Salesforce is offering substantial discounts to customers who sign up early and commit to its full business suite plus services.
The cloud provider is understood to be going 25 per cent over its standard volume discount in cases where customers qualified for a maximum 50 per cent off.
The catch is that customers must sign up early and for the full Salesforce suite, an industry source has told The Reg.
And the hidden danger is what happens once that new contract expires and when standard pricing kicks in – and prices go up.
The Reg understands Salesforce has been initiating talks on renewals with customers six to nine months ahead of the expiration of a current contract.
An industry source who advises customers about Salesforce licensing and who wished to remain anonymous told The Reg that to qualify customers must – in addition to using Sales Cloud – take Marketing Cloud and the firm’s consulting services.
“Salesforce is going to the customer base six to nine months before renewal and saying: ‘If you agree to take on services or marketing cloud and you renew early, we will give you a greater, up front discount’,” The Register source said.
The firm targets the marketing department having first succeeded in winning over sales with its trademark CRM-as-a-Service product.
“They [Salesforce reps] will say: 'You are renewing early and adding marketing cloud and consulting, so I will drop it [price] another 25 per cent',” our source said.
Our contact, who works with companies with $1bn or more in revenue, reckoned the use of these tactics by Salesforce has spiked in the last 12 months.
In February this year, Salesforce CEO Mark Benioff made it his target to become the first and fastest “software” company to hit $10bn in annual revenue.
But be warned, as the standard Salesforce contract leaves the customer open to uncapped increases on the next renewal at the end of the new contract.
Our source warned Salesforce can increase contracts by as much five per cent.
If Salesforce really wants to squeeze the customer, it’ll make that an annual five per cent increase. “We have seen that approach,” he said.
The safest approach is to cap your increase at time of signing the new contract.
“We tell customers: ‘If you want to roll in more [Salesforce] you have to be more aware of what it will look like three to five years from now’.”
Asked to comment on the claims, Salesforce declined to comment on what it called contractual agreements citing “confidentiality of our customers”. ®