1. Executive Summary
The report helps to understand the importance of key requirement in a B2B business and with the study of Salesforce growth helps to understand how a startup organization can become a market leader with the help of innovation. The report focuses on how Salesforce became a market leader in CRM software market by creating a Blue Ocean for itself in the already highly competitive red ocean of CRM software.
It helps to understand how an organization like Salesforce was able to maneuver big competitors like Oracle, Sap etc by not only using innovative technique in CRM software but also upgrading itself regularly to further deepen its Blue Ocean.
The study shows us how Salesforce fulfilled all the key requirement of B2B buyers in the modern world by not only providing solution but also being a proactive organization that anticipates the customer future needs and provide solution accordingly and support at all the level. The report helps us to understand the importance of creating a new business space and how to maintain business position by exceeding the expectation of the client.
2. Key Requirement of B2B Buyers
As per (Association, 2011) following are that key requirement of any B2B buyers:
- Service Quality
Service quality is referred to how well the company in B2B business is able to help their customer in improving their performance by providing strong operation and results.
The seller should have in-depth knowledge of the customer business, providing proactive recommendation, have industry expertise, respond to the request timely and provide measurable result (Saha, 2013). The buyer also expects that the seller must be flexible enough to meet their special requirement. As per the data service quality is considered as the top priority by 25% of the buyers.
- Program Management
Program management is referred to as the management of service by the seller. The buyer in B2B business expects the seller to manage the services provided by them in an effective manner.
Increasing competition has expanded the buyer’s expectations and today program management not only covers managing the services but also being proactive by the seller and provides recommendation or innovative ideas as per the buyers business so that the overall performance can be increased (LaPlaca, 2013).
- Financial Performance
The buyer expects the seller to provide them such a financial model that has competitive pricing as per the market, the operating cost is least or competitive and thus it improves the profit of the organization.
Previously financial performance was only limited to decreasing the operating cost of the buyers but today financial performance includes not only lowering the price but also the seller ability to improve the buyer’s total effectiveness and entire financial result (Lee, 2014).
- Account Support
In B2B marketing account support plays an important role as it includes support from the seller sales as well as account team. The buyers expect the seller to not only identify and address the need that are stated by them but also to identify or understand other needs that may be hidden or may arise in future and address them as well.
The buyer expects the account support to have a proactive approach while addressing the issue at hand as well as provide support like a partner to the buyer (Graham, 2013).
3. How did Salesforce find its Blue Ocean?
Salesforce introduced the new concept of providing sales, marketing and customer service applications via a simple website. The organization provided an on-demand customer relationship management i.e. CRM solution that provided immediate benefits of company across various sectors and of different strength.
Thus the organization was not only able to replace traditional enterprise software technology but also create a new market where the demand and expectation of the companies were increased. Salesforce followed the Eliminate-Reduce-Create-raise grid analysis to create a Blue ocean for itself in the CRM software market.
- The Salesforce eliminated the trend of having software installed on the customer’s desktop and configure and customize it according to their need. They provided the same CRM application by signing up through the website simply and making it easy for the user to access CRM application at any time and form any place as long as internet facility was available (Kaila, 2013).
- The necessity of developing a proof of the concept to show and convince the customer to make the purchase was eliminated as now the software could be configured online or a WebEx demonstration could be given.
- The cost of sales force required for direct selling in various industries was reduced by use of WebEx, telesales and word of mouth marketing.
- The sales completion cycle which was of 3month was reduced to around 23 days with the use of websites (SHAH, 2014).
- The complex pricing structure and high price of the CRM software that consisted of license, hardware maintenance, support etc was replace by one fixed low cost for per user per month.
- The concept of using reseller and channel partner was reduced by direct online or website purchase of license.
- Salesforce created CRM software that can be used via nay web browser which was a new concept in the CRM software market.
- A free trial of 30 days before the purchase thus there was no necessity to develop proof of concept (MAUBORGNE, 2017).
- They developed rental model for the CRM software which was very low prices.
- The software did not required any expensive IT staff or provide special training to be used.
- The software could be used anywhere there is internet and upgrades online.
- The ease of use associated with CRM software.
- Deployment time of the software was reduced.
- Created a new marketplace for such software.
Thus Salesforce as a startup was able to find its Blue Ocean in the red ocean of the software CRM.
