We’ve found that the average savings potential for a company switching from a Salesforce Enterprise License Agreement (SELA) to a standard Salesforce Subscription Agreement is 41.3%. ​Yet many large enterprises still honor their SELA agreements simply “because we’ve always had one.” Subsequently, these companies have a difficult time benchmarking the value they’re extracting from a SELA vs any other contracting method. ​

While Salesforce will present these agreements in a way that may seem extremely advantageous to the customer, the truth is they’re rarely a good fit.In this article we are going to explain:

• What is a SELA Agreement?
• How SELA’s looked in the early days of Salesforce
• How present day SELA’s have changed
• Why SELA Agreements are a bad idea for most companies
  • Problem 1: SELA caps are built off of your current needs
  • Problem 2: SELA agreements are manipulated by Salesforce’s changing product line
  • Problem 3: You are paying 41.3% more than you should be with a SELA Agreement
• When SELA’s work
• When SELA’s don’t work
• Why “you don’t have to manage it” rarely justifies a SELA
• What to do if you have a SELA

What is a SELA Agreement?

A SELA Agreement is a Salesforce Enterprise License Agreement.

​What is the difference between a Salesforce Enterprise License Agreement (SELA) and a Salesforce Subscription agreement?

​A Salesforce Enterprise License Agreement (SELA) agreement is different from a Salesforce Subscription Agreement in one key way. A SELA is meant to provide “Unlimited Access” to the platform, while a standard Salesforce Subscription Agreement includes set prices for a set number of products.

Yet while SELA began as an “Unlimited Access” promise, that is not quite what SELA agreements look like today.

To understand SELA’s and why your company probably doesn’t need one, it’s helpful to understand the history of SELA’s and how they may have looked when your company originally signed one.

How SELA’s looked in the early days of Salesforce

​In the early days of Salesforce, there was a massive focus on market penetration. Like any typical SaaS company, all they cared about was volume.

In the early days of Salesforce, the CRM market was extremely fragmented with small players and disparate homegrown solutions. Arguably, at the beginning, the largest competitor to Salesforce was Microsoft Excel. As a result, Salesforce hit the market precisely at the right time and acquired new customers relatively easily.

But given that Salesforce was in such a high-growth mode, they wanted to leverage their existing client base to grow organically both internally and externally at the client organization. In other words, they wanted to pursue any strategy that enabled new endpoints whenever, and wherever, possible.

Under this premise, they created the first SELA which conceptually provided unlimited access to the platform. This would ensure that Salesforce could land and expand as fast as possible within a new account without any barriers, paperwork, governance, or red tape.

​The MO of an early SELA deal summarized would be:

Your contract with Salesforce is $10M per year over a 5 year contract term. It is a $50M relationship, and you can use the entire Salesforce platform however you see fit, no restrictions. Use our support as you need it. Our goal is to help you grow.

This unlimited access approach was the foundation for Salesforce’s growth by 100x in the early years. By signing one of these deals, and then expanding into a large enterprise organization, they were able to show massive growth rates on all of the SaaS growth metrics such as users, retention, growth rate, turnover rate, etc.

Because they were signing customers onto SELA’s, their growth metrics went through the roof which gave all of the signals for additional funding, press, and market share.

The goal of SELA in the early days was simple. Achieve as much penetration as possible into the corporate world.

How present day SELA’s have changed

While SELA’s once provided “Unlimited Access” to the platform, that isn’t always the case today. Present day SELA agreements look quite different.

Today’s SELA Agreements are full of floors and caps on the quantity of specific product sets that you can use. While old agreements were “Unlimited”, the new agreements come with added restrictions, usage ceilings, and massive financial growth commitments.

Salesforce’s objective with SELA’s is to give you an agreement that fits your current needs, but has the potential to break if you’re not careful negotiating both the commercial and legal terms and conditions.

When your organization grows/declines past the commercially allowed threshold within your specific SELA, there will be significant financial consequences. Subsequently, without the proper legal terms and conditions protecting you from changes within your business, you are setting yourself up for significant financial and legal risk.

