NEGOTIATING WITH SALESFORCE.
What you must know!
Is your Salesforce contract up for renewal? Or thinking of becoming a NEW Salesforce customer?
by Sopheap Buor, managing consultant at Strivesource
UNDERSTAND SALESFORCE’S BACKGROUND!
Salesforce recently announced their ambition to become a $23 Billion revenue company by 2022!
They were one of the first Software as a Service companies and have been a major disruptor of the CRM cloud since then. From a $5.9M annual revenue company in 2001, they are exponentially growing, and in Q2 of 2018, they had an impressive rate of 27% year over year revenue growth. Salesforce is already exceeding the $10 Billion a year mark for 2018 and counts more than 170,000 clients worldwide.
WHAT TRIGGERS SALESFORCE?
Revenue Recognition, Revenue Recognition and Revenue Recognition.
Oh and I forgot one more, Revenue Recognition!
Salesforce ability to maintain investor’s confidence HIGH has a lot to do with their relentless focus on GROWTH and strict discipline to deliver on the reported earnings, almost at all costs!
Dare you come and ask for a cost reduction on your existing price levels, and you will feel the FULL force of Salesforce!
BUT HOW CAN YOU LEVERAGE?
Stronger customer relationships is where Salesforce is focusing on, specifically targeting organizations that are going through a digital transformation journey. With their #1 CRM solution, and with client’s budgets $$ going up in the digital space, they have the perfect environment. Clients do not want to be left behind and can easily get hooked to Salesforce’s seduction tactics!
BUT watch out, as LOVE can be blind, especially in the early stages of the relationship.
Salesforce’s focus on Growth
With aggressive targets to reach $23 billion annual revenue by 2022, Salesforce is under a considerable amount of pressure to maintain and even exceed their growth levels. So the good news is that this will give you leverage during your negotiations.
Assess your utilization levels and functionalities. Do you know how much subscriptions are actually being used? And are all the functionalities needed? A clear view on any sub-optimal use, combined with the right executive relationship in place and a strong purchasing strategy will help bring Salesforce back to the negotiation table. At the end, they have to grow with their current client base! Salesforce will be prepared to give some concessions in order to CREATE new opportunities.
Aggregate and consolidate NEW demand
You must fully understand your current state and future demand. It might be a long tenuous road before you get there, but there’s no way around it, unless you are willing to lose out! It’s essential to start as early as possible and to involve all the right parties. Start conducting detailed roadmap reviews in order to validate your future requirements and organizational needs. With this in hand and the ability to offer additional commitments, you can be assured Victory!
Executive Level relationship
Make sure your prioritize the consolidation of your relationship with Salesforce at Executive Level. It is likely that Salesforce will first try to disrupt your procurement process by reaching out directly to your executives, therefore creating internal misalignment and weakening your negotiation position.
However if you are fully aligned with your own executives and remain in the lead in the negotiations, with the full attention and support of executives from both sides, then you will be able to get results!
HIRE A SALEFORCE SOURCING EXPERT AND HERE’S WHY
It is essential to understand where your organization fits with Salesforce. With over 170,000 clients worldwide, the battle for attention will be tough!
Make sure you have a Salesforce sourcing expert at your side, or RISK the following:
- Duplicate costs
- Incompliance exposure
- Price uplifts
- Cost model not fit for purpose
- Limited flexibility
- Acquisition and Divestiture impact
- Sub optimal Terms & Conditions
- Disperse communication channel
Having led the Salesforce account for one of Salesforce’s biggest clients in Europe, we have strong experience in leading contract negotiations with Salesforce. We procured across their core product suites, Service cloud, Sales cloud, Marketing cloud and Force.com for a number of organizations, including a top 25 strategic Salesforce client out of more than 170,000 clients worldwide.
Similarly, we have led the Salesforce contract split negotiations for a €20 billion annual revenue company, including additional divestitures and acquisitions.
And have maintained relationship with Salesforce leadership executives, both regionally and globally.
Strivesource can support you on your Salesforce negotiations, experts benchmarks and negotiation strategy
ABOUT THE AUTHOR
Sopheap has over 15 years work experience in Global sourcing, Vendor & Contract management, Supply chain and Project management. He worked for organizations such as Philips, Jacob Douwe Egberts (JDE), Burberry, Marks and Spencer and American President Line (APL), and previous experiences includes:
- Salesforce Global Account Lead for a top Health technology provider, listed on Euronext and the NYSE
- Led multi-millions commercial negotiations with Salesforce for Service cloud, Sales cloud, Marketing cloud and force.com
- Led Salesforce contract splits for a 7 Billion divestiture of a Global health technology provider
- Led negotiations in procuring Enterprise Applications with Salesforce, Adobe, Oracle, Mendix, Sprinklr, SAP, Akamai, etc.
- Global IT category lead and Vendor management roles at fortune 500