How did the acquisition of Radian6 by Salesforce.com change the way we do marketing?

Jatuphol Chawapatnakul

March 2016

Contents

1. The Introduction ...................................................................................................... 4

2. The Case ................................................................................................................... 5

3. The Analysis ............................................................................................................. 6

3.1 Customer Centricity ............................................................................................. 6

3.1.1 Product / Service .......................................................................................... 7

3.1.2 Process .......................................................................................................... 7

3.1.3 People ........................................................................................................... 8

3.1.4 Professional Marketing ................................................................................. 8

3.2 Branding ............................................................................................................... 9

3.3 Market expansion potential ............................................................................... 10

3.4 Impact on Society ............................................................................................... 12

4. The Conclusions and Recommendations............................................................... 12

4.1 Management ...................................................................................................... 12

4.2 System Simplicity ............................................................................................... 13

4.2 Organization structure ....................................................................................... 13

4.3 Infrastructure ..................................................................................................... 13

4.4 Securities ............................................................................................................ 13

4.4 Direction and standing points ............................................................................ 13

4.5 Accuracy ............................................................................................................. 14

5. The Appendices ..................................................................................................... 14

5.1 About Salesforce.com ........................................................................................ 14

5.2 About Radian6 ................................................................................................... 14

5.3 Details Regarding the Proposed Radian6 Acquisition........................................ 15

6. The References ...................................................................................................... 16

1. The Introduction

Second by second, the competitions in all industries have become more and more

intense. As the consumer behavior today changes even quicker than the climate, every single

company needs to find it’s standing point in the market and learn to be active and flexible at

all time. This issue has driven curiosities for all companies in seeking all kind of information to

be converted into their marketing strategies from evaluating their performance by historical

data, and also necessary information for forecasting their potentials in the future. Hence, data

collection and analysis has become crucial function in all businesses. Hence, there are data

collection and analysis functions introduced into the market to collect data related to business

operations such as sales transaction, customer database, financial records, internal

collaborations, etc. The technological systems that are designed to manage these internal

business data are called Enterprise Resources Planning system (ERP). For almost 3 decades,

the implementation of ERP systems focuses on the improvement of the system efficiency and

functionality, which is not enough for business strategy setting up. External data such as

customer behavior/communication, market trends, competitors’ movement, collaborators’

situation are also essential information that all companies should take into accounts.

Since the exposure of internet usage, there are huge shifts in the consumer behaviors.

People share their preference and opinions about their lifestyle, comments to brands and

their products/services through various online platform such as social media (facebook,

twitter, youtube, etc.), product review forums (yelp.com, tripadversier.com, etc.), community

websites (reddit.com), etc. This has also created opportunities for companies to conduct

researches using social listening tools to collect insight and analyze market situation via those

online sources. Somehow, to interpret and finding relationship between internal and external

data requires not only business and technical knowledge, but also intense analytical skills and

simplified-enough platform to reduce human error and keep track to the situations real time.

This causes the communication and utilization of data gathered from social listening tools to

be not effective enough. Idea of combining external data into the internal data has been a big

concept throughout the business world. For ERP giants such as SAP, Oracle, SAS and IBM, their

long-developed system architecture create difficulties in migrating its system to the new

cloud-based technology.

Unlike the legacy standard system providers, Salesforce.com, one of the most highly

valued cloud computing companies specialized in cloud-based customer relationship

management (CRM) products, data analysis products, sales supporting products and

organization collaborative products (Nasdaq.com, 2016), was the very first mover to make its

big leap in integrating social data into its products by acquiring Radian6, one of the leading

social media monitoring platform in March 2011. Its main objective was to develop its core

CRM products, commercial and social applications to become more effective and social

intelligent.

2. The Case

On March 30, 2011, the acquisition of Radian6, the industry’s leading social media

monitoring platform by a cloud computing giant, Salesforce.com was been published all over

the news portal throughout the net. The acquisition value was $326 million in cash and stocks

(Salesforce.com, 2011). Objective of the acquisition was meant to shift the paradigm for its

customers to be better at social interactions from both inside and outside their companies by

providing insights from different online sources. With Radian6’s functions that “track and

analyze hundreds of millions of conversations across social media landscapes”

(Salesforce.com, 2011), Salesforce.com would be able to deliver insights from the public social

web to its products. As of 2011, Marc Benioff, chairman and CEO of Salesforce.com said that

they would mainly focused to integrate its social functions into the company’s following

products:

Sales Cloud: sales module that allows its clients to manage and monitor sales

status of each customers and allocate sales force effectively. Radian6 integration

will allow its clients to obtain customers’ insights, create sales leads and connect

with their customers from different social media channels.

