Salesforce Strategy

1. Blue Ocean Strategy
A Case Study on Salesforce.com
Presented by :
Ashley Molina
Niranjan Zende
Siddharth Kumar
Zain Yusuf

2. What is a Blue Ocean ???
Blue ocean is nothing but an analogy to describe the wider, deeper
potential of a market space that is yet to be explored.
They may be termed as industries which are
• non-existent today
• Untainted by Competition
• Demand is created and not fought over
• Growth is profitable and rapid
• Competition is made irrelevant
The theory is in direct opposition of Porters’ Five Forces model

3. Pain Points of Existing CRM
Solutions
● Complex requirements and systems infrastructure
required to be integrated with the applications. Small
businesses could not afford these costs or
accommodate the lengthy deployment process
● Customers needed proof of concept before they
committed to the purchase. This resulted in sales
cycles of more than 3 months and lengthy technology
discussions among tech professionals. It often took 18
to 24 months for companies to get the application to
work at full functionality

4. Pain Points of Existing CRM
Solutions (contd)
● Cost of purchasing packaged CRM software was high.
A software license for 200 users was approximately
$350,000
● Price of software was typically 25% to 30% of the
overall cost. Additionally, customers needed to spend
money on infrastructure, support and maintenance, and
on hiring internal or external professionals to implement
and upgrade the software/hardware and train users.
Including these factors, the cost could easily exceed
$1.8 million in the first year and $4 million in five years

5. Pain Points of Existing CRM
Solutions (contd)
●Vendors normally pursued one of two strategies in the
CRM market:
● They either differentiated their product by adding
more features
● Or they lured customers with big discounts at the
time of closing the license agreement
●Over 60% of CRM deployments failed to work

6. The Salesforce Blue Ocean
strategy:
● Innovation on the Product, Service and Delivery
Platforms:
●Based on cloud computing: The applications were
delivered via the internet from central servers on
salesforce.com’s side, where systems were
deployed and data were stored. This enabled the
sharing of resources across a large pool of users,
thus increasing economies of scale and cost
efficiency of individual customers

7. The Salesforce Blue Ocean
strategy (Contd):
● Customers were freed of the need to deploy and
maintain the software with their own infrastructure
thereby reducing costs and deployment time
● Users could access the applications anywhere from
any device with internet access
● The price structure was dramatically simplified as
customers simply paid a monthly subscription fee of
$65/user. Total cost was reduced to $156,000/year
bringing it within reach of small businesses

8. The Salesforce Blue Ocean
strategy (Contd):
● The subscription model removed costs associated with
low value activities in purchasing and deploying the
service, allowing them to focus on strategic activities
with a greater impact on their business
● Customers could test the application in a single work
group or division first, then extend the use to other
divisions once the test was successful. Customers
could also quit at any time due to the subscription
model.

9. The Salesforce Blue Ocean
strategy (Contd):
●Salesforce stripped of excessive features and focused
on essentials that catered to buyer’s core needs in
sales, customer service and support, and marketing
automation. Removing features made the application
simple, more intuitive and user-friendly.
●Because of the web based nature, it was possible for
Salesforce to collect information on website usage
patterns and improve its user interface accordingly.
●They encouraged customers to build custom programs
according to their business needs using Salesforce’s
cloud based development tools. Done this way, custom
programs were built four times faster at a lower cost
and reintegrated into salesforce.com’s original offering

10. Red v/s Blue
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new demand
Make the value‐cost trade‐off Break the value‐cost trade‐off
Align the whole system of a
company’s activities with its strategic
choice of differentiation or low cost
Align the whole system of a
company’s activities in pursuit of
differentiation and low cost

11. Costs
Value
Costs
Value
Value Innovation is
simultaneous pursuit
of High value & Low cost
Traditional Companies Blue Ocean Companies
Eliminate
Reduce
Raise
Create
1. Cost savings are made by eliminating and reducing the factors an industry competes on.
1. Buyer value is lifted by raising and creating elements the industry has never offered.
Differentiating Blue firms

12. Blue Ocean Companies

13. What is Salesforce.com
● Founded in 1999, a global cloud computing
company headquartered in San Francisco
● Salesforce Inc. is listed on the NYSE and is a
constituent of the S&P 500 Index
● Best known for its Customer Relationship
Management (CRM) product, has also expanded
into commercial applications of social networking
● Has clients in plethora of industries ranging from
Financial Services, to Healthcare & Life sciences
and Retail to Non-profit
● Pioneer to offer CRM in a SaaS format

14. Creating a BOS in 4 steps
● Eliminate factors that the industry takes for granted but
adds no perceived value to customers.
● Reduce factors well below the industry’s standard to
avoid the mistake of over delivering in order to beat the
competition
● Raise factors well above the industry’s standard so
your customer won’t have to make compromises.
● Create new sources of value that the industry has
never offered.

15. Traditional CRM Customers
● Large businesses
● Complex requirements
● Complex system infrastructures
● Needed highly integrated software

16. Buyer Utility Map for
Traditional CRM Software
1.
Purchase
2.
Delivery
3.
Use
4.
Supplements
5.
Maintenance
6.
Disposal
Client
productivity
Simplicity
Convenience
Risk
Fun and image
Environmental
friendliness

17. Innovation & Delivery –
Salesforce.com
● Comprehensive and flexible platform.
● Small and medium-sized businesses.
● Cloud based application: simplicity and convenience.
● Reduced cost and time.
● Better customer experience.
● Centrally deployed applications.
● Quit any time.
● Focused on essentials

18. Value Curve of Traditional
CRM’s v/s Salesforce

19. Sustaining Salesforce’s
Market Leadership
● They created another Blue Ocean by encouraging
customers to build custom programs according to their
business needs but in a completely different way:
●Force.com - Provided an application development
environment for external developers to create add-on
applications for almost any business need on a cloud
basis and host them on salesforce.com’s infrastructure.
Applications could be created four times faster at a low
cost
●AppExchange - Used to package and distribute the
software. Developers could upload the software to the
platform. Corporate customers could search, read
reviews, test for free, and ultimately purchase and
download new applications to their salesforce.com
environment.

20. Sustaining Salesforce’s
Market Leadership (Contd)
●Another Blue Ocean strategy, “Chatter” provided a
private social network service which allowed
salespeople to collaborate in real time on their work
items. In this way, they got timely updates about what
their colleagues were doing as well as the status of
important projects and deals, and therefore had a full
picture of what mattered most to their business
●Traditional CRM solutions with fragmented corporate
implementation rarely got integrated later on. This
compromised the productivity of traditional CRM
solutions.