Editors Note: Some quotes have been edited for clarity.
Last week, Brian Walsh hosted Tom Martin (Glance Network’s CEO), Angela Carter (Korn Ferry’s Senior Client Partner), and Jonathan Rosenbaum (Insight Venture Partners’ Vice President) to talk about how their year went and predictions for 2019. We’re going to share some of their key findings to shine a light on the opportunities the AppExchange presents.
If you want to watch the webinar in full, click here to access — you’ll also receive a complimentary copy of our second annual State of AppExchange Partners Report.
To understand how fast Salesforce is growing, let’s take a look at some of the stats from last year. As of Dreamforce ‘18, the AppExchange just crossed 150k+ customers and 6M+ installs. This, plus the solutions these partners are providing are driving these network effects across the Salesforce Ecosystem.
And with the release of Salesforce’s Q4 year-over-year growth rates, we see that every area of the business is posting 10%+ growth.
Q4 y/y subscription and support product growth:
• Sales Cloud grew 11% - now at a $4.2B run rate
• Service Cloud grew 22% - now at a $3.8B run rate
• Platform and Other grew 54% - now at a $3.3B run rate
• Marketing and Commerce Cloud grew 34% - now at a $2.1B run rate
— Salesforce IR (@salesforce_IR) March 4, 2019
Understand the White Space
The number of companies partnering with Salesforce is continuing to increase — based on our research, we see that the number of partners building multiple applications on the AppExchange continues to increase (now up to 45%). Combine that with the fact that a number of large public companies like Optum, Twilio, Google, and IQVIA announced new products on the AppExchange last year, we see the opportunities to grow and develop unique partnerships are increasing.
We know that the companies that experience the fastest growth in the ecosystem are those that fill in the gaps by providing a solution in the white space. Angela Carter shared how Korn Ferry’s talent development platform neatly fills the white space not only with the current Salesforce platform but also where Salesforce is going.
While Korn Ferry just officially joined the AppExchange last year, their partnership model was a bit different than the traditional ISV approach. Korn Ferry provides a wall-to-wall talent management and talent development solution. Angela explained that they have “helped Salesforce become one of those companies that are known as the best places to work by helping them think through their employee engagement strategies and leadership development.”
To deliver the quality of service that Salesforce provides, it takes an engaged and motivated staff. While the talent management and employee engagement space is growing to be more competitive, Korn Ferry was able to understand Salesforce’s goals and mission. They took that understanding and interfaced it with internal stakeholders to grow their own teams and presented the information in a way that their sales teams can position the Korn Ferry platform to others evaluating the ecosystem.
“For us, it has been a very natural process, we are a very relationship-based company and that fits very well with the philosophy of Salesforce as well. So for us, I’m still building out my overall team structure so that we can scale; but in terms of optimizing your relationship with Salesforce, I do have a full-time Alliances person that is working through them to get to these account-based conversations.”
As a newer partner to the ecosystem, Angela and the Korn Ferry team have focused in on defining the right accounts that fit their customer profile and are working hand-in-hand with Salesforce to reach them.
An Example of a Multi-Cloud Approach
Just like the number of applications a company is listing on the AppExchange continues to increase, the number of clouds partners are building on continues to grow as well — now up to 65% based on our survey results.
Glance Networks is a long-time partner with Salesforce — starting seven years ago, they were an early pioneer of a blossoming environment. Tom explained, “Back then the Sales Cloud was really the dominate Cloud. Service Cloud was really not even created yet.”
As we discussed in last week’s deep dive on Salesforce Technology and Platform, more ISV partners are building their platforms on multiple clouds. Tom discussed Glance’s history on building across the various clouds and how being able to provide the context of how their solution fills the white space across these clouds continues to drive growth for their company.
Glance Networks’ solution provides context for sales, service, and support employees to be able to see and connect with the problems their clients are having. Tom goes on to say, “This heightened demand for context and convenience really drove into things like the Sales Cloud or into the Service Cloud and now into other clouds like the Community Cloud that are now part of the Sales or Service Clouds — where having the ability to connect with clients wherever they are has given us access to all kinds of different channels.”
As they look towards the future with Salesforce, they see the opportunity to expand their platform to the Commerce Cloud and feeding that information back to the Service Cloud. By building with a multi-cloud approach in mind, you are not only able to reach more customers, but you also provide a stickier solution. There are greater chances to up-sell opportunities, and you can continue to showcase how you are growing with Salesforce as they venture into new areas.
Moving Upmarket Means Selling with Salesforce
Investors are taking note of the AppExchange. We found that (per Crunchbase) $1.3B was invested throughout the ecosystem. Additionally, the companies that Salesforce invests in through Salesforce Venture (a $100M fund) are pulling in tremendous amounts of additional VC funding. We found that of the companies Salesforce Ventures has backed, additional VCs invested more than $500M this year alone.
Jonathan Rosenbaum joined us from Insight Venture Partners (IVP), a major investor in the ecosystem last year. IVP has over $20B in assets under management and has more than 29 investments in the ecosystem with companies like nCino, Qualtrics, Fenergo, and DocuSign.
When asked about the challenges in the ecosystem, Jonathan focused in on moving upmarket, which our respondents highlighted as a top 3 challenge in our State of AppExchange Partner report.
Jonathan noted that “You’re absolutely right when you gather the information around the idea that the AppExchange is really great for access to the Salesforce install base as well as faster time to market. Originally, it was a very innovative concept for the creation of a B2B marketplace and is obviously today a great lead engine. But I think what’s interesting is that as much as it’d be great to be able to click through the AppExchange and look at a nCino-like product or a CloudCraze-like product that is a fundamental platform for business operation, that’s just not how these buyers are looking to procure software.”
We talk with many partners who believe that signing a partnership agreement, going through security review, and posting their app on the AppExchange is the end of their efforts and that leads will start flowing in from Salesforce. However, this is simply not the case. With thousands of other partners in the ecosystem, those that succeed with Salesforce are the ones who learn to sell with Salesforce. Brian reiterated, “The AppExchange can’t be viewed as an if you build it, they will come. It is still enterprise sales. You have to have Alliance Managers, and you have to work with the sales teams that actually go do the face-to-face meetings to get these large deals done.”
And if you’re not sure this approach works, Tom shared some of his growth numbers. “We’ve grown 65%+ year-over-year. And in going through 2019, we see maybe that trending up not just a little bit, maybe a lot. The fact that Salesforce as a channel continues to really develop their enterprise chops has helped us a lot...To Jonathan’s point earlier, the hard work is really about building those relationships and especially honing in areas like focusing on the Salesforce sales engineer and solution architect staff to really make sure they understand what you provide.”
To do this requires an understanding of how the various players across Salesforce want to learn more about your product in an easy-to-consume way. When the Salesforce sales team presents your solution to an enterprise client, you want the team at Salesforce to be able to provide a custom solution that gets you at the table for the next conversation.
There were many other great takeaways around understanding Salesforce’s total addressable market and what that means for future partner success, as well as a discussion around Salesforce’s PNR (percent-net-revenue) model and how investors evaluate this when they look at your company. You can check out the full recording here.
Are you ready to build for success on the AppExchange? Or are you not getting as much traction with your product as expected? Contact us — it is our mission to help partners thrive within the Salesforce ecosystem.