For local CRM, Salesforce is both a mirror and a catalyst.
In the long run, the addition of Salesforce will, to some extent, accelerate the direction of the reasonable value curve of China's CRM track. By driving outside attention and enthusiasm for the entire CRM track, it will accelerate the growth of local CRM.
Author|Sihang
Editor|Piye
Produced | Industrialist
Salesforce is making a comeback with a new attitude.
The updated news is that Alibaba Cloud has become the exclusive agent of Salesforce in China, and its products will be officially launched on Alibaba Cloud on December 18, 2023. When this news was released at the Alibaba Cloud Compliance Conference on October 31, it also meant that the four-year cooperation between the two parties finally made substantial progress.
At the Yunqi Conference, more details of some cooperation were revealed, including the product roadmap released by Salesforce, the business model and service model of cooperation, etc.; as for more details about ecological partners and channel partners, both parties are currently Still debating.
But what is certain is that this time, Salesforce is returning to the Chinese market by being "hosted on Alibaba Cloud". Judging from Salesforce’s “entry and exit” in the Chinese market, this is its third attempt. The approach is conservative but also more “localized”.
However, behind this, some discussions also followed.
Looking back at Salesforce's performance in China over the past few years, its customers are mainly Chinese branches of foreign-funded companies (G2C) and Chinese companies going global (C2G). Moreover, in the ten-year development process of local CRM, although there are international software giants like Salesforce, high-quality local CRM vendors such as SalesEasy and Fenxiangpinke have also grown up in China.
So, in today's market environment, CRM, which has been developed in China for ten years, is already a more mature track. In addition to thinking about whether Salesforce will compete in the local market again, the question that needs to be discussed is now that Salesforce has returned to the Chinese market, what kind of CRM does China's industrial digital market need? For CRM vendors, what is its real value?
1. Will "Salesforce+Alibaba Cloud" combine Chinese and Western medicine to be more effective?
First of all, hosting on Alibaba Cloud is a decision made by Salesforce to consider data compliance. At the same time, this also means that the data center will be moved from overseas to Alibaba Cloud's data center. This is the primary purpose and result of migration.
Secondly, for customers, product functionality is a more important consideration. Judging from the product roadmap released by Salesforce, in the international version of Salesforce, the sales cloud, service cloud, platform cloud, integration cloud, marketing cloud and business cloud, etc. Among applications, currently the sales cloud, service cloud and platform cloud have been migrated, and the other business cloud has been reconstructed.
Taking marketing cloud as an example, industrialists learned that this cooperation between Alibaba Cloud and Salesforce, on the one hand, is for Salesforce to borrow the Alibaba Cloud platform to make data compliant; on the other hand, it is using Alibaba Cloud to "get closer" to the domestic market.
For example, for the international version of Commerce Cloud, Salesforce is a Social Commerce Cloud based on Alibaba e-commerce and specially launched for the Chinese market. Because of the participation of Alibaba Cloud, this product is integrated with many local platforms. And it will be launched as early as 2022.
In addition, Salesforce chose to be hosted on Alibaba Cloud, making Alibaba Cloud its exclusive agent in China. This also means that its main services will be provided by Alibaba Cloud (specifically operated as Alibaba Cloud Antelope). To some extent, this will also eliminate some customers' concerns about service agility and security.
In fact, not long ago, Salesforce also announced a business model for ecological partner cooperation on Alibaba Cloud’s official website. To join the Salesforce On Alibaba Cloud ecological cooperation program, you must first join the Alibaba Cloud sales ecosystem and become a partner of Alibaba Cloud. This also includes Salesforce's original ecological partners. They also need to join the Alibaba Cloud sales ecosystem before they can finally reach strategic cooperation on the Salesforce On Alibaba Cloud ecological cooperation plan.
This also means that Salesforce’s domestic ecosystem must be “entrusted” entirely to Alibaba Cloud.
In fact, for this cooperation between the two parties, in addition to changes in product functions, service models and ecological cooperation, another change that cannot be ignored is the change in reporting levels.
Xu Xi, head of the domestic alternative business of SalesEasy, has worked at Salesforce for many years. When Alibaba Cloud and Salesforce first reached cooperation in 2019, he analyzed that the cooperation between the two parties actually improved the reporting level in China. Before cooperating with Alibaba Cloud, the reporting process in Greater China first went through the Asia region headquartered in Singapore, then to the Asia-Pacific region headquartered in Australia, and then reported to the Salesforce U.S. headquarters. The reporting level was relatively low.
After cooperating with Alibaba Cloud,China will report directly to the strategic partner department of the US headquarters. This also explains to a certain extent the importance attached to the China region.
However, behind the disclosure of various cooperation details, a bigger concern is,As Salesforce provides services on Alibaba Cloud, whether its long-standing ecological advantages will also be Follow?
