SalesforceIQ unhitches from Sales Cloud to woo SMBs
- Summary:
- With the advent of SalesforceIQ, there are now two distinct Salesforce product lines, one for enterprise, one for small business. Is the SMB strategy sound?
With the release last October of SalesforceIQ — initially in the US and Canada, and worldwide as of last week — Salesforce has completed the bifurcation of its product line into two distinct technology stacks. Its product offering for midmarket and large enterprise is Sales Cloud, built on its App Cloud platform, which has its own version of SalesforceIQ. Meanwhile, it offers the SMB sector a best-of-breed portfolio, in which the core sales automation platform is a separate small business version of SalesforceIQ.
Entry-level offering
The new Salesforce IQ for Small Business replaces the former Salesforce Group Edition as the entry-level offering for small businesses. It uses the machine intelligence acquired in the $350 million purchase of Relate IQ in 2014 to automate much of the drudgery of prioritizing and recording sales contacts. Chad Kutting, general manager of SalesforceIQ, who spoke to us by phone late last week, explains the product ethos:
We fundamentally believe that CRM starts here. As a small team you just want something you can plug in and get value from immediately.
We've been able to package relationship intelligence and data science in a way that the small business can plug in straight away.
You understand the flow right away and get value, because it's built for you as a small business.
The aim is to offer small businesses a product that's more suited to their needs — and thus more competitive in the market — than the old Group Edition. By that measure, it seems to be successful. Veteran SMB sector analyst Laurie McCabe says it gives SMBs "a much better bang for the buck," and according to Salesforce, businesses that have been using it report saving more than 4 hours a week on manual data entry and up to a 70 percent increase in number of deals closed per week. Kutting tells me:
In our product development, the question is always, does this work for small business? It's simple, it's easy to pick up but also it's powerful.
We want to give you the power of an enterprise but we want to deliver that in an easy, intuitive way.
Breaking the upgrade path
Those benefits come at the expense however of breaking the old upgrade path that ran directly from Group Edition to the Professional and then Enterprise versions of Salesforce's mainstream product set. It's still possible to migrate from SalesforceIQ to the Sales Cloud, but only by porting the data and learning a new UI. All the messaging about Salesforce being a single, integrated cloud platform no longer applies if you're an SMB customer.
Instead of Service Cloud, your customer service product is Desk.com. Your marketing product is Pardot. If you'd thought the recently announced acquisition of Steelbrick means you'll soon have the option of plugging in configure-price-quote functionality, think again. The SalesforceIQ team will evaluate whether to add quoting and invoicing, but there are no plans to do so at present, says Kutting.
There is a packaged, free-of-charge integration with Desk.com, he points out, and there's a "seamless" connection to Pardot, too.
We can plug in with just a few clicks to Desk.com. As the marketing automation goes out [when integrated to Pardot], the sales team knows that those emails are being sent, the service team is in the loop every step of the way.
There's not a bundle where everything operates all together. But if you look at the way it's being used, it's more about having access to that data rather than one single experience.
What SalesforceIQ can do is provide that single source of truth.
No common ecosystem
There's a further disadvantage of running each of these products on their own separate technology stacks. It means there's no common ecosystem of third-party apps, as there is for the Salesforce platform products that larger businesses use. Each SMB product team separately evaluates the third parties that make most sense for their own product, and partners have to build multiple integrations to each of them. Or as Kutting puts it:
While we cannot share a pool of third-party integrations, we're all approaching it in the same way of what makes most sense for our business and our customer.
In spite of this best-of-breed approach, Salesforce isn't looking to work with solution providers or integrators to take SalesforceIQ out to the market. Instead, it's counting on ease-of-use and its own direct telesales team to get SMBs onboard, says Kutting.
If they go to the website and sign up for a free trial they're going to have an intuitive experience that helps sell itself.
Our aim is to grow market share through that out-of-the-box application. We believe we're going to give SMBs fantastic value from day one.
There's certainly all to play for in a marketplace where most businesses still have no CRM software of any kind, and the rest are mostly using other solutions, as SMB Group's Laurie McCabe pointed out last week in a detailed analysis of Salesforce's refreshed SMB strategy (worth reading in full):
True, Salesforce is the #1 CRM vendor in SMB: SMB Group’s 2015 Routes to Market study shows that 25% of SMBs (1-999 employees) that currently use a CRM solution use Salesforce. However, 75% use other brands, from old-guard competitors such Microsoft and ACT!, to newer ones such as Insightly and Pipeliner. And then there are all of the SMBs still using Excel, email and/or basic contact management solutions.
Salesforce has yet to make any headway against that amorphous mass of 'others'. Even though Gartner's latest CRM market figures show that Salesforce commands a rising 18.4% share of the total market, its growth has mainly come at the expense of enterprise rivals SAP and Oracle, whose shares have been declining fast. As CRMsearch's Chuck Schaeffer points out, 'others' have grabbed even more of the available dollars, growing to a 55% share in 2014, up from 46% in 2007.
My take
For a while I've been speculating that Salesforce's recent emphasis on acquiring large enterprise deals led it to take its eye off the ball in the SMB market. While that view has not been well-received within Salesforce, I didn't see any persuasive counter-argument prior to the launch of SalesforceIQ.
That launch now provides clear evidence that Salesforce is indeed investing in recapturing momentum in the SMB marketplace. The question now becomes, can it succeed? My feeling is that it might, but there's more that it still needs to do.
I'm particularly concerned about the lack of a partner strategy for taking SalesforceIQ to market. As former Salesforce insider Kraig Swensrud, now CMO at GetFeedback, told me last year, it's crucial to work with solution providers that understand small business verticals:
It’s going to be companies like us, and system integrators, that bring these packaged offerings to the customers at a low enough price point that they can afford it.
I know there's an argument that it should be possible to deliver modern digital functionality on-demand without manual intervention of that type. While that may work in certain pockets of the US market, it will certainly meet resistance in many countries where SMBs remain committed to buying from the IT channel, even when it comes to cloud products.
The other thing that worries me is the contradiction between Salesforce's platform ecosystem message in its App Cloud and the best-of-breed reality in its SMB offerings. I can understand why the vendor isn't going to be drawing attention to the fact that its SMB portfolio doesn't follow the same platform ethos as its enterprise products, but small business customers that sign up having heard that messaging may feel disappointed or even misled when they discover it doesn't apply to the Salesforce products they've bought into.
A more distinctive marketing message that wasn't shy of addressing that point would also give more scope to take up the mantle of market education. I'm with McCabe when she says there's a huge opportunity for thought leadership here:
The broader swath of SMBs still need a lot of business and conceptual education about how and why sales, marketing and customer service are changing, and what they need to do to succeed amidst these changes. Salesforce paved the way in educating SMBs about the big picture benefits of the cloud, it should have the same lofty goals in terms of educating them about the new customer journey.
None of this should detract from the merits of SalesforceIQ as a product in its own right. It's a good, distinctive offering for SMBs that shows Salesforce is prepared to embrace innovation that extends its core offerings in new directions. But launching the product is just the beginning. Salesforce now has to show it understands how to run with it.
Image credit - Cloud with ladder below © lassedesignen - Fotolia.com.
Disclosure - Oracle, Salesforce and SAP are diginomica premier partners at the time of writing.