Deal-Maker Toolkit: Salesforce

Salesforce is one tough supplier when it comes to renewal negotiations. If you over-purchase with this formidable CRM vendor, you will find it very difficult to right-size your environment and optimize your spend later.


The problem exists because the supplier is an expert at gathering information about your organization from various stakeholders, which they use to develop heavily inflated demand models. We have often observed that the pricing on these deals can be attractive, but the demand is not accurate, which negates the good pricing because it forces customers to buy (and renew in perpetuity) significant amounts of shelf ware.


Salesforce Methodology


Salesforce is highly-organized to sell product. The following chart shows the supplier’s A to Z methodology.


Few customers are equipped to combat this well-oiled practice. Even if they are aware of the supplier’s playbook, they are ill-prepared to compete with Salesforce throughout the process, because there are so many opportunities for the supplier to pivot. We call these opportunities “moments of truth”, highlighted in the chart below.



In the supplier’s view, you and your stakeholders fit into one of these “gates” which they need to open to move the deal forward. We counsel clients to develop their own process to prepare for these moments of truth and neutralize these challenges when they arrive. To assist them, ClearEdge offers the following 5-step methodology that moves from data collection to deal execution, and when implemented, can consistently counter the Salesforce playbook.


Each step in this process builds off the former, making certain that throughout the deal, the customer has a firm grip on their demand and deal options before beginning negotiations with the supplier.


A major stumbling point for clients is their ability to start a deal with enough time – failure to do so often results in skipping the “data collection” and “risk & inspection” steps, which in turn results in being unprepared for the supplier’s inflated demand model and risk-filled proposal. Many customers focus on the discount level instead of the accuracy of the demand, which almost always guarantees a big over-purchase.


Gaining Leverage Against Salesforce


In short, this process shows you how to work purposefully and in lockstep to build leverage and guard against risk in a Salesforce engagement. First and foremost is building that accurate and conservative demand model and starting the process at least six months prior to any Salesforce deal execution. Customers should ask Salesforce for utilization reports to track which licenses are being over- and under-utilized to help map out needs. We also recommend using a confidence rating system which considers which business units are growing or shrinking and assigns a numeric level of certainty to predict usage probability. Salesforce will provide its own demand model; it is important to validate and reduce its inflated projections. And finally, it is wise to create a ramp plan since it is unrealistic to deploy everything on day one. By completing these tasks, you will establish a low baseline prior to the start of negotiations with Salesforce. (ClearEdge has developed a toolkit to help clients with this step which is available on the client portal.)


Next, clients must increase their supplier knowledge regarding its sales process. It is important to understand that Salesforce reps earn commissions based on the amount of net new spend in year one of a deal. Also, sales reps may receive an additional incentive for multi-year commitments. The longer the term, the larger the compensation. You must determine which products the vendor most wants you to buy, and by when. All this information is useful to build leverage and gain concessions during negotiations.


Following this data gathering, you must conduct a contract risk assessment, which calls for a careful inspection of the vendor’s master service agreement and any product order forms. We’ve charted the major things to examine below.



Salesforce recently removed renewal protections from its standard MSA, making it more important to review prior to renewal. Also, be aware that tiered pricing tables are becoming standard for entitled rates, which can lock you into less competitive rates later. Other clauses that can result in significant financial exposure are those that relate to compliance (especially surrounding restricted use licenses) and volume requirements. And please note that many of the vendor’s terms appear online only and are subject to change at any time.


Alternatives to Salesforce


Last but absolutely not least, you must investigate viable alternatives to your Salesforce purchases. While most customers are unable to move entirely off Salesforce, we know that the vendor responds quickly when competition is introduced in a deal, even for a portion of a solution. Microsoft and Adobe have joined forces to offer many competitive products and can provide considerable leverage by creating uncertainty for Salesforce surrounding the deal, highlighted below.



Help is available for dealing more effectively with Salesforce. As mentioned above, ClearEdge tools can help get you organized for a successful Salesforce deals, starting with an early warning system, and a checklist for accurate forecasting. For more information on our toolkit for Salesforce deals, please download this webinar, visit our client portal, or contact your ClearEdge representative.


Contributing to this article were ClearEdge Analysts Dan Beyh and Matt Gowing, along with Managing Director Mark McKenna.