Service Cloud: customer service platform that allows its clients to manage

services required from their customers and allocate service resources

effectively. Radian6 monitor and allows the Service Cloud clients to access and

provide services for their customers through different social media channels

effectively.

Salesforce Chatter: internal social media platform for enterprises that allows the

clients’ staff to communicate and collaborate between each other. With

Radian6, its clients’ staffs are able to access the insight and information from

different social media and provide the better effective works.

Force.com: Platform that allows the clients to create additional applications as

the extension to Salesforce.com. Its clients are able to integrate the social

media-related functions as the extension for the Salesforce.com’s core features.

Up to now (2016), Salesforce.com has integrated social media linkage into most of its

products, which Radian6 has played significant roles in providing insights, improve the

communication efficiency and drive the company’s positioning to the higher level as the

innovative company in terms of both products and strategies.

3. The Analysis

The objective of the analysis for this case is not for understanding the situation of

Salesforce.com in acquiring Radian6. Instead, this essay will define the benefits to its

customers with Radian6’s functions integrated. In order to answer the question, “how did the

acquisition of Radian6 by Salesforce.com change the way we do marketing?”, Customer

centricity, Branding, Potential for expansion and Social impact are the aspects that we will be

looking into.

3.1 Customer Centricity

In a way, customer centricity is the major aspect to be considered in CRM system, which

is the core features of Salesforce.com’s product. Radiant6 integration has improve

Salesforce.com products’ clients to be more customer centric as they will understand more

about their consumers’ behavior and perceptions outside their brands as well as create better

opportunities for companies to communicate and engage with their customers.

Based on the additional features from Radian6 integration, the clients will be more

customer centric in terms of product/service, processes, people and professional marketing,

which can be illustrated as the below diagram.

Figure 1: Customer Centricity Evaluation Model (Basu, 2016)

3.1.1 Product / Service

Interpreting customers needs into product and service development is one of the most

challenging activity in marketing. Integration of Radian6 helps the clients to have access to

the customers’ mind and analyze their needs by time, sentiment, demographics, trends,

intent, etc. It allows the clients to obtain insights, be able to understand more about their

target customers and create the right products/services that matches their needs.

3.1.2 Process

Radian6 integration into Service Cloud (the service support platform) and Chatter (the

internal social media platform) has support Salesforce.com’s clients’ processes to be more

efficient in terms of:

Communication: It assists their staffs to have the better synchronization

between each other from both internal aspects (staffs to staffs) and external

aspects (staffs to customers). With this advantage, it makes the communication

within the company, such as reaching the right responsible person for each

specific case/question to be more efficient.

Information searching: The clients’ staff can search for information, not only

from internal sources, but also from social media, which allows them to have

the better accessibility to information and response to the customers efficiently.

Platform simplicity: Combining internal and external information into one

platform create simplicity for the staffs in searching for information and support

their customers.

Product / Service(Core Value)

Process(Efficiency)

Professional Marketing(Understanding Market

Needs)

People(Creativity)

Customers

Coherence: With the integration of different sources of communications into

one platform, the clients will be able to communicate with their customers more

effectively without discontinuity. Whether the customers change source of

communication or changes of the responsible staffs, it allows the company to

keep track to the exact customers with less mistakes.

Rapid response: When there is any mention about the clients in any external

sources such as social media, blogs, forums or news portal, the clients’ staffs can

take action into responding to the conversation rapidly, causing less threat of

being backfire damaging the companies’ image.

As of the above factors, the clients’ staffs can provide the better service quality, which

is considered a crucial factor in CRM, and takes role in increasing customers satisfaction,

brand image and also sales opportunities.

3.1.3 People

With the ability that allows the communication and information exchange within and

from outside the organization to become more effective, Radian6 integration into

Salesforce.com’s product creates the better working system that assists its people to reach

necessary information for their works effectively. With Radian6, Chatter, Salesforce.com’s

social network for enterprise will be able to synchronize the information from external social

media such as facebook, twitter, blogs and youtube, making its clients’ staff to obtain market

insight real time.

3.1.4 Professional Marketing

From the second their customers wake up, stories of the entire journeys in the

customers’ life such as what they do, where they go, who they meet, how they think, what

they want, or even what they dream of, could be turned into valuable resources in creating

touchpoints that leads to “The Moment of Truth”. These insights allow the clients to

understand more about the customers’ behavior, needs and opinions and able to setup

effective marketing activities to grab the customers’ attention.

Tracking of social responses also allows the clients to evaluate their marketing

performances by measuring mention, reach, sentiment and opinion about their campaigns.

They are also able to evaluate performance of the campaigns’ communication channel,

messages and mechanics. This creates better opportunities for them to adjust and optimize

their campaign to become more effective.

