By Ben Goldstein and Cody Slingerland
It always pays to read the fine print—especially when it comes to Salesforce contracts.
While Salesforce remains the most well-known name in CRM software, their billing practices, one-sided contracts, and minimal user support can make them a bad fit for small businesses.
Many Salesforce customers have encountered substantial financial hardships and unbelievable frustration simply because they didn’t know what they were getting themselves into. (We’ll share some real-life horror stories throughout this article.) That’s why it’s so crucial to inspect their user agreements from every angle before committing to the deal.
To help you out, we took a close look at the Salesforce Master Subscription Agreement and found seven spots in a standard Salesforce contract that could land you in hot water. We’ll also share some practical tips on what you can do to protect yourself should you decide to sign with Salesforce.
1. Your subscription price can significantly increase on renewal
Have you ever been roped into a cable or internet package at a low introductory rate, only to get serious sticker shock when your contract renews? It’s an extremely effective method for attracting new customers while guaranteeing future business growth, so it’s no surprise to learn that some Salesforce customers have experienced similar situations.
Don’t expect these prices to hold by the time your contract comes up for renewal:
This is spelled out in Salesforce’s agreement under section 11.2, “Term of Purchased Subscriptions”:
“Except as expressly provided in the applicable Order Form, renewal of promotional or one-time priced subscriptions will be at SFDC’s applicable list price in effect at the time of the applicable renewal.”
Research published by Jo Liversidge and Alexa Bona at Gartner offers some advice in this regard:
- Do not assume the price will not increase without prior negotiation.
- Negotiate a maximum net price increase of 3% to 5% for a renewal term.
- Define what your per-unit price metrics are, then negotiate to guarantee that those same metrics will be used for at least one renewal term.
In essence: negotiate, negotiate, negotiate. The good news here is that Salesforce is willing to discuss some terms of the contract, upfront at least. But once you’ve signed, you’re at the mercy of Salesforce’s legal team.
“Salesforce wasn’t nearly as expensive when we first signed as they ended up being during the last few agreements we had with them,” says a former Salesforce user who spoke to Nutshell on condition of anonymity. “They were reasonable at first and just kept jacking up our rates.”
One day, they hit me with an invoice in the neighborhood of $30,000-$40,000 and said it was all due at one time. We immediately put it over to our attorney. We were trying to figure out if there was any loophole to get out of our contract, which I don’t think there really is. Even when you search the internet, you don’t see a ton of people talking about how they got out of their Salesforce contracts.
“I think we originally offered them $2,500, but by the time we were done going back and forth with lawyers for three months, it cost us nearly $10,000. I don’t want to tell you the exact number because if you print it, they’ll probably be able to track me down.”
2. Salesforce can terminate your contract (and delete your data) with only a few days’ notice
Suppose you’ve been in negotiations with Salesforce for weeks or months, trying to sort out a disagreement over contract terms. If you’re behind on payments, perhaps because you believe your agreement has been infringed in some way, Salesforce can hand over a notice that terminates your contract—and all your data with it.
This is laid out in section 11.2, “Termination”:
“A party may terminate this Agreement for cause (i) upon 30 days written notice to the other party of a material breach if such breach remains uncured at the expiration of such period…”
Unfortunately, Salesforce doesn’t always stick to its own “30 days notice” rule. Several complaints filed with the Better Business Bureau mention abrupt terminations that became effective in a matter of days, but perhaps most notable is this user’s story:
We received an email stating that we were responsible for paying the outstanding invoice of $40,000 within 5 DAYS otherwise our organization would be shut down. Knowing FULL WELL that if our salesforce account went down, we’d be out of business, we are now being manipulated into paying the full balance under threat of being shut down within 5 days. We negotiated for over 5 MONTHS without resolution, who could possibly believe we’d achieve a resolution within 5 DAYS?
This user had been attempting to communicate and negotiate with Salesforce employees for months, only to have their concerns shuffled from one department to the next without meaningful, sustained communication from a knowledgeable representative. They also felt that some communication they received was misleading, filling them with the false hope that a resolution would be achieved before the ultimatum fell into their lap.
