• Causal Engines

The anti-Salesforce strategy

Some of the best software companies are ones that ingrain themselves into the operations of their customers.

Traditionally, a very effective route to do this is with the help of a fantastic sales team and a product that wins along the way.

A great example is Salesforce. Marc Benioff doubled down on the inside sales approach to promote their cloud-based CRM. To compete with the much larger Oracle and SAP, Salesforce hired many experienced sales reps and hunted elephants.

While Salesforce had plenty of success, this sales model is not appropriate for every SaaS company and can lead to high overhead.

The norm is shifting, and sometimes a totally opposite strategy can work as well.

Today we see many successful SaaS businesses that do not emphasize a robust sales team.

Let’s dive into Zoho:

Zoho is a “Walmart” for SaaS. Their focus is providing cheaper, yet effective cloud-based products. They offer lightweight versions of numerous suites - CRM (Salesforce), Data (Tableau and Looker), Email marketing (Marketo), and more.

A key component of their platform is that it is completely self-serve. Customers can seamlessly exit their website with the product of their choice without the need to speak with anyone.

By doing this, Zoho is very agile and does not need to rely on enterprises. Interestingly enough, they are bootstrapped which demonstrates their ability to be frugal with their capital allocation and silently grow into a $2bn business.

A large factor of this growth is due to Zoho investing 50% of profits towards R&D. Rather than fund advertisements or a strong sales team, the firm doubles down on its platform and product quality to make sales. This has enabled its user base to grow and become long-term customers.

Zoho’s strategy of winning on price while making sure customers are happy with at least 80% of their product’s features is what keeps the engine running.

Targeting price-sensitive customers while offering a wide product range and self-serve model has minimized the need for a sales team.

Simply put, Zoho found a better way of distributing their products that did not require an expensive team dedicated to pushing the idea down customers’ throats.

This is a classic example of disruption theory in practice. Incumbents serve the higher-end while the more plentiful lower-end customers continue to be underserved.

Zoho took advantage of this value gap and has built a competitive advantage around being a price leader with affordable products that sell themselves.

When thinking about your own business ask yourself: who is my target customer and how can I design my product and sales strategy to fit what exactly they need?

This article is a collaboration between Archit Bhise and Sebastian Duluc.

We would like to thank Abhinav, Keshav, Rohan, Shiraz, and Aviral at A Junior VC and Alexi Neocleous at fubbi.co for their inspiration.