The Blog

  • January 24, 2018
  • Salesforce’s pivot

    Faced with increasingly robust competition on all sides Salesforce is doing what comes naturally. It is proactively innovating including increasing its market by creating new customers. That’s no easy trick but they found a way.

     

    In my research I’ve seen that diffusing a disruptive innovation throughout an economy is inversely proportional to the cost and effort required of the customer. After all it’s the customer that determines what to purchase and on this the future success of almost any new endeavor rests. Telephone, electric service, cable TV and many other disruptions over the last two centuries succeeded both because they were desirable and because vendors made it simple for customers to adopt them. You might quibble with cable but desirability and ease of use form a product that is diffusion and the multiplicands are often not equal.

    Salesforce is a leading vendor of cloud computing but its success has attracted a legion of competitors and all of them seem to be nested at the intersection of lower cost, ease of use, and fast time to market. All of them are right too. However, each has the same diffusion challenge and all are discovering that their cloud universes are not exactly analogs of their on-premise business. In other words they need to behave differently in the cloud in no small measure than because customers can easily leave.

    As a company born in the cloud, Salesforce has been watching this phenomenon play out for most of two decades so it quite possibly has a lead in thinking about how to address it. Part of the solution, introduced a couple of years ago, is Trailhead, an online learning and certification utility that teaches all sorts of skills relevant to Salesforce users. From system administration to development, with or without coding, Trailhead offers small digestible training courses and certifications that are all gamified. One’s value as a user and potential employee of a company using Salesforce is directly related to the number of badges or proofs of certification that you hold.

    By implementing Trailhead, Salesforce has hit on an approach to growing its market while simultaneously creating career paths for thousands of individuals who might not have the “right” educational backgrounds for careers in IT. If you can succeed in Trailhead and earn badges you have the requisites for helping a company to be successful with Salesforce and you become a consumer of Salesforce services at the same time thus Salesforce is able to “create” customers or at least consumers.

    According to Salesforce’s website, Trailhead is composed of 4 elements,

    • Trails are guided learning paths that chart your course through Salesforce skills
    • Modules are short self-paced tutorials that cover individual topics you want to tackle right away
    • Projects reinforce your learning with step-by-step instructions on customizing Salesforce and building apps
    • Superbadges are skill-based credentials that showcase your Salesforce skills

    Perhaps most interestingly, Salesforce has recently opened up Trailhead to its ecosystem partners who can now build training elements for their Salesforce apps thus enabling them to quickly and efficiently train new users. Also, since its inception Trailhead has had its own conference as well as a massive cut out at Dreamforce. All of this adds up to more training, more learning and more qualified users to swell demand for Salesforce’s core CRM. But most importantly, Trailhead aims at developers who might at best only have a tangential interest in CRM. These people could easily build database apps for almost any purpose using the tools.

    This directly translates into sales, which is Salesforce’s intention. There are well over 300,000 job openings for people with Salesforce skills so there’s clearly demand for some kind of training. Other Vendors like Oracle, SAP, and Microsoft no doubt have similar demand so attending to the training need is likely to be an issue for all of them in the near term. There’s already customer pain that has to be addressed. A study recently published by Nitro Software highlights the importance of training in customer success including,

    • Insufficient user training is a common pain point, with 42% of organizations identifying it as a challenge.
    • A collective 37% say user training, whether led in-house (19%) or managed by a vendor (18%), was ineffective during software implementations.
    • The most neglected change management strategy is user adoption tracking—one in four organizations do not effectively watch this metric.

    Source: Nitro Software

    You might not think these numbers are high enough to be threatening but they can be additive affecting one of the key causes of customer attrition: failure of customer onboarding. Attrition in the early phases of deployment is especially expensive since it uses up resources without producing profits. Consequently customer training is becoming one of the most important areas of competition in zero-sum markets today.

    My take

    Salesforce’s competition includes Workday, Oracle, SAP, and Microsoft, to name only the most obvious players. Each has some form of training provided directly by the vendor or through a third party. But many, if not most, of the training appears to be specific to managing specific products and apps and not so much about getting to the internals of the system or performing development. It’s also unclear how they treat partners that develop solutions on their platforms or whether partners can develop courseware too. Training isn’t exactly sexy but it has the potential to upset some apple carts if it is ignored.

     

     

     

     

     

     

    Published: 3 months ago


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