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Chuck Schaeffer CRM Industry Month End Review—For September 2012

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Here's What Happened in the CRM Software Industry During September 2012

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Salesforce.com's Dreamforce Top Take-Aways & CRM Idol Update
CRM Software Industry Review Dreamforce was the big event for September, and we examine the top take-aways, including the Marketing Cloud which offers new social marketing but is without the demand generation features most requested by marketers. We also share how this 10th Dreamforce was different than prior events, and why the absence of significant product announcements may suggest an acceleration of CRM commoditization.

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CRM software industry highlights for September 2012:

  • Marc Benioff and the Salesforce.com team continue to promote the social revolution. Business is becoming much more social and Salesforce.com both spearheads this opportunity and is clearly a thought leader in explaining, demonstrating and promoting how this enables a never before available business opportunity. The CRM evangelist notes that people are collaborating in social channels, but many companies are still sitting on the sidelines. Companies must transform how they market, sell, service and collaborate with customers, staff, partners, machines and devices if they are to take advantage of the social revolution. Benioff also reminds that “the social revolution is a trust revolution” and advises that social must be integral to company culture to succeed. These are wise words from a leader who leads by example. Other business leaders would do well to seriously consider his recommendations now while it still can be applied for competitive advantage, not later when it will forced upon them as a cost of doing business.

    Salesforce.com launched a new push to target CMOs. Benioff has taken note of the oft quoted Gartner forecast that CMOs will invest more in technology than CIOs by 2017. In fact, in the press/analyst Q&A session Benioff said he believes this change is coming even faster. Salesforce also recognizes that CMOs are without an underlying marketing technology platform to call their own, and instead continue to grapple with a mix of manual processes and disparate point solutions.

    The Salesforce Marketing Cloud is the combination of the Radian6 and Buddy Media acquisitions, and is an interesting start, but remains overly cloudy in its role as a marketing platform. In reality, the solution is a social marketing cloud, which bodes well for aiding the social business, but lacks most of the lead generation capabilities needed by marketers. CRMsearch.com attracts about 900 to 1100 marketers per day and in our outreach sampling with these online visitors they consistently share that they want solutions for lead acquisitions, with technology that supports capabilities such as anonymous lead tracking, online lead acquisition, lead scoring, nurture campaigns, lead routing and rich demand generation marketing analytics. Salesforce.com’s marketing cloud does few or none of these things. For these most in demand requirements, customers must turn to third party marketing automation software such as Act-On, Eloqua, Marketo, Pardot and Silverpop.

    Forcing third party marketing automation systems to satisfy lead generation requirements is viable, for now, but significantly increases total cost of ownership (TCO) and the complexities of multi-vendor systems and relationships. As marketing automation software is now late in the game, a build it yourself option is undesirable, so it’s unclear why Salesforce hasn’t already acquired one of their marketing automation partners. From some comments he’s made, I believe Benioff underestimates these solutions as glorified “email marketing”, and somehow old-school or otherwise less than exciting. But if Salesforce.com expects the marketing cloud to achieve its stated billion dollar goal, it will need the growth and revenues that marketing automation continues to achieve. Expect Salesforce.com to finally acquire Marketo in the next nine months.

    There was a notable absence of significant product announcements at this Dreamforce. Last year’s introduction of Saleforce Touch now delivers an HTML5 mobile presentation layer. Work.com was born as the next incarnation of Rypple. Do.com was announced as a personal or small workgroup online project office. Chatter now includes a Chatterbox to sync files. And several product announcements such as Salesforce Identity, Chatter Communities and the Data.com social key won’t be available until 2013.

    This year the show felt as though it was missing that big announcement that would deliver something new and excitedly different. It felt like there was an announcement that was planned, but never came to fruition and missed the annual event. While it’s difficult to deliver innovative technology every year, this has been a historical hallmark of Salesforce.com and something the CRM company effectively uses to position itself as unique. For the CEO whose most asked question to others is “What does the future look like?”, this year’s Dreamforce looked like incremental advancements of existing solutions.

    Salesforce.com has successfully executed a CRM software strategy and evolution not by advancing the CRM software to any unique capabilities but by introducing innovation on the periphery which arguably adds value to the core CRM software – and creates new messaging that catches competitors by surprise and leap frogs the competitive landscape. Just think back to the announcements of cloud, social, Force.com, AppExchange, data.com, heroku, chatter and other novel product offerings that pumped new life into a 20+ year old CRM software market. The CRM software itself doesn’t do anything that hasn’t already been done for nearly two decades, but by introducing and heavily promoting innovation on the fringes, the sum of the pieces creates a synergy that has given the company a leadership position.

    Dreamforce has historically been the event to introduce new innovation and promote a rolling thunder messaging campaign which raises the industry bar and puts competitors on the defensive. In fact, in many ways, Dreamforce is the event with the marked purpose to position its CRM application as unique in some new way. That didn’t happen at Dreamforce 2012. And to be clear, CRM software in the cloud or otherwise is rapidly becoming a commoditized market. Salesforce along with virtually every competitor performs account/contact/activity/opportunity/campaign/case management equally well.

    The prior two Dreamforce conferences positioned Chatter as the internal collaboration tool that customers needed and competitors didn’t have—and in the process kept the flagship CRM software more relevant. But now Microsoft, Oracle, SAP and other competitors all have a comparable internal network and collaboration tools. This Dreamforce introduced a social marketing play by way of the Radian6 and Buddy Media acquisitions, but direct competitors such as Oracle have also acquired the same types of tools (Collective Intellect and Vitrue) which eclipse the type of unique positioning historically achieved by Salesforce.com.

    Competitive advantage is earned when products or services meet the three criteria of being relevant, measurable and unique. This last tenant of being unique is clearly the most difficult to achieve and nearly impossible to sustain. And without uniqueness, product commoditization accelerates and forces pricing pressures and margin erosion. Salesforce currently sells its solutions at a high premium relative to other cloud CRM competitors, which is a testament to its brand, and its ability to be perceived with competitive advantage. However, as of this year, there is nothing material or notable – perceived or actual – that Salesforce offers that isn’t also available from competitors. Unless this situation changes, and the company introduces new product innovation that gives it unique footing, CRM software competitors with much lower prices will find increased customer acquisition success and market share growth

  • This month the CRM Idol judges announced the 6 semi-finalists for EMEA, Asia and Australia. From here, the 10 finalists will be named October 8th – 7 from the Americas and 3 from the ROTW. You can get more information by visiting crmidol.com.

  • If I've missed anything, please let me know at chuckschaeffer[at]crmsearch[dot]com. Thanks! End


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Salesforce.com has successfully executed a CRM software strategy and evolution not by advancing the CRM software to any unique capabilities but by introducing innovation on the periphery which arguably adds value to the core CRM software – and creates new messaging that catches competitors by surprise and leap frogs the competitive landscape.

 

 

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