Salesforce.com Analytics Cloud

Marketing Plan for Emerging-Small-Medium

Businesses

Paul Gabriel

Brandon Gojenola

Philip Lam

Matt Levine

Elliot Mar

Objective:  

Provide  a  strategic  go-­‐to-­‐market  plan  for  lower  tier  markets,  with  

recommendation  on  whether  or  not  it  is  worth  positioning  a  stripped  down  

version  of  Analytics  Cloud  to  smaller  companies.  

 

Analytics  Cloud,  powered  by  Wave:  

Up  until  now,  Salesforce  customers  have  been  able  to  run  reports  on  data  in  

Salesforce  to  understand  some  trends,  but  have  not  been  able  to  cross  

reference  that  data  with  other  data  they  have  in  other  systems,  like  ERP,  or  

other  back-­‐end  systems.  Analytics  Cloud  is  a  new  service  provided  by  

Salesforce  that  enables  companies  to  use  the  data  they  have  in  Salesforce,  

back  end  systems,  and  even  product  usage  trends  so  that  those  companies  can  

make  strategic  decisions  for  the  future  using  all  this  data  together.  The  

pricing  structure  is  currently  as  follows:  1  license  of  Wave  to  power  the  

platform,  $495,000/year.  Builder  licenses  (to  create  reports)  -­‐  $3000/year,  

and  Explorer  licenses  (for  business  users),  $1500/year.  

   

Analysis  Overview:  

Company  and  Climate:  At  Dreamforce  ’14,  Salesforce  launched  Analytics  Cloud,  

positioning  the  product  for  enterprise  level  companies.  Given  the  cost-­‐

prohibitive  budgeting  required  to  pay  for  this  product  by  smaller  companies,  

we  will  explore  whether  or  not  there  is  a  legitimate  opportunity  for  

Salesforce  to  take  the  product  down  market  after  the  initial  launch,  assuming  

the  product  find  success  in  at  the  enterprise  level.  

 

As  there  is  already  a  team  in  place  for  this  product,  we  are  assuming  that  

rolling  this  out  to  a  new  market  segment  would  require  relatively  few  

additions  to  the  existing  Analytics  Cloud  team  of  product  developers,  

engineers,  marketing,  and  management.  We  are  going  to  outline  the  additional  

required  resources  in  this  report.  

Customer:  As  mentioned,  typically,  Salesforce  customers  have  been  looking  for  

a  way  to  combine  all  of  their  data  together  to  make  more  sense  out  of  expected  

market  trends.  This  is  the  classic  Big  Data  problem  that  has  arisen  with  the  

success  of  cloud  computing.  

Collaborators:    The  main  collaborators  here  will  be  existing  implementation  

partners  as  well  as  other  divisions  in  the  company.  Many  of  our  implementation  

partners  serve  as  advisors  to  our  customers  and  help  them  implement  of  our  

products  with  best  practices  to  help  ensure  success.  These  partners  can  be  

educated  on  our  new  product  at  so  that  they  are  knowledgeable  on  new  

opportunities  with  their  clients.  While  these  partners  are  used  more  in  the  

upper  tier  market  segments,  they  are  still  used  frequently  as  low  as  the  SMB  

market  segment.  In  conjunction  with  how  Salesforce  markets  all  of  its  non-­‐CRM  

products,  positioning  our  core  sales  teams  to  loop  in  Analytics  Cloud  will  be  

a  commonly  used  internal  “lead-­‐pass”  system  that  Salesforce  already  uses  for  

all  products.  

Competition:  Our  closest  competition  to  Analytics  Cloud  (AC)  would  be  Tableau,  

as  they  target  the  same  business  need  as  AC  does.  While  many  of  Tableau’s  

capabilities  mirror  those  of  AC’s,  Tableau  does  not  cover  some  of  the  key  

differentiators  like  predictive  analytics,  and  of  course  lacks  the  thorough  

integration  with  the  world’s  most  commonly  used  CRM,  Sales  Cloud  by  

Salesforce.  

