Salesforce.com: Burning Rubber

By Baselinemag  |  Posted 2005-11-08 Print this article Print

Salesforce.com wins kudos for its flexible, easy-to-roll-out approach, but its hyper-growth has concerned some.

Some customers give Salesforce.com nothing but high fives, but others say it has grown at such a blistering pace—from 76,000 users in 2003 to 308,000 by mid-2005—that it hasn't always been able to keep up with their needs.

R.L. Polk & Co., a provider of automotive marketing information, has used Salesforce.com since 2001 for about 250 sales and marketing staffers. Wanda Dembeck, Polk's vice president of global initiatives, likes its pay-as-you-go approach and says the application is flexible enough to handle long-sales-cycle teams as well as telemarketing groups that close sales in minutes.

But Dembeck says she's sometimes frustrated by Salesforce.com's "low-seniority" technical support employees: "Sometimes it feels like we're training them.... So many people bought the tool, they're now scrambling to catch up." Moreover, Salesforce.com is difficult to work with outside North America because each international office operates independently, says Dembeck: "We've gone global. They're still trying to do that." (Asked for a response, a Salesforce.com spokesman says: "We're proud of our 95% customer-satisfaction rate, but if even one customer isn't satisfied, we aren't either.")

Meanwhile, Honeywell's specialty materials division, which has used Salesforce.com for 500 sales and marketing employees for three years, has found service to be top-notch. "They really focus on their customer service," says John Vantuno, the division's information-technology program manager. "They do practice what they preach."

That hasn't been Martin Payne's experience. "If you're a small customer, the account team they put on you just doesn't understand the product," says Payne, vice president of business development and client relations at Hanger Orthopedic Group. The prosthetic device maker has 75 salespeople and executives using the system.

Payne says he relied on an Atlanta consulting firm, GrowthCircle, to deploy the application: "Salesforce.com just backed up the truck, offloaded the product and drove away." Salesforce.com says it recommends working with one of its 41 consulting partners to help with setup.

For Chris Ground, senior vice president of national accounts for biomedical products supplier FFF Enterprises, Salesforce.com's rapid growth "concerns me a little bit, because service can decline." He says Salesforce.com has done a very good job since FFF went live with it in early 2005, but adds, "As they grow, we'll continue to keep our eye on them."

Customer Relationship Management

1 Market St.
San Francisco
Ca 94105
(415) 901-7000


Marc Benioff
Founder & CEO
Before founding the company in March 1999, spent 13 years at Oracle in sales, marketing and product development jobs. The 40-year-old has made a mantra of the company's slogan: "The end of software."

Jim Steele
Hired in October 2002 after heading sales for Ariba, an electronic-procurement software vendor. Prior to that, he was a sales manager at IBM.

Team Edition provides customer-contact management and trend analysis for groups of up to five; Professional Edition adds the ability to customize some features; Enterprise Edition provides programming links to integrate with existing applications.
Reference Checks

John Vantuno
I.T. Program Manager, Specialty Materials
Project: Division manages leads and customer information for 500 sales and marketing staff with Salesforce.com, which is integrated with its SAP system.

FFF Enterprises
Chris Ground
Senior VP, National Accounts
(951) 296-2500
Project: Biomedical products supplier uses Salesforce.com to manage contact with up to 20,000 health-care customers.

First New England Mortgage
Melissa Caylor
Mgr., I.T.
(617) 641-6856
Project: Mortgage broker in Newton, Mass., distributes and tracks sales leads for 90 employees covering 26 states with

R.L. Polk & Co.
Wanda Dembeck
VP, Global Initiatives
Project: Auto marketing information firm manages leads, forecasts sales and tracks customer service calls with Salesforce.com.

Hanger Orthopedic Group
Martin Payne
VP, Business Development
Project: Prosthetic device company maintains contact information for 56,000 U.S. doctors in Salesforce.com.

Dick Moore
Dir., I.T.
Project: Helicopter flight and repair service company with 600 employees uses Salesforce.com to manage sales leads and generate marketing campaigns.

Executives listed here are all users of Salesforce.Com's products. Their willingness to talk has been confirmed by Baseline.

2006FYTD 2005FY 2004FY
Revenue $136.12M $176.38M $96.02M
Gross margin 79.3% 81.0% 82.0%
Operating income $8.46M $6.52M $3.72M
Net income $9.42M $7.35M $3.51M
Net margin 6.9% 4.2% 3.7%
Earnings per share $0.08 $0.07 $0.04
R&D expenditure $9.77M $9.82M $6.96M

* Fiscal year ends Jan. 31; FYTD reflects first six months

Total assets $323.68M
Stockholders' equity $165.40M Cash and equivalents $25.14M
Short-term investments $109.27M
Long-term debt $1.17M
Shares outstanding 117.97M
Market value, 10/28 $2.65B
**As of July 31, 2005, except as noted


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