4. How did Salesforce outmaneuver its Original Competition?
Sales force was able to overcome the fierce competition in the software CRM industry as they not only created a blue ocean for themselves but also deepened the ocean regularly with the use of the following strategy:
- Salesforce introduced as new delivery model for their software, software-as-a-service (SaaS) which eliminated the need to purchase, install or maintain specific hardware or software for the CRM and became a pioneer in this field and competitors like Oracle; Sap etc later followed the same approach (Wong, 2016).
- Salesforce has a diverse customer base as it can serve large multinational organizations as well as small and midsize organization thus it became the market leader with 18.4% of the market share (Levy, 2016).
- They introduced Force.com a cloud application development platform where it was possible for any developer to create add-on application for any business by providing them all the tool, resources and environment need to developing application. Thus making it easy for developers to create application as they no longer required buying and maintaining infrastructure (Salesforce, 2017).
- They introduced AppExchange, a platform for trading or selling application online. The new application built by developers on Force.com were uploaded on AppExchange and it provided the organization an opportunity to search, read the review of the application, take a free trail and then make the purchase decision. Thus the whole process of implementing customer program was reduced to some hour from days or week. The success was such that corporate stated requesting customer application on Force.com (Davis, 2014).
- There was a gap in the corporate sector due to lack of communication and connectivity between different department and Salesforce in order to eliminate this defect from CRM introduced Chatter. This function allowed the user to communicate with each other in real time, share information, updates and status thus bringing more co-ordination in the corporate and make it easy for every individual to understand the status of important work.
5. Was Benioff right to turn down Microsoft?
Salesforce is today the market leader in CRM software with around 20%of the market share and its forecasted revenue is between $1.69 billion to $1.70 billion (BORT0SEP, 2016). The organization has been constant on a rise in the CRM sector since its inception.
The organization has a good vision and strategy to sustain its growth and has been able to ward off competitors at every level of business and remain the No1. CRM Software Company (report, 2015).
The organization external developer serving customer included big name in the Silicon Valley like IBM, Microsoft, BEA Systems etc. The company has a large satisfied customer base. The organization through its acquisition is growing in size and also the kind of services that it provides in-house.
Example: Acquisition of Steelbrick allows Salesforce to offer quote-to-cash and CPQ capability (Team, 2017). The acquisition by Salesforce also ensured that the facilities which were previously provided by the vendors are now provided in house which will enable Salesforce to further deepen its Blue Ocean and expertise in CRM software.
The new that Benioff turn down Microsoft resulted caused the Salesforce share to increase by 4% (KIM, 2015). The company has a good hold on the market, future vision and is bound to generate more profit hence Benioff was right to turn down Microsoft.
6. Will the current acquisition strategy ensure that Salesforce stay ahead?
Salesforce acquisition strategies are such that they are expanding the reach of CRM. In 2016 the organization identified that artificial intelligence will be the growth factor in the coming year and thus acquired Prediction IO which is into machine learning, Metamind into deep learning, Implisit which is into data automation and BeyondCore which is again into machine learning.
On completing the acquisition the organization launched Salesforce Einstein which is a platform for artificially intelligent CRM. The organization not only received great attention in the industry but also further deepened the company Blue Ocean (Trefis Team, 2015).
Salesforce target acquisition of those capabilities or features that were not provided directly to their client. The company acquired Steelbrick so that the CRM could provide quote-to cash task which was previously provided by Salesforce partner Apttus.
Now the service can be provided to the client in house. The company further acquired Gravitytank which was an innovative consultancy that allowed company to enter into new market and thus provided pro-active feature to the client. The company further entered into e-commerce by acquisition of Demandware and acquired Quip to further improve its data processing and collaboration capabilities (Patel, 2016).
These aquistion strategies by Salesforce have deepened their hold in CRM software making the organization a one stop shop for major CRM services. The organization has built a strong hold for itself in cloud based CRM and thus the market share of the organization is expected to grow.
The acquisition by Salesforce has resulted in continuous product development and large base of satisfied client (Goldstein, 2017). These acquisitions have increased the capabilities offered by the organizational and also opened the gate for new innovation. Hence these acquisition strategies will ensure that Salesforce is way ahead of its competitors.
7. Recommendation for future Growth
- Salesforce could concentrate further to enter into proper e-commerce selling like that of Amazon with acquisition of Demandware.
- The organization can further look into expanding their working place to developing Asian economy for penetrating the Asian market as well.
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