Friday, April 25, 2014

How Salesforce.com Tends Its Garden

In the role of CIO I am very careful to promote (or seem to promote) any products.  At the same time, when I see a company doing something innovative or just plain cool, I feel compelled to point it out.  Therefore, as always, remember that this blog is not to be used for references, advice on trading, etc. etc.

There is a conventional wisdom that talks about how to get great talent in your organization.  Essentially, the advice is that the best people come from years of careful grooming, training, and mentoring from within a company's talent pool.  I tend to agree with this sentiment as long as the people being groomed were truly "good clay" from the start.  It's hard to argue with this kind of wisdom because it just seems to make sense.

So what about customers?  Wouldn't it be great if you (or your company) could manufacture the customers that you want to serve?  That would a great way to ensure profitability and future success.  Several companies, over the years, have had strategies to do just that.  I can think of two mega-corporations that have successfully created loyal life-long customers by targeting younger demographics.  One used cute Polar Bears and has been lauded for being clever and "hip".  Another used Cool Camels and has been demonized.

I recently saw a different strategy by Salesforce.com that did not involve any animals or fancy slogans.  They did something different; something so basic but yet so effective that I was stunned.  I was left thinking, how could a $3 billion+ company be so intuitive?  Maybe after spending decades buying from vendors who could care less about me after a sale, maybe I'm just jaded.  I'll tell you what I observed and maybe you, the reader, can tell me your thoughts.

This week I had a relative sign up for a one-user license of Salesforce.com - the cloud version.  I believe the cost for the subscription is $26/month.  She has a business that requires her to track customers and potential customers through the whole sales lifecycle of prospect-to-closure.  The relative went online, signed it up, and started to go through the online help materials.  That's when the phone rang.

When she picked up the phone there was an analyst from Salesforce.com on the other end.  He was following up after her registration.  Of course, I thought to myself, "Here comes the cross-sale."  Imagine my surprise when I heard that the analyst was calling to find out more about my relative's business.  He wanted her to walk him through every part of how the business operated, what the products were and how they worked, and her business goals.  The call between the two of them lasted about half an hour before it was finished.

The question begs, "Why would a multi-billion dollar software company spend so much time and resources on a customer that will only net them a maximum of $300/year?"  Although I can only guess, I would say that Salesforce is taking the long view of things.  I'm fairly certain that they must believe that some sizable portion of their business is going to come from the little customers of today.  In other words, when a person/entity comes to Salesforce.com and takes the time to subscribe, the software company is going to invest the time and effort to help make them as successful as possible.  You just cannot predict which business will have explosive growth, but statistically you know that some of them will.

Much like planting seeds and tending them to the point where they bear fruit, Salesforce.com is making an effort to grow their own future success.  I think that approach is extremely novel, well reasoned, and likely to work.  Based on the extreme customer satisfaction that my relative had after Salesforce took the time to really understand her needs, she is likely going to be a customer for life.  And if you think about it, if her business really takes off and grows, Salesforce.com already has a customer who is locked in and unlikely to switch to a competitor.

When you look at the cost these days of acquiring new customers, just in sales and marketing expenditures, I think we all have a lot to learn from Salesforce.com.

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