Salesforce.

com: Creating a Blue Ocean in the B2B Space

Salesforce, a dominant CRM company revolutionized CRM through providing CRM software as a service through cloud
computing technology. Salesforce has started with a disruptive innovation by providing the software on a platform that had
not been used by enterprises before which had the advantage of flexibility, cost benefits, credibility and adaptability. The
company has been very successful through the years with brilliant innovations on the product, network and profit model.
Today, Salesforce has ventured into healthcare, IT and marketing automation. In our case we aim to understand the
predominant innovations, competitive advantage, sustainability analysis and future recommendations.
Throughout its company history, Salesforce has been constantly reinventing itself to live up to the brand promise and to
differentiate itself from other CRM companies. Therefore, Salesforce as a whole is predominantly a successful brand
innovation, which is achieved through the following innovations including but not limited to:
Profit model innovation (Subscription Model & simplified price structure), network innovation (Force.com), product
performance innovation (Cloud computing service, stripped down feature), product system innovation (Force.com), service
innovation (trial purchase), and customer engagement innovation (Force.com & Chatter). Among them, the cloud
computing, subscription model and Force.com are the three most important elements.
1. Cloud computing - Traditionally, CRM companies like Oracle developed and sold software to B2B customers, which not
only required huge financial investment upfront, but also imposed a handful of burden on the customers: companies need to
hire internal experts to install/use the software and train employees accordingly; at the same time, companies needed to
purchase costly hardware and additional equipment to ensure the proper operation of the software; on top of that, upgrading
remains a constant struggle for companies since the integration with legacy system was usually resource-consuming and
merely satisfying. Based on its deep understanding of customers pain points and needs, Salesforce invaded the CRM industry
with its truly disruptive innovation: a cloud computing based CRM product/service. It freed customers from the troublesome
software deployment, upgrading, additional equipment investment and limited access to CRM service. While it significantly
lowered the cost for customers, user experiences were greatly improved as the software included simpler but to-the-point
features and a truly intuitive interface.
2. Subscription model: Another key innovation for Salesforce is subscription model it has adopted, which fundamentally
changed the way Salesforce makes profit. Instead of paying both high up-front and on an on-going basis, customers are
allowed to pay subscription fee that is as low as $65 per month. It allows customers to manage their costs more conveniently,
and at the same time significantly increases the flexibility: customers can leave whenever they want to, rather than being
forced to stay because of the high investment. In addition, the low subscription fee reduces the barrier to entry, and therefore
has attracted a large base of new customers. Unlike traditional CRM companies that only serve big corporations with deep
pockets, Salesforce is able to target and secure medium and small businesses customers.
3.Force.com - Force.com is a platform that allows any independent and external developers to create enterprise-class
solutions by giving them the tools they need at a lower costs and shorter time. The open source platform allows everyone to
be part of the development process. It not only makes customization easier and cheaper, and increases the engagement level
between the company and the customers, bringing the sense of community and increasing brand loyalty. At the same time,
Salesforce also established partnership with big brands like IBM, benefiting from the synergy.
On reflection, Salesforce made several strategic moves to address customer concerns in the existing CRM market.
Customer concerns

Salesforces strategy

Sustainability of approach

Huge expenditure: includes

financial costs, human
resource input & long
purchase/ deployment
cycle

Subscription model, 68
dollars a month, no
upfront huge investment

Yes: Easy adoption (low cost), higher flexibility & better customer
experience will nurture customer loyalty, and ultimately increase
customer base (to middle & small b2b customers).

Difficulties in integrating
with legacy system

Cloud computing
service

Although under subscription model, the switching cost is lower and

customers can more easily default, it in the long term is more
sustainable for the business.

Yes: From product to service, Salesforce has the first-mover

advantages in providing CRM cloud service; easier for product future
upgrade (burden shifted from the customer side to the Salesforce
side) and innovations

No: Potential issues regarding customer data protection, burden of

server investment
High risk associated and
uncertainty of ROI

Trial, subscription
model

Yes: trial allows customers to have a better understanding of the

products before purchasing, which will increase customer
satisfaction, and benefit Salesforce in the long-term.
No: additional cost and risks for Salesforce associated with trial

Lack of customization

Force.com

Yes: leverage on external resources and builds partnership with third

parties; fulfill customers different needs with very low internal
resources; rating system
No: open source leads to the lack of product performance control;
possible intellectual proprietary issues

Salesforces rapid growth in the face of well-established and highly successful competitors was because it continuously
disrupted the market through a variety of innovations. However, the most important factor in the growth of Salesforce has
been that it has continually focused on the customer for each of its innovation.
Salesforce followed a process - As mentioned in the HBR Article, Surviving Disruption, Disruption is less a single event
than a process that plays out over time. Sometimes quickly and completely and in other times slowly and incompletely. This
immediately ties back to Salesforce as it innovated through a strategic process that not only delivered innovative products but
also continually aimed to complete each innovation through another innovation that followed. For example, the cloud
computing software was further completed through the app exchange by adding customization; this was further completed
through Chatter by adding a social and collaborative aspect.
Salesforce created needs not just fulfilled needs - Salesforce was build on the premise of fulfilling a customer need - A
more affordable and easily deployable on demand software. They grabbed the attention and loyalty of customers through their
lower risks, lower entry barriers and lower costs. They further fulfilled needs through providing customization to companies.
However, they also created needs through aspects such as Chatter that added an experience of Social networking and
Collaboration to their existing platform.
Salesforce provided what competitors could not: Salesforce provided accessibility through which customers could access
the software through multiple devices, their lower costs let 2 tier and 3 tier businesses try the product and hence expanding
their market and their adaptability did not interfere with the companys existing heritage systems. Through this Salesforce
realized an opportunity that pre-existing market leaders could not lower costs as their investment was larger and could not
provide adaptability as their system was built in a way to integrate with the heritage system.
Extendable Core - The HBR article Surviving Disruption introduced a concept, Extendable core, the aspect of a business
model that allows the disrupter to maintain its performance advantage. Salesforce had this extendable core, the cloud
computing system, which had proven to be its performance advantage. This set a base for Salesforce to continually innovate
as the customer had already accepted its initial offering. The extendable core further led to the building of an ecosystem, as
there were no ecosystem or technological implementation barriers.
What should Salesforce do next? The answer stems from the question what can customers do next after CRM? Reaching a
customer facing insight, managing customers and understanding behaviors leads to a next step of developing strategic
marketing to the customers. This is where Salesforce has a potential strength as they have already achieved credibility in a
very closely related business. This strength could be executed in 2 ways:
1. B2B Enterprise Marketing Objective (EMO) based software
2. B2B Individual Marketing Objective (IMO) based software (stripped down features & opening up to a new
market).
These marketing objective oriented software could be further packaged to serve the needs of an enterprise or individual
(businessmen, entrepreneurs), while adhering to the IMC loop. The software packages would be able to serve the needs of
financial planning to achieve marketing objective oriented goals and determining the risks associated with a plan. Salesforce
can thus incorporate forecasting from trends noted from the CRM and real time market scenarios to help provide ease of
planning to individuals and institutions.