The Evolution of Sales and Marketing SaaS
Sales and marketing. Marketing and sales. They are often mentioned in the same breath because of their intertwined purpose. Marketing builds the funnel and sales moves its contents along. They have grown increasingly close together in recent years with the lines of demarcation between each blurring, and yet remaining distinct. The consistent theme for both sales and marketing is that the importance of software solutions has only gone up and to the right.
Sales and marketing SaaS applications have collectively accrued over $72B in value over the last 15 years and it doesn’t seem to be slowing down(a). You can see in the chart below the split by (primary) buying decision maker(b).There are quite a few reasons for this significant value creation, but one of the main ones is that these sales and marketing applications can be directly tied to revenue with a demonstrable ROI. Before implementation and after implementation. See what it does to revenue. Revenue up. Revenue good.
What’s fascinating to me is that while these SaaS applications are actually both tied to, and integrated with, one another, and they grew up around the same time, sales and marketing software took very different initial approaches to addressing their markets and are now meeting in the middle.
Players need coaches. Actors need agents. Musicians need producers. Almost everyone that actually does something has a manager enabling and supporting the success. Doers need managers. Managers need doers.
- Jerry Seinfeld was the comedian but needed Larry David as the producer to become Seinfeld
- Avon was the leader but Stringer Bell was the business man in West Baltimore
- Rod was the scrappy receiver and Jerry was the negotiator
- Without Richard, Tommy never sells half-a-million brake pads
They complement one another. One is the execution pillar and one is the management layer. And sales started with the management layer, while marketing started with the execution pillar. And now each is building the other.
Fifteen years ago Salesforce established itself as a SaaS repository for sales-related information in the cloud. And while it’s spent the years since delving into other adjacencies(c) its fundamental value proposition is a central repository of sales information that aids in understanding customers and sales reps. Sales reps don’t really do anything that is central to closing a deal in the core Salesforce platform (there is no execution), but it is the central source of truth for the sales organization. It manages all the information.
Conversely, the marketing software ecosystem began differently. The tools for executing largely came first with companies like Marketo*, Eloqua, ExactTarget*, Responsys etc. building solutions that were heavy on workflow. These solutions helped people track/nurture leads, customize web experiences, send targeted/customized emails etc. – they were focused on action, but each solution was largely a silo of information that was relevant to that workflow(d).
And so what’s happening now? Two things:
- Execution tools are being built for sales, and management tools are being built for marketing. We’re seeing the Marketo* for sales people and the Salesforce for marketing people. You have companies for sales like InsideSales.com, Yesware*, ToutApp, Clearslide, APTTUS that are actually focused on the end-user doing something. And you have companies like Origami Logic, Beckon, Datorama, Tealium*, Ensighten and Segment.io that are being built for managing (and moving) marketing-related data. This doesn’t mean that people have stopped building execution tools for marketing or management tools for sales, but the other area has proliferated for each.
- Both ecosystems also are focusing on tools that aid in the actual understanding of information. In the marketing ecosystem this is largely happening within the tools built for the management of information. And in the sales ecosystem this is happening (for the most part) with tools that extract information from the management layer (mostly Salesforce(e)) and then analyze it in a new platform.
Here is a graphic I put together for how I think about the ecosystem:
Note: Some Battery companies included in the graphic above. For a full list of all Battery investments and exits, click here. The companies included were ones that have raised at least a Series A (before my seed stage friends get upset with me)
While the customer journey is blurring the lines that separate sales and marketing functions, ultimately to sell half-a-million break-pads you’ll need tools that allow you to execute, manage AND understand what and who is working. We’ve reached an inflection point where both sales and marketing are beginning to look pretty similar, although they each took different roads to get there.
(a) Just note around half of that value is in Salesforce.
(b) This data set is part of a larger database that my colleague Neeraj Agrawal and I have compiled and will be rolling out over the next few months. It is composed of public SaaS companies or companies acquired for more than $500M. Ain’t no private Unicorns in this.
(c) This has included an extremely successful dive into Customer Service, a solid acquisition to build its presence in Email Marketing and Lead Nurturing, a nascent position in analytics and then failed forays into HCM and Social Media Management. All the while Salesforce remained the leading sales database (and successfully fought off competitors) by building an app ecosystem around their position as the sales database in the cloud.
(d) Over time, large incumbents in the digital and CRM ecosystem did acquire and build solutions to try and serve as the centralized information. Oracle, Adobe and Salesforce all came from different angles on why they were best positioned for this information (Oracle – data and analytics, Adobe – digital, Salesforce – CRM), but at the core of this was the actual workflow and tools to actually execute on jobs.
Omniture should also be noted here – while lighter on workflow, it was a silo of web data.
(e) Note that Salesforce is making a big push into analytics as well
* Represents a current or past Battery portfolio company. For a full list, please visit here