From the analysis, Salesforce.com’s clients are able to increase their customers value

through Radiant6 functions as follows:

Product value: can be increased by improving brand awareness and product

knowledge. Radiant6’s functions will let the clients track the customers’

communication channel and create the product/communication contents to

create the better flow for different touchpoints in their journeys.

Accessibility value: can be increased by improving availability and convenience.

Research for customers’ insight will allow the clients to analyze the

product/service distribution strategy and allocate resources and

product/service availability to fit the demand within different areas.

Affordability value: can be increased by improving ability to pay and willingness

to pay. The customers’ perception toward the clients’ pricing strategies will be

voiced out in the social, which enables the clients to set the price that match

their need or communicate the better perception for customers, driving them

to pay more for the product/services.

Acceptability value: can be increased by improving functional acceptability and

psychological acceptability. Customers’ needs and opinions toward the clients’

brands and their competitors are valuable resources for benchmarking and

improving the products/services as well as their communication messages to

match their customers’ need and increase the willingness to buy the

product/services.

3.2 Branding

Radian6 integration will leverage Salesforce.com’s clients’ branding to become social

media oriented, and be able to leverage their brands effectively. The diagram below describes

the brand framework that describe the relationship between the customers’ expectation and

experiences.

Figure 2: Brand framework

The principal of customers’ brand perception is the match between their experiences

and expectations. Expectations of the customers are built from the communications which

are created from the brand’s assets, differentiation of the brands toward competitors, and

also emotional value delivered together with the communication messages. Radian6’s

functions that allow its clients to understand more about customers’ insight. Not only better

understanding about the customers’ behavior and opinions, they are able to verify the right

message/channel to communicate with their customers creating the better expectations

toward brands.

In terms of experiences, when the brands understand more about their customers’

need, they could deliver the match-to-demand products/services for their customers, which

will directly create the better experiences for their customers. Besides, their better customer

services and CRM functions provided by the integrated channel creates the better perception

toward their brands and also create the better loyalty and surprises for their customers.

Radian6 functions help Salesforce.com’s clients to leverage and improve their

customers’ expectation and experiences, and hence, it improves the clients’ brand perception

for their customers.

3.3 Market expansion potential

With Radian6’s function on analyzing the customers’ voices toward social media,

Salesforce.com’s clients can also benchmark themselves with their competitors, which allows

them to position themselves within different dimensions. In this way, it is easier for them to

Brand

Expectation Communication

Perceived Quality

Differentiation

Emotion

Experience Delivery

Loyalty

Service

Surprise

find the point of differences to the competitors, find the right strategy to attract to different

groups of customers.

Markets

Existing New P

rod

uct

Exis

tin

g Penetration

Market

Development N

ew Product

Development Diversification

Figure 3: Market expansion strategies

The figure above identifies the market expansion strategies. From integrating radian6,

Salesforce.com’s customers are able to expand their business opportunities toward the

following dimensions:

Existing product on the existing market: penetration strategy, researches on

customers behavior and social listening function from Radian6 allows

Salesforce.com’s customer to find sales leads and opportunities to approach

the customers in direct and indirect ways. It also enable 1-to-1 marketing

function for brands to contact the customer directly on social media.

Existing product on the new market: Market development strategy, it helps

the clients to find the potential market for their existing products and also new

ways of communicating customers from different segments to their existing

targets.

New product on the existing market: Product development strategy,

researches on the consumer voices will make the clients understand more

about the needs of their customers for the existing products. This allows them

to create improvement on their existing products to have a better match with

the customers and gain more market share from their competitors.

New product on the new market: Diversification strategy, listening to the

customers’voices from different sources allows the clients to find the

potential market gaps from the customers need and offer innovative

products/services to the untapped market.

As for Salesforce.com and Radian6’s product characteristics, which are cloud-based

system, they allow the clients to be able to expand their products/services providing

internationally. Therefore, the market potential can be expanded from both vertical and

horizontal dimensions.

3.4 Impact on Society

With the application of Radiant6 in listening to social mentions, Salesforce.com’s clients

will have better understanding about the social pain toward their brands offerings, and also

social demands in the industry. In this way, the clients will be able to state the problems and

concerns that create impacts on society and take actions to improve their brand image

through CSR campaigns. Besides, the clients will be able to catch up with the market trends

and take them as opportunities to communicate to their customers through social media.

4. The Conclusions and Recommendations

In reality, social media-related operations have long been implemented into business

processes such as customer relationship management, online advertising, sales leads

exploring, customer insight surveys / researches, etc. However, most of the application are

activated with manual works, which has created limitations for companies in terms of both

effectiveness (limited data coverage, limited analysis quality, errors, etc.) and efficiency

(information accessing time, analysis time, etc.). However, integration of Radian6 functions

into Salesforce.com’s products allows its clients to connect the business from both internal

and external aspects. As a result, it lowers the limitations and allow the clients to be able to

create better business strategies and operations through their ERP systems.

