Marketing Automation Next For Salesforce.com

The next item on the list for Salesforce.com is marketing automation, an executive told me yesterday. The company currently makes on-demand software that lets salespeople manage leads, and recently set its sights on call center technology, as I reported yesterday.

But while Salesforce sees huge growth potential in the call center market, it is still fighting skepticism about its future prospects. Thus the need for another break-out segment similar to its flagship Salesforce Automation (SFA) product. Alex Dayon, the company’s senior vice president of service and support at Salesforce, told me that marketing automation software will be “the third component of CRM [customer relationship management].”

Marc Benioff, the company’s CEO, had a different answer when I asked him about it during a Q&A session following a presentation to financial analysts. He said the company already partners with Google and offers some email marketing software. “I’m extremely satisfied with the quality of our marketing technology and I think you’ll find it’s extremely competitive today,” he said.

It was the shortest answer to any question of the day. And indeed, Salesforce does have marketing technology, just as it had call center technology three years ago. That’s how it could have 2,500 customers before it even officially launched “the service cloud.” But it didn’t–and couldn’t–launch the service cloud until after it integrated knowledge management technology from InStanet, acquired last August.

But Benioff wasn’t trying to simply deflect talk of a potential acquisition; Benioff yesterday was all about a message around balancing growth with caution, and reassuring analysts that the company could maintain its margins.

He noted that market conditions are different than they were two years ago, when Salesforce seemed to be following in the acquisitive footsteps of Benioff’s mentor Larry Ellison, CEO of Oracle and holder of the modern Olympic speed record for acquisitions. But, in the current environment, he said, “it’s time to be mindful and contemplative in our growth.”

Perhaps not in the short term, but medium-term the company is going to have to prove it can continue generating revenue growth all while maintaining margin and earnings, just like grown-up companies. And it isn’t even getting much of a boost from its share of revenues from vendors on the AppExchange, a platform it developed to attract partners to increase the critical mass of applications available to customers. The company doesn’t break those revenues out separately from its other subscription revenues; a spokesman told me that’s hard to do because customers who use applications from other vendors also use SFA. There’s probably software for that, but the truth is probably that revenues from partners isn’t significant enough to mention, or in accounting jargon, “isn’t material.” That’s not a good sign.

The new service offering should hold the analyst community at bay for now, but it’s quite likely that Salesforce will be adding that third component of customer sales, service and marketing in fairly short order.