Case Study – Salesforce Negotiation Service US Manufacturing Company (Midwest) Saves 25% on Salesforce Sales Cloud and CPQ Licensing
Background
The client, a mid-sized manufacturing company based in the U.S. Midwest, had ~8,000 employees and about $5 billion in annual revenue.
It relied on Salesforce Sales Cloud as the backbone CRM for its sales teams and used Salesforce CPQ (Configure, Price, Quote) to generate quotes for its industrial products.
The company operated on a transactional Salesforce licensing model (standard subscriptions, not a Service Level Agreement, or SELA), with approximately 1,200 Sales Cloud Enterprise Edition users and 300 CPQ users.
Salesforce was critical for managing its dealer network and direct sales pipeline, but over time, the cost had grown substantially.
As renewal approached, the manufacturing firm sought to reduce its Salesforce spend and address inefficiencies in license utilization.
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Challenges
- Rapid Cost Escalation: Over the last three years, the company’s Salesforce costs have nearly doubled due to the addition of new users and extra products. The CPQ module, in particular, carried a high price per user. The upcoming renewal quote from Salesforce was set to increase the cost by another 15%, straining the IT budget.
- Over-licensing & Shelfware: A detailed review of usage revealed that approximately 200 of the 1,200 Sales Cloud user licenses were assigned to employees who rarely or never logged in. Similarly, some CPQ licenses were allocated to users who didn’t actually configure quotes. This shelfware (paid-for but unused licenses) meant the firm was paying for functionality it wasn’t fully utilizing.
- Misaligned License Types: The firm had only purchased full Sales Cloud Enterprise licenses, despite having a portion of users in primarily read-only or support roles. Salesforce offers lower-cost license types (like Platform or read-only licenses). Still, the company hadn’t taken advantage of mixing license tiers – resulting in paying for premium licenses for low-use cases.
- Lack of Renewal Leverage: Since the company was not under a large enterprise agreement, Salesforce treated the renewal in a transactional manner. The account representative’s initial discount was modest (around 10% off the list price) and came with a warning that any renewal lapse would result in the loss of that discount. The manufacturer felt it had limited leverage and insight into what a fair price or discount should be.
How Redress Compliance Helped
- License Utilization Analysis: Redress Compliance conducted a thorough audit of Salesforce usage data. They identified 200 inactive Sales Cloud users and over 50 CPQ users with minimal activity. This analysis provided hard evidence of shelfware, which Redress used to justify a reduction in licenses. The team recommended immediately reclaiming or eliminating these unused licenses before renewal, ensuring the company would not renew contracts for users providing no value.
- Right-Sizing and License Tier Optimization: The Redress advisors worked with the client’s sales operations team to segment users by role and usage needs. They discovered that roughly 300 users only needed basic access (e.g., to view dashboards or contacts) rather than full-fledged Sales Cloud functionality. Redress helped the firm negotiate a switch of these users to lower-cost Salesforce Platform licenses, which provide limited access at a fraction of the cost. This mix-and-match approach allowed the company to keep critical power users on Enterprise Edition while significantly reducing costs for light users.
- CPQ User Reallocation: For the expensive CPQ licenses, Redress questioned the necessity of all 300 seats. After conducting an internal review, the company determined that it could manage with 200 CPQ users by sharing licenses among teams and enhancing process efficiency. Redress negotiated with Salesforce to allow a one-time reduction in CPQ license count at renewal – a normally difficult ask in mid-term. By presenting data on under-utilization, they convinced Salesforce to accept a reduced count without penalty.
- Negotiation and Benchmarking: Redress leveraged its market insights to benchmark pricing and discounts. They knew that similar manufacturing firms were paying significantly less than the initial quote. Using this data, Redress requested a higher discount tier from Salesforce. The team timed negotiations strategically, engaging Salesforce sales leadership near the end of their quarter. Faced with the risk of losing a portion of the business (license cuts) and armed with comparative pricing data, Salesforce relented and improved the discount from 10% to nearly 30% off list price on Sales Cloud and CPQ.
- Future Growth Provisions: Although not a SELA, the renewed agreement was structured with some flexibility for the future. Redress secured price hold guarantees for 12 months on any additional Sales Cloud users the company might add, ensuring that if the company grows, new licenses would be priced at the same discounted rate. They also obtained written assurance that the company could true-down (reduce) a small number of licenses at the next renewal if certain business units stopped using Salesforce, giving the client more confidence that it wouldn’t be locked into excess spend.
Outcome and Impact
By following Redress Compliance’s plan, the manufacturing company achieved notable savings and efficiency gains:
- 25% Cost Reduction: The final negotiated renewal came in at 25% lower cost than the initial Salesforce proposal. In real terms, the company will save approximately $800,000 annually on Salesforce and CPQ licenses by continuing with the new approach.
- License Count Optimization: The firm reduced its Sales Cloud licenses from 1,200 to 1,000 and CPQ licenses from 300 to 200, eliminating unnecessary licenses and aligning license counts with actual needs. This immediately eliminated wasteful spending on ~250 unnecessary licenses.
- Optimized License Mix: By introducing lower-cost license types for light users, the company significantly lowered the per-user cost for roughly 300 employees, without impacting their access to necessary data. This tiered licensing approach will continue to yield savings every year.
- Better Discount and Terms: The improved discount (30% off vs 10% originally) and the inclusion of a price hold on new licenses give the company confidence that it is paying a competitive rate. The contract now also has built-in flexibility – if the business contracts, there are provisions to adjust down some licenses at the next cycle, reducing future risk.
Client Quote
“We knew we had inefficiencies in our Salesforce use, but Redress Compliance quantified it and fixed it. Their team showed us exactly where we were over-licensed and overspending. Redress not only negotiated a better price, they helped us reshape our contract to fit our business. We went from feeling captive to Salesforce’s pricing to feeling in control of our CRM costs. The 25% savings we achieved is huge for our IT budget, and we have Redress’s independent guidance to thank for it.”
– IT Procurement Director, Manufacturing Client (anonymous)
Call-to-Action
Tired of rising Salesforce costs? Contact Redress Compliance for a free Salesforce license audit and contract review. We’ll help you identify savings opportunities and negotiate a better deal, so you only pay for what you need.
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