In this instance, rigid terms combined with erratic customer service can leave a user especially vulnerable. To prevent such a situation from happening, Liversidge and Bona advise negotiating a 60-day term to retrieve your data in the event of termination.
3. Salesforce won’t let you change your seat-count during a term
Salesforce has a complex pricing system that changes based on the functions made available and the number of users accessing the software, which gives their sales reps plenty of leverage to upsell you. But what happens if you find you’re paying for something you don’t need?
Section 5.1 of the Salesforce Master Subscription Agreement, titled “Fees”, states:
“Customer will pay all fees specified in Order Forms. Except as otherwise specified herein or in an Order Form, (i) fees are based on Services and Content subscriptions purchased and not actual usage, (ii) payment obligations are non- cancelable and fees paid are non-refundable, and (iii) quantities purchased cannot be decreased during the relevant subscription term.”
In other words, if you get locked into an agreement and find that you need fewer features or users than were originally sold to you, you’re stuck paying for them anyway.
“If you’re a new Salesforce customer, make sure you’re not overbuying at the start,” says Dan Kelly, President of SF Negotiator, a contract negotiation team specializing in Salesforce.com. “Adoption is always slower than you anticipate when introducing any new CRM platform, and it’s all too common for Salesforce’s sales team to overweight your first-year agreement as they’re solely focused on capturing as much revenue as possible from your account.”
The former Salesforce user we quoted earlier in this article (who asked to remain anonymous out of fear of reprisal from Salesforce’s legal team) talked about their experience with this very issue, stating:
“We were originally using Salesforce in a minimal way for email marketing automation, and they convinced us to upgrade to Pardot, which is their marketing platform. Naively we signed a three-year agreement on Pardot for a lump sum fee of about $12,000 a year.
“The problem was, we had to sign on for extra user agreements too. And that’s where they really get you in the whole process because now you’re locked into these seats. Our business is somewhat seasonal, so while we need an extra five or ten users during the summer months, we don’t need much during the other months.
We tried to adjust the contract, but they always tried to twist it to their favor. It was always like, ‘Okay, you want to drop two users, we’re willing to do that. But we need to sign a new bond for another two-year agreement for the four users that you’re keeping.’
“I think that the salespeople are only incentivized to get more users locked into agreements. That’s all it is from their perspective.”
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4. Your integrations could be canceled at any time
For some teams, software integrations are invaluable. It may even be the case that a business chooses Salesforce over a competitor because of how Salesforce integrates with certain third-party tools that are essential to the operation of their business.
Before signing on the dotted line with Salesforce, know that those integrations could be discontinued at any time according to section 4.2 of Salesforce’s user agreement. The section, titled “Integration with Non-SFDC Applications,” states:
“The Services may contain features designed to interoperate with Non-SFDC Applications. SFDC cannot guarantee the continued availability of such Service features, and may cease providing them without entitling Customer to any refund, credit, or other compensation, if for example and without limitation, the provider of a Non- SFDC Application ceases to make the Non-SFDC Application available for interoperation with the corresponding Service features in a manner acceptable to SFDC.”
This scenario would leave the customer up a creek and still paying out to Salesforce if the third party app initiates the discontinuation of integration, or if Salesforce initiated the discontinuation because the integration was no longer “acceptable” by their standards.
Note that this has already happened a couple of times, such as in the case of Eventbrite. Users who still need to use that app in tandem with Salesforce were forced to manually shuffle data around or use a tool like Zapier to bridge the gap.
Salesforce contract horror story: “I only found out when I got the bill”
“When my company first signed up with Salesforce we were on quarterly billing, and then all of a sudden they changed it to annual upfront billing out of nowhere,” says a current Nutshell customer who also asked to remain anonymous. (We’ll refer to him as “Ryan,” which is not his real name.)