​Why a SELA is a bad idea for most companies

A floor/cap on your product usage initially may not sound like a large risk for your company, especially if you are comfortably within the allowed threshold at the time of contract execution.  That being said, there are 3 major problems that commonly arise from this scenario. Here we are going to dive into the three fundamental problems:

Problem 1: SELA caps are built based on your current needs

A SELA agreement will often be on a 3-5 year term, and the caps are negotiated based on the needs of your organization at the signing of the contract. This may not sound like a major risk, but for high volatility (growth and/or decline) companies, or anyone in an active M&A industry, this can be a major issue.

When you break the caps of your SELA Agreement, it’s not as simple as “buying extra licenses” to make up the gap. Instead, it will trigger an entire sales event with Salesforce that is going to have them coming back to you for more money.

Additionally, you may only trigger your cap in one single product category (Ex. Pardot), but if you break your SELA caps in that space, they can use that as grounds to raise prices across the board.

These caps are dangerous because as soon as you break one, it puts the power of the contract back into Salesforce’s hands.

Problem 2: SELA Agreements are manipulated by Salesforce’s changing product line

The second problem with a modern day SELA is the ever-changing product line from Salesforce.

Salesforce is a master of releasing and repackaging products. They are constantly rolling out new products into the market, as well as repackaging existing products, while retiring old products.

While innovation at Salesforce is great, the new products and services that are organically (or inorganically) created are rarely contemplated as part of your organization’s SELA. If your organization wants to use those new products and/or services, they will likely need to be paid for separately as an additional expense.

Additionally, some products may “retire” or become a “carveout” of an existing product. Continued usage of these products may actually trigger a contractual breach of your SELA.

This sounds ridiculous, but Salesforce does it all of the time, and it’s very expensive for the client. Naturally, most Salesforce clients are not aware of these inherent risks until they’re sent an invoice for this incremental out of compliance usage.

Here is a recent practical example of how they pull this off...

Repackaging Example: Sales & Service Cloud

Up until recently, Sales Cloud & Service Cloud were two separate products from Salesforce.

Sales Cloud was for Sales Reps while Service Cloud was for service department technicians. These two products came at two different price points. Sales Cloud was cheaper, and Service Cloud was more expensive.

Eventually, Salesforce decided to roll these into “Sales and Service Cloud” as a single commercial product even though they technically operate as separate infrastructures (clouds). This provided Salesforce a commercial opportunity to financially uplift those existing clients that had both products (Sales and Service Cloud), historically with two different price points, now as a single price point that matched the more expensive line item as part of Customer 360. The logic being that both clouds are integrated harmoniously whereas the entire client organization is able to review all of its omnichannel touchpoints with their customers. This “additional value” was largely the basis for this product and price convergence.

The targeted outcome is typically around a 30% revenue boost within the existing customer base. This revenue boost was predicated by a simple repackaging of services.

Problem 3: You are likely paying 41.3% more than you should be with SELA

​We renegotiate a lot of SELA deals at The Negotiator Guru (TNG), and on average, we identify a 41.3% cost reduction opportunity when switching to a standard Salesforce Subscription Agreement.

The reason behind this is that most SELA’s are priced extremely high (on a price per unit, per month basis) and commit the client to much higher usage (products & quantities) than is actually being used, creating conceptual shelfware.

At TNG, we leverage a proprietary Right Size, Right Price approach to drive efficient and long lasting savings for our clients.

We first understand what your organization actually needs and build a roadmap to support you based on your specific global business. Instead of buying everything through a SELA Agreement, we leverage our Right Size framework to ensure you’re leveraging the appropriate products and services at the Right Price.

We are able to easily identify Right Price information based on our industry leading price benchmarking database that is minimally rationalized based on your Annual Contract Value, Industry, and Company Size. We say “minimally” because there are other factors that determine product pricing such as product mix, your roadmap, Salesforce quarterly interests, etc.

Then, we leverage our unmatched expertise negotiating with Salesforce either as a covert silent advisor, or an overt legal agent, to extract maximum value for you at the lowest possible cost.

Those two simple components alone have generated our SELA Agreement customers 41.3% in savings.

