Five Business Lessons from Salesforce.com

On a recent work trip to Boston I read the superb Behind the Cloud: the Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company - and Revolutionized an Industry by Marc Benioff, Chairman and CEO of the customer relationship management (CRM) behemoth.

Benioff tells the story of how Salesfore.com grew from a small startup to the company that is now synonomous with the CRM industry. Salesforce.com is rightly heralded as the most successful SaaS company, with over 16,000 staff and $6 billion dollars in annual revenue. It’s for that reason I’m pleased Benioff shared this tale of phenomenal growth and the part Salesforce.com played in creating the software as a service (SaaS) industry.

The book contains 111 plays (the number is based on the company’s 1-1-1 philanthropic model) which focus on different facets of managing a business including startups, SaaS marketing, events, sales, technology, international growth, finance and leadership. The plays are concise, yet insightful and the importance of giving back is a reoccurring theme throughout the book.

Among the many excellent tips shared by Benioff, five important lessons stood out:

1. Market to the end user
It may seem obvious now, but when Salesforce.com started most enterprise software was marketed towards executives who controlled budget. Benioff says he found this approach nonsensical, and that end users were delighted to finally be given a voice. The lesson here is that by focussing on the end user, Salesforce.com was able to build a community of people who were advocating for their product within their respective companies.

2. Referrals are your best marketing play
Benioff explains how every employee should be considered part of the marketing team and that every customer could serve as a salesperson. By offering training and support to customers, Salesforce.com created an army of happy customers that would help evangelise the product and could be called upon to speak with prospects. This is an interesting play and referrals, in my mind remain an underutilised tool to help get a sales deal over the line.

3. Welcome, leverage and enjoy competition
When Salesforce.com launched in 1999, the SaaS industry was still in its infancy, with few companies delivering products online. Many people were uncertain about using cloud-based software and the industry leading CRM, Siebel Systems was very much an old-school software provider. However, in 2003 after years of denouncing the SaaS model, Siebel announced it would launch its own on-demand product. This move to directly compete with Salesforce.com created a market and more importantly validated the company’s innovative SaaS business model.

4. Give away your product for free
As part of the company’s seed-and-grow strategy Salesforce.com offered businesses a free trial for five users. The trial was open to anyone and they didn’t even need to speak with a salesperson. This approach to sales was unheard of within the enterprise software industry, but the concept has evolved into what we now know as the freemium model. This strategy helped both entice new customers and increased opportunities for Salesforce.com to receive valuable feedback and further improve its product.

5. Go after the market leader
Benioff shares that Salesforce.com very deliberately went after the market leader, Siebel. This was the only position they were vying for, so it didn’t make sense to worry about other companies. As a new business that was introducing a fresh approach to software, Salesforce.com managed to position itself as both the David in a Goliath battle and the visionary, taking on an unimaginative and slow moving corporate. By drawing Siebel into a battle of words, the market leader began defending themselves and acknowledging Salesforce.com, which helped legitimise the plucky startup (at that time) further.

If you’re interested in learning more about SaaS businesses and want practical tips you can implement today, then read Behind the Cloud: the Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company - and Revolutionized an Industry. Benioff has an incredible tale and it’s inspiring to hear how he followed his dream to change the software industry forever. The book is a treasure trove of actionable strategies, tips and best practice, and is essential reading for anyone working at a SaaS business.