Ryan had used Salesforce for several years while working at a leading credit card company, and took the platform along with him when he launched a biotech startup. Salesforce’s unexpected decision to change his new company’s billing structure meant that Ryan’s company was charged over $20,000 at one time.
“They didn’t even tell me it was happening—I only found out when I got the bill,” Ryan said. “I reached out to Salesforce and asked if they could reverse the transaction and charge me quarterly, as had been happening the whole previous year, and I was told no, they wouldn’t, but after another full year, they would put me back on quarterly billing. That’s when I decided that I was going to look at other options.
“When I was using Salesforce at a large corporation, we had tremendous amounts of resources,” Ryan continued. “Now, I’m leading a smaller company, and though we aspire to be a very large company someday, I can’t spend the amount of money that Salesforce requires. And it’s just not worth it. There were a lot of things there that we weren’t even using.”
What bothered Ryan the most about his Salesforce experience was their complete lack of explanation or justification for their decision to change his contract:
I think that it was more or less, ‘We’re a big company, and you’re a small client of ours, so we don’t really care,’” Ryan said. “I never felt as though we had a point person at Salesforce, or any personal communication with any individual whatsoever. Which is a shame, because that’s so easy to do. It doesn’t take a lot of effort to talk to your customers.
5. Your subscription price doesn’t include the cost for developers
It’s common to customize a Salesforce product into the exact solution your business needs to execute certain tasks. Salesforce typically farms out this customization process to third-party developers, which can quickly overtake your budget.
This was another challenge encountered by the former Salesforce user that we quoted earlier in this article. Here’s what they told Nutshell about the experience of working with a developer to tailor Pardot to fit their marketing needs:
“They had talked to us about how they had a lot of preferred vendors to help you do the implementation, build your first campaigns, make it super easy for you. So we started down that route, got the first campaign in place, then realized they had done everything and we didn’t know what we were doing afterwards.”
It was bad enough that the customer was dependent upon third-party developers to help them understand and make use of the product, but as he found out, the situation also created a budgetary nightmare:
“Every time you turned around it was thousands of dollars for development and that was just painful for us. I mean, we’re a small business. Salesforce sells you on the glitz and glamour of these huge Fortune 500 companies that are using their software. What you don’t know is that those companies have their own Salesforce developers in-house that are doing that stuff. Unless you’ve got a $100,000 Salesforce developer on staff, I just don’t know how you can keep up with it.”
6. Salesforce uptime guarantees are below market standards
Cloud software has opened the business world to seemingly limitless possibilities as to what they can achieve. Having software hosted off-site, however, comes with one obvious con: downtime.
While no company can offer 100% uptime, most customers expect that they’ll be able to access their software and their data at least 99% of the time.
Denis Zhinko from ScienceSoft ran the numbers: 99.9% of guaranteed uptime means only eight hours and 42 minutes of downtime a year, while a guaranteed uptime of 99% means the average downtime would be 87 hours and 40 minutes. That’s 3.6 days that customers can’t access vital tools.
So what’s Salesforce’s guaranteed uptime? Liversidge and Bona from Gartner allege that Salesforce’s uptime rate is only 98%—well below market standards. Given that a 99% uptime still means almost four days of downtime a year, 98% uptime could be crippling for a business, as it would put your team out of commission for more than a full week.
Unfortunately, Salesforce’s contract language makes no promises on this front. Section 2.1, “Provision of Purchased Services” states that the company will “use commercially reasonable efforts to make the online Purchased Services available 24 hours a day, 7 days a week.”
That’s little comfort to the countless Salesforce users who were affected by the platform’s near-apocalyptic day-long outage in May 2019, when Salesforce accidentally granted all of its users admin access and had to take their service offline while they rolled back the changes. If your business relied on Salesforce to operate, absolutely nothing got done that day—except for some good twitter memes, of course.
7. If a sales rep sells you the wrong Salesforce product, there’s no warranty guaranteeing you can break the contract without paying out
Salesforce seems to have a solution to almost every business need, from sales and marketing to finance. Such a huge line of products is a lot for any sales representative to know inside and out, though you certainly hope they do. Being sold the right solution at the right size for your business is the very least of what a customer should expect from a company.
