Salesforce: Trust is the Key Value for Tech Companies

Salesforce: Trust is the Key Value for Tech Companies

Speaking to Jim Cramer on Mad Money, Salesforce CEO Marc Benioff argued that for technology companies, the key value is no longer the great idea, but trust:

In technology over the last two decades, the most important thing has been the idea. That is, the best idea wins.   That has been what gets you funded, that’s how you grow your company, that’s been your highest value: the best idea wins. No longer true.

The current highest value is trust, and if trust is not your highest value, if the most important thing to you and your company is not trust, you need to look again, and that’s what’s happening with these companies today.

Salesforce CEO Marc Benioff

Benioff observed that a lack of trust is eroding Silicon Valley companies such as Facebook.  “Their executives are walking out, employees are walking out,and that happens with a lot of companies in tech right now. We’ve had a lot of walkouts this quarter.  And the reason why is because it’s kind of amessage to the executives: it’s time to transform.”

“Every company has to hold themselves to a new level of trust, and if your brand is not about trust, you’re going to have customer issues, and you can see that in that brand,” observed Benioff.

And trust has long been part of Salesforce’s value proposition.  The firm emphasizes it’s 1:1:1 philanthropy program (Donating 1% of technology, people, and resources) which has been adopted as a model by other companies.  Salesforce also promotes local nonprofits at Salesforce events, emphasizes Trailhead and meetups for skills advancement, embraced a San Francisco tech company tax to address homelessness, called for a US GDPR to protect privacy, raised womens’ wages to address a pay equity gap following a self-audit, and spoke out against anti-gay legislation.  Under a short-term profit-maximization model, these activities make little sense, but under a longer-term stakeholder’s approach, they make perfect sense.

Trust is based on a stakeholders approach to corporate governance.  It recognizes that Milton Friedman’s stance against social responsibility (“there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays in the rules of the game, which is to say, engages in open and free competition, without deception or fraud.”) is wrong.  A stakeholders approach recognizes that employees, customers, partners, investors, and the general public all place value on companies that take a long-term view of their role in society.  Simple profit maximization is a short-term approach which fails to recognize that you can’t attract the best employees or close multi-million dollar deals if you are not trusted.

And you can see this in the stock price growth of Facebook and Salesforce over the past five years.  Facebook’s stock price outpaced Salesforce for the past five years, but once Facebook lost trust, its stock price declined.

Salesforce and Facebook both had strong stock price growth over the past five years, but Facebook retreated this year after it lost trust amongst stakeholders.
Salesforce and Facebook both had strong stock price growth over the past five years, but Facebook retreated this year after it lost trust amongst stakeholders.

Are We Really Selling Quarter-Inch Holes?

Black & Decker Cordless Drill (Source: Wikimedia Commons)
Black & Decker Cordless Drill (Source: Wikimedia Commons)

Sales and marketing often forget to focus on the unique value proposition they offer their customers.  They focus on product features instead of customer benefits.  There is an oft-repeated saying in marketing which captures this logic perfectly:

“People don’t buy quarter inch drills, they buy quarter inch holes.”

The electric drill was first developed by Black and Decker and patented in 1917 as a tool for their own production facility.  Interestingly, the firm only recognized the value of the tool for consumers when employees began taking it home.  Ironically, the tool often used to discuss the value of thinking broadly about use cases and customer needs was originally designed for a limited purpose, the Black and Decker plant, became an indispensable DIY consumer and industrial product.

A product/technology focus emphasizes the features of the drill and not the benefits of quickly making holes of specific sizes as needed, where needed.  Marketers need to translate many product features to a distinct set of customer benefits and roll them into a unique value proposition that differentiates their product in the mind of potential customers.

Understanding the needs of the customers is also important for the product and engineering teams.  Otherwise, they will view both the competition and the market too narrowly.  If you are selling quarter inch drills, you view your competitors as quarter inch drill manufacturers.  If you view your product as on demand tools for boring holes and attaching objects, you recognize a broader set of competitive and complementary products including bores, glues, solder, welding supplies, nails, screws, bolts, etc.  You would also recognize that electromechanical torque can be applied to screws, bolts, and nuts, expanding your product line into adjacent markets.

Focusing on product features is also a bad practice for sales reps.  As with marketing, emphasizing features prevents them from communicating the unique value proposition of your products and services.  If your sales reps are too often complaining about losing on price or the need to constantly discount off list price, then either your prices are too high or your sales reps are engaged in too much feature-speak and failing to communicate customer benefits and value.  Of course, these reasons are not mutually exclusive.  You could have two root causes to your pricing difficulties – your prices may be too high and your sales reps may be failing to communicate value.

Another problem with focusing on features is it treats your product as little more than a commodity.  A differentiated service is less subject to price erosion and heavy discounting.  This is one reason I tell my clients in the sales intelligence space not to compete on database size.  While there are benefits to larger databases, users aren’t usually purchasing big databases [feature], they are purchasing sales insights [value proposition] that make them more effective at building prospecting lists [benefit 1], qualifying leads [benefit 2], managing accounts [benefit 3], reducing CRM data entry [benefit 4], improving analytics [5], and selling deeper into organizations [benefit 6].  Thus, it isn’t the size of the company and executive files, but the breadth of data insights that help reps more efficiently and effectively sell.

So as you hold your 2018 sales kickoffs, make sure to communicate your new product’s value proposition to your salesforce.  Likewise, evangelize your company’s vision during new hire training, product road mapping sessions, and all hands meetings.  In the end, customers are interested in your value and how you benefit them, not RPM or database size.