Distribution Approach: Salesforce

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Distribution Approach: Salesforce

Salesforce has numerous offices located around the globe and delivers products to their customers mostly by using direct channels. Their direct sales force consists of telephone and field sales personnel that are divided into regional hubs and territories that are near their customers and are supported by sales representatives who provide qualified leads.

DISTRIBUTION CHANNELS

OVERVIEW
  • Salesforce uses direct and indirect channels to distribute its products to customers. The company is headquartered in San Francisco and it has more than 50 offices around the world on every continent.
DIRECT SALES
  • Salesforce sells its products to businesses around the world primarily through direct sales and plans to hire more sales professionals. They plan to establish more global distribution channels for their products.
  • The direct sales force is divided into telephone sales staff and field sales staff both supported by sales representatives, who have a responsibility to generate sales leads. Sales personnel are based in regional hubs and territories that are close to the customers.
INDIRECT SALES
  • Salesforce has a network of partners including system integrators, global consulting firms and others who send qualified leads and also assist in making sales. They focus less on this channel and pay their partners a commission based on the revenue generated in the first year from the referred customers.

KEY DISTRIBUTION NETWORK EXECUTIVE

  • Ari Schmorak is the SVP, Global Distribution Strategy and Operations at Salesforce.
  • He is responsible for the global distribution operations and strategy including pipeline management, sales planning processes, sales strategy, territory operations and other functions.

DISTRIBUTION NETWORK KPI

  • The key sales metric used to track performance at Salesforce is the annualized contractual value (ACV) which provides the sum of new add-on opportunities and is followed by the pipeline. Both of the ACV and the pipeline are continually tracked and evaluated at Salesforce.
  • Salesforce measures sales performance by tracking annual and quarterly year-over-year growth and revenue for each of their four major categories of cloud products and services.
  • The company also tracks revenues and year-over-year annual and quarterly growth for the Americas, EMEA and APAC.

RESEARCH STRATEGY

We started our research by looking through the Salesforce website, where we wanted to find information about the methods they use to deliver products to their customers. We scanned their news, product pages, annual reports and presentations among others. We found that they mostly distribute their products and services directly to customers in their most recent annual report, but there was no indication of who is in charge of the distribution network or the key performance indicators they use to measure their success. After an extensive search of their website, we managed to find a couple of key success metrics they mention in most of their investor presentations. Since most of their sales are made through direct channels via telephone and field sales personnel, we assumed that the revenue by region statistics is one of their most important key performance indicator along with the revenue by cloud service.

Next, we scanned LinkedIn, Crunchbase and other databases where we looked for the person who manages the distribution network. We found a number of executives associated with distribution in the Salesforce company, identified the highest-ranking executive responsible for the global distribution strategy and added him to our findings.

We noticed that Gartner was noted as a source in the Salesforce financial presentations, so we scanned their website in order to check if any of the other key performance indicators were mentioned. We also scanned The Motley Fool and other industry publications but there was no mention of other Salesforce distribution strategy or any other success metrics on any of these pages.

Finally, we searched through news and articles including CNBC, Cloud Computing News, Forbes and others, where we hoped to find success metrics related to the Salesforce distribution strategy. We mostly found information about their revenue, market share, expected growth, but there was no mention of any distribution strategy or other key performance indicators on any of these pages.
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