Greater usability, product “stickiness” and the newly acquired ExactTarget propelled Salesforce.com into a strong second quarter, according to analysts.
Salesforce.com posted $957 million in revenues, a 31% increase compared to last year. The San Francisco-based company projects its revenues will top $4 billion for the 2014 fiscal year and is on track to hit a major milestone next year, according to CEO Marc Benioff.
“There is no other enterprise software company of our size that is growing faster,” Benioff said during yesterday’s earnings call.
Hardly a young startup, the 14-year-old company temporarily beat back speculations that it was struggling to find new areas of growth.
Salesforce.com has focused the past few months on expanding its marketing cloud. After buying the social media monitoring service Radian6 for $326 million in 2011, it bought Buddy Media, a social media marketing firm, in 2012 for $689 million and rolled those platforms into a new ad-targeting product, Social.com, earlier this year. And last month it acquired email marketing services firm ExactTarget for $2.5 billion.
The company’s strategy of expanding beyond its automated salesforce products into a “one-stop shop” of online business marketing technologies is working, noted Rebecca Wettemann, VP of research at Nucleus Research. “We’ve seen increasing adoption of their marketing technologies by small and large firms alike, and the clear ROI companies are getting from the Buddy Media, Radian6 and other social marketing technologies have shown Salesforce’s ability to do more than deliver software,” Wettemann said.
Wettemann attributed a large part of Salesforce’s success to the “usability” of its products, noting that more Salesforce customers are able to “take what they’ve learned to build custom application on their own and automate more parts of the sales and marketing process, [and] get more out of Salesforce without the need for consultants or other investments.”
“A lot of what Salesforce is doing is making its solutions stickier for their customers,” Wettemann noted. “When marketing tools become a part of standard processes that drive greater efficiency and results, they’re more likely to become the company standard — and companies are less likely to consider switching.”
Ray Wang, principal analyst and CEO of Constellation Research, agreed that the usability of Salesforce.com’s Web products like Radian6 has improved, and pointed to mobile advertising as the company’s next challenge.
“More people are buying Salesforce.com because the usability of their products is better than the competition, but we’re hearing complaints around mobile,” Wang commented. “It’s hard to determine what the 80/20 rule in mobile is and I think they’re still figuring out how that’s supposed to work.”
Looking ahead, in addition to developments in mobile, Wang said he wants to know what the CRM company’s “mobile and analytics stories” will be at the upcoming Dreamforce annual user conference. Even though there are areas that need more work, the company made the right decision in pursing a “customercentric” approach, Wang added. “Salesforce’s customercentric approach has opened the door to many conversations,” he said, “but you can open the door and still not execute. The point is they’re executing and convincing people to buy.”