 

Strategy  and  Implementation:  With  our  recommendation  to  pursue  the  SMB-­‐MM  

business  segments,  we  plan  to  utilize  the  existing  team  in  place  from  the  

launch  of  Analytics  Cloud  from  a  product,  engineering,  and  management  

perspective,  all  while  adding  minimal  staff  to  handle  the  additional  

responsibilities  around  marketing  and  sales  for  this  segment  and  2  additional  

staff  for  the  product  as  it  will  be  positioned  to  this  segment.  The  product  

will  also  be  stripped  down  from  its  original  formatting  to  fit  the  needs  of  

smaller  businesses.    

The  product:  Many  of  the  capabilities  will  need  to  be  reduced  with  the  lower  

edition  product,  including  reducing  the  max  users  of  the  platform  down  from  

400  users  to  20  users.  As  with  the  higher  tier  product,  if  they  need  more,  

another  Wave  license  would  need  to  be  purchased.  Additionally,  we  recommend  

limiting  the  number  of  outside  applications  that  can  be  integrated  for  data  

addition  to  1  app  and  a  product  channel  as  well.  Most  of  these  smaller  

companies  won’t  need  as  many  channels  for  input  anyway  to  other  systems,  and  

this  will  be  a  good  way  to  get  them  to  upgrade  to  the  higher  tier  should  they  

continue  to  grow.  The  price  of  the  product  will  therefore  drop  to:  Wave,  

$50,000,  Builder,  $1,200,  Explorer,  $600.  

 

The  people:  As  with  many  other  Salesforce  products,  we  will  include  our  sales  

team  in  a  co-­‐prime  model,  where  a  core  AE  will  be  able  to  engage  the  

appropriate  resource  when  they  discover  a  potential  opportunity.  This  is  the  

way  Salesforce  has  had  success  with  other  products  like  Marketing  Cloud,  

Service  Cloud,  Desk.com  and  Data.com,  and  we  fully  expect  this  to  continue  to  

work.  This  also  allows  us  to  add  minimal  staff  as  we  have  already  hired  and  

staffed  most  of  the  other  positions  for  AC  earlier  in  the  year  for  the  

enterprise  launch.    

 

In  order  to  justify  our  business  initiative  towards  marketing  a  lightweight  

and  barebones  version  of  the  Salesforce  Analytics  Cloud  software  to  ESMB-­‐MM,  

we  first  identified  the  total  approximate  potential  opportunity  for  our  

product  launch.  To  begin,  we  leveraged  data  collected  by  the  US  Census’  

Statistics  of  US  Business.  The  Census  data  collected  has  been  pooled  together  

annually  from  years  1988  –  2011.  Given  that  we  are  in  Q4  2014,  we  developed  a  

way  to  annualize  changes  in  the  segmented  data  by  taking  the  average  growth  

rate  broken  down  into  the  following  market  segments.  

A) US  Firms  with  less  than  20  Employees  

B) US  Firms  with  20-­‐99  Employees  

C) US  Firms  with  100-­‐499  Employees  

 

Our  itemized  market  data  begins  goes  from  2006  to  2011.  We  chose  this  time  

frame  to  capture  our  economy  prior  to  the  economic  downturn,  the  downturn  

itself,  and  the  slight  recovery  that  followed.  We  argue  taking  the  average  

change  in  total  US  firms  –  segmented  by  total  employees  would  give  us  a  

growth  rate  in  order  to  project  US  business  data  for  years  2012,  2013  and  

2014.  (Itemization  of  each  market  segment  is  shown  in  Exhibit  A.)  

It  is  worth  acknowledging  that  given  the  current  macro-­‐economic  landscape,  GDP  

is  still  relatively  low  and  our  recovery  from  the  most  recent  economic  

downturn,  we  are  still  struggling  to  gain  traction  as  a  country.  Even  with  

Unemployment  hovering  around  5.8%,  the  under-­‐employed  add  significant  

percentage  points  to  the  unemployment  rate,  bringing  the  US  closer  to  11.5%  

percent.  Because  of  this,  we  are  comfortable  using  average  negative  growth  

rates  for  our  forward-­‐looking  data  as  outlined  above  (Exhibit  B).  

