🚨Salesforce just announced Q2 earnings - $CRM
I analysed the entire earnings call. Here's what the results mean for everyone in software sales.
This blog post was published in a shorter version on LinkedIn here.
Reading time 3 min.
Salesforce is one of the largest enterprise software companies. Since its launch in 1999, the company has become a giant and will soon hit $30bn ARR.
Thousands of startups are built around or rely on Salesforce. This is true for large enterprises built on the force.com platform. And it’s true for many startups in the B2B software base that integrate or are also built on the platform.
The business is huge. Across industries, geos and lines of business. It’s a great representation of the global B2B software market.
Its performance is a strong signal to everyone in B2B software sales right now. The current economic climate is shifting fast and if Salesforce can feel the impact of times becoming tougher, then most others will too.
Top Earnings Call Learnings
So, what did I learn from listening to the Salesforce management during their Q2 earnings call?
1. Sales cycles started slowing down from July
2. Deals are being inspected by higher levels of management
3. Customers are becoming more measured with their spend
4. Consolidation has become a common theme
5. Time to value & payback periods are more critical
6. Deal compression [lower order values] in key deals observed
7. Slowdown is most pronounced in North America and Europe
From Bret Taylor, Co-CEO:
"I think what you’re seeing is an increased focus on [...] three things. One is time to value, the other is ensuring that these projects drive cost savings, in addition to customer satisfaction and top line growth, and then the third is reducing complexity and vendor consolidation."
What does this mean for you?
If Salesforce feels the macro shift pain, then you will too.
This will show in particular when go-to-market teams are selling software and fighting in some way for the same budget. You will probably ask yourself, what does this mean for you? It’s very simple. If something as essential as a CRM gets scrutinised more, then any spending on software will.
In short, the impact will be huge and spread across most go-to-market teams. It’ll show in many variations.
Lower average order values, worse win rates, more pipeline slippage, higher discounting, extra demos, additional ROI work, higher pipeline coverage need, pressure on critical metrics like GRR and NRR...and more.
Now is the time to adapt your GTM to the new environment and set yourself up for success in the future.
What can you do now?
- Ask: are we proving value in all sales cycles (renewal & new logo)?
- Ask: are our implementations on track to deliver value quickly?
- Ask: are we seeing high adoption across key accounts?
- Ask: are we pricing our solution attractively to execute fast?
- Ask: are we improving internal processes to act fast and efficient?
- Ask: are we at risk of falling prey to consolidation projects?
- Ask: are we prepared with all teams to fight for every renewal?
- Ask: are we adapting marketing appropriately for the new macro?
Hope you enjoyed this brief analysis. Let me know your thoughts and what you want me to cover next.