In 1999, former Oracle salesman Marc Benioff started a groundbreaking company to help
salespeople manage their relationships. His company, Salesforce.com, was built on a model radically different from other business software companies. In fact, the first marketing campaign featured the word “software” with a line drawn through it, implying that its “software” wasn’t actually being packaged as software at all.
Benioff’s insight was that advances in Internet technology had made it easy for nontechnical people (even salespeople!) to purchase business software, a revolutionary idea. Sales reps could subscribe to access software without needing help from their IT department. The software would update itself, and the sales reps could use the software without their parent company’s involvement. This was the promise of the cloud—easy, efficient, and secure. This idea alone helped Salesforce.com grow at lightning speed.5
The software-as-a-service model meant that the software didn’t have to be downloaded, managed, or upgraded.
When Salesforce.com came along, it was one of the first software-as-a-service models.
This meant that the vendor managed the software implementation and that the customer didn’t have to worry about the responsibilities of ownership—a big advance from prior business models.
Also Salesforce.com used a new strategy to seed the market, now known as
“consumerization of the enterprise.” Instead of selling to the larger enterprises, Salesforce.com targeted the salespeople themselves. The salespeople acted like consumers, making a decision on their own behalf, subscribing to Salesforce.com to make their own lives easier.
Salespeople could actually buy it as individuals, for a relatively low price that they could expense. The Salesforce.com solution was first designed to help the salespeople, not with a primary focus on the corporation. As a result, the salespeople loved it. It was easy to buy and powerful to use.
Even though Salesforce.com initially targeted salespeople, the end users of their solution, from the beginning, the start-up envisioned partnerships with vendors who would sell related apps and IT firms that would implement the Salesforce.com solution enterprise-wide. “Salesforce.com wanted to foster collaboration between Salesforce.com and individual partners and customers but also among the partners and customers,” says Leyla Seka, senior vice president and general manager of Desk.com at Salesforce.com.6 What was smart about Salesforce.com’s strategy was that it, like Pandora, had the long-term strategy in mind, even as it was in the start-up phase. Rather than “managing the brand” in the traditional sense, it encouraged everyone in the user/developer community to communicate with each other.
Salesforce.com began to transition into its next phase, enterprise sales, once it had seeded the market with users and achieved critical mass. The company began to aggregate data on which companies had the most salespeople using Salesforce.com and then sent a representative to talk with the corporate employer. The pitch was, “Look how many of your salespeople are already buying Salesforce.com—wouldn’t you like to gain the control and price break that come from central purchasing?”
From there, it continued to engage its community, building forums to generate conversation online and listening carefully to the good and the bad news. “We’ve done interesting things at Salesforce.com,” said Seka. “With every product release, we incorporate features that our community members have voted on through our ‘True to the Core’ program.”
Today, Salesforce.com is the corporate standard for customer relationship management, purchased at the enterprise level. The company’s unique strategy of finding prospects by providing direct value to the individual users of their “nonsoftware”—the salespeople—was key in helping it grow from a scrappy start-up into a mature company.
From there, extending its marketing efforts to reach the enterprises where these individuals worked was an easy next step. Salesforce.com has since grown to look more like a traditional enterprise SaaS company, with a big sales organization and big annual subscription contracts. But it has kept its membership orientation.
In addition to providing the initial suite of services and community for salespeople, the company also has invested heavily in a community for developers. Its AppExchange is a marketplace where Salesforce.com customers can download free or paid applications that increase the value of the data customers keep in the Salesforce.com system. These apps are vetted by the Salesforce.com organization, and the app developers and users further strengthen the community around Salesforce.com.
What’s great about the AppExchange and Salesforce.com’s developer community, DeveloperForce.com, is that the partners get immediate feedback on their apps and can rapidly improve their offerings in response to what they hear. The community mitigates risk that customers won’t like new apps because the app developers know they will be told how to make them better. Often, partners even join forces and develop new offerings in response to community discussions.
For many sales and marketing professionals, as well as for the application developers who build solutions that complement Salesforce.com, the Salesforce.com community is core to its success, conferring status, publicizing job opportunities, and building important peer relationships.
Access has trumped ownership, turning the software business model upside down and revolutionizing an entire industry. Salesforce.com continues to reinvent itself—it’s no longer just about delivering for sales users. In 2014 Forbes named Salesforce.com the world’s most innovative company, for a record fourth consecutive year.7 It’s Salesforce.com’s commitment to innovation that has allowed it to continue evolving and expanding, going from innovative start-up to mature industry leader.
What Can We Learn from This Model?
If your organization feels like a rocket ship and members flock to join you because they describe your organization with words like “cool,” “under the radar,” or “disruptive star”—make sure you have a plan. Know what you’re going to do when you’re no longer what Membership Economy pioneer Jim Clark (founder of many companies including Netscape, WebMD, and myCFO) once called “the new new thing.” Because that day is
coming.
This transition from start-up to mature organization is deceptively difficult.
This transition from start-up to mature organization is deceptively difficult. Everyone knows that getting started is hard, but most people don’t realize how many companies nose-dive after a fantastic launch phase. Organizations need to expect and prepare for potential hazards, including slowing revenue growth, conflicts between new and existing members, and increasing competition from both the big players who are finally noticing you and new up-starts who see you as the dinosaur.
Moving from the single big idea to continuous innovation is tricky, but critical. The information here is relevant even for organizations that have successfully managed the transition to relative maturity. The same techniques that help transition a start-up to a success can be applied to incorporating a skunkworks endeavor into the larger organization. After all, we’ve seen casualties of the Membership Economy, firms that had survived the transition from start-up to mature organization only to stumble or crash (Yahoo!, MySpace, Ask Jeeves, LoudCloud).
The best Membership Economy organizations have learned to evolve. Generally, they have solid infrastructure, predictable revenues, metrics that they can count on, and experienced leadership. The challenge they face is precisely this: their own success. Many of the casualties of the Membership Economy had already made it past the challenges of starting up and growing into a successful business.
Remember
Being known as “edgy” or “cool” is a double-edged sword—it speeds early growth but can’t work as a lasting brand.
As you grow, you need to evolve your funnel into an hourglass (see Chapter 5), expanding the engagement and impact of members.
Once you’ve proven the model and acquisition and retention are working, aggressively seek to automate processes and build structure.
Evaluate what major change you can make to stay edgy to at least some people.
Consider what new benefits you can capitalize on because you’ve become mainstream.
Build some protection against the biggest players who haven’t seemed to have noticed you—they’re about to put you in their sights.