Salesforce may be resorting to some of the old sales tactics that made its bigger, traditional enterprise software makers so successful.
According to The Register, Salesforce is now offering huge upfront discounts to users who renew their contracts ahead of time — as early as 6 to 9 months — and agree to include the full suite of Salesforce products, which span sales and marketing software to consulting services.
The report said the discounts can be as much as 25%, on top of the standard volume discount, which means some customers could see 50% off deals.
But there’s a catch: once that new, discounted deal expires down the road, Salesforce could bring up the price again to as much as 5% over the standard price.
In other words, Salesforce wants its existing users to sign up for bigger deals at a discount, but once the customers are locked in to the system, it’s planning to charge more. Plus, Salesforce doesn’t make it easy to scale down once your deal expands, meaning some users could end up paying a lot more than their actual use case if they’re not careful.
The report noted Salesforce has been using this strategy more actively in the past 12 months.
This tactic is pretty common among the more traditional enterprise software makers, and it may be a sign that Salesforce is now playing by the same rules that made the likes of Oracle and Microsoft — companies Salesforce has long said to be replacing — become dominant forces in the enterprise space.
In fact, The Information reported last month that Salesforce is now charging its consulting service providers a minimum annual registration fee of $US1,000, and a larger chunk of fees on its AppExchange market — both seen as a move implemented by Salesforce president, and former Oracle executive, Keith Block.
On top of that, with Block’s hiring two years ago, Salesforce has been replacing a lot of its existing executives with former Oracle executives, hinting at a changing sales culture. All these moves may be inevitable for Salesforce, as it moves up market to huge enterprise customers while trying to nearly double its annual revenue from $US5.3 billion last year to its $US10 billion goal as soon as possible.
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