Case Study: Business Innovation Lessons from Salesforce.com

Salesforce.com was founded in 1999 by Marc Benioff. A former executive at Oracle, he dreamed up the concept while on sabbatical in Hawaii and India. After noticing the success of consumer websites like Amazon.com, he saw the potential for the Internet to be a goldmine for business consumers and set out on his plan to create his own startup business. After considering a human resources endeavor, his first venture was Customer Relationship Management (CRM), with an idea that his software would be easy to use and inexpensive, a vast improvement over similar items already on the market. Salesforce.com has become a platform for business owners and managers to buy subscriptions for software that has many business applications, like service and support, marketing and, of course, sales. Competitors like Oracle, SAP, Microsoft, etc. that dominated the enterprise software market, locked in almost all the large companies in the world with their products and services offerings and it forced Saleforce.com to innovate a new way of offering so that it can enter the market and survive and the best way was to not only on demand web based solution with a 30 day initial free trial before buying but also the company focused on small and medium businesses (SMB) and mid-market customers which generated billions of dollars in revenues. SMBs and Mid-Market customers preferred the company’s solutions as they need not invest on ant hardware like servers or PCs and other software which is reduced their costs big time. Salesforce.com success mantra has been their ability to generate immediate benefits to companies of all sizes at reduced risks and costs, fixed low cost per user per month inclusive pricing model, less complicated and easy to use product focusing on contact management and Salesforce automation, reduced deployment and administration costs and single deployment with upgrades done regularly online automatically. Company also tasted success with large enterprise customers too over period of time and has become a market leader in the CRM market.

Business Innovation Lessons from Salesforce

Another innovation that Saleforce.com adopted was its Business to Business marketing strategy where the company used simple and fast online configuration and WebEx demonstrations to present to new clients rather than complicated proof of concepts in terms of case studies, documents and other promotional materials to show utility of their product offerings, also used telesales through WebEx and word of mouth rather than employ costly direct sales force which drastically reduced the sales cycle for the company to 23 days where as its competitors had more than 90 days sales cycle. Since the company used direct web delivered model it not only reduced the deployment time for the customers but also enabled the company to offer low pricing to their customers. In September 2005, Salesforce.com added a new service called AppExchange offering which a web-based portal is giving companies access to a range of applications for on-demand use, ranging from financial and administrative applications, to applications focused on specific industries. Company adopted this model which is similar to Amazon.com retailing model, that allows Salesforce.com customers see a range of competing products and can read reviews from other users, as well as check how other user’s rate additional products that extend the core functionality of Salesforce.com. This model is necessitated as the company started targeting the large enterprise customers who needed complimentary products and services that aligned best with their existing technologies. With such innovative business strategies, Salesforce.com has been able to build brand equity and loyal customer following that earned billions of dollars in revenues for the company.

Along with the CRM market, Salesforce competes in the Cloud Computing industry. While the cloud offerings differ greatly among these companies, the product offerings differ in that some are value-added products and some are collocation products. A collocation product is a cloud offering that simply allows for increased processing. On the other end, value-added refers to a cloud service that allows for increased performance, but also provides developers with increased productivity or delivery. Salesforce, Google, Amazon, and Akaimi fall into this category. Google and Amazon offer a platform for using applications, while Akaimi offers a platform for speeding the delivery of applications. Salesforce.com offers a combination of these two with the platform for creating applications and then using AppExchange to deliver them.

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