Wednesday, May 04, 2011

Intuit / Salesforce.com Alliance Is No April Fool's Joke

Am I the only one who missed the April 1 announcement of a strategic alliance between Salesforce.com and Intuit? Given our industry's endless nattering about whether Salesforce.com will move into marketing automation, this should have attracted more attention (or, at least, enough attention that I would hear about it sooner than I did).

In case you too missed the news, it comes down to this: Salesforce.com will be available on Intuit’s App Center and be deployed so that the Intuit and Salesforce.com databases are synchronized. For those of us used to thinking of Salesforce.com as the 900 pound gorilla, it’s disorienting to see Salesforce on the Intuit App Center, rather than the other way around.

But it does make sense. Intuit has more than 4 million customers, compared with 90,000 for Salesforce.com. The revenue differential isn’t as large ($3.5 billion for Intuit vs. $1.7 billion for Salesforce) and Salesforce.com actually has a slightly higher market cap ($17.5 billion for Salesforce.com vs. $16.5 billion for Intuit). But Intuit represents a gateway to the small business market for Salesforce.com, so it’s clear who needs whom.

What has this to do with marketing automation? Pretty much everything, I’d argue, at least for companies like Infusionsoft, OfficeAutoPilot, and Genoo, who target “micro-businesses” at the lowest end of the market. Those vendors base much of their appeal on the convenience of using one system for marketing, Web pages, CRM, and even order processing. The one thing they don’t offer is accounting, in good part because Intuit’s QuickBooks has such a dominant position.

The lack of accounting data is an important gap, because the accounting system is the ultimate source for information on customer identities and transactions. That data is important for effective marketing. Having it automatically available to Salesforce.com makes Salesforce a much more attractive marketing option for small businesses.

I suppose I should backtrack a bit here and acknowledge that I’m talking about marketing to customers – that is, people who have already made a purchase – rather than marketing to prospects or leads. Business-to-consumer marketing automation systems manage relationships with both groups, while B2B marketing automation is concerned primarily with just prospects and leads. The “micro-business” marketing automation vendors are more like B2C systemsbecause they do deal with customers as well as leads and prospects.

In other words, the Intuit / Salesforce.com alliance poses a very large threat to the “micro-business” marketing automation vendors but doesn’t have much impact on the rest of the B2B marketing automation industry, which sells to larger companies. Indeed, those larger firms are typically not QuickBooks clients at all.

But here’s the thing: let’s say that Salesforce.com does succeed in selling to a lot of Intuit clients, and in the process adds marketing automation features to serve them better. Those marketing automation features will be available to all sizes of Salesforce.com clients, including the larger ones who currently purchase marketing automation systems. Even if those firms continue to use marketing automation just to target leads and prospects, they’ll suddenly have a stronger reason to adopt Salesforce.com as their marketing platform. So marketing automation vendors who thought the Salesforce.com / Intuit deal didn’t apply to them, might want to think again.

2 comments:

Fred said...

Hi David,

I thought I would start the conversation on this one.

SFDC has many levels of capabilities, and I would guess that for the Intuit relationship, they would use their lower (lowest?) price version, which won't have much beyond email marketing, and even then in low volumes.

My guess is that SFDC wants to become the CRM platform for small biz, (which doesn't mean the MA platform), and before someone else did. It counters Netsuite as well.

I think also that the greater value in the association is for Intuit to counter Microsoft Dynamics (which has CRM too) and to grow into the larger small biz segment, which SFDC has some market share.

David Raab said...

Hi Fred,

I agree that SFDC's goal is more likely CRM than marketing automation. But if SFDC really listens to micro-business users, they will add marketing automation features because sales and marketing are done by the same person in a microbusiness. Once those features are added, SFDC will take them upmarket almost without attempting to. I don't think this is their plan, but it could be an unintended consequence.