Salesforce License Negotiation – A Beginner’s Guide

Salesforce License Negotiation can be very difficult to reach a succesful outcome in.

But why does this process tend to be so challenging, and how can you secure the best possible terms for your organization? Is it possible to turn these negotiations into a strategic advantage rather than a headache?

In this comprehensive guide, we will demystify Salesforce license negotiation and equip you with the insights and strategies you need to strike not just any deal, but the right deal.

Salesforce, one of the world’s leading Customer Relationship Management (CRM) platforms, operates on a subscription-based licensing model. This means you pay a periodic fee (usually annually or monthly) for each user who accesses the system.

Overview of Salesforce Licensing Model

The Salesforce licensing model is designed to offer various options to cater to different user needs within an organization. Depending on the complexity of tasks and the level of access required by each user, several types of licenses are available, each with distinct features and pricing. Salesforce licensing agreements are typically structured around the number of users and the edition of the product you choose.

Different Types of Licenses and Their Uses

1. Salesforce Lightning Licenses: These are the most common licenses to access the full range of Salesforce CRM functions. They are further divided into several editions – Essentials, Professional, Enterprise, and Unlimited – each with different levels of customizability, features, and support.
2. Salesforce Platform Licenses: These licenses are for users who need to access custom apps but not standard CRM functionality. They are more affordable than Lightning licenses and are ideal for users who don’t need full CRM access.
3. Salesforce Community Licenses: These are for users outside your organization, such as partners, customers, or members of the community, who need access to certain Salesforce features.
4. Salesforce Chatter Licenses: These licenses allow users to access Chatter, Salesforce’s collaboration tool, without access to any other objects.
5. Salesforce Identity Licenses: These licenses provide identity services, including single sign-on, mobile identity, and connect.

Understanding the types of licenses and their uses is crucial to ensure that your organization is only paying for the access it needs, and it forms the basis for effective Salesforce license negotiation.

Salesforce License Negotiation – A Beginner’s Guide

The Salesforce Sales System

At the core of Salesforce’s negotiation process is its sales system. This system is designed with one primary goal: to maximize revenue from every account. It’s a well-oiled machine, with each part playing a specific role in the overall process. Your sales representative, the business desk, and even the fiscal year all play a part in this system.

Understanding how this system works is crucial to successful negotiation with Salesforce. It’s not just about getting the best price; it’s about understanding how Salesforce operates and using that knowledge to your advantage. By understanding the Salesforce machine, you can better prepare for your negotiation and ultimately secure a better deal.

Here are the key points to understand about the Salesforce sales system:

• Your Sales Representative: Your sales rep is your primary point of contact with Salesforce. However, they are often not the decision-maker regarding pricing and contract terms. Understanding their role and limitations can help you navigate the negotiation process more effectively.
• The Business Desk: The business desk is the Salesforce team with the authority to approve pricing and contract terms. Your sales rep must go to them for approval on any deal. Understanding their role can help you strategize your negotiation approach.
• Salesforce’s Fiscal Year: Salesforce’s fiscal year plays a significant role in the negotiation process. The company is often more willing to negotiate at the end of its fiscal year, which ends on January 31st. Understanding this can help you time your negotiation for the best possible outcome.

In the following sections, we’ll delve deeper into these components, providing you with the knowledge you need to navigate your negotiation successfully. Stay tuned as we explore the role of your sales representative, the function of the business desk, Salesforce’s divide-and-conquer tactics, the importance of organizational alignment, the implications of Salesforce’s fiscal year, and the differences between new and existing customers. We’ll also discuss the complexity of Salesforce’s product and service offerings and the role of sales incentives in these offerings.

By the end of this article, you’ll have a comprehensive understanding of Salesforce’s negotiation process, empowering you to negotiate more effectively and secure the best possible deal for your organization.

Understanding Your Sales Rep’s Role

When negotiating with Salesforce, your primary point of contact will be your sales representative. However, it’s crucial to understand their role and position within the Salesforce hierarchy to navigate the negotiation process effectively.

Position in the Salesforce Hierarchy

Your sales rep is part of a larger team within Salesforce. They are often the face of the company to you, but they are not the ultimate decision-makers. Here are some key points to understand about their position:

• Your sales rep is typically the first point of contact and your advocate within Salesforce.
• They are part of a larger team that includes sales engineers, customer success managers, and the business desk.
• The business desk is the team with the authority to approve pricing and contract terms. Your sales rep must go to them for approval on any deal.