The integration of Radian6 might be a good opportunity for Salesforce.com’s client to

understand their customers and communicate with them with the better performance,

however, there are some recommendations to the clients to make the better use of the

system.

4.1 Management

The value of the system will not be created if there is no support from management,

especially authorities for employees in taking actions for some service-related jobs. The issues

should be classified into different levels such as high/low involvement, high/low priority-risk

or by type separated by involving departments, so that the services can be arranged in the

efficient way.

4.2 System Simplicity

Even the system is integrated to support human and create the better value for the

organization, it cannot fully replace them. Most of the analysis and decision making processes

are still needed to be based on employees. This increased the employees’ burden in their

learning, which not only the knowledge about their jobs, but also about the technology.

Therefore, the system and process should be simplified and user-friendly enough for the

employees.

4.2 Organization structure

The system might synchronize all the information and operations within the

organization together, but another important factor is the physical interaction of the

organization. The structure should support the collaboration within the organization and

breakthrough the barriers between departments allowing the employee to contact and

collaborate well.

4.3 Infrastructure

Technical/networking system is also considered as the backbone of the cloud-based

system. If there are limitations to the infrastructure, or the system breaks down, there should

be backup plans for the operations. Therefore, the clients should not have fully based their

operations on the system.

4.4 Securities

When all the essential information, which is valuable asset for the company is gathered

into one system, one of the most significant issue to concern is securities within the

organization. Whether it is physical or technical, the securities and authorities to access into

the workplace or system should be set well enough to protect from breaking through.

4.4 Direction and standing points

Listen to customers and respond to their needs might be a key to customer centricity,

but you should not let it control your standing points and business directions. Besides,

customers’ behavior nowadays changes frequently and promptly, which you should also look

forward into the future instead of trying to catch all the trends on social media.

4.5 Accuracy

When speed is the key to social CRM, accuracy is also another critical point to concern.

Thousands of prompt response can increase customers’ satisfaction, but only a prompt bad

response could ruin your company credential heavily.

5. The Appendices

5.1 About Salesforce.com

Salesforce.com is the San Francisco-based enterprise cloud computing company

founded in 1999 by Marc Benioff, Parker Harris, Dave Moellenhoff, and Frank Dominguez, the

former Oracle executives. It’s core product focuses on cloud-based CRM and commercial

solutions. The company’s platform and application services includes Sales Cloud, Service

Cloud, Data Cloud, Marketing Cloud, Community Cloud, Analytics Cloud, App Cloud, and IoT.

As of information from NASDAQ, in the early 2016, its market capitalization was $45 billion,

and was considered one of the most highly valued American cloud computing companies. As

of 2011, it distributed its services throughout the world with up to 90,000 clients operating

within its platforms.

5.2 About Radian6

Radian6 was a Canadian startup founded by Chris Newton and Chris Ramsey in 2006. By

2011, it was “the leading social media monitoring, engagement and insights platform with

over 2,400 customers including Dell, Kodak, PepsiCo, and UPS, as well as many of the world’s

leading public relations and marketing agencies” (Salesforce.com, 2011). It monitors more

than hundreds of millions of conversations over leading social media such as facebook,

twitter, Instagram, youtube, etc. and also community websites and forums to gain insight

about their brand, products, competitors and services and take actionable activities through

the right channel real time.

5.3 Details Regarding the Proposed Radian6 Acquisition

“Salesforce.com will acquire Radian6 for approximately $276 million in cash and $50

million in stock, net of cash acquired. In addition, approximately $10M in stock and $4M in

cash will be issued to founders and will be subject to vesting conditions over two years. The

acquisition has been approved by Radian6’s board of directors and stockholders and is

expected to close in the second quarter of salesforce.com’s fiscal 2012, ending July 31, 2011,

subject to customary closing conditions.” (Salesforce.com, 2011)

6. The References

Salesforce.com Signs Definitive Agreement to Acquire Radian6, the Industry’s Leading

Social Media Monitoring Platform. (2011). Retrieved from www.salesforce.com:

http://www.salesforce.com/company/news-press/press-releases/2011/03/110330.jsp

http://www.salesforce.com/eu/marketing-cloud/overview/

http://www.cloudsocius.com/top-5-salesforce-acquisitions/

http://www.cloudsocius.com/top-5-salesforce-acquisitions/

http://www.zdnet.com/article/salesforce-buys-radian6-for-326-million-enters-social-

media-monitoring/

http://www.infoworld.com/article/2624804/erp/enterprise-2-0-and-social-media-

coming-to-erp.html

http://www.strategic.com/blog/2012/social-erp-the-next-step-in-collaboration-and-

customer-engagement/