Salesforce’s  launch  of  Analytics  Cloud  primarily  targets  firms  of  enterprise  

scale  (Exhibit  C).  We  argue  developing  a  barebones  version  of  their  latest  

Analytics  Cloud  software,  packaging  it  with  their  CRM,  and  targeting  ESMB-­‐MM  

companies  would  add  significant  top-­‐line  revenue  for  the  firm  and  its  

shareholders.  Additionally,  we  provide  an  entry  point  into  the  broader  

Salesforce  suite  of  services  as  the  small-­‐to-­‐mid  sized  companies  scale  up  over  

time.  

We  have  divided  the  potential  market  into  the  following  two  segments  (Exhibit  

D):    

1. Those  currently  using  Salesforce  –  without  Analytics  Cloud  (44.5%  of  top  5  

CRM  Market)  

2. Those  not  using  Salesforce  and  not  using  Analytics  cloud  (55.5%  of  CRM  

Market)  

Based  off  our  2014  estimate  for  total  US  businesses,  there  are  approximately  

528,272  firms  that  currently  employ  people  ranging  from  twenty  to  500  

employees.  Not  all  of  those  firms  are  equal  candidates  worth  targeting,  as  

the  data  includes  small  “mom  and  pop”  type  companies  and  other  small  

businesses  such  as  convenient  stores  and  skilled  labor  proprietorships  that  

would  not  need  to  use  our  software  or  could  not  afford  it.  Therefore,  we  

assumed  net  opportunities  of  40%  of  the  528,272  companies  are  worthy  

potential  customers  to  either  a)  enhance  their  current  Salesforce  

relationship  by  selling  them  the  Analytics  Cloud  software,  or  b)  companies  

not  using  any  Salesforce  software.    

Per  AMI-­‐Partners  CRM  growth  projections,  the  total  market  share  opportunity  

for  2014  is  approximately  $3.25bn.  With  respect  to  the  44.5%  of  CRM  users  

currently  utilizing  the  Salesforce  software,  we  assigned  a  20%  close  ratio  and  

a  15%  close  ratio  for  those  currently  not  using  the  Force  platform.  Given  

these  close  ratios,  we  predict  that  over  a  five-­‐year  business  development  

initiative,  we  can  collectively  close  approximately  18,806  firms  and  17,591  

firms  in  each  respective  market  segment.  The  total  opportunity  is  36,398  

firms.  Given  this  estimate,  we  can  project  a  total  revenue  opportunity  as  

follows:  36,398  potential  firms  *  $15,380  Average  Revenue  per  firm  equates  to  

approximately  $559.8MM.  (Exhibit  E,F)  

The  above  average  revenue  projection  on  a  per  firm  basis  is  a  conservative  

estimate.  Our  goal  is  to  sell  the  CRM  and  Analytics  Cloud  Software  for  roughly  

$51,800  per  company  for  those  already  utilizing  the  Salesforce  platform  and  

$53,300  per  company  to  those  not  currently  using  the  Salesforce  platform.  The  

difference  between  the  two  is  that  the  additional  cost  accounts  for  a  $1,500  

per  year  CRM  fee  on  top  of  the  $51,800  Analytics  Cloud  user  fee.  We  calculated  

a  Customer  Lifetime  Value  in  Exhibit  G.  

The  Task  Force  will  be  comprised  of  8  Account  Executives,  2  Analysts,  2  Sales  

Engineers,  and  2  Software  Engineers.  The  total  cost  of  running  this  unit  will  

cost  $1,270,000  per  year.  Salesforce.com  will  also  allocate  .5%  of  their  R&D  

budget  for  this  project,  which  translates  to  approximately  $3mm  over  five  

years  (or  $623k/yr.  for  five  years).  In  addition  to  R&D,  the  company  will  also  

budget  .2%  of  their  gross  profits  for  marketing  -­‐  $6,205,150.  The  total  costs  

of  adding  this  program  is  approximately  $10.5mm  (see  Exhibit  H).    

