported the final decision.

7. Establishing Long-Term Relationship Goals

Instead of focusing solely on the immediate renewal, TechFirm aimed to establish a longer-term partnership with Salesforce. This approach proved advantageous.

Key points of their relationship strategy:

• Multi-Year Commitment: They negotiated for a three-year renewal term, which provided pricing stability and reduced the frequency of renewals.
• Defined Success Metrics: They set joint success metrics with Salesforce to ensure ongoing value delivery. This included quarterly business reviews to assess the platform’s effectiveness.
• Future Discount Opportunities: By indicating their intention to expand their Salesforce use in coming years, TechFirm also negotiated the potential for future discounts.

Positioning the renewal as part of a long-term relationship allowed TechFirm to achieve immediate cost savings, longer-term stability, and growth potential.

8. Scenario Planning for Different Outcomes

TechFirm understood that negotiations could take multiple directions, so it engaged in scenario planning to prepare for any outcome.

Steps for scenario planning included:

• Best-Case Scenario: They identified the most favorable terms, including maximum discounts and extended promotional pricing, and considered necessary actions to achieve them.
• Worst-case scenario: TechFirm also mapped out a scenario where they faced a significant price increase. They defined their walk-away point and alternative solutions, such as migrating to another CRM.
• Middle-Ground Scenario: They planned for a likely scenario where they achieved moderate discounts but needed to make trade-offs regarding features and services.

Benefits of scenario planning:

• It ensured that the team was prepared to respond effectively to Salesforce’s proposals, regardless of their favorable or unfavorable nature.
• It clarified acceptable and unacceptable terms, making decision-making during the negotiation more efficient.

9. Emphasizing Value Realization

During the renewal discussions, TechFirm didn’t just focus on cost reduction but also emphasized maximizing value from their Salesforce investment.

Actions they took to realize value:

• Defined Key Business Outcomes: They tied Salesforce’s features to specific business outcomes, like improved customer retention and streamlined sales processes.
• Quarterly Business Reviews: TechFirm proposed quarterly business reviews to assess their usage and ensure they got the most out of the platform.
• Training and Adoption: They also requested training credits to ensure their teams could leverage the new features they invested in.

TechFirm shifted the conversation from purely price-based discussions to mutual benefits by focusing on value realization, strengthening their negotiation position.

10. Engaging Multiple Salesforce Contacts

Like many large organizations, TechFirm took advantage of Salesforce’s multiple contacts, which could influence its renewal.

How they approached this:

• Sales Account Executive: TechFirm’s primary point of contact was the Sales Account Executive, but they also engaged with others to broaden their influence.
• Customer Success Manager (CSM): They worked with their CSM to gather insights about usage and discuss the alignment of Salesforce features with their business needs.
• Sales Leadership: TechFirm escalated discussions to Sales Leadership when additional approvals or pricing flexibility were needed.

By engaging multiple contacts, TechFirm ensured that their renewal discussions were visible and that they leveraged different parts of Salesforce to advocate for their needs.

11. Reviewing the Salesforce Product Roadmap

Another critical aspect of TechFirm’s renewal strategy was understanding the Salesforce product roadmap. This allowed them to make informed decisions about future feature adoption.

Key actions taken:

• Product Update Meetings: TechFirm attended product update webinars and meetings hosted by Salesforce to understand upcoming changes.
• Alignment with Future Needs: They assessed whether new features would align with their evolving business needs, allowing them to plan for adoption or avoid unnecessary spending.
• Negotiating Future Access: They negotiated access to beta features and ensured that their renewal contract included provisions for adopting new features without additional cost during the contract term.

I understand the product roadmap allowed TechFirm to make more strategic decisions and avoid unnecessary future expenses.

12. Customizing Support Levels

TechFirm also reassessed its support needs during the renewal. Although initially subscribed to premium support, upon review, it realized that its internal team could handle most of the issues without needing Salesforce’s highest level of support.

