Blue Ocean Strategy Salesforce

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Blue Ocean Strategy
A Case Study on Salesforce.com

Presented by :
Ashley Molina
Niranjan Zende
Siddharth Kumar
Zain Yusuf

What is a Blue Ocean ???
Blue ocean is nothing but an analogy to describe the wider, deeper potential of a market space that is yet to be explored.
They may be termed as industries which are
• non-existent today
• Untainted by Competition
• Demand is created and not fought over
• Growth is profitable and rapid
• Competition is made irrelevant
The theory is in direct opposition of Porters’ Five Forces model

Pain Points of Existing CRM
Solutions
● Complex requirements and systems infrastructure
required to be integrated with the applications. Small
businesses could not afford these costs or
accommodate the lengthy deployment process
● Customers needed proof of concept before they
committed to the purchase. This resulted in sales
cycles of more than 3 months and lengthy technology
discussions among tech professionals. It often took 18
to 24 months for companies to get the application to
work at full functionality

Pain Points of Existing CRM
Solutions (contd)
● Cost of purchasing packaged CRM software was high.
A software license for 200 users was approximately
$350,000
● Price of software was typically 25% to 30% of the
overall cost. Additionally, customers needed to spend
money on infrastructure, support and maintenance, and
on hiring internal or external professionals to implement
and upgrade the software/hardware and train users.
Including these factors, the cost could easily exceed
$1.8 million in the first year and $4 million in five years

Pain Points of Existing CRM
Solutions (contd)
●Vendors normally pursued one of two strategies in the
CRM market:
● They either differentiated their product by adding
more features
● Or they lured customers with big discounts at the
time of closing the license agreement
●Over 60% of CRM deployments failed to work

The Salesforce Blue Ocean
strategy:
● Innovation on the Product, Service and Delivery
Platforms:
●Based on cloud computing: The applications were
delivered via the internet from central servers on
salesforce.com’s side, where systems were
deployed and data were stored. This enabled the
sharing of resources across a large pool of users,
thus increasing economies of scale and cost
efficiency of individual customers

The Salesforce Blue Ocean
strategy (Contd):
● Customers were freed of the need to deploy and
maintain the software with their own infrastructure
thereby reducing costs and deployment time
● Users could access the applications anywhere from
any device with internet access
● The price structure was dramatically simplified as
customers simply paid a monthly subscription fee of
$65/user. Total cost was reduced to $156,000/year
bringing it within reach of small businesses

The Salesforce Blue Ocean
strategy (Contd):
● The subscription model removed costs associated with
low value activities in purchasing and deploying the
service, allowing them to focus on strategic activities
with a greater impact on their business
● Customers could test the application in a single work
group or division first, then extend the use to other
divisions once the test was successful. Customers
could also quit at any time due to the subscription
model.

The Salesforce Blue Ocean
strategy (Contd):
●Salesforce stripped of excessive features and focused
on essentials that catered to buyer’s core needs in
sales, customer service and support, and marketing
automation. Removing features made the application
simple, more intuitive and user-friendly.
●Because of the web based nature, it was possible for
Salesforce to collect information on website usage
patterns and improve its user interface accordingly.
●They encouraged customers to build custom programs
according to their business needs using Salesforce’s
cloud based development tools. Done this way, custom...
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