Limited Information and Its Implications

Your sales rep may not have all the information about Salesforce’s pricing and contract terms. This has several implications:

• Your rep may be unable to answer all your pricing and contract terms questions.
• They may need to consult with the business desk or other team members to get answers to your questions.
• This can slow down the negotiation process and create a sense of uncertainty.

Importance in the Negotiation Process

Despite these limitations, your sales rep plays a crucial role in the negotiation process:

• They are your advocate within Salesforce and can help push for better pricing and contract terms.
• They can provide valuable insights into Salesforce’s products and services.
• Understanding their role and limitations can help you strategize your negotiation approach.

In summary, your sales rep is essential to your negotiation with Salesforce. Understanding their role, the limitations of their position, and their importance in the negotiation process can help you navigate your negotiation more effectively.

The Salesforce “Business Desk”

The “Business Desk” plays a pivotal role in the Salesforce ecosystem. It’s a term that refers to the team within Salesforce that has the authority to approve pricing and contract terms. Understanding the Business Desk’s role and how to communicate effectively with it is crucial for successful negotiation.

Introduction to the Business Desk

The Business Desk is a critical player in the Salesforce sales system. Here’s what you need to know about it:

• The Business Desk is the team within Salesforce that approves pricing and contract terms.
• They work behind the scenes, and you typically won’t interact with them directly.
• Your sales rep is your link to the Business Desk.

Decision-Making Authority

The Business Desk holds considerable decision-making authority within Salesforce. Here’s how that plays out:

• The Business Desk has the final say on pricing and contract terms.
• They can approve or reject any deal based on Salesforce’s policies and goals.
• Your sales rep must go to the Business Desk for approval on any deal.

Communicating with the Business Desk

While you won’t typically communicate with the Business Desk directly, it’s essential to understand how to communicate effectively with them through your sales rep:

• Be clear and concise in your requests. Your sales rep will relay these to the Business Desk.
• Be prepared to justify your requests. The Business Desk will want to understand why you’re asking for specific pricing or contract terms.
• Be patient. The Business Desk deals with many deals simultaneously, so responses may not be immediate.

The Salesforce Business Desk is a critical player in the negotiation process. Understanding their role, their decision-making authority, and how to communicate effectively with them can help you navigate your negotiation more effectively.

Divide and Conquer Tactics

One of the tactics that Salesforce may employ during the negotiation process is the “divide and conquer” strategy. Understanding this tactic and how to counter it can be crucial for maintaining negotiation control.

Overview of Divide and Conquer Tactics

Salesforce’s divide-and-conquer tactics involve creating divisions within your organization to gain an advantage in the negotiation. Here’s how it works:

• Creating Divisions: Salesforce may try to make divisions within your organization by interacting with different departments separately. This can lead to inconsistent communication and conflicting interests.
• Gaining Advantage: By creating divisions, Salesforce can potentially gain an advantage in the negotiation. Different departments may have other priorities, and Salesforce can leverage these differences to its advantage.

Impact on Your Negotiation

Understanding these tactics is vital because they can significantly impact your negotiation. Here’s how:

• Conflicting Interests: Divide and conquer tactics can lead to conflicting interests within your organization, making it harder to present a united front in the negotiation.
• Loss of Control: If Salesforce successfully creates divisions, it can gain more control over the negotiation process.

Countering Divide and Conquer Tactics

Fortunately, there are strategies you can use to counter divide-and-conquer tactics and maintain control of the negotiation:

• Maintain Consistent Communication: Ensure that all departments within your organization communicate consistently with Salesforce. This can help prevent divisions from forming.
• Present a United Front: Ensure your organization presents a united front in the negotiation. This can help counter divide-and-conquer tactics and maintain control of the negotiation.
• Align Your Interests: Align the interests of different departments within your organization. This can help prevent divisions and ensure that your organization works towards a common goal in the negotiation.

In summary, understanding Salesforce’s divide-and-conquer tactics and how to counter them can be crucial for maintaining negotiation control. You can navigate your negotiation more effectively by maintaining consistent communication, presenting a united front, and aligning your interests.

The Importance of Organizational Alignment

When negotiating with Salesforce, organizational alignment is crucial. Many organizations face a common issue of lack of alignment, which Salesforce can leverage to its advantage during negotiations.