Unfortunately, several complaints filed with the Better Business Bureau indicate that Salesforce reps have, on more than one occasion, accidentally sold a customer the wrong product for their needs. The customer is then left paying for something that they can’t use, as in the case of this complaint filer:
“When we initiated our discussions with Salesforce about our needs as a business, I had made it very clear what we needed and what we were looking for. The sales representative reassured me countless times that their system would satisfy our needs and that they would be available for any questions to help us get our account set up. Immediately after I finally agreed to initiate the account, I ran into problems…Finally I got our sales rep on the phone, almost a month after our account started, only to find out that the services that were promised to us were not available.”
The user’s experience ends with Salesforce sending their account to collections.
The reality is that Salesforce has a disclaimer in section 8.3 of their contract to protect the sale, no matter what the sales rep said:
“CONTENT AND BETA SERVICES ARE PROVIDED “AS IS,” AND AS AVAILABLE EXCLUSIVE OF ANY WARRANTY WHATSOEVER.”
There are no warranties—express, implied, or otherwise.
Salesforce contract horror story: “salt in a wound”
“Try calling Salesforce if you want to end up with a hole in your head,” says SCM Consultants President Steve Meitzen, a current Nutshell customer who used Salesforce at two previous companies. After leaving a firm where he had worked as a sales consultant, Meitzen tried to end his Salesforce subscription and was stonewalled by the CRM giant’s accounts team.
“They kept saying they were going to charge my credit card on renewal, and I kept trying to tell them I was no longer there,” Meitzen told Nutshell. “They made it really difficult to get them on the phone in the first place. The impression I got was, ‘Salesforce is big and wonderful, and you’re very blessed that you use this.’ I actually still get promotional emails from them. It’s like putting salt in a wound.”
Beyond the billing issues, Meitzen struggled to get other members of his team to learn the product. “I remember one phone call I had with a production manager who didn’t know the product, and just getting him logged on was a trial and tribulation. Salesforce has all the advertising and the pretty cartoons, but if you’re not extensively familiar with how they do things, you’ll run into some real difficulties.”
What’s a Salesforce user to do?
If Salesforce is the software your team needs to perform at their best, then there are a few steps you can take to protect yourself:
- Inspect the product. Don’t rely on the sales rep to know what’s best for you. Do your research to ensure you’re being sold the best solution for your needs.
- Dissect the contract. Go over the agreement with a fine-toothed comb, consult your legal team, and do whatever it takes to know their terms inside and out.
- Negotiate! There are entire consulting firms devoted to negotiating contract terms with Salesforce, proving that negotiation is possible.
Alternatively, you could consider a CRM that doesn’t lock you into a contract you can’t get out of, and gives businesses of all sizes personal support and attention. Start a free 14-day trial of Nutshell and see what our sneaky powerful CRM and sales automation platform can do for you.
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Salesforce contract horror story: “This is why people hate Salesforce”
F*ck Salesforce, or, How I migrated away from SF in 30 days and lived to tell the tale
We’re a smallish eating disorder and chemical dependency healthcare provider. When the company was founded 5 years ago, a lot of dumb choices were made, expensive dumb choices. One bad decision was to embed Salesforce deeply into our patient acquisition/intake/follow-up processes from day one.
One thing about COVID-19 is that people having to social distance made some people realize how bad they or their family members were, with respect to their disorder. No distracting events/activities outside the home let people see their own behaviors, or their family members, up close. We do about half in-patient work, and half IOP/PHP programs.
Our admissions stayed steady when the shutdowns started, and have stayed strong throughout the pandemic. When you’re talking about patients who are literally near death because of substance abuse or eating disorders, it’s not an exaggeration to say we’re essential healthcare. Our patients’ disorders can definitely cause them to be immune compromised, so we stayed open and took massive precautions. We haven’t had a single patient in our facilities who was positive yet, fingers crossed.
