"Salesforce has done this extremely effectively, from salesforce automation, to customer relations management, to customer service, etc. In many cases now it is virtually unimaginable not to use Salesforce, since the feature set is so extensive."
This is the same strategy that Microsoft has pursued for years - and it sometimes works and sometimes doesn't - MSFT going after Intuit comes to mind, as does their own Salesforce.com competitor.
ExactTarget is a good large-scale email tool, but it is a very below average marketing automation tool. Now, they purchased Pardot, which is a decent, if basic marketing automation tool - good for small business but nowhere near an Eloqua or a Marketo - more comparable to Hubspot. So the question is how integrated they can make all these various tools. To date the Pardot/ExactTarget integration was rather weak - probably more to come on that front. I could see a world where they use Pardot's front end and ExactTarget just for scale email sending but the existing user base won't appreciate that move.
Now, I look at the integration (or lack thereof) with existing Salesforce acquisitions, and I have little confidence that Salesforce will be able to build a world-class, fully integrated product. For reference, look at the integration of Buddy Media or Radian6. So Salesforce may have all the tools, but true integration between the tools has been historically lacking. Now they're adding a company that is strong in B2C email and has a small B2B marketing automation tool that they themselves are trying to integrate. Sounds very complex and difficult - and sounds like something that would take a number of years to get right.
The real question for me is what now happens to Marketo and Hubspot - Hubspot, for example, has an investment from Salesforce, but was probably unavailable for acquisition as they want to spin public. Now that Marketo is public, and it looks like their business is not very sustainable (based on my read of the S-1), they'll likely see their stock price dip to the point where they look more interesting as an acquisition to someone. They're valued at around $800m right now - so if they show poor financial metrics, I'd expect that to dip. If they get cut in half, then a pick-up in the $600-800m range becomes viable - about the same price as Eloqua - but I'm not sure who would be the buyer at this point.
I think Salesforce did the right thing in terms of topline revenue (ExactTarget does around $300m vs. $65m for Marketo) and customers (ExactTarget has large B2C brands, Marketo mainly B2B), but they bought a far inferior product. Maybe they pickup another company in the space for the product?
Provided Salesforce's internal sales teams and enterprise consultants can effectively promote ExactTarget as a new addition to the product platform to Salesforce customers that hitherto hadn't considered it, the actual details of the level of integration are of secondary importance.
My own experience is that their internal sales teams and enterprise consultants are separate islands based on the product and they are very poor at cross-selling. We're a pretty decent size Salesforce.com customer and they have never even attempted to sell us other services. Not Radian6, not Buddy Media - hell, we had to ask them about Data.com.
So I'm doubting their ability to cross-sell. And then the integration is absolutely important - if you looked at the integration between Salesforce and ExactTarget, you'd be shocked by how primitive it is. Now, they might try and then sell them Pardot.
Do you feel your experience is representative of how their sales teams generally work? (genuine question)
If that's the case I'm surprised, since decision makers (especially at C-level) overlap a lot, their products' basic use cases and value propositions are relatively straightforward and they have armies of pre and post sales specialists to refine the proposal and worry about implementation details. Maybe I'm overestimating their sales organization based on their growth figures achieved...
In this case, I think it is a function of the fact that these are acquisitions and my guess is you have stovepiping going on. Meaning, the organizations probably aren't properly aligned.
Sales teams can function this way - but usually the way I've seen it setup is that you have a group that is focused on cross-sell/up-sell after the close of some additional business (farmers) vs. a hunter organization.
It works exceptionally well if you can lean into a market fully. Microsoft was heavily constrained by anti-trust issues.
Oracle is perhaps a better example of how well it can work than Microsoft. Ellison has openly admitted his strategy was acquired from the Office approach that Microsoft leveraged. Oracle has spent a huge pile of money, far more than Microsoft, in consolidating their space, and all without having a monopoly to lean on.
Not sure I agree that Marketo's business is unsustainable - clearly they want to make more headway in the B2C space; the B2B Marketing Automation market would seem to be saturated, but I would argue that there's still plenty of growth for them for the next 3-5 years, at a minimum.
As far as I can tell, ExactTarget's marketing automation capabilities vastly pale in comparison to Marketo or Eloqua, I could be wrong though.
something like 90%+ of Marketo's customers integrate it with Salesforce. Of course Salesforce won't just cut them off if they have a competitor tool, due to anti-trust issues, but it doesn't necessarily bode well for Marketo now that Salesforce owns a competitor. Pardot is a fairly small piece of Exacttarget though so potentially Marketo could still be a target at some point.
Larger scale B2C marketing automation is generally much more complex than b2b. Ecommerce databases are generally less normalized across businesses, aren't hosted by an intermediary like salesforce and contain more data. Cross-channel retailers with physical stores track a ton of transactions and customers. I really don't think that any b2b marketing automation platform will make much headway trying to go b2c. Hubspot has some success only because they focus on local and small businesses.
This is the same strategy that Microsoft has pursued for years - and it sometimes works and sometimes doesn't - MSFT going after Intuit comes to mind, as does their own Salesforce.com competitor.
ExactTarget is a good large-scale email tool, but it is a very below average marketing automation tool. Now, they purchased Pardot, which is a decent, if basic marketing automation tool - good for small business but nowhere near an Eloqua or a Marketo - more comparable to Hubspot. So the question is how integrated they can make all these various tools. To date the Pardot/ExactTarget integration was rather weak - probably more to come on that front. I could see a world where they use Pardot's front end and ExactTarget just for scale email sending but the existing user base won't appreciate that move.
Now, I look at the integration (or lack thereof) with existing Salesforce acquisitions, and I have little confidence that Salesforce will be able to build a world-class, fully integrated product. For reference, look at the integration of Buddy Media or Radian6. So Salesforce may have all the tools, but true integration between the tools has been historically lacking. Now they're adding a company that is strong in B2C email and has a small B2B marketing automation tool that they themselves are trying to integrate. Sounds very complex and difficult - and sounds like something that would take a number of years to get right.
The real question for me is what now happens to Marketo and Hubspot - Hubspot, for example, has an investment from Salesforce, but was probably unavailable for acquisition as they want to spin public. Now that Marketo is public, and it looks like their business is not very sustainable (based on my read of the S-1), they'll likely see their stock price dip to the point where they look more interesting as an acquisition to someone. They're valued at around $800m right now - so if they show poor financial metrics, I'd expect that to dip. If they get cut in half, then a pick-up in the $600-800m range becomes viable - about the same price as Eloqua - but I'm not sure who would be the buyer at this point.
I think Salesforce did the right thing in terms of topline revenue (ExactTarget does around $300m vs. $65m for Marketo) and customers (ExactTarget has large B2C brands, Marketo mainly B2B), but they bought a far inferior product. Maybe they pickup another company in the space for the product?