Salesforce's Q3 earnings call: Key takeaways for customers

Salesforceheld its third-quarter earnings announcement last week, reporting a revenue rise of 24 percent to $1.7 billion, putting the company on pace to generate $6.6 billion this year.

Those interested in combing through the numbers can find them all here in the official announcement, but the earnings conference call with CEO Marc Benioff and others turned up several points of with more interest for customers. Here's a look.

Benioff: Customers, Not Technologies Will Rule

For some years now, Benioff has been discussing the notion of "customer companies" and how Salesforce's products can help create them. The notion has sometimes seemed a bit nebulous, since which company isn't concerned to some degree about customers? But on the conference call, Benioff rendered his position pretty clearly:

I think the next 10 years is the age of the customer. I don't think it's the age of data science or the age of machine intelligence or the age of cognitive, or the age of mobility, or the age of social, or the age of cloud or whatever. Because all of those things are going to be important in the next 10 years. All of those things the cloud, social, mobile, data science, deep learning, NLP, machine intelligence, on and on, those are table stakes.

What are you going to do with that technology? Who's not using those technologies? Phillips is using that technology. GE is using that technology. Apple is using that technology. Cisco is using that technology. Coca-Cola, Unilever, they're all using it. Look, the next 10 years for these companies will be about the customer. What are they doing to build a world-class customer experience? How do they transform from being product companies to customer experience companies? ... And I think that if we get to into any one particular technology or if I was to all of a sudden wave the flag like I used to do 15 or 16 years ago for cloud, that would be a huge mistake for our company because the number one thing, most important thing to this company is the customer.

POV: Benioff is a salesman at heart and Salesforce won't be able to meet its aggressive growth targets if it doesn't keep upselling customers on plenty of new technologies. Where the challenge lies for Salesforce and its partners is in helping companies translate them into the customer-friendly business models Benioff espoused so articulately.

Salesforce's Industry Strategy: Paying Off?

The vendor's industries strategy, which launched in April 2014, was met with initial skepticism in some quarters. Salesforce President Keith Block fielded a question about how the strategy is progressing:

Across the board if you look at the wins in this quarter, we had some terrific experiences with financial services, obviously with American Express and automotive, with General Motors, consumer package goods. ... So financial services is very strong. Healthcare and life sciences is very strong. Retail is really picking up. CPG is really picking up. Manufacturing has always been a strength for the company.

So it really has become a situation where it's no surprise customers want to speak to us, and we should be speaking to them in their language. That is the whole idea behind the industry strategy.

POV: Earlier this year, prior to the Dreamforce conference, Salesforce announced vertical products for health care and financial services industries. But it's important to note that Salesforce isn't trying to do it all, both in the interest of speed-to-market and a lack of specialized expertise in certain areas. For example, Salesforce's Health Cloud "patient relationship management" system--which reorients Salesforce CRM around the patient-care model--uses Accenture and other partners to handle integration with EMR (electronic medical records) systems, customizations and other aspects.

It also wasn't clear from Block's remarks whether Salesforce has managed to actually replace entrenched vertical applications at the companies he mentioned with its own products, versus simply completing any type of sale.

Getting Bigger Slices of the IT Pie

Salesforce landed a number of large deals in the quarter, and beyond sheer dollar spend, customers are starting to use its portfolio in a broader way and the sales conversations are happening with CEOs, Block said on the call:

The reason why CEOs are coming to us is because they see Salesforce as that catalyst for growth. ... Whether it's a company of all shapes and sizes, whether it's a business model that's B2B or B2C, large company or a small company, regardless of the industry, these CEOs are really looking at us now to be their trusted advisor and really help them to find their new customer strategies, their digital strategies, their engagement models, and really new ways to transform into a customer company.

The total number of our large transactions in Q3 was up significantly compared to last year in terms of value. Our relationships are becoming bigger. They're becoming broader. They're becoming more strategic and deeper. We're now working with some of the worlds greatest brands.

Block went on to name-check General Motors as one big win, as well as Salesforce's biggest-ever deal for its Marketing Cloud, with a "very large" retailer:

They're taking things to the next level by personalizing the shopper experience across every single channel. We're going to be at the core of their omni-channel consumer engagement strategy. And they will be able to create a very personalized and predicted one-to-one relationship with customers at every single touchpoint, which is really compelling.

POV: Big customer wins are always a good thing for vendors' images, but they're good for the installed base overall as well when it comes to their confidence in newer products. It will be interesting to see whether GM and the unnamed large retailer show up onstage at next year's Dreamforce, telling their stories.

A Deepening Talent Pool

The global pool of certified Salesforce consultants is growing rapidly, Block said on the call:

Another area where we continue to make progress, quite frankly, is with our partners in our ecosystem. I'm very proud of the results we're seeing with regional and global systems integrators. Our partner certifications in the quarter, they were up more than 40% from a year ago, which is outstanding. With all of our global SIs growing at an even faster rate, this is a great indicator that the most important consulting partners in the world are betting their business and their customers' business on Salesforce.

POV: Access to a broader pool of consultants is generally a good thing for Salesforce customers, but one wonders if there is any element of a gold rush mentality in play among the systems integration community. It's on Salesforce to consistently provide a strong governance framework for partners, in order to maintain high standards for customer project success.

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