SaaS & The Cloud hits 1. Or rather $1billion…

Posted on 27. Feb, 2009 by Alastair in Collaboration Biz, Huddle News

Salesforce.comA massive congratulations to SalesForce.com, the pioneer of selling web apps to the enterprise,  who announced today that it’s hit $1bn in annual revenues.  Not bad for 10 years in business….there’s hope for all of us yet!

Seriously though, this is fantastic news. Salesforce pioneered the SaaS model with their ‘no software’ mantra and have been amongst the leading proponents of the platform approach and cloud computing – as well as proving that boring enterprise software can be, at least moderately, sexy. Of course we agree, after all online Team Collaboration is the next CRM!

What can we learn from their success? Well, we know the guys in EMEA pretty well and, from the horses mouth it comes down to several things:

  • An inspirational founder who is a marketing genius (Marc Benioff)
  • An unwavering focus on hard, direct, sales (they only learnt this after a couple of years of trying to sell over the web though)
  • A huge marketing spend (including sales this gets as high as 75% of total turnover)
  • You have to constantly prove and reprove your ROI if you want to keep customers
  • Transparency and customer service (they publish uptime on the website, give free support to customers likely to churn)
  • Time. If you’ve got a low cost SaaS subscription model then the early years suck. But if you can maintain low churn by making your service business critical then you rapidly start to ramp  up (eg: if you do the same number of new sales in year 2 than in year 1 then you’ll ‘automatically’ double year-on-year revenues due to recurring subscriptions. That’s quite a growth rate). Do that for 10 years and you’re onto a winner…

With that said, I better get back to work!

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One Response to “SaaS & The Cloud hits 1. Or rather $1billion…”

  1. babul

    27. Feb, 2009

    $1BN is seriously impressive but 75% spend on marketing is seriously high. Your business needs to be a cash cow to maintain that.

    I remember reading an excellent article on the salesforce.com marketing spend as it (75%) has been quoted many times on various sites and some very clever people explored the fallacies of the model in detail. I’ll post it if I can find it later tonight.

    The rest is good wisdom that seems common to sensible people on the outside, but can often get lost once things get rolling in a company.

    How much does Huddle spend on marketing as % of turnover? …whatever it is, spend more and give Suz a raise! ;)

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