Of  the  allocated  .5%  of  2014  gross  revenue  of  $3.1bn,  a  maximum  of  70%  will  be  

used  to  acquire  new  customers  currently  not  using  Salesforce  and  the  30%  will  

be  used  to  upsell  existing  Salesforce  CRM  clients  with  our  new  Analytics  Cloud  

tool.  Total  Marketing  Campaign  Costs  for  Existing  Salesforce  CRM  clients  and  

new  customers  is  $4,653,862  and  $10,859,012  respectively.  (Exhibit  I)  

Cost  of  Customer  Acquisition  is  approximately  $1,237  and  $3,087  respectively.  

This  cost  will  remain  the  same  from  Years  1  through  5,  assuming  that  our  

program  will  be  able  to  penetrate  the  target  market  at  20%  per  year.  (Exhibit  

J)  

Our  total  projected  revenue  for  the  product  launch  over  an  estimated  five-­‐

year  horizon  is  $1.9bn  ($974mm  for  market  1,  $937mm  for  market  2;  see  Exhibit  

E)  

Competitive  Analysis  

The  biggest  emerging  player  in  the  SMB  Business  Intelligence  market  is  

Tableau.  This  company  was  founded  in  2003  and  recently  went  public  in  2013.  

Tableau  is  known  for  their  rich  user  interface  and  design,  the  best  looking  

product  in  the  industry.    Though  they  have  a  solid  looking  product,  when  

taking  into  account  the  value  of  both  their  product  and  Tableau  as  a  vendor,  

we  soon  realize  that  beauty  is  only  skin  deep.  

Referencing  Exhibit  K  from  the  Analytics  x  Tableau  Competitive  Array,  both  

Tableau  and  Analytics  Cloud  offers  great  products  and  services.  In  the  

Product  Evaluation  table,  Features,  Usability,  Affordability,  and  

Architecture  were  taken  into  consideration.  Tableau  scored  very  high  in  

Usability  but  lacked  in  Affordability  and  Architecture.  Analytics  Cloud  

exploits  these  weaknesses,  as  these  categories  are  its  strengths.  

Salesforce.com  is  a  multi-­‐billion  dollar  company  that  has  not  only  the  

technological  and  financial  resources,  but  is  also  the  market  leader  of  

Software  as  a  Service  (SaaS)  in  Sales,  Marketing,  Service,  and  Community  

Industries.  By  being  the  provider  of  SaaS,  it  makes  integrating  their  front-­‐

end  UI  product,  Analytics  Cloud,  seamless  for  customers  already  using  

existing  Salesforce  SaaS  services.  This  is  a  huge  advantage  for  Analytics  

Clouds  for  one  of  the  main  considerations  in  selecting  a  Business  

Intelligence  product  is  system  compatibility,  integration  complexity,  and  

cost.  Another  valuable  feature  that  Analytics  Cloud  offers  is  predictive  

analytics,  a  highly  sought  after  feature  that  can  only  be  achieved  through  

scientific  and  technological  competence  (ref:  Business  Intelligence  

Technologies  Spectrum).  The  categories  covered  in  the  Vendor  Evaluation  are  

Viability,  Strategy,  Reach,  &  Channel.  Salesforce’s  stronghold  of  the  SaaS  

industry  explains  their  9.1  score  in  the  Vendor  Evaluation  segment.    Tableau  

as  a  vendor  remains  mainly  as  a  front-­‐end  graphical  user  interface  of  data.  

Analytics  Cloud  offers  not  only  a  solution  for  Business  Intelligence,  but  is  

built  upon  the  largest  SaaS  platform  in  the  world,  Salesforce.  

Risk  Acknowledgements  

Risk  

The  main  risk  involved  with  launching  this  product  would  be  the  costs  

associated  with  the  development,  staffing,  and  marketing.  

Product  Development  Costs  

Since  this  is  a  simplified  derivative  of  the  full  Analytics  Cloud  software,  

the  product  development  costs  will  be  very  little.  We  have  estimated  that  the  

total  costs  to  run  the  operation  is  approximately  $10.5mm  (see  exhibit  H).  

