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        Salesforce Dreamforce Keynote: Social is Changing Industry Power Structures

        With more than 90,000 attendees registered and 100,000 more expected to watch via live stream on Facebook, Salesforce.com’s Dreamforce is the biggest technology event of this year. The conference kicked off yesterday morning with MC Hammer letting the packed house know that it was “Chatter time” and leaving little doubt about the theme of the Marc Benioff’s keynote speech: Social. Citing numbers from McKinsey and IBM, Benioff suggested that social adds $1.3 trillion to the economy and that CEOs see social media as the second most important communication channel of the 21st century, just after the direct sales force. Our own sales benchmark research here at Ventana Research shows similar trends, with 63 percent finding that collaboration is a key trend in sales organizations.

        The keynote pronouncements were put in context by a number of clients. Two clients in particular highlighted broad changes occurring in industry.

        Rossignol uses Force.com to exploit social and mobile areas for competitive advantage. Rossignol is a winter sports gear retailer, and its target consumers – as well as its dealers, such as REI – are often youthful and cutting-edge.

        Saleforce.com allows Rossignol’s sales representatives to adjust offers and sign deals at the point of purchase with mobile devices. It integrates customer social profile information, offers team interaction between the pricing departments and other managers, and lets salespeople revise proposals and sign deals on the spot. With impressive ground game capabilities like these, Rossignol will likely take market share until its competitors can deploy a similar approach.

        Salesforce also allows the ski community to be involved with Rossignol’s brand at a visceral level through things like coaching camps and excursions, and provides informal interactions with like-minded skiers. Even more impressive is the involvement of the company’s communities in its two-year product development cycles. This sort of crowdsourcing was unheard-of just a few years ago.

        Rossignol represents the impact this type of company and brand is having on the relationships between manufacturers and retailers. Retailers are losing leverage with customers as manufacturers build loyal followings and establish pull-through channel strategies among their end-user customer base. We see similar trends in other markets.

        Salesforce also highlighted General Electric, my alma mater. When I was at GE, collaboration consisted of doing things like GE Boundaryless Sales, where reps would share leads across GE Capital as well as with the core divisions. So GE has always been somewhat collaborative, but I was surprised to see how aggressively it is pursuing things such as social collaboration with its sales teams.  In particular, it is rolling out Salesforce.com in the Honeywell division, which in and of itself is a large diversified business. Deal sizes go from a few thousand dollars that may take a couple of weeks, to a seven-year, $100 million deal.

        Two interesting things here apply to the broader GE organization, and illustrate how sales is changing as a result of social and mobile. First, the new systems give management a better picture of what is happening and how to manage its sales force. It’s difficult to do forecasting, communication and root-cause analysis with very different buying environments. Internally, these types of diversified organizations are often a Tower of Babel. Social tools provide the equivalent of a common language that can be instituted across the organization.

        The second big impact is the inversion of the organizational pyramid. This is not just a GE phenomenon, but is beginning to occur across multiple industries.  The business process used to be about getting information from the sales force into the organization –  for instance, getting pipeline updates to management and rolling them up, or trying to get a salesperson to share his contact information. Now it’s just the opposite; organizations are pushing information down into the hands of the sales folks and empowering them to make deals. This is changing the nature of sales. It used to be that a lone wolf was the ideal salesperson. Now it’s a social collaborator who can act like an orchestra conductor.

        As these two companies demonstrate, seismic changes are occurring in organizations and across industries. I strongly encourage companies with medium-sized or large sales forces that haven’t yet moved forward with sales force automation (SFA), or consumer brands that are not actively engaged in community building, to start doing so.

        For additional in-depth analysis of the social aspect at Dreamforce as well as the key announcements, read my colleague Mark Smith’s post. Salesforce is helping companies change the way they operate and through the use of social and mobile technology in conjunction with cloud computing which is definitely worth looking at more closely.

        Regards,

        Tony Cosentino

        Vice President and Research Director

        Authors:

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