It's been a busy first half of 2018 for Salesforce. In addition to acquiring MuleSoft for $6.5 billion, the CRM company doubled down on commerce with the purchase of CloudCraze.
Salesforce's CloudCraze acquisition comes nearly two years after Salesforce bought B2C e-commerce vendor Demandware for $2.8 billion, turning the product into the Salesforce Commerce Cloud. But selling B2C is substantially different from selling B2B, so Salesforce turned its attention to a B2B commerce provider. Enter CloudCraze.
Financial terms for the CloudCraze acquisition haven't been disclosed. In this Q&A, CloudCraze president and chief customer officer Ray Grady discusses the Salesforce acquisition, what it means for CloudCraze customers and what the future holds for the B2B commerce company.
How does the Salesforce acquisition help CloudCraze customers?
Ray Grady: We think, and it's been validated with my talks with CloudCraze customers, we think it's a huge win for them. Most of the customers we work with like CloudCraze because we're SaaS and B2B commerce, but we're also native to the Salesforce platform and that's important to them because they've made significant investments into Salesforce.
They're going through some level of transformation digitally; perhaps a front-office transformation and they want one view of the customer. Now the fact that they can have a commerce system native to the rest of their suite is pretty compelling. It's why they bought us as an independent business and we think they're excited we're part of the Salesforce family.
What about CloudCraze customers that don't use Salesforce?
Grady: The ones who were not invested in Salesforce weren't negative to the Salesforce acquisition. We have a handful of customers that said OK, we're starting down a SaaS journey and need to find a program that has immediate ROI, so they'll start with CloudCraze even if they didn't have a contractual relationship with Salesforce. It would be the first way Salesforce technology gets into their environment.
For those folks, it's almost business as usual. They'll lead with commerce and they'll bring in over time other technologies to run their business. More often than not, they'll say they want to get their call center reps here, case management and sales reps involved; we want to light up a portal for partners and customers and then you'd see the Salesforce technology kind of expand.
What is the main thing the CloudCraze acquisition is bringing to Salesforce?
Grady: Look at the total adjustable market of B2B from B2C, and it's pretty big. I think when Salesforce bought Commerce Cloud they were excited to be in the commerce business. I think they realized when they looked across their customer base and said you know, we think our total adjustable market would double if we had a B2B offering.
If you look at how we segment data at Salesforce, it's a pretty significant market opportunity, combining B2B and B2C. We have this great piece of technology right now, it improves our relevancy with brands and retailers, now we're going to take that ability of commerce and bring a solution to map to the rest of our customer base. Salesforce customer base has a lot of manufacturing, a lot of CPG and that's where we play historically. It was to capture more of that trillion-dollar market.
Salesforce is typically quiet about number of customer adoptions for specific products. Does adding B2B e-commerce to Commerce Cloud indicate that B2C adoption wasn't as fruitful as Salesforce hoped? Was Salesforce's CloudCraze acquisition a reaction to Commerce Cloud's performance or just a necessary next step?
Grady: It was absolutely a next step. Commerce Cloud business is booming, but I can't get into specifics on numbers. Putting CloudCraze into the ecosystem was a wonderful thing for the Commerce Cloud platform from a scale standpoint and for Commerce Cloud customers.
Ray Gradypresident, CloudCraze
It wasn't a 'growth has stopped, now what are we going to do?' It was a simple reflection of the overall addressable market and where they wanted to take their business.
It wasn't a plateauing by any means; in fact, we're now part of the Commerce Cloud team so our sellers are folded into that team and we're attacking both markets. It wasn't a reaction to lack of growth.
Are there commerce customers who need both a B2B and B2C commerce offering or are those industries usually split off?
Grady: It's more than you think. Look at any branded apparel company; they have a direct to consumer business, but they also have a large wholesale business. They sell their product in mass to retailers. That wholesale business is robust and the requirement to solve for commerce there is much different than a consumer. You're buying an entire season's worth of products, you may have retailer 'A' get something that retailer 'B' does not; each of those have different pricing. Lots of those customers would have Commerce Cloud for consumer business and CloudCraze for wholesale business and now there's one platform to deliver both; it's pretty compelling.
With past Salesforce acquisitions, the company has either kept the previous company's name and branding (Pardot) or adopted a Salesforce-centric name (Commerce Cloud). Are there any changes that customers or potential customers should expect after the CloudCraze acquisition?
Grady: I think so; we're still working through that. CloudCraze is a Salesforce company, but I'll advocate that we move quickly to not confuse the marketplace. Salesforce is a wonderful brand, the Commerce Cloud is a wonderful brand -- and CloudCraze was a known brand as well -- it just makes sense to look at a unified commerce solution that can solve a B2B use case, a B2C use case and do it on one platform and call it Commerce Cloud. I think you'll see us fold into that nomenclature pretty quickly, but for now we're CloudCraze, a Salesforce company.