New  Hires  Associated  With  Product:  

The  most  that  the  team  would  have  is  14  people  –  Eight  account  executives  

(Average  Salary:  $95,000),  two  sales  engineers  (Average  Salary:  $80,000),  2  

analysts  (Average  Salary:  $75,000),  and  two  software  engineers  (Average  

Salary:  $100,000).  The  total  cost  of  paying  this  team  would  be:  $1,270,000  

per  year.  

Marketing  Expenditures  

Since  we  are  tapping  into  a  new  market,  we  estimate  that  we  will  spend  

approximately  $6.2mm  million  over  the  course  of  five  years,  until  our  product  

becomes  well  known  in  the  market  that  we  are  penetrating.    It  is  presumable  

and  estimated  that  these  costs  will  drop  as  the  product  gains  traction.  

Overall  Estimated  Risk  

If  this  project  were  to  fail,  we  will  incur  over  $10.5mm  in  fixed  costs.    If  

the  project  gets  no  traction  after  implementation  and  launch,  the  company  

would  eat  almost  all  of  the  costs  accounted  for  here.    It  may  be  a  couple  

years  for  this  product  to  be  profitable  since  we  would  increase  advertising  

at  launch.    

Risk  Analysis  

This  is  actually  a  very  low  amount  of  risk  for  a  large  company  like  

Salesforce.com  to  take.    The  product  itself  may  not  generate  revenue  in  the  

short  term  to  cover  the  costs.    If  the  product  fails,  the  max  loss  with  no  

sales  will  be  $10.5mm.    Not  only  is  this  solution  a  product  that  can  generate  

cash  flow  by  itself,  it  will  also  be  an  investment  in  other  solutions  by  

acting  as  a  gateway  into  our  services  and  solutions;  customers  that  are  

experiencing  growth  could  turn  into  larger  wins.    For  a  rapid  growing  company  

like  salesforce.com,  the  risk  is  not  all  that  large.  

Implications  

1. Many  of  the  costs  associated  with  this  product  were  already  incurred  

when  the  Analytics  Cloud  Software  was  created  to  target  larger  

companies.    Outside  of  marketing  expenses,  all  other  incremental  costs  

on  top  those  already  spent  on  the  parent  software  will  be  small.    If  we  

can  be  successful  in  tapping  the  new  market,  our  new  version  of  

Analytics  Cloud  could  help  pad  our  bottom  line  effectively.  

2. There  is  also  a  strong  desire  to  get  into  this  market  because  of  growth  

potential  of  the  customers.    If  a  customer  begins  to  grow,  we  can  use  

the  small  to  medium  sized  business  software  to  segue  them  into  our  more  

premium  and  more  expensive  offering.    This  is  a  win-­‐win  for  our  

customer  and  us  because  the  only  learning  curve  will  be  with  the  added  

features.    This  will  also  be  a  gateway  for  our  customers  to  purchase  

other  company  offerings.  

3. This  could  be  an  area  for  company  growth.    These  smaller  businesses  and  

companies  could  have  a  legitimate  need  for  a  simplified  version  of  

another  current  product  offering  or  a  future  product  offering.  

4. If  the  project  does  flop  in  the  United  States,  we  would  not  roll  it  out  

in  other  countries.  The  US  releases  can  be  used  to  test  the  

effectiveness  of  our  product.  

 

Conclusion/Recommendation  

In  conclusion,  we  recommend  the  use  of  a  stripped  down  version  of  Analytics  

Cloud  to  penetrate  the  market  for  ESMB-­‐MM  companies.  Adding  AC  to  CRM  

customers  should  be  a  primary  goal.  A  secondary  goal  should  be  to  capture  all  

other  customers  who  could  use  CRM,  perhaps  by  introducing  them  to  the  basic  

version  of  AC,  and  using  the  basic  version  to  hook  customers  into  the  variety  

of  products  available  from  Salesforce.  We  believe  the  market  size  and  

customer  lifetime  value  justify  the  implementation  of  our  proposed  strategy  

when  compared  to  the  cost  of  implementing  and  maintaining  the  team  needed  to  

execute.  

