Salesforce Negotiation Strategies: Navigating Complexities for Optimal Outcomes.

Preparing for Effective Salesforce Negotiations

Like most things in life, preparation leads to better results and with some negotiation tips you will be better suited to navigate the negotiation process. 

Know what you have, what you want, and who you speaking with. 

Get these three topics down and you will already be ahead of where most companies start negotiating with Salesforce. 

Maximizing Your Salesforce Licenses: Are you using what you bought? 

Most SaaS licenses are underutilized. This means you have shelfware somewhere in your agreement. These are licenses you purchased but are not currently using. The first thing you need to get a clear view of your Salesforce usage.  Are you using all the items in your contract? Do you know all the features that are included in your edition? 

You will not be able to downgrade your edition from the one you have. So if you are on Enterprise, you can not go to Pro, or if you are on Unlimited you can not go to Enterprise. So have a look to make sure you are fully utilising what you have before increasing spend. We will touch on Einstein 1 in another blog post. 

Make sure to map out your own needs and decision criteria. 

Go around your teams, and ask them what they are missing. Have they identified any features or products worth adding to your system based on discussions with Salesforce? Salesforce is great at marketing and multi-thread sales so it is a high likelihood that someone has something on their wishlist. Write that down and stress test it.

•  Why do they need it?
•  How long would it take to implement?
•  What resources are needed to make it useable?
• What results will the additional feature or product drive in the organisation and can you quantify that in a metric?
• Are there viable alternatives from competing vendors? 

If your team has some Salesforce products on their wishlist, simplify it to a use case, and define the decision criteria around that use-case. Maybe there is a Salesforce partner that has created something better or similar to a better price and it could be found the AppExchange. The AppExchange is filled with amazing products, and some of them get bought by Salesforce and folded into their suite. Often the same app with a new name. Make sure you know the competitive landscape. 

So you have the wish list, you have the use case, and you have defined the decision criteria. Add a timeline to it and decide when your organisation would need it. Any good salesperson will drive urgency, and often by coming up with a “good deal”. But if you can not implement and get actual usage, it will become a sunk cost. This will torpedo any good deals.

Salesforce Discounting Strategies: Understanding Levels 0 to 5.

Before we go into these six levels, know one thing. If you are a small fish there are limits on what you will get approved. A rule of thumb will be that if you spend more than $500,000 a year on one product you will get attention. That doesn’t mean that if you have a $50,000 a year contract there is nothing you can do. It’s just that the band we are operating in will be smaller. 

Level 0 is your Account Executive. 
More often than not they are creating interest and when you say yes, they are as much trying to get the deal done internally as they have been trying to sell you. The challenge is that the better the AE, the more prepared they have been in not giving you too much too early, and will make it look like they gave everything they could. In our experience, the less experienced AEs give much more in the beginning, and the old foxes keep their discounts tight until you really is asking for it. The AE often feels like they’ve exhausted all options because at Level 0, they truly have.

Level 1 to Level 3 are the managers.
Sales Managers, Directors, Regional Vice Presidents, and even Area Vice Presidents sometimes fall into the Level 3 category. Each level has a couple of percentage points they can give. Depending on the size of your company and the size of your contract, you will get paired accordingly.

Marc Benioff (Salesforce founder and CEO) is often engaged with the CEOs of the most famous and well-known brands, and so the pyramid goes down. But Marc is way above L5. This doesn’t mean that the managers, directors, and president are not important. They are the ones that care more about you because, for every level you go up, the impact that your company is having on their book of business is going down. So you need them in your ring to deal with the next level. The most important one. 

Level 4. Deal Desk. 
Deal Desk is 9 out of 10 times where the puck stops in Salesforce negotiations. Deal desk is the internal team that is set there to protect Salesforce pricing in the market. AEs would give away the deal for 10k if it meant they would hit some accelerators. Deal desk is there to stop bad selling behaviour. Any discount that goes above Level 3 needs a business justification for Deal desk to approve.

You need to make sure you create stronger relationships in Level 0 to 3 so they can take the fight with Level 4. This is where you would have needed to start a couple of months before in order to create leverage during negotiations, have you made it easy for L0-L3 to give L4 the business justification? There will be multiple rounds of negotiations and if you are an existing customer, then Salesforce knows that you won’t switch CRM every other month. Deal Desk is unemotional and there to not give discounts. 

Level 5 The Executives
Depending on the product and region who this person is varies. But it is also when you get into bigger deals. Think above the guideline of 500k per product. The only time L5 would lean on L4 when it is a smaller contract would be if the region is not performing and hitting its growth numbers for that period. The highest likelihood of that is in the end of the fiscal year, or sometimes at the end of a quarter. 

Key Tactics for Salesforce Negotiation Process

The main job of your Account Executive is to expand its footprint on your account, or in other words, increase Annual Contract Value. Having a multi-year contract will get them more money, but is secondary. And depending on the size of their portfolio they might not even care if you remain a customer. However, the managers and the renewal team will care. 