We’ve worked with Fortune 100 companies paying $25M+ per year to Salesforce whose actual contract value should have only been $10M.

The savings potential is real and worth the time to renegotiate.

​When a SELA is a good idea

Most of this article is spent sharing why SELA’s are a bad idea for most clients. That being said, there are a few select cases where they may be temporarily beneficial to a client.

Every year, we speak with hundreds of Salesforce Customers. Since the inception of TNG in 2015, we have only had one customer where a SELA was actually a good fit for their needs.

While we always keep our clients confidential, this specific company was a high-growth IT firm with rapid-growth aspirations (500x), large amounts of equity funding, minimal IT resources, and a technical architecture that required Salesforce to act as the backbone for their outreach strategy. They were in a very unique situation.

Here are the required conditions to even consider a SELA:

• High-Growth Environment of 10x-500x per year;
• High-amounts of capital investment;
• A large volume of customers with varying interaction levels across multiple channels; or,
• A clear architectural roadmap from a digital capability and functionality perspective.

When a SELA is a bad idea

99% of the time, a modern day SELA Agreement is a bad idea. In almost all cases, it just doesn’t make sense.

Here are (only some of) the conditions where a SELA does not work:

• You signed a SELA 4+ years ago;
• Your company has predictable needs in both products and quantities;
• Your company is spending less than $10.75M/year on Salesforce;
• You have less than 5,000 API connections per day;
• Your IT department’s strategy is to leverage native (vs. custom) functionality wherever possible;
• You have less than 3,500 Sales and/or Service Cloud licenses; or,
• You’re not sure where your business is going in the next 3-5 years. ​

Why “you don’t have to manage it” rarely justifies a SELA

Yet, even with everything we shared, many companies still sign up for new, or keep renewing their existing, SELAs. Perhaps that’s because they haven’t read this article!

The most common reason we hear from our clients on why they have a SELA is that “We don’t have to manage it. There are no order forms, compliance, or governance. We just signed the deal and originally, didn’t have to worry about it.”

While that is great in theory, you can achieve nearly the same benefits with a standard Salesforce Subscription Agreement by negotiating specific terms and conditions into your Order Forms. We will share two of these terms below for your awareness and utilization:

M&A Language

Request language be added to your Order Forms that protects you in the event of an extraordinary corporate event like Merger and Acquisition (M&A) Activity. Adding in the appropriate language for M&A activity can provide huge benefits to your organization. Specifically, ensuring that an acquisition or divestiture can be brought in or taken out of your environment without commercial recourse will proactively avoid painful legal headaches and financial synergy slippage.

Product Swap Language

​As we discussed, Salesforce likes to change up their product line to create disruption in the marketplace and in your contract. Introducing product swap language that enables you to swap products and services freely as long as you maintain the same annual contract value provides a huge value that is similar to that of a SELA.

FAQ’s

What happens if I exceed the caps on a product in my SELA Agreement?

Salesforce will use this overage as leverage against you in your upcoming negotiation. They will either charge you an overage fee or push a net new product on you in exchange for waving your overage fee. This net new product helps them achieve additional revenue, new products, and a larger footprint inside of your organization.

When you exceed the caps on a product in your SELA Agreement you are naturally placing yourself in a vulnerable position with Salesforce.

Many organizations who have an active SELA Agreement with Salesforce don’t have an internal software asset management (SAM) team. As such, these organizations won’t know they have exceeded their cap limit until Salesforce informs them. Even with an active SAM team inside multinational organizations it can be very easy to exceed your caps.

In general, 6 months prior to your contract renewal, Salesforce will conduct an audit on your account to look for any overages. If your organization is not already aware of these overages you’re naturally going to be on your heels trying to fact check information internally. Either way, Salesforce will use these overages as leverage against you in the upcoming renewal negotiation.

There are two scenarios that commonly play out within this situation:

First, if you notice you have exceeded the cap limit, you can take corrective action to decrease your quantities of specific products so that you are back in compliance. Your organization will technically be obligated to pay overage fees for the time those overages were occurring within your environment. The standard language within Salesforce agreements indicates you will be liable to pay the “published retail rate.” In other words, the rate that Salesforce publicly publishes on their website without your organization’s discount.

