Does Salesforce.com’s “Aggressive Incentives” Mean It Might Miss Q4?
- Posted by ToddSullivan
- on December 15th, 2011
For me, it was a foregone conclusion……but this email from the $CRM sales staff seems like a group a bit desperate to get any business any way to make a number:
“Aggressive incentives”. Now, we already know that $CRM is not profitable. Even on a pure operational basis they aren’t. Notice the word usage, “driving for what we hope will be a record breaking year”. Now guidance given by the company for Q4 and FY’12 is in fact record breaking (in terms of sales, in terms of profits, it is dismal). So offering “aggressive incentives” to reach that goal means things are slowing way down for them. My guess can be the Europe business is falling off the table in Q4 as one would expect.
Think about it. The auto industry is seeing strong demand and the value of incentives to customers is falling because it isn’t needed, the business is there. The only time to get really aggressive with incentives (really called “price cutting”) is when you aren’t making your numbers and need to do anything to get some business in the door. The other scenario is that the cloud competition, now including little boutique shops you may have heard of like $ORCL, $MSFT and $IBM is also being aggressive with pricing and are taking business. The real problem for $CRM here is that the other three have other businesses that will easily support a “cloud price war” to gain market share, $CRM does not. In this respect, a price war in the space will seriously negatively affect $CRM business results.
Now, will it work? I don’t know and they still have 6 weeks to go before the end of the quarter but I think this email shows some panic is starting to set in with the sales staff….Whether they make sales goals or not, it seems as though margins are going to take hit which means larger losses..
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