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What Does the Salesforce Acquisition of ExactTarget Mean for the Future of CRM?

by Greg Head

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Last week, Salesforce.com acquired marketing software leader ExactTarget for $2.5 billion, making it their largest software acquisition ever. Salesforce is the leader in web-based CRM (customer relationship management) software for large sales forces. ExactTarget is one of the largest providers of marketing software for big businesses, which includes sophisticated email, social and web marketing tools. They both sell to large, global companies, so this is a great marriage for each of them.

Industry watchers have been waiting for Salesforce to acquire one of their marketing software integration partners for years, so this move will create a few waves in the “enterprise” software world. CRM analysts like Paul Greenberg, David Raab, Forrester Research and others have posted their thoughts since the deal was inked. The assessment has largely been positive.

I have been part of the growing CRM software businesses for the last 20 years. I helped both ACT! and SalesLogix grow from startups to maturity through acquisitions. I see the marketing software business growing up fast and playing out in a similar way as other maturing software industries, with a few twists.

Here are a few reasons why I think the ExactTarget acquisition is significant:

1) Sales and marketing software belong together

Marketing technology has matured across the spectrum of marketing tactics – email, social, web – so CRM vendors that serve the sales forces of large companies (as Oracle, Salesforce and Microsoft do) are being required to provide CRM and marketing technologies that work together seamlessly from one vendor. These CRM vendors also need big new revenue streams to keep growing and all of them have acquired marketing software companies in the past year: Oracle acquired Eloqua and Microsoft acquired Marketing Pilot.

Small businesses are very different from the medium-and large-sized companies that Salesforce serves. Unlike big businesses, small businesses can’t afford to buy separate expensive sales and marketing systems and integrate them on their own, which is why Infusionsoft has always included CRM, email marketing and automation in one system. Technology trends for small business software often lags a few years behind the established approaches of big businesses, but in this case the small business approach with integrated sales and marketing software has led the way.

2) It’s musical chairs time for marketing-only software vendors

The old game of musical chairs is playing out in the enterprise software market, as it usually does. CRM vendors need integrated marketing technologies to complete their modern sales and marketing suites. The long-term options for standalone marketing software companies are reduced when all the CRM vendors with which they integrate have their own in-house marketing solutions.

Eventually, the acquired technologies will have the best integration and become the recommended solutions from the large CRM sales forces of Salesforce, Oracle and Microsoft. These vendors each say they will continue to support open integrations and “play nicely with each other,” but their customers really want one vendor in the long run – one system that works reliably and one throat to choke.

Where do marketing software players Marketo and HubSpot go now that Salesforce and Oracle have purchased two of their biggest competitors? To stay independent, I believe they need to either align with other CRM partners or build/buy their own CRM solutions. There is still opportunity to differentiate with unique technology approaches or be valued as an independent player, but I don’t think this will be enough. Remember the old days when we bought spreadsheets and word processors from different vendors? That didn’t last long. Only time will tell if “best of breed” will beat the suites, but I wouldn’t bet on it.

For Infusionsoft, we don’t face the musical chairs game since we provide both the CRM AND the marketing software together. In fact, Infusionsoft doesn’t integrate with Salesforce at all, since our CRM and marketing automation were built to work together with no IT integration. We grew slower than some of the marketing software vendors who just sold to the established Salesforce customer base (fish in a barrel), but in the long run we are not dependent on a powerful partner who can determine our fate. Years ago, our fanatic focus on the small business market with our own CRM and marketing platform raised some eyebrows, but now we feel great about our long-term growth prospects and controlling our destiny.

3) Your customers want a seamless sales and marketing experience

For companies big or small, it is no longer an option whether to use marketing software (email, social, automation, website tools) and customer management software (CRM, contact management) that work together. All of us as buyers are moving online to find out about new products and drive our purchases, whether we are looking for a new dentist, a restaurant, a house, or a new technology for our business.

The entire Customer Lifecycle needs to be managed in one system – our customers expect that seamless experience. And how can we run a great business if we don’t know which online lead source drives the most profitable customers, just because the data is in two disconnected systems? Multi-system chaos will be a thing of the past. Businesses without a common marketing and sales system won’t thrive.

Sales and marketing belong together inside our businesses and in our technology.

To all the great marketing software companies that have grown their business from an entrepreneurial idea to an industry leader, we wish you the best. It’s an exciting time in the sales and marketing software game. There is no doubt that it will be a much larger – and different – business in the next ten years.

Image credits: © Salesforce, ExactTarget

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