The acquired Salesforce silos are joined together with Customer 360. And guess who'll be paying for that…
Salesforce recently made the announcement that it would now be offering 360-degree customer insight into their own diversified and fragmented landscape known as Salesforce. That's all very well, of course, but a keen observer will think: What The F...? Isn't that what a good CRM is supposed to be able to do anyway? 360-degree customer insight? Hasn't that always been the promise and purpose of a CRM system? How low has the leading Salesforce sunk if they're now using sentences like this:
“Customer 360 represents a fundamental commitment on the part of Salesforce — including marketing, sales, service, and commerce — to provide a unified customer profile that can be used across our customers' organisations”.
“With Customer 360, we promised to deliver a unified ID. With it, companies can easily connect and resolve customer data across their various Salesforce apps.”
In short, Salesforce has developed its own CRM shell for the complex landscape that Salesforce has become. My tone might seem a little cynical and sarcastic, but rightly so, in my view. I frequently come across companies that have been expertly woven into the Salesforce fabric. Initially, that went smoothly and with great results, using Salesforce back in – say – 2009. Back then, Salesforce was indeed a breath of fresh air and a unicorn. The ease of a cloud-based CRM that could be supplied as a tailored solution: it worked wonderfully well.
Value for shareholders or value for the customer?
But as happens quite often with successful companies, they grow quickly and helping their customers is no longer their primary task. That becomes growing shareholder value instead. And growth is achieved in roughly three ways:
- You sell to more customers
- You sell more to existing customers
- You buy new customers by acquiring companies
Salesforce is using all three of these strategies – and from the shareholders' point of view, with great success given Salesforce's price movement.
Salesforce also achieved record figures in the first quarter of 2019. The turnover amounted to 3.74 billion dollars – a rise of 24% compared to the year before. The income from subscriptions and support added up to 3.5 billion dollars, a 24% rise on an annual basis. Geographically, Salesforce saw a 25% growth in turnover in North and South America (70% of the total turnover), 27% in the Asia-Pacific region (10% of the total turnover) and 32% in Europe (20% of the total turnover). In short, things are going brilliantly from the shareholders' perspective. But what is that like for a Salesforce customer?
Customer perspective or perspective on the customer
I predict that Salesforce will ultimately be presented with the bill for this rapid and structured growth. In my view, there are a number of reasons behind this:
- Customer centricity and practise what you preach
All the marketing and sales endeavours that Salesforces unleashes upon the market put the customer first. You can't read more than five consecutive sentence that don't contain the word 'customer'.
“ Connect to your customers in a whole new way with the world's #1 CRM platform. ”
“Our customers' success is our success.”
“Solutions for finding, winning and keeping customers.”
These are all great promises, facts, and opinions, of course. Fantastic. However, the question is whether Salesforce can deliver on these slogans it uses for itself when it comes to its customers – and, in particular, at what cost. Technically speaking, there is no larger or more all-encompassing box of tricks you can find in the world in terms of marketing, sales and service than the one from Salesforce.
And they've worked hard for that, given their acquisitions in the past 10 years. They have bought up more than 60 companies worldwide for over 30 billion dollars. And we're not talking about companies with 10-15 FTE, but about large businesses with hundreds of employees and countless products, services, and technologies. The companies already had their own profitable business model or were well on their way towards one. At some point during the implementation of their strategy, Salesforce got wind of this and added those decorations to the already over-full Salesforce Christmas tree. As a result of this, many of Salesforce's customers are now stuck with this Christmas tree – a very expensive one that is too big and requires too much attention. And the worst thing is that it doesn't just stay up for two weeks, but for the whole year. This Christmas tree, despite its pretty lights, regularly gets in the way of things.
This is how they've ended up looking like something they used to lash out against: a technological giant. It's fun to cite a snippet from an interview with the former SF EMEA Marketing Manager, Woodson Martin, at Dreamforce 2008 in San Francisco (from Computable):
"Martin is highly critical of traditional software suppliers. "The business environment is changing at lightning pace. Chief Information Officers want to innovate as much and as quickly as they can to stay ahead. You need agility and flexibility for that," says Martin. According to him, these are two qualities that traditional software suppliers like SAP, Oracle and Microsoft lack. Agility is the ability to quickly and efficiently adjust a process in the interim. He makes no secret of his contempt for the competition. "Our competitors' products are expensive, inefficient and outmoded. They say that supplying custom software is difficult and that standard solutions are the way forward in meeting their customers' wishes. That's just nonsense. Custom work is precisely what doing business is all about. It's the most important way organisations can distinguish themselves from their competitors. But the traditional software suppliers lose their interest in their customers as soon as the contract has been signed."
The Agile trend, which was just beginning to rear its head around that time, was fully embraced by the pioneering Netherlands. Nothing wrong with that, but what if your own growth and complexity means you've now become an unwieldy giant yourself, and that you're no longer known for your ability to deliver custom solutions, but instead for the fact that you're too expensive, inefficient and outmoded, to paraphrase their own words. In short, they've become what they dead-set against before (despite denying and concealing that with overblown marketing language).
And that brings me to point two. The inflexible, inefficient Christmas tree that Salesforce has become.
