Customers come first: Siebel's secret to success

Siebel is riding high. Its last quarterly results went through the roof, smashing analysts' expectation, and by all esteem, it is the one to beat in the CRM world. An analyst at Lazard Ferers called it the "800-pound gorilla" dominating the market.

This week, ZDNet Asia caught up with its CTO and co-founder, Bill Edwards, who was in Singapore on an extended trip around Asia and chatted up on how Siebel became the King of CRM.

Edwards has been Siebel's vice president of engineering right from the beginning, since March 1994.

He was right there heading up the software development department when Siebel rolled out its version one software. And he has seen the release of every Siebel software right up to Siebel 99.

Becoming the CTO in 1999, Edwards' job now is to connect with customers around the world and find out what they would like to see in future products.

According to Edwards, a lot of the company's success today can be attributed to its willingness to listen to its customers.

"An issue that comes up often in internal discussions is, as Siebel grows, how do you ensure that you continue to listen to your customers?" asked Edwards. "It's fine for the executive to get up and say it's important to listen to the customers because that had helped us in the past."

Siebel does this by making sure that customer-driven business approach is imbued into its culture.

Every quarter, the company hires an independent research firm to conduct a survey with a segment of its customers. The goal of the survey is to find out customers' level of satisfaction with Siebel in terms of product, sales processes and support.

The results of those surveys will go into Tom Siebel's quarterly planning sessions where the company's direction for the next few quarters is planned. Everything from product design to staff compensation hinge upon the outcome of those surveys.

A third of the sales commission, for instance, is held back until the results are in and a certain level of customer satisfaction has been reached.

According to Edwards, even he is subjected to the rule.

"Similar criteria occurs in marketing, engineering, and support. Since each of those people are compensated differently, the models are a little different for each department, but they are all tied to the scores one way or another," explained Edwards.

Two years ago when the craze for Web-based applications began to take hold, Siebel had wanted to put all of its application screens on the Web like everybody else. But according to Edwards, the company did the crucial thing of listening to the customers again and found that that was not what customers wanted.

Siebel finally opted for delivering a thin-client solution that allows users to pick and choose which component of Siebel's solution will go onto their corporate Web sites.

Siebel's strategy of following the customers' demands seems to have worked tremendously well.

It is the fastest growing CRM provider around. Last quarter, despite an industry-wide downturn, the company posted a profit of US$106 million. Its revenue grew year-on-year at 111% last quarter.

Still, the field of CRM has become quite crowded all of a sudden over the last year. As the pace of ERP begins to slow, software companies like Oracle, SAP and PeopleSoft are starting to elbow their way into the front office applications arena and all of them want to take a bite out of Siebel's share of the market.

Siebel is still, by far, the leader of the pack.

According to Edwards, it plans to stay that way. For its long term strategy, the company is working on tailoring its products to custom fit different vertical industries.

"By the time our competitors catch up to where we are now today, we won't be there anymore," intimated Edwards, "we will be further along and one of the areas that we are further along is verticalization. We will take our product where it doesn't just work horizontally or generically, but rather vertical in the areas where we can apply domain expertise."

Some of the industries that can expect pre-customized Siebel products some time in the future are financial services, communications, pharmaceutical and apparel.

In the immediate future, Siebel plans to expand its Web-based functionality.

Market demand is changing, Edwards noted. Customers who, two years ago, had only wanted to put bits and pieces of a CRM solution on their corporate Web sites are now looking at deploying full-scale enterprise portals that will allow everybody to do everything.

In response to that, Siebel will be launching, in the next few months, a product that allows not just pieces of functionality to be available over the Internet but the entire Siebel application.

The company is understandably excited over the launch and customers have already begun test-driving samples of the soon-to-be-released product.

How successful is it going to be? With Siebel, the key, as always, is how well they have listened.

"The fact that I spend 75% of my time around the world asking current customers what they need, is unusual. And I am not the only one doing this. We're basically driven by what our customers tell us they want, and success seems to be following as a result of that," said Edwards.