Steps taken to adjust support:

• Support Utilization Analysis: TechFirm reviewed the number of support tickets raised and how often they relied on Salesforce’s premium support. They found that usage was low.
• Adjusted Support Level: They negotiated a reduction to a lower-tier support package, which still met their needs but resulted in substantial cost savings.
• On-Demand Upgrades: They included provisions that allowed them to temporarily upgrade their support during periods of significant activity, like product launches or system migrations.

By customizing their support level, TechFirm was able to reduce costs without compromising their ability to resolve issues efficiently.

13. Ensuring Flexibility in Contract Terms

TechFirm recognized the importance of having a contract that could adapt to changes in their organization’s needs over the agreement’s term.

How they ensured flexibility:

• Scalable Licensing: They negotiated for scalable licensing options, allowing them to add or remove licenses annually without significant penalties.
• Review Clauses: They included mid-term review clauses to assess if their Salesforce package was still suitable and make adjustments if necessary.
• Lock-In Protection: They sought protection against steep price increases by including a cap on annual price increases for additional licenses or features.

Flexibility in contract terms meant that TechFirm’s Salesforce solution could evolve alongside their business without incurring excessive costs.

FAQs

What is the first step in preparing for a Salesforce renewal?
The first step is conducting a detailed license usage audit. Analyze which licenses are actively used, underutilized, or entirely unused. This data is critical for shaping your negotiation strategy.

How can I avoid overpaying for licenses I don’t use?
Identify redundant licenses through user activity tracking. For example, if certain team members rarely log in or only view data, downgrade their licenses to lower-cost options like read-only licenses.

When should I start planning for a Salesforce renewal?
Begin at least 3–6 months before the renewal date. Early planning provides time to assess needs, negotiate terms, and explore alternatives if necessary.

Is it possible to renegotiate terms with Salesforce?
Yes, it is possible to renegotiate. Salesforce is often open to adjusting terms, especially if you clearly understand your business needs and provide usage data as evidence.

What should I do if Salesforce proposes new features during renewal?
Evaluate the proposed features based on your current goals. For instance, if they offer Marketing Cloud but you already use another email marketing platform effectively, it may not add value to your operations.

How do I address an auto-renewal clause in my contract?
Review the contract terms months before the auto-renewal date. Contact Salesforce to discuss adjustments or opt-out if necessary. Ignoring this can result in being locked into terms that no longer serve your business.

Can I negotiate discounts for my Salesforce renewal?
Yes, discounts can often be negotiated during discussions with Salesforce representatives, leveraging loyalty, historical usage patterns, and potential future growth.

What if my business needs have changed since the last renewal?
Communicate these changes to Salesforce. For instance, if your company has downsized, discuss adjusting your license quantity and removing unused features to save costs.

How can I evaluate whether I need to upgrade my Salesforce licenses?
Assess the features of higher-tier licenses against your specific goals. For example, upgrading to a permit with Einstein Analytics may offer significant benefits if your sales team struggles with forecasting.

What are the risks of not addressing unused licenses?
Ignoring unused licenses can lead to a wasted budget and reduced ROI. For example, paying for Marketing Cloud licenses that no one on your team uses adds no value to your business.

Is it better to sign a multi-year agreement or stick to annual renewals?
Multi-year agreements can offer cost savings, but they reduce flexibility. Before committing, consider your company’s growth trajectory and potential changes.

What role does usage data play in negotiations?
Usage data is crucial. For example, showing that 30% of your licenses go unused strengthens your case for cost reductions or adjustments during renewal talks.

Should I involve an external consultant in the renewal process?
Yes, consultants bring expertise and can uncover opportunities for savings. For instance, they may identify underutilized features or better licensing structures suited to your operations.

How do I align Salesforce renewal terms with long-term business goals?
Engage stakeholders from different departments to ensure the licenses and features you renew align with current and future needs, such as planned expansions or shifts in strategy.

What should I do if Salesforce renewal terms don’t meet my needs?
Present alternative options backed by data. For example, if Salesforce’s terms are inflexible, you might explore similar CRM solutions and use them as leverage to negotiate better terms.