But while patients were still coming in, insurers have been sloooow to pay. Collections are tight. Charges are being accepted, but insurers are just taking their sweet time paying the accepted charges.
The Main Event
Our Salesforce renewal came up, and we knew it was going to be a problem. We engaged with Salesforce about creating a payment schedule, because coming up with about $160k in one lump sum by the due date wasn’t going to happen. We had 75 licenses for all our various departments.
Salesforce absolutely refused to work out a payment plan for us on the contract, which was separated into three product invoices, $12k, $32k, and $123k, but all due on the same date. They literally refused, I got one email response that was just “No.” Weeks of emails back and forth seemed to be going nowhere.
I thought we got somewhere when they finally set up a conference call to discuss it, but then the finance guy for Salesforce basically said “just pay all three invoices by the due date and then we’ll be fine.” I said, “While technically, yes, that is a payment plan, but I assumed you understood that the request was to break this up across several months. With COVID-19, our patient count is stable but insurers are paying very slowly right now. We simply can’t afford that as a lump sum.” The finance guy literally said nothing.
After 20 or so seconds our Salesforce account manager stepped in and mentioned a couple programs they’re introducing for new customers to make payments easier during the COVID crisis. I asked if we were applicable to use them, he said, “Oh, well, no, I guess not, they’re just for new customers.” I said, “So you’ll help new people but not existing customers.” he replied, “Well, that’s why we’re on the call today.” I said, “yes, it is, but I’m not hearing anything from Finance.”
Salesforce absolutely refused to work out a payment plan for us on the contract…They literally refused. I got one email response that was just “No.”
The finance guy piped up, “Like I said, all I can do is suggest you pay the three individual invoices one at a time, and as long as they’re paid by the due date, then we’ll be all caught up.”
I said, “So this call has basically been just so you can say you had the meeting and made an offer, isn’t it? You never had any intention of actually working with us, but now you can, on paper, say you tried. Look, if we don’t work out a deal, I have to move us to another product. You can have the money over a 6 month period, or you can shut us off, and lose us permanently.”
He said, “We’ll see.”
I said, “This is why people hate Salesforce. You have us over the barrel, and you’re going to make sure you f*ck us. Thanks.” I hung up.
I researched other CRMs to see what would fit our company, and luckily found one. They had all the features we need, in one way or another, they were honest about what their product did and didn’t do, and they had a team that was eager to help us import our data and work out the process workflows. We went into overdrive.
30 days later, Salesforce sent us a letter that we hadn’t paid, and asked when they could expect payment. I said, “I have been telling you for months we can’t make the full payment at once. I wasn’t kidding, exaggerating, or bluffing. I told you $160k wasn’t going to appear in our bank accounts on the due date.” They sent an email warning us that we’d be cut off in 7 days. I didn’t reply. They sent another email a day before the shut off, I didn’t reply. They sent a final email the day they shut us off. I ignored it.
11am, Salesforce shut us off. We were already on the new product, had all of Intake trained, had our processes fairly well worked out, and had begun training after-care people. We had managed to cut the seat count down to 40 people by simply not letting people have accounts “just in case.”
The next week, Intake had the most admissions in company history. Not by a huge margin, but a record is a record. It wasn’t due to the new CRM, we just had a lot of people willing to jump in, but our intake team HANDLED IT with the *brand new* CRM system they had just started using. I can’t take credit for that, our intake people are fantastic.
It’s been over two months. People like the new system more, we’ve ironed out the bugs, people are used to it. CEO is thrilled we pay $1,900 per month rather than the equivalent of $13k/month. Intake has a smarter system, one we designed for what we NEED rather than what we might want.
Addendum: I didn’t name the new CRM because I didn’t want this to sound like an ad for them. They’re great, I like them, they’re a small company in mid-Michigan that’s been around for a decade or so, and they’re good honest folks, so far. Spoiler: They’re Nutshell and we’re happy with them, but this is not an ad.
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