Second, if Salesforce notices that you have exceeded the cap limit, then you will be hit with a heavy overage fee in a similar manner as discussed above.  However, Salesforce will likely use this opportunity to push new products within your environment in exchange for some of the overage fee. The net outcome, if not properly negotiated, will be a higher total cost of ownership over the term of your new contract than paying the overage fee by itself.

It’s important we state this again: Standard Salesforce MSA and SELA Agreements (aka all agreements) include  a standard clause that any license overage will be charged at the then current retail price. That means instead of paying for additional seats at your discounted rate, they will charge you the retail price for the product that is currently listed on their website.

This is a very dangerous situation as the retail price can often be 2 -3x your standard rate.

We recommend negotiating specific contractual language that limits your financial liability to that of your organization’s reduced rate vs. retail.

How do you approach negotiating an existing SELA Agreement?

When renegotiating a SELA Agreement, we leverage our best-in-class and proprietary  approach that we always use when Negotiating with Salesforce.

Mastering Your Salesforce Spend: Why Ditching the SELA Can Save You Millions

Create a Salesforce Roadmap

The first step in controlling your Salesforce spend is to build a roadmap of specific products and services you will need from Salesforce over the next 5 years. Create a list of both your needs and your wants.

With a Salesforce Enterprise License Agreement (SELA), it is very important that you build a 5-year game plan instead of a 1-3 year plan. The reason is that the 5-year roadmap will help you decide if a SELA agreement is right for you. If you are forecasting rapid growth or large M&A activity, then a SELA may make sense, assuming the proper legal terms and conditions are in place. But without either of those two components, a SELA rarely provides the differentiated and intrinsic value one would expect from its large price tag.

In most situations, a SELA Agreement will not make sense for most organizations. Putting together a Salesforce Roadmap will help you see this clearly. When you have a clear roadmap of what products you need, in what quantities, then you can use that as a benchmark on price.

Benchmark Your SELA Spend with Right Price Data

Once you have your roadmap, the next step is to gather Right Price Data for what rates you should be paying for each product on your roadmap.

At The Negotiator Guru, we have the largest database of Salesforce rates as a result of reviewing hundreds of Salesforce contracts for organizations that span literally every industry. We can tell you what you should be paying for each product or service.

While firms out there like Gartner can provide directionally correct information, they are not able to provide prescriptive insights for your specific situation. To access our Right Price Data for your account, contact us at info@thenegotiator.guru.

When you take this Right Price Data and line it up against your roadmap, you can see an estimation of what your Salesforce spend should be in a total cost of ownership view. Now simply take that total number and compare it to the annual spend of your SELA Agreement to see just how much of a savings potential is available for your organization.

Based on our real client data, we find there is typically a 41.3% opportunity available when switching from a SELA to a standard MSA & Order Form contract and pricing structure.

Examples of SELA Negotiation Success

Through our work at The Negotiator Guru, we have helped hundreds of organizations reduce their Salesforce expenses. Our firm is the industry-leading expert in negotiating with Salesforce.

Here are two recent examples of SELA negotiations we have completed with, and for, our clients (all company information has been redacted for client confidentiality).

Negotiating a $75M SELA Agreement down to $32M (57% savings)

One of our clients came to us with a 3-year term on a SELA Agreement valued at $25M per year. This was a total contract value of $75M over a 3-year period.

We worked with the client to create a Salesforce Roadmap and shift the organization over to an MSA & Order form contract and pricing structure. This simple shift produced a material reduction of their annual spend down to $10.7M per year for a 3-year term.

That is over 57% in savings and $43M in cost savings over a 3-year period. This example shows just how much SELA Agreements can be overpriced.

$30.5M in savings by negotiating a SELA Agreement that no longer made sense post-M&A

This particular organization was on a 5-year SELA Agreement. The SELA was designed based on the company footprint at the execution of the SELA Agreement.

There was one major problem—this specific organization was in the telecommunication industry which was experiencing heavy disruption. As a result of this disruption, the company divested several business units for financial and regulatory reasons. When these business units were divested, everyone assumed that their Salesforce contract would adjust accordingly… but that was not the case.

