Does Salesforce still care about SMBs?

Go back to the early days when Salesforce still counted its annual revenues in hundreds rather than thousands of millions and you'll see that its early success was built on selling to small and midsized businesses (SMBs). When it acquired 4-person startup Keiden in 2006 for its ability to link Google AdWords campaigns into Salesforce, the resulting product was all about optimizing sales processes for SMBs.

Today, Salesforce has moved on to target larger enterprises, as Keiden co-founder Kraig Swensrund told me when we caught up in San Francisco on Monday morning:

When we look at [Salesforce CEO] Marc [Benioff]'s [Dreamforce] keynote on Wednesday, my hunch is what we're going to see is the largest companies in the world tapping Salesforce. We're going to see the shining examples of success of the Fortune 500.

I don't think we're going really to see any SMBs. That's where [vendors like us] come in and the ecosystem. I don't think that's bad. I think that's Salesforce's strategy.

That strategy, said Swensrund, is now founded on offering a platform that large enterprises can develop on — and on which partners like Swensrund's current company can build packaged offerings for the SMB sector.

Having listened to the latest earnings call, if you're going to be a $10 billion revenue line company, the fastest path there is multi-million-dollar deals with Fortune 500 companies. Therefore you need products like the Service Cloud and the Marketing Cloud and Wave and these big platform deals to get there.

I was listening to the earnings call and I wrote down this quote from Marc that said, 'We're not an app, we're a platform. We're not an app, we're an ecosystem.'

That was really the first time I've heard him say we're not a CRM company even, we're something much bigger. And I think that's probably credit to [Salesforce president] Keith Block coming in from Oracle and selling these solutions. You can sell a 10 or 20 or 50 million dollar deal when you're selling a solution for a company like Home Depot or General Electric.

Where the ecosystem comes in

Swensrund spent six years at Salesforce after the Keiden acquisition a decade ago, until leaving in 2013 to found online and mobile survey provider GetFeedback. That company was acquired last year by originally Australian email management provider Campaign Monitor, which immediately named Swensrund CMO and brought in Assistly founder Alex Bard as CEO (Assistly was acquired by Salesforce and has become its Desk.com service management app for small businesses). The focus of this management team is squarely on offering packaged apps for SMBs.

What I think is that SMBs, they want apps, because they understand apps as opposed to platforms.

Bringing those packaged solutions is what they need, at a price point that's dramatically lower than a million dollars. Millions of companies don't have a million dollars in a year to implement an analytics cloud or a marketing cloud. That's what I'm pretty passionate about doing.

Fortunately for Salesforce, its AppExchange provides a thriving marketplace where vendors can bring SMB-focused packages, said Swensrund.

If you look at the health of the partner ecosystems, to us as a third party, it appears the Salesforce ecosystem and the AppExchange as a marketing vehicle for a company like ours appear much stronger than what Microsoft or Oracle has to offer.

When you go to the AppExchange, it looks alive and you feel like there's gravity there.

The other factor in the success of the ecosystem, said Swensrund, is the proliferation of small systems integrators (SIs) that help SMBs implement Salesforce along with third party packages.

There are a ton of these boutique regional SIs that are doing implementations for a real estate agent or a doctors office or a small business in the middle of the country.

I've seen a lot of these regional SIs working with our company that just bring us into these implementations. They're the ones that can explain the value proposition of the partners in the ecosystem. They're the ones that can configure the Salesforce app.

That has to be Salesforce's strategy. Right now they're not investing millions of dollars in making the SMB technology better and simpler, they're investing that money in the high-end products so that they can sell to the Fortune 500.

So who's going to do it? 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.

My take

I've written before about Salesforce's focus on building up sales to large enterprises. Salesforce spokespeople have told me that doesn't mean the company has been neglecting SMBs, pointing to product initiatives that are designed specifically for the SMB market.

But as Swensrund points out, Salesforce relies on its ecosystem of ISV and SI partners to do the heavy graft of serving its SMB customer base. That partner ecosystem is crucial to maintaining its presence in the SMB market.

Disclosure: Salesforce is a diginomica premier partner. My travel to attend Dreamforce has been funded as part of a paid consulting engagement with Vlocity, a Salesforce ISV partner.

Image credits: Small businessman facing legs of giant © ra2 studio – Fotolia.com.