- Salesforce Architecture: the price tag
The Salesforce architecture is far too expensive for what it actually does. This is because Salesforce can do just about anything, but that ‘anything’ comes at a price. Let's just work it out:
Say you're responsible for a manufacturing company with around 200 staff and a turnover of 60 million, and you're getting started with Salesforce. We'll begin, then, with the primary functions around Sales and Service. The Sales department (8 account managers, 4 office workers) and the Service department (4 service engineers + co-ordinator) work out to a Salesforce package of: Sales and Service for €175 per month. Including management, that works out to 25 people at €175, being €4,375 per month. After a while, there will be a need for greater analysis features (recommended by an external consultant, who's also pretty pricey by the way, but more on that later). So Sales Cloud Einstein is purchased for €50 p/m for 5 users. Six months later, it's the Marketing department's turn, as they have a need for marketing automation, mailing lists, customer journey tracking and what-have-you. They purchase Salesforce's most-chosen marketing solution for this: The Marketing Cloud Plus for €2,500 per month. All the new information collected by Marketing, Sales and Service creates a great need for information to be accessible using an app built with the Lightning Platform Plus at €100 per 50 people.
The employee app is also purchased for all 200 staff at €25 per month. All this adds up to the following sum (due every month):
25 x 175 = 4,375
5 x 50 = 250
1 x 2,500 = 2,500
50 x 100 = 5,000
200 x 25 = 5,000
Total per month: €17,125
Knock a little discount off that and we end up at 15,000 euros per month. And that's just the monthly price for the software. A rule of thumb used by a lot of software suppliers is that the market around services is 3 to 10 times as big. So you can count on double that amount for the first two years at least. Then there's the fact that a scarcity has arisen around Salesforce expertise. It's not uncommon to see amounts starting at €150 per hour for a Salesforce partner consultant. In short, you can count on at least €200,000 in support from a partner in the first two years. All added up, you'll be over 400 grand out of pocket in two years' time. And that €15,000 amount keeps coming back every month too – which, given the Salesforce Christmas tree (which according to Salesforce is nowhere near full yet), certainly won't be going down. One question you should then be asking yourself as a right-minded entrepreneur or manager is: are there no alternatives?
- What's the alternative?
An oft-heard term that I still frequently encounter is ‘lock-in’. If we work with software X, Y or Z, will we then be locked in? Let me just help clear this one up. You will always be locked in. Whether it's about the location you're in (relocating a factory/office is expensive), staff you take on, or software that supports your primary processes – there's no escape. And you don't need one either. Just make sure you don't become too dependent on your supplier who might start throwing anything they like at you, which you'd have to swallow for lack of an alternative. Or that's what you believe.
For some time now, there's been another American company that's taken a good look at Salesforce and an even better look at what customers in the 21st century actually want. I'm talking about HubSpot. HubSpot was founded in 2005 by 2 MIT graduates, Dharmesh Shah and Brian Halligan. They saw a world in which the way products and services are bought was changing drastically. This shift resulted in the birth of a company: HubSpot. It is based on ‘inbound’. The idea that people don't want to be disturbed by marketeers or harassed by salesmen, but instead want actual help with solving their issue/problem. Today, the inbound movement is working to empower companies to help customers in their quest as well as they can. This also involves returning to the customer, which is what it's ultimately all about.
The HubSpot platform was set up based on this philosophy. HubSpot is known among many marketeers as the leading Marketing Automation system, but this doesn't do HubSpot any justice at all. HubSpot has seen huge growth in the past few years, and sizeable investments in R&D (over 180 million dollars in the past 2 years) have since turned it into a fully-fledged CRM – plus more besides. With all its features, it is targeted at employees working in marketing, sales and/or service roles. In short, at roles that put you in direct contact with the customer, whether that's an existing one or one you still need to acquire. HubSpot gives you 360-degree customer insight from whichever commercial silo you're operating. How your organization is organized or what systems you work with are no longer an impediment to that.
What exactly makes HubSpot different from Salesforce?
As mentioned above, Salesforce hasn't been just one product for a long time now, but instead a collection of products all packaged up and sold as Salesforce. THAT is where HubSpot takes a materially different approach. HubSpot is based on its own system architecture, which is being developed and redeveloped thanks to over 300 developers (2,800 employees in total) who are tweaking and optimising it every day. Take a good look at HubSpot's logo. It's a ring with three other small rings branching off it. Anyone who's been in IT for a while knows that this conveys a service-oriented architecture. Something that keeps you flexible, scalable and versatile as a company.
And yes, HubSpot does sometimes take over a company for its specific knowledge and skills too (Motion AI), but as opposed to Salesforce, this is then 100% integrated into the existing platform.
As mentioned, the architecture and consequently the user-friendliness of HubSpot for normal ‘people’ (read: the end users) is many times simpler and more practical, and thereby more efficient. This isn't just what HubSpot itself says, but can be found in more than 10,000 reviews by ‘true’ commercial professionals, like these examples below.
You can get a lot done much faster and without the intervention of expensive consultants and umpteen consultation meetings. Gone are the difficult and expensive operations and integrations. That's why HubSpot has had a heavy focus on connectivity since the start, given that they too have more than 300 standard integrations, most of which can be set up in three clicks and a few minutes' time.
HubSpot is also at least ten times smaller than Salesforce, which makes it more versatile as a company, and not anywhere near as affected by the law of the dialectics of lead that Salesforce has now run into (although the Salesforce marketing machine would tell you the opposite). HubSpot is becoming more and more aware of this too, and is slowly stepping out of the shadow of its major example: Salesforce. It is even gutsy enough to go on the offensive, according to this article that recently appeared on the renowned platform Techzine.
Customer 360 from Salesforce is a smart attempt by Salesforce to conceal the law of the dialectics of lead. However, don't let yourself be led up the garden path, and look further than the lovely tall Salesforce HQ tower in San Francisco.
Would you like to find out more about the impact of the HubSpot journey from marketing app to fully integratable platform – and what that means for you as a marketeer, sales or service expert? We'll be glad to tell you more about it during the September edition of the HubSpot User Group (HUG). Registration for this HUG is now open.