The response that came back from Salesforce was essentially, “It won’t be possible to reduce your spend because you have committed to this agreement for a total of 5 years.”

This meant that the telecom organization was now paying for products and services that were used by companies they divested, and they were committed to continuing to pay for those products for an additional 3.5 years. In total, this would be $36M in wasted expense over a 3.5-year period.

Through negotiations with Salesforce, we were able to reduce that down to a $5.5M breakup fee for a total savings of $30.5M over a 3-year period. This example shows just how important it is to structure in proper M&A language into your SELA and all Salesforce Agreements.

SELA Agreement Logistics and Strategy

What is the typical SELA annual spend?

The typical customer on a SELA agreement is a multinational organization doing over $10B in annual revenue with a total spend of $15M+ per year with Salesforce.

How long does the process take to renegotiate a SELA Agreement?

The process to renegotiate a SELA Agreement typically takes 2.5 months. That being said, to properly prepare for the negotiation, we engage our clients a minimum of 6 months prior to your natural renewal date. Remember, 80% of negotiation is done through thoughtful and intentional planning. In a best-case scenario, you want to plan for your SELA renewal 1 year in advance.

Who is involved in a SELA Agreement negotiation?

On your organization’s side, the following individuals should be involved in your core negotiation team:

• Head of IT Sourcing
• IT Leadership in charge of the Salesforce Platform
• IT Finance Representative
• CIO (Optional)

From The Negotiator Guru, the following individuals are involved:

• Lead Negotiator
• IT Architect
• Legal Representative

Do I need to switch off a SELA or just negotiate a lower price?

In most cases, it will make sense for you to switch from a SELA Agreement to a standard MSA & Order form agreement with Salesforce. While you do not have to switch, it is often the most advantageous for you as a customer of Salesforce.

There are several material reasons for this, however, the most prominent being that it’s very difficult to proactively measure the value you’re receiving from Salesforce when everything is bundled into an annual fee. This lack of transparency is by design from Salesforce, allowing your account team to do some creative accounting.

When you convert to an MSA & Order Form contract structure, you can compare your specific needs with Salesforce directly with our Right Price Data to understand exactly what you should be paying.

My company’s workflow is seasonal, and a SELA allows us to adjust licenses as needed. How do we accomplish this with a Salesforce Subscription Agreement?

You can achieve the same flexibility of a SELA by adding in Seasonal Worker Licenses within your subscription agreement. These licenses largely produce the same flexibility as they are intended to be used for seasonal contingent workers that increase and decrease throughout the year. Another common use for these licenses would be for college interns or factory workers.

In some cases, Salesforce will tell their customers that this product option does not exist. This is simply not the truth.

Recently, one of our customers did not believe that a “seasonal worker license” actually existed. Through multiple conversations with Salesforce, he was told this simply was not an option. We pulled up a screenshot of another client’s invoice, redacted all of the confidential information, and shared the invoice with “Seasonal Worker License” as a line item. The client was blown away. You can achieve a Seasonal Worker License... you just have to ask... perhaps more than once.

In previous articles, we shared with you how the Salesforce machine operates. We shared with you how it structures its organization and the tactics it uses to maximize its revenue from your company.In this article, we are going to dive into your single most important weapon against Salesforce in your negotiation . . . Your Salesforce Roadmap.

​What is a Salesforce Roadmap?

Simply put, a Salesforce Roadmap is nothing more than a table outlining:

• What you are going to buy
• When you are going to buy it

This sounds simple, yet most companies don’t go into a negotiation with Salesforce clear on these two points. As a result, Salesforce hijacks the conversation and creates a roadmap for them.

What you are going to buy

This question isn’t always as simple as it sounds.

Do you need Enterprise or Unlimited?

Do you even need premium support? Or would that money be better spent on a 3rd party consulting firm?

Have you run a utilization report to see how many of your licenses are actually being used?

​Is marketing actually using that instance of Pardot you purchased three years ago?