First of all, it is a generally accepted view that part of the reason why Salesforce has an absolute advantage internationally is based on its prosperous ecosystem. On top of this, it also has achieved the ultimate in PaaS platforms and products.
In this regard, Luo Xu, founder of CRM vendor Fenxiangxike, told us that on the one hand, overseas, ISV suppliers with various vertical capabilities are integrated on the Salesforce platform, such as Veeva, an excellent CRM service provider in the medical field; on the other hand, , Salesforce also has a large number of SI partners doing customized development on it, which also constitutes Salesforce's strong advantage in services.
However, in the Chinese market, this strong openness will not be transferred.One reason is that ecological partnerships need to be re-established on the basis of Alibaba Cloud. Refactoring requires a lot of time and cost; in addition, it also involves third-party integration with the system, and many integrations require long-term cooperation with the local ecosystem. According to the roadmap for the implementation of Salesforce released by Alibaba Cloud’s official website, AppExchange App Integration is not included in this product release, which also means that in the short term, the Chinese version of Salesforce will not be able to use all ecological applications on the international version of AppExchange. .
"Previously, you could get a 30-day trial version by providing your mobile phone number or email address on the Salesforce official website. However, this version is now only available through a few designated implementation partners. The details will have to wait until the official announcement on December 18. "Xu Xi told the industrialist. Therefore, judging from the current situation, many details of ecological cooperation are still unclear.
But objectively speaking, this is undoubtedly a huge challenge for Salesforce. However, what can be predicted is that as the products are gradually launched, Alibaba Cloud and Salesforce will also update more ecological partners and channel partners in the future.
In addition, in addition to ecological aspects, factors such as product functionality also need to be considered. Compared with local CRM, although Salesforce’s Einstein GPT products are released globally, Xu Xi told Industrialists, “Due to data protection and data cross-border issues, it is also a big question whether Einstein GPT products can be used in China. "
But in addition, this cooperation is also full of opportunities for Salesforce and Alibaba Cloud. First of all, for Salesforce, this opportunity is reflected in regaining the "trust" of old customers with a new face; on the other hand, it is also injecting "fresh blood" into Salesforce through Alibaba Cloud channels.
Finally, for Alibaba Cloud, this cooperation with Salesforce may mean an "tentacle" extending into the SaaS market. Alibaba’s biggest entrance in the enterprise service field is DingTalk. Now DingTalk’s strategy is to only do PaaS. But this time, the addition of Salesforce may be an opportunity for Alibaba Cloud to extend its SaaS market and feed back IaaS.
2. What impact will the return have on the domestic CRM market?
It is understood that with the implementation of the Salesforce product roadmap and the improvement of the ecosystem, some inherent customers have also shown different attitudes.
In the past, Salesforce's annual subscription fee revenue in China could reach US$300 million, including TOC customers and TOB customers, as well as customers who purchase and use in China and customers who purchase and use globally in China. In the face of today's "comeback" of Salesforce, different customers have different attitudes towards migration.
“Because TOC customers faced challenges in the past such as personal information protection laws and network security laws, etc., but now after migrating to Alibaba Cloud, these challenges will no longer exist. So for this part of the customers, they are not satisfied with the migration back. The concerns will be smaller. The focus will be on migration costs." Xu Xi explained to industrialists.
In fact, the combination of internal and external factors such as the acceleration of domestic substitution, the rise of local CRM products, and Salesforce's withdrawal from China last year have caused many former Salesforce customers to completely migrate to local CRM.
However, due to the differences between the Chinese and American CRM markets, Xu Xi also wrote in the article that in the U.S. CRM market, industries such as finance, government, and telecommunications have higher penetration rates; but in China, the industries with higher penetration rates revolve around Manufacturing, medical, technology, retail, FMCG, etc. Industrialists learned from local CRM vendors that some "Salesforce customers" who have chosen local CRM are also concentrated in manufacturing and medical industries, such as Hikvision, Hytera, Schneider Electric (China), etc. .
But now, facing the implementation of Salesforce on Alibaba Cloud, most customers maintain a wait-and-see attitude. In addition to C-side customers, B-side customers also need to look at the further situation after landing, including stability, migration costs, etc.
First of all, there are migration costs when migrating back to the Alibaba Cloud platform. In addition to continuing to pay the account software fee, the system reconstruction implementation service also needs to be redone, because Salesforce International Edition and China The two bottom layers are different. This also involves customers who have used other domestic clouds in the past. Whether they are willing or able to migrate to Alibaba Cloud is also a question.
Secondly, as far as the current situation is concerned, due to external uncertainties, user experience issues, etc., it is difficult for some multinational customers and local medium and large customers to choose to move back to Salesforce in the short term.