 

 

 

 

Appendix  

Exhibit  A:  Itemization  of  Each  Market  Segment  

 

Exhibit  B:  Percentage  Change  in  Total  Businesses  YOY.  SBA.gov  

 

Exhibit  C:  SWOT  Analysis  

 

   

 

Exhibit  D:  Top  Five  CRM  systems  for  1-­‐100  employees  

 

Exhibit  E:  Market  Overview  

 

Projected  #  Firms  -­‐  Deal  Closed     Revenue  Projections  

Market  (1)      18,806    $974,174,973.44    Market  (2)      17,591    $937,623,865.89    

 36,398    $1,911,798,839.33    

             

 

 

Exhibit  F:  Average  Revenue  Per  Firm  

 

 

Exhibit  G:  Customer  Lifetime  Value  for  Target  Markets  

 

 

 

 

 

 

 

 

 

Exhibit  H:  Costs  of  Running  Operation  

Cost  of  Running  Program  

Product  Development  

Number  of  

Employees   Salary    

 Account  Executives   8    $95,000.00      $760,000.00    

Sales  Engineers   2    $80,000.00      $160,000.00    

Analyst   2    $75,000.00      $150,000.00    

Software  Engineer   2    $100,000.00      $200,000.00    

Total  Cost  of  Annual  Salary  

   

 $1,270,000    

       Research  &  Development  

     Total  R&D  in  2014    $623,698,000    

   Percentage  Allocated  for  SMB  AC   .5%   $3,118,490  

 Total  Cost  of  R&D  (5  Yr.  Period  –  Max  

Contribution)  

   

$3,118,490  

       Marketing  

     10%  of  Gross  Profit  ($3,102,575)  

     Gross  Profit   $3,102,575,000  

   Percentage  allocated  for  SMB  AC   .2%  

   Total  Cost  of  Marketing  Campaigns  (Max  

Contribution)  

   

$6,205,150  

       Estimated  Initial  Cost  of  SMB  AC  Program  

   

$10,593,640  

 

 

 

Exhibit  I:  Costs  of  Running  Operation  

Marketing  Expenditures  Breakdown  

   Total  Dollars  Allocated  (.5%  of  2014  Gross  Profit)       $15,512,875  

Percentage  allocated  for  Existing  CRM  Users  (#1)  of  the  10%  SMB  AC  Budget   30%   $4,653,862  

Percentage  allocated  for  New  CRM  Users  (#2)  of  the  10%  SMB  AC  Budget   70%   $10,859,012  

 

Exhibit  J:  Cost  of  Customer  Acquisition  

5 Year Market Penetration Forecast *

Y1 Y2 Y3 Y4 Y5

(#1) Existing CRM Users +AC 3761 7522 11283 15044 18805

(CA#1), Change per Year (delta) 3761 3761 3761 3761 3761

(#2) New CRM Users + AC 3518 7036 10554 14072 17590

(CA#2) Change per Year (delta) 3518 3518 3518 3518 3518

CAC Existing Users (MCC#1/CA#1) $1,237 " " " "

CAC New Users (MCC#2/CA#2) $3,087 " " " " * 5 Year Projection: Assuming that we achieve 20% of our projected penetration  

 

 

 

 

 

Exhibit  K:  Analytics  Cloud  vs.  Tableau  Competitive  Array  

   

Analytics  Cloud   Tableau      

Product  Evaluation  Array   Weighting   Rating   Weighted   Rating   Weighted  

Features   0.3   9   2.7   8   2.4  

Usability   0.3   8   2.4   10   3  

Affordability   0.2   7   1.4   4   0.8  

Architecture   0.2   9   1.8   6   1.2  

        33   8.3   28   7.4  

Vendor  Evaluation  Array   Weighting   Rating   Weighted   Rating   Weighted  

Viability   0.3   10   3   7   2.1  

Strategy   0.2   8   1.6   8   1.6  

Reach   0.3   9   2.7   6   1.8  

Channel   0.2   9   1.8   6   1.2  

        36   9.1   27   6.7  

*Tableau  ratings  derived  from  Gartner’s  2014  Magic  Quadrant  for  Business  Intelligence  and  Analytics  

Platforms  report.  See  Exhibit  L  

 

 

 

Exhibit  L:  Business  Intelligence  Technologies  Spectrum