Common Lack of Alignment

Many organizations struggle with alignment, particularly regarding Salesforce usage plans. Here’s what you need to know:

• Different departments within an organization may have different needs and priorities regarding Salesforce usage.
• This lack of alignment can lead to confusion and conflicting interests during negotiations.
• Salesforce can leverage this lack of alignment to its advantage during negotiations.

Aligning Salesforce Usage Plans with Business Objectives

Aligning your organization’s Salesforce usage plans with its business objectives is crucial for successful negotiation. Here’s why:

• It ensures that all departments within your organization work towards the same goal.
• It helps to present a united front during negotiations, making it harder for Salesforce to leverage divisions within your organization.
• It ensures your organization gets the most value from its Salesforce subscription.

The Role of a Salesforce Roadmap

A Salesforce Roadmap can be a valuable tool for achieving alignment and successful negotiation. Here’s how:

• A Salesforce Roadmap outlines your organization’s Salesforce usage plans and aligns them with your business objectives.
• It provides a clear vision for your organization’s Salesforce usage, helping to prevent confusion and conflicting interests.
• It can be a valuable tool during negotiations, helping to justify your organization’s requests.

The Salesforce Fiscal Year

Understanding Salesforce’s fiscal year and its implications for negotiation is also crucial.

Understanding Salesforce’s Fiscal Year

Salesforce’s fiscal year runs from February 1st to January 31st. Here’s why this is important:

• Salesforce is often more willing to negotiate at the end of its fiscal year as it’s trying to meet its sales targets.
• This can potentially give your organization an advantage during negotiations.

Renewing Early with a January Effective Date

Renewing your Salesforce subscription early with a January effective date can have both benefits and drawbacks:

• Benefits: Renewing early can potentially give you more leverage during negotiations, as Salesforce is often more willing to negotiate at the end of its fiscal year.
• Drawbacks: However, renewing early can mean committing to a new contract before you’re ready.

Organizational alignment and understanding of Salesforce’s fiscal year are crucial for successful negotiation. You can navigate your negotiation more effectively by aligning your Salesforce usage plans with your business objectives and understanding the implications of Salesforce’s fiscal year.

New vs. Existing Salesforce Customers

When it comes to negotiation, Salesforce treats new and existing customers differently. Understanding these differences can significantly impact your negotiation strategy.

Different Treatment for New and Existing Customers

Salesforce often treats new and existing customers differently during negotiations. Here’s what you need to know:

• New Customers: Salesforce often offers attractive deals to new customers to get them on board. These deals can include discounted pricing and additional services.
• Existing Customers: For existing customers, Salesforce focuses on renewals and upselling. The deals offered to existing customers are often less attractive than those offered to new customers.

Implications for Your Negotiation Strategy

The different ways Salesforce treats new and existing customers have several implications for your negotiation strategy:

• New Customers: If you’re new, you should take advantage of Salesforce’s attractive deals. However, these deals may not be available when you renew your subscription.
• Existing Customers: If you’re an existing customer, you should focus on negotiating the best deal possible during renewals. Be prepared to push back against upselling if it doesn’t align with your business objectives.

Understanding Salesforce’s Products and Services

Salesforce offers a complex array of products and services. Understanding these offerings and their impact on your negotiation is crucial.

The Complexity of Salesforce’s Offerings

Salesforce’s product and service offerings are complex and varied. Here’s what you need to know:

• Salesforce offers various products and services, each with pricing and contract terms.
• The complexity of Salesforce’s offerings can make understanding what you’re getting and how much it costs challenging.

Importance of Your Negotiation

Understanding Salesforce’s product and service offerings is crucial for your negotiation. Here’s why:

• It helps you know what you’re getting and how much it costs.
• It allows you to negotiate more effectively for the products and services that align with your business objectives.

Role of Sales Incentives

Sales incentives play a significant role in Salesforce’s product and service offerings. Here’s how:

• Salesforce sales reps are incentivized to sell certain products and services.
• These incentives can influence the deals your sales rep offers you.

Conclusion

In conclusion, understanding the differences between new and existing customers, the complexity of Salesforce’s product and service offerings, and the role of sales incentives can significantly impact your negotiation with Salesforce.

By understanding these points, you can negotiate more effectively and secure the best possible deal for your organization. If you need help in your Salesforce Negotiation, Redress Compliance can help!