In this regard, Luo Xu also believes that customers are also worried in the face of various uncertainties. This concern comes from two aspects. On the one hand, there are concerns about products, and on the other hand, there are concerns about ecology.
"For example, in the United States, if you look for any small and medium-sized enterprise, its company may have purchased fifty or sixty sets of SaaS software, so for multinational enterprises, the heterogeneous integration between systems is very complicated. And in the migration process , the integration of heterogeneous systems and the migration of customized development all rely on the reconstruction of a large number of ISV partners." Luo Xu told Industrialist.
However, the above is all a matter of whether the customer is willing to move back. For Salesforce to migrate to Alibaba Cloud, in addition to old customers in the past, new customers in the future are also the main groups that Salesforce will welcome.
While the entry of giants has heated up the domestic CRM market, it has also affected the market's competitive landscape to a certain extent. This change comes from the impact on the survival of some CRM vendors and the strategic impact on the leading CRM vendors.
Looking back on the development of domestic CRM in the past ten years, the entry of different forces has had a certain impact on the pattern at that time, such as the entry of DingTalk in 2014 and the re-entry of Internet manufacturers in 2019.
Today, the same thing may not happen to the same person, but history will always repeat itself in another way.
But what is different is that as the domestic CRM market gradually matures, its own service capabilities are also getting stronger. The trend in recent years is that the PaaS capabilities of leading CRM vendors are becoming stronger and more integrated. More importantly, they are taking root in different tracks and building their own moats through their accumulated industry experience, increasingly prosperous ecology and adapted products.
However, although Salesforce's capabilities are difficult to copy from overseas in a short period of time, as an internationally advanced TOB company, some of its models are also quietly bringing some changes to the industry.
3. Post-thought: Where have Chinese CRM companies gone?
Returning to the supply and demand side of the CRM market, changes are also happening at the same time.
"A typical Matthew effect will appear on the demand side." Luo Xu told industrialists. The strong will become stronger and the weak will become weaker. When the general environment faces impact, the digital demand of some small and medium-sized enterprises will decline. Although medium and large enterprises will not face survival problems, today's environment will also inspire them to reduce costs and increase costs. Therefore, the digitalization needs of medium and large enterprises will rise and become more urgent.
This is also accelerating to become a self-certification place for Chinese CRM manufacturers.
In fact, from a larger perspective, domestic CRM has undergone significant changes in the past ten years. From the data point of view, whether it is pricing, renewal rate, renewal rate, gross profit margin, cash flow and other indicators, they are all in Enter the benign range.
This is not an easy task. Although it is one of the most needed software for enterprises, in China's special industrial environment, how to build CRM, or what kind of CRM is needed, has always been a difficult problem, and these problems have also become the process of continuous exploration by Chinese CRM manufacturers in the past many years. . Whether it is the valuation bubble in the past or capital entry based on SCRM, etc., they are all shaping the growth path of Chinese CRM companies.
But today, when Salesforce re-enters the Chinese market, what can be seen is that no matter in terms of data indicators, products, corporate structure and technical capabilities, Chinese CRM vendors have strong enough market competitiveness, and even in services in specific scenarios, China's leading CRM vendors have their own obvious advantages.
This kind of value construction also constitutes the value return of CRM companies in the past two years. “China’s CRM track has long had low pricing, which is related to the immaturity of products in the past. However, as the maturity of local products increases, the value of the products is gradually returning. ." Luo Xu explained to the industrialist.
Corresponding to the supply and demand side, as the core value of China's CRM products increases, companies' recognition of their commercial value is also increasing. One signal is that the leading manufacturers in the domestic CRM industry are developing towards a more positive curve in terms of single customer model and cash flow, and the growth rate continues to be stable at 20%. —30% or so.
A corresponding data is that it took Salesforce 17 years to achieve breakeven. At the same time, in the past development, its annual growth has been maintained at a rate of 20% to 30%. Salesforce's stock price has also rebounded significantly recently, which is driven by a significant increase in positive cash flow and a response to the higher-than-expected growth performance of its full-year results in 2023.
In the long run, the addition of Salesforce will, to some extent, accelerate the direction of the reasonable value curve of China's CRM track. By driving outside attention and enthusiasm for the entire CRM track, it will accelerate the growth of local CRM.
In addition, it is worth mentioning that the "Cloud + SaaS" cooperation model is not only the cooperation model between Alibaba Cloud and Salesforce. This kind of collaboration has also become a quiet new direction in China. For example, the recent cooperation between Fenxiang Sales and Huawei Cloud Announced the release of joint solutions, launching specific plans for high-tech, industrial manufacturing, retail and other directions, and both parties will work together to provide value to customers.
"We still expect Salesforce to bring some changes and increments to the market." A CRM related person told us, "It is a mirror and also a catalyst. We are confident to meet the challenge."