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Marc Benioff's "damn good position"

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21st Aug 2009
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Salesforce.com CEO Marc Benioff has hit out at rivals over a lack of transparency as his firm continues to enjoy solid customer growth. But is it just part of the usual war of words between competitors or does Benioff really have something to boast about? Stuart Lauchlan reports.

According to Salesforce.com CEO Marc Benioff, customers need to ask a very basic question: “As we all look forward to the economic recovery to come, each business has to ask, 'Do we want to spend the next five years creating better products, delivering better service, selling more, having higher productivity, being more successful and delighting our customers, or do we want to buy more software from Oracle, SAP, and Microsoft?',” he says.

“At the top level, you really have to look at the numbers. That's the number one thing,” he suggests. “During the [past] quarter we added approximately 3,900 net new paying customers, matching the pace we saw in the first quarter. Over the past 12 months we've added nearly 16,000 net new customers, to bring our total global community of customers to more than 63,000. This represents a year-over-year increase of 32%.”

And the numbers keep on coming: over the past quarter, the firm delivered 15bn customer transactions, up 30% from a year ago; sub-300 millisecond response time for the third quarter in a row; 81m lines of Apex code (the Force.com programming language); 312,000 custom Visual Force pages, both up 10-fold from last year; customers have now built 576,000 custom data base objects and 245,000 custom work role rules, both roughly doubled from this time last year. Financially it's going well too, with second quarter profits doubling to $21.2m, compared to $10m a year ago, while revenue grew 20% to $316.1m.

Transparency

It's all about transparency, insists Benioff, something he doesn't see from rivals. “I don't know how many customers these competitors have because they won't say. They won't say how many net subscribers they have, they won't say their revenue levels; their growth rates. And so from a competitive standpoint, they are making these broad generalisations without the facts. Where are the numbers?,” demands Benioff.

“Where is the quality of service? We see over and over again that customers may in fact sign with a competitor because of a 'low price' or something like that. Of course, that's true in every industry. But time and time again we see those customers come back to us. Many of those customers say the product doesn't work, that it stops; the reliability isn't there.”

One such convert was Cloud performance management firm SuccessFactors, which had previously used Salesforce.com, dropped it in favour of Oracle CRM On Demand and have now canned that and come back into what Benioff calls “the Salesforce.com family”. He says: “SuccessFactors dropped Oracle On Demand after the application failed to deliver and sales reps pleaded to return to Salesforce. When sales teams are demanding your application to support their own success, you know that you've got a superior service and certainly that was a factor.”

Welcome to the family!

SuccessFactors is not alone in its abandoning of Oracle, claims Benioff, citing the likes of Motorola, Axion, Sun Power, GTSI, Xerox, and Barclays as evidence. “That's just to name a few that have switched off of Oracle service,” boasts Benioff. “Overall, our win rate against Oracle, both in service and in software continues to be very strong. In addition to the Marsh and SuccessFactor deals, we won large deployments in the second quarter against Oracle at Comcast, Thompson Reuters, NCR, AT&T, Abbot, Waste Management, Capital One Services, BBVA, Bancomar, the Frank Russell Company, and Developers Diversified Real Estate.

“We also continue to be successful against Microsoft with head-to-head wins at Fujitsu, Progressive Media, Fain Capital, Reid Exhibitions, Gannett Supply, Saveology, and Etech. And while we are seeing SAP quite a bit less these days in the CRM marketplace overall, we recorded solid wins against them at Cardinal Health, Thomas Cook, and Winovo.”

One  of the “marquee transactions” which he says illustrate Salesforce.com's continued success, was a shoot out against Oracle and Microsoft in the insurance market. “Leading insurance broker and risk management company Marsh selected Salesforce.com for sales and marketing automation in a win against Oracle and Microsoft,” Benioff says. “Marsh is driving higher employee productivity and greater customer satisfaction by fully integrating their Salesforce.com CRM and third-party news feeds and account contact information. With an initial deployment of roughly 2,500 subscribers, Marsh plans to grow their Salesforce.com deployment to over 10,000.

"Insurance has become the second pillar of our success in financial services. Marsh joins a long list of insurance brokers and providers using Salesforce.com, including Aeon, A. J. Gallagher, Allianz, AIG, Lincoln, Liberty Mutual, Chubb, and Japan's leader, Sampo.”

The Cloud factor

In terms of product offering, the Sales Cloud continues to be Salesforce.com's best performing product, but Service Cloud and Custom Cloud are making progress, now making up 25% of new business signings. Service Cloud was up 17% over the past three months and Benioff seems certain that this offering will generate a lot more interest. “You are going to see us make some very exciting announcements around that product between now and [the] Dreamforce [conference],” he says. “A lot of call centres and contact centre are really old and their software is really old. Their cost structures are completely out of date and they need to get revised.” 

Meanwhile Custom Cloud's prospects have been boosted by the release of Force.com Sites in recent months. “In all, customers have now created more than 123,000 custom applications on the Force.com Cloud platform. For customers, the benefits are clear: The Force.com platform lets them develop apps five times faster and at half the cost of traditional platforms,” says Benioff. “Customers who build and customise on our platform tend to have the highest levels of loyalty and adoption. That is a key reason why we announced Force.com free edition. We told our customers 'your first app is on us.' 