Divide and Conquer, or Multi Level Selling:

Salesforce will use a divide and conquer strategy during negotiations by dealing with different members of your team separately. The problem often is that there are members on your internal team who want to get things from Salesforce to do their job better. So they are in effect a liability to the process. To counter this, maintain a unified front and ensure all communications go through a single point of contact.

You also need to agree internally on what you want to get during this negotiation, and what could potentially be later products or services. Salesforce does not need to know this roadmap.

A single point of contact and a clear roadmap prevent confusion and keep your negotiation strategy focused and consistent, enabling you to present a united stance on what you need from Salesforce contracts.

A Compelling Event: 

It is very common knowledge that you get the best deals at the end of the fiscal year.  This is true for every SaaS company. A huge portion of Salesforce’s total annual revenue is coming in Q4. Classic Hockey Stick. 

Don’t worry though if your need for a start date is in the middle of the year, you can leverage their quarterly ends and make sure to structure your deal to maximum value. 

The biggest mistake companies make is that they are overbuying licenses in the beginning. The bigger you are as an organisation, the less important the fiscal year is. At Enterprise level prices timing becomes less important because your deal will move the needle in every quarter. Your contract value needs to be in the bracket of millions of dollars yearly. Smaller than that and the fiscal calendar becomes more important to create leverage. 

One way to create leverage is to work backwards from a compelling event. That event will be crucial for how your Account Executives forecast and if you can find out when your opportunity is set to close, then that becomes an important time for the sales team. An Account Executive that commits a deal, needs to deliver that deal. The compelling event is a balance, because if there truly is a go live date for your organisation, then the leverage pendulum can go back to the sales team. 

SELA Negotiation, Salesforce Enterprise License Agreements

Effectively leveraging Salesforce Enterprise License Agreements, or what Salesforce call SELA can lead to more favourable contract terms. But use cautiously. 

Why cautiously? Most of the time SELAs are driven by the business users in your organisation together with the Salesforce Account team. If you sit in procurement you don’t want to hinder business, and the pitch is flexibility. That flexibility comes with a cost.

So truly dig down in the use cases, is there an economy of scale component that will be favourable for your organisation? Or would it be better to pay as you go with slightly more paperwork down the line? It is not like Salesforce will say no to your money next month or quarter. Maybe the unit prices will be greater, but adoption higher. 

And anyone who says Salesforce ELA, has probably written their blog post with AI. No one in the know calls it that. 

Common Pitfalls in Salesforce Negotiations and How to Avoid Them

Like we touched on before the most common pitfall is that you do not have a clear overview of what you need, and when. Start there and you have already come further than most organisations. Timing. If you are renewing your contract and start renewal discussions less than 6 months before, there is a limit to what leverage you can create.

Click here to get a notification when our post about practical tips to successfully negotiate Renewals that customers can take advantage of. 

More is More, Understand Business Needs

Are you the one that came up with that use case or was it Salesforce? Who will own this product internally if you buy it? When will you implement it? The most common tactic from Salesforce is to try to bundle. You will get a better unit price for the product you need if you also try out the product that seems interesting. Often a product someone in your organisation has said they would want to try.  

Salesforce Contract Negotiation Services

Salesforce contract negotiation services can be invaluable for navigating the complexities of Salesforce contracts. The complexity is by design. Having someone in your corner to guide you through that complexity will naturally help you move faster and with less risk. If Salesforce’s founder Marc Benioff would sit at the table, how would he structure the contract? That is how we at SaaSed.co is looking at it. 

The Path to Maximizing Salesforce Value: Continuous Insights and Preparation

To become skilled in negotiations with Salesforce, one must continuously adapt and learn, with an added advantage if specializing in Salesforce contracts. It’s pivotal to align business requirements with the evolving landscape of Salesforce solutions. With over 1000 SKUs that is changing names and new end of life products every year this is becoming increasingly difficult.

Understanding the difference between must-haves versus nice-to-haves sharpens negotiation focus. Put that in an internal roadmap ensuring that business goals remain at the forefront. This will help determine if you are the one changing the criteria, or if it is Salesforce. 

Effective negotiation tactics stem from this alignment, enabling parties to navigate discussions with clarity and purpose. Preparation, paired with a deep understanding of these elements, sets the stage for successful negotiations with Salesforce.

How Strategic Negotiation Ensures Mutual Success for You and Salesforce

When one party might want the opposite of the other it can be hard to find mutually beneficial ground. The challenge is that if you as an organisation fail to paint the big picture on future growth and opportunity with your Account Executive, they might want to squeeze every incremental revenue they can out of you because next year they might not have you as a prospect.

We know how to balance this. Presenting a unified front helping our customers negotiate with Salesforce.  We know what is important for Salesforce customers and how Salesforce typically operates.  It is a balance, but with the right insights and preparation, you will have a fruitful ROI-rich relationship with Salesforce.