The “what you are going to buy” conversation isn’t always easy. One company we worked with ran a utilization report to find that only 63% of their licenses had even been logged into in the past year. This means they were paying for 37% more licenses than they actually needed!

Another customer realized that a large portion of his organization could get by through downgrading to a lower license level. They were only using basic features that didn’t require them to be at the Unlimited License.

It’s easy to think you know exactly what you need going into a negotiation, but sometimes you need to do a bit more digging into understanding how each department actually utilizes the tool.

When you are going to buy it

Another common tactic Salesforce uses is to tell you that you cannot roll out licenses over the course of a three-year contract. Your rep will tell you that you need to buy them all up front now if you want to get a discount.

This ironically always works out in Salesforce’s favor as the added revenue from those dormant licenses makes up for the discount one rates. The truth is you can negotiate to roll out licenses at set periods of time throughout your negotiation.

​In order to do this though, you need a clear roadmap and to create confidence with Salesforce that this is what you actually need and when you need it.

Why Is Building a Salesforce Roadmap So Important?

Before we dive into how to create this roadmap, let’s first dive into explaining why this roadmap is so important.

A roadmap is your best defense against divide and conquer

Remember the divide and conquer tactics we described in our guide on negotiating with Salesforce? We shared with you how Salesforce will make contact with multiple individuals and decision-makers throughout your organization.

Its goal with divide and conquer is to create conflicting stories which develop chaos in terms of what you actually need.

Creating your own Salesforce Roadmap helps you prevent against that.

When you create a roadmap and get buy-in from all your key stakeholders on that same roadmap, you create alignment within your organization. In addition to the roadmap, we are also going to give your internal stakeholders key talking points on what to say if Salesforce approaches them. It’s also important to know that timing is everything with regards to these key messages.

As a result of being aligned on talking points and what your organization actually needs, your organization begins to speak from one voice. Instead of having Salesforce gather conflicting stories from each department, they suddenly are left dumbfounded when they receive the same story from all contacts within the organization.

Flip-flopping your wants in the negotiation focuses the discussion on the wrong things

Whenever you don’t have your roadmap aligned, you spend your time in the negotiation with your rep going back and forth on how many licenses you need or what add-ons you do or don’t want.

Every time you go to your rep with a revision on your renewal because you and your team changed your mind, you are wasting a valuable chance to negotiate a key term or reduce your rates.

Without a roadmap, you will end up flip-flopping on what you want during the negotiation and spend your time focused on what licenses you are even going to buy instead of the price point or the terms. The entire negotiation gets focused on just figuring out what you need instead of getting you the best rates.

Your roadmap creates that clarity and alignment and lets you spend your time focused on getting you the best deal.

A lack of alignment undermines the key contact of the negotiation

Imagine for a moment that you are a Salesforce rep. You go into conversation with the Salesforce Admin who is your main point of contact in the negotiation. The Salesforce Admin request a 20% license count increase but is not interested in adding any new products or expanding their Salesforce footprint into any new departments.

Then two days later, your sales management team comes back from a basketball game with the CEO of your client organization. They tell you “we just met with the CEO, he wants to roll Salesforce out to his entire marketing department as well.”

As a Sales rep, you immediately jump to the conclusion that your Salesforce Admin is not the authority or decision-maker on this account. All respect you had for this Salesforce Admin’s decision-making ability has gone out the window.

As a result, that Sales rep treats the Salesforce Admin differently in the negotiation. He starts going around them and maximizing his divide and conquer tactics because he knows the Salesforce Admin is not in charge.

This is what happens when your organization is not aligned.

It undermines the individual who is the face of the negotiation. It doesn’t matter if it is a Salesforce Admin, CIO, or CFO.

Alignment and a roadmap gives power to the negotiator

Let us imagine another scenario for a moment here. Imagine that you are a Salesforce rep. You go into a conversation with your Salesforce Admin who is your main point of contact. The Salesforce Admin tells you they want to increase sales cloud licenses by 20% and consider a demo of Pardot in their marketing department.

Then two days later, your sales management team comes back from a basketball game with the client CEO. They tell you “we just met with the CEO, he wants to grow his licenses by 20% and is considering expanding Pardot into their marketing department.”