“Customers have responded with an amazing 8,000 sign up since launch. Crescent Health Care is using Force.com to develop seven custom applications on our platform to monitor key aspects of patient care, from intake through pharmacy needs. Chicago's Rasmussen College, building on their success with the Service Cloud, is using Force.com to develop a custom app for a student enrollment portal, which cuts a three-week paper-driven process down to a couple of days.”

Platform as a service

But overall, it's the combination of  the offerings into platform as a service (PaaS) that is the real winner, reckons Benioff. “Salesforce.com is being used by the Japanese government to implement the nationwide eco-point program. Consumers get points for buying eco-friendly appliances and receive credits that they can use towards future purchases,” explains Benioff. “Built on our new Force.com site service in just three weeks, this new application is expected to serve more than 8.0 million consumers. [It] joins a long list of Japanese customers using Salesforce.com, including the Japan Post, MTT, Mizuho, Canon, Shinsa Bank, Hatachi, and Sampo.”

Japan overall remains a prime market for Salesforce.com. “I am a big believer in success in Japan,” confirms Benioff. “Japan represents the largest IT market outside of the United States. It's something that we've put a decade of work into. It takes a lot of time. We have the very top and most important companies in Japan all endorsing us and having tremendous success. Much greater success, I think, than any enterprise software that they’ve ever had from an American software company or European software company.”

Whatever the prevailing economic problems, it's been a good year for Cloud Computing, argues Benioff. “At the end of the day, we're making customers more successful than they were with Oracle or SAP or Microsoft Solutions, which for the most part are on their shelves and have never been installed, or have turned into kind of high-risk fiascos. No one will ever say that about our services or our technology,” he concludes.

“As more companies move to Cloud Computing, the total level of success that they achieve will be higher with technology than ever before. We are going to be fighting a lot less about on-premise versus Cloud and we are going to be fighting head-to-head against every software company in the world because this is going to be the dominant model. Fortunately for us, we are the number one supplier in the world of enterprise Cloud Computing today. And as the world moves to Cloud Computing, that's a damn good position to be in.”
 

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By grahamanderson
27th Aug 2009 12:18

I have to say as a hosted CRM provider who sees what salesforce.com are doing as a real indicator of what is required in the market, he tells a good story, I suppose you can take these sorts of 'announcements' in one of two ways, either depressing because they keep growing and become more powerful, or (as I look at things) carving out an even bigger piece of pie that growing independents like us can take advantage of.

There will always be a market where the Salesforce approach does not work, not just because of price, so 'go SF go !!!' as far as I am concerned.

He is right in so much as service and customer satisfaction are going to carry on being the main driving factors in growth for companies like ours.

We have seen some tremendous growth over the last 12 months and remain on the upward angle, which is great news, maybe the key to his comments is that he is getting some real big wins, with major corporate players and developers, so roll on the SME market place, take a look at opencrm.co.uk and see why so many people are adopting what we do....

This is a great piece to help fuel the hosted CRM debate and give some confidence to the market and in particular potential customers moving away from the more traditional offerings.

Raa Raa - Bang that drum :0)

Graham
Graham Anderson
Managing Director
Software Add-ons - The Home of OpenCRM
www.opencrm.co.uk

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By j.coldwell
27th Aug 2009 15:39

Interesting article on Marc Benioff's idea of transparency. We are looking at a new CRM system to replace Goldmine. I waited two months for Salesforce to give me an indication of costs before I gave up! You might want to pass this back to Mr Benioff!

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By grahamanderson
27th Aug 2009 16:00

In response to your comment J. Coldwell - In the text Mark Benioff focusses on the large accounts that his organisation is chasing, and I guess that's the reason why you have had this frustration and we (OpenCRM) win so much business in the 5 - 30 seat arena, better prices and the ability to respond to the mid market. I always used to say that this is because we are more agile, and not really believe it, but over the years this has been proven over and over again, I guess I should have more confidence !

If you are looking at migrating from GoldMine we can offer you a data migration plan that takes all of your data into OpenCRM (http://opencrm.co.uk), just in case it was of interest to you :0)

Happy hunting for the CRM utopia, everyone's is out there it just takes some effort to find the right partner.

Graham

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By marcelwiedenbrugge
11th Jan 2010 11:08

Transparancy is indeed a very important aspect, but saying something about the number of customers you have or gained over the last year doesn't say so much to me. What does 16.000 new customers exactly mean?  How does this number compare to the total market of newly sold CRM solutions? Besides, it is easy to say something about competitors of which you already know they won't respond. It does not mean that the competition is less transparant.  If Salesforce.om would be a truely transparant company, then they would also dare to say something about customers who changed from CRM supplier and for what reason.

Recently I have read a comparison between Salesforce.com and Salesboom (http://www.salesboom.com/salesboom_salesforce_compared/9-reasons-to-leav...). Of course I don't accept those claims immediately, but I tried to search for a counter article. So far I haven't found any. Then I ask myself: why does Salesforce.com not respond to such articles? Or why doesn't Salesforce.com order an independant research on functionality / service / stability / etc. among several CRM solution vendors. Transparancy is a great word, but imho companies are never fully transparant, because of competition. So they apply marketing techniques and tell stories how good they are to further enhance their market position (and Salesforce.com seems to do that job very well, but maybe others do it as good or maybe better...I can't say). If you are really transparant you would not only talk about the good things, but about the less good things as well. So I am eagerly waiting for the second article.

Marcel Wiedenbrugge

 

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