When you look at a company that has achieved success, it's easy to make assumptions about how it arrived there. It's easy to look back and pick out the key turning points that led to winning. It's become common to label these key markers in time as pivots.
But, in the moment, these key pivots usually don't carry the weight they do in retrospect. They just seem like another decision you make along the way. As aleader, you usually have access to what feels like one-third of the information you need to make a decision. And then other times, the path simply reveals itself.
In 2005, Salesforce CEO Marc Benioff was in the process of building a juggernaut.
Under his guidance, Salesforce ended 2004 with a market cap of $500 million. By the end of 2005, that number would approach $2 billion. New bookings were also on a triple digit rocket ship. In 2005, the company raced past 20,000 clients acquired. Salesforce had emerged as the lead dog in the online CRM space.
But underneath the public adulation and stunning growth numbers lay a fatal flaw. Salesforce was hemorrhaging customers to the tune of 8 percent--per month. That's right, over the course of a year, nearly every customer was leaving.
Its inability to persuade existing customers to continue to be customers was creating a death spiral for Salesforce. Eventually, they simply wouldn't be able to entice enough new customers to come in the front door to make up for the unhappy customers headed out the back.
Churn was killing Salesforce.
In retrospect, this seems crystal clear. At the time, it wasn't. Salesforce seemed to do no wrong in the eyes of the market.
A Company-Saving Presentation
That's why what a man named David Dempsey did at a corporate retreat in the spring of 2005 was nothing short of heroic. Previously, Dempsey, an Irishman, had run a team expanding Salesforce's European footprint.
At the time of this fateful meeting, he'd been tasked with the responsibility of managing customer renewals. His presentation to the executive team left little room for interpretation.
Salesforce needed to fix this customer churn problem or else. Dempsey did such a masterful job of painting a disastrous "or else" that he became known throughout the C-suite as Dr. Doom.
To Benioff's credit, he listened. Dempsey's message hit home. Churn was killing Salesforce, and understanding this one word was imperative to the company's survival.
Keeping customers needed to become just as important as finding new ones.
The Customer Success Pivot
Benioff proceeded to set the company on a road that it still travels today. Customer success has become just as much a part of the Salesforce DNA as the iconic founder himself.
The team that handles customers is called the customer success group, not the customer support group. It's made up of customer success managers, not customer service reps.
Many of Salesforce's latest product enhancements have been additions to what the company calls its Customer Success Platform. These bells and whistles have been designed to, you guessed it, help customers be successful.
All this focus has paid off. Remember the 8 percent per month attrition rate? Salesforce's churn is now in the high single digits per year.
This focus, along with maintained momentum in acquiring customers, has taken Salesforce to new heights. The company's market cap today is in the neighborhood of $65 billion.
This retaining customers thing looks to be a winner.
Looking back, it's easy to applaud David Dempsey and Marc Benioff for this pivot. But great leaders don't make great decisions with the benefit of hindsight.
Dempsey's precision and Benioff's openness might very well have saved the company from a spectacular fall. Since then, their dedication to a guiding principle has not only changed the DNA of a multi-billion-dollar behemoth (never easy to do) but has also marshaled in an era of customer focus that transcends.
Marc Benioff himself once said, "Life grows relative to one's investment in it."
Said another way, "You get better at what you focus on."
Today's version of Salesforce is proof positive that a focus on customer success creates customers whose loyalty is earned.
Play a part in the success of your customers and they'll never leave.