As a Sales Rep, you just heard consistency.
You heard that your Salesforce Admin is aligned with the CEO.
You heard that your Salesforce Admin is actually in charge of this negotiation.

When you have organizational alignment on your roadmap, it gives power to whoever is running your Salesforce Negotiation. It doesn’t matter of it is the Director of IT, CIO, or CFO. Whenever you have that alignment of stories, it gives that person in the negotiating seat power to drive the negotiation on their own.  

When to Create your Salesforce Roadmap

We typically recommend companies start building their roadmap six to nine months prior to their negotiation. You are going to want at least three months to handle the actual negotiation with Salesforce so a six month runway gives you an additional three months to get that internal alignment.

Each organization is different, but that internal alignment won’t happen overnight. Give yourself some time to meet with all key stakeholders and achieve that internal alignment.

Three Steps to Creating your Salesforce Roadmap

A Salesforce Roadmap is not complicated. It is a simple table of “what you need” and “when you need it” over the next three to five years.

Even though most Salesforce renewals are only three years, it is helpful to plan five years in advance so you can think of a bigger picture of what may be coming down the line. This helps you in creating an aligned story for Salesforce at your renewal.

Step 1) Create a rough draft alone

If you are reading this, chances are you are the one who is driving the Salesforce negotiation. You have extensive knowledge of Salesforce and can probably fill out 80% of the roadmap on your own.

The key in this step is to document all of your ideas for the roadmap on paper.

You don’t want to go to your key stakeholders with a blank slate and build the roadmap from scratch together. That is not a good use of their time, and it is going to create too much debate.

By crystallizing your thoughts about Salesforce into a rough draft of the roadmap, you can share that document with others. It becomes a starting point for the entire roadmap discussion.

Step 2) Take the rough draft to key stakeholders for feedback

This rough draft of the roadmap is purely for internal use. Once you have this rough draft complete you are going to present this document, typically in the form of a PowerPoint presentation, to your key stakeholders within the organization.

This may be your CEO, CFO, CIO, COO, VP of Sales, Director of IT, Salesforce Admin, Sales Management Team, etc.

You are going to take this roadmap to them and say “This is what I believe our 3-5 year Salesforce roadmap looks like...what feedback do you have?”

As you go into these meetings you may find yourself saying, “I have an idea here but I don’t know exactly what X department needs.” This roadmap and these conversations are meant to help you refine the roadmap and clarify those needs with each department in the organization.

What is great about this step of the process is that this allows your team to have internal dialogues about what you need with Salesforce. Without doing this internal roadmap, these contacts would not be brought into the conversation until a contact from Salesforce had reached out to them.

Instead of letting Salesforce guide these conversations, you are getting in front of them and taking charge. This helps you own and drive the conversation.

Step 3) Gather all feedback and refine your roadmap

Once you have gathered alignment from each of your key stakeholders on the roadmap, you are going to want to take some time to sit down and refine that roadmap into a final polished version.

At this point, you are almost ready for entering the negotiation. But before that we need to build a communication strategy and negotiation plan.

​We commonly get the question: “What are the most common mistakes and/or things to avoid when negotiating a Salesforce Agreement?” So much actually that we thought it made sense to write a short article for all to consume.

​A Customer Relationship Management (CRM) platform is commonly within the top 5 expenses within every CIO’s annual budget. The day-to-day operations of business serve as a natural distraction for all of us and, if you don’t negotiate contracts all day long, it’s near impossible to know all the information you need in order to successful prepare and execute a negotiation strategy. Negotiating a Salesforce contract is tricky and can be extremely complex. Don’t underestimate the time, effort, or expertise you’ll need, or you’ll quickly lose control of the entire deal.

Here are the 7 most common mistakes we find CIOs and IT Management Teams make when negotiating their Salesforce agreement:

1. Failing to prepare

‍While this may not come as a surprise, the single most common mistake is failing to allocate enough time, resources, and expertise to properly prepare for the negotiation.

Ask yourself this: Would you ever go to a car dealership and take the first car they offer without first doing your research on price, warranty, etc.?

As a CIO or IT management team, you should not make assumptions or rush through the process of finding and/or negotiating your CRM platform. No matter whether you are searching for a new CRM platform or simply renewing your existing agreement, make sure you take time to understand the business and digital capabilities you are looking to acquire and/or augment. Take time to conduct interviews across the organization and create a business canvas of those needs to create a simple viewpoint of the wants and needs of the entire organization.

We advise our clients to start 6 months prior to any anticipated contract execution date.

2. Failure to look at the bigger picture

We find CIOs, IT Management Teams, and Salesforce administrators are great at thinking about the relatively short-term needs of their organization but commonly forget to keep the big picture in mind. As with any strategic supplier relationship, you need to think about how the pricing, requirements, and relationship with Salesforce will look over the next 3-5 years. Instead of looking at the short term, think strategically about your organization's goals and the relationship you want to build. You need to approach your CRM vendor with a long term mindset. Look at how their services will be beneficial to your organizations in terms of growth and transformation. Make sure you prepare a compelling forward-looking strategy that is deliberate in identifying how the Salesforce relationship will benefit your business. It’s equally as important to understand how Salesforce views its relationship with you. Only after both sides understand the current state of each organization can it build a plan forward.

3. Focusing too much on price

Our clients are almost always surprised when we say this statement. While price is ultimately very important in any commercial agreement, it’s equally as important to validate that you have the proper products and services for your organization.

“Right Size for the Right Price” – Dan Kelly, The Negotiator Guru

If you’re a new customer, make sure you’re not overbuying at the start…remember, adoption always proves to be slower than you will anticipate when introducing a new CRM platform.

Subsequently, it’s all too common for the sales team to overweight your 1st year agreement as they are solely focused on capturing as much revenue as possible from your account.

If you’re an existing customer, conduct an internal audit of your products and services that are currently part of your Salesforce ecosystem. Make sure not only these products and services are being used (the easy part) but also that they’re being used appropriately. Very often we’ll find opportunities for our clients to downgrade while still achieving the same business functionality required.

4. Not considering all your options

It’s important to keep a pulse on the marketplace…there are multiple CRM platforms out there and while Salesforce is the industry leader they may not be the best fit for you.

Subsequently, if you are a current Salesforce user then it’s equally as important to conduct a deep dive assessment on how other peers in your industry are using Salesforce. A properly run CRM platform should not only optimize the sales process but also drive efficiencies in back office operations, etc. If you identify (and you most likely will) new areas where Salesforce can assist your business, carefully bring this up as an opportunity during the negotiation process. Again, we urge the word “carefully.”

5. Not developing Executive Level relationships

As written in previous articles, Salesforce has set-up its very own incredibly effective sales machine. While we won’t reiterate the previously written articles it’s important to call out that most Salesforce customers underestimate the importance of developing and engaging VP level and higher relationships at Salesforce. Only these levels have decision making authority on your account. If these individuals are on your side, and understand your story, you’ll be far more successful in your negotiation.

6. Failure to create a strategic internal communication plan (as part of your negotiation strategy)

Almost everyone fails at developing a bulletproof internal communication plan. While the saying “speak from one voice” is widely used and understood in negotiations, it’s not enough to simply rely on human beings to say exactly the same thing at the same time. Instead, we advise our clients to develop a communication plan that provides key talking points for different levels of the organization. These talking points all align to the same objective but are developing in a way that reinforce message authenticity for that specific stakeholder.

7. Neglecting to include your C-Level Executives in the negotiation

Related to the previous point, we find that the majority of organizations we advise have historically tried to limit and/or eliminate any C-Level interaction with Salesforce. This is naturally understandable (based on common thinking) but actually a serious mistake.

Salesforce takes great pride in, and places great importance on, developing relationships directly with their customer’s executive team.

We advise clients not to fight this point but leverage it. We admit that we used to get this point wrong ourselves. We used to ensure the C-Suite knew not to say anything and only redirect messages to a single point of contact. The big problem with this is that the c-suite really likes to talk! Instead of fighting this natural instinct (and skillset) we advise our clients to leverage it by creating a C-Suite communication and engagement plan that empowers the negotiation plan.