Salesforce.com's Chatter: Facebook-Like Feel for CRM Applications

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1 Research Publication Date: 24 February 2011 ID Number: G Salesforce.com's Chatter: Facebook-Like Feel for CRM Applications Robert P. Desisto, Michael Maoz Salesforce.com attempts to use principles similar to those of Facebook for CRM applications, and sees Facebook as having changed the way consumers share information and content with each other. Chatter provides salespeople with social tools to better collaborate during the sales process, and opens up the customer support process to anyone in the enterprise, increasing the opportunity for innovative resolutions to problems. Key Findings Though it's targeted more to B2B salespeople, salesforce.com's Chatter is a very intriguing tool to make the customer service and support role more dynamic. A vast majority of companies considering Chatter are doing so in the context of salesforce.com's CRM applications, not as an enterprisewide social collaboration tool. Recommendations Before providing Chatter access to salespeople, document use cases that demonstrate its value. This will help guide initial usage. Technical support for B2B customer service departments should consider the principles behind salesforce.com's Chatter as they think about next-generation customer interaction processes. Avoid prebuying Chatter subscriptions enterprisewide until value can be shown in the context of salesforce.com's CRM applications. Chatter has an invite feature that will enable it to grow virally. For organizations using Chatter, monitor Chatter Invites usage, and measure its value based on that usage Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity" on its website,

2 WHAT YOU NEED TO KNOW Salesforce.com is taking a different approach to social technology by embedding capabilities directly into the context of the application. Other vendors incorporate collaboration items like instant messaging or content sharing, but not to the extent of salesforce.com. Salesforce.com's initial Chatter success will be for its own CRM or Force.com-built applications. The ultimate success across an enterprise ($15 per user per month) is much less certain. ANALYSIS Collaboration Collaboration has always been and continues to be a challenge for CRM. Getting salespeople to share best practices, and having employees share insights to help handle customer service issues remain key struggles for most companies. Complex business processes, cultural barriers and technology challenges have prevented collaboration from taking root with any lasting effects in most CRM initiatives. On the flip side, as businesses continue to struggle with collaboration, consumers are leveraging Facebook to share information and content among family, friends and professional associates. Many users ask why a Facebook-like experience can't be available for CRM applications. Salesforce.com is attempting to answer this question with Chatter. Chatter is a Facebook-like user interface and knowledge repository for CRM and custom-built Force.com applications. Salesforce.com's Chatter looks quite similar to Facebook in that users have walls, status updates, feeds and concepts, such as groups. One issue some customers cited with early versions of Chatter was the lack of real-time collaboration. To meet this challenge, salesforce.com acquired Dimdim (see "Dimdim Buy Strengthens Salesforce.com's Chatter, Hurts Dimdim Customers") and Activa Live (Chat). The Dimdim acquisitions has brought presence awareness, real-time messaging, and group chat and meeting capabilities, as well as a set of developers. Chatter.com To grow adoption, salesforce.com has also launched a free version, called Chatter.com (see Table 1). Table 1. Salesforce.com Chatter Editions Item Chatter Free Chatter Plus Chatter in CRM List price $0 $15 per user per month Included in CRM subsection Chatter and file tabs Profiles and feeds People and groups Desktop and mobile apps Chatter Invites (invites non-crm users to Chatter Free) Accounts and contacts Read-only Integrated content library Publication Date: 24 February 2011/ID Number: G Page 2 of 7

3 Item Chatter Free Chatter Plus Chatter in CRM Reports and dashboards Ideas and answers Tasks and activities Calendar and events Workflow approvals (submit) Follow opportunities and cases Follow campaigns and leads Custom objects 0 10 Based on edition Custom apps 0 1 Based on edition Data storage (per-user, above original limits) Source: Gartner (February 2011) 0 MB 20 MB Based on edition Chatter.com is more of a consumer-type offering, with no ability to share salesforce.com application data. Gartner does not see Chatter.com being important for salesforce.com CRM users, since they already get free access to Chatter free of charge. Chatter Plus could help clients reduce their contract commitments when they renew, if they are currently paying for a full read/write access CRM subscription and have users that only need read-only access. Rather than renewing for the full read/write subscription, they can renew at a fraction of the cost using Chatter Plus. Chatter's Impact on Business Metrics The most immediate value for Chatter will be with sales teams. Challenges will continue in the business-to-consumer customer service center, because efficiency metrics, such as time on call, call wrap-up, one-and-done interactions and calls per shift, remain powerfully entrenched. For all other areas of service, Chatter will be useful, and pertinent primarily to existing salesforce.com customers. The key business metrics Chatter may have an impact on are: Increased efficiency for and overall productivity of the sales team, leading to a shorter lead-to-sales closure cycle, competitive review, differentiation and bid pricing, increasing bid-to-win ratios. Better customer service as a result of reduced query resolution time, innovation around problems and a gradual reduction in call volume. Although the theory behind embedding Facebook qualities in an enterprise application are intriguing, they don't necessarily make the application more useful, unless there are use cases that have value. We outline two prime examples for sales force automation and customer service. Example Sales Force Automation Use Case: Responding to a Demanding Customer Sales Situation Imagine that a salesperson is in a difficult customer-facing situation. You know the meeting. The customer has a laundry list of issues and expects the salesperson to respond with answers Publication Date: 24 February 2011/ID Number: G Page 3 of 7

4 yesterday. Traditionally, a salesperson would have to send out s and/or make phone calls to whomever the salesperson thinks can help. This is a time-consuming process that often is divided among a few salespeople. Under the salesforce.com Chatter approach, the salesperson could first check the Chatter knowledge repository to see whether the issues have arisen with other customers. At the same time, the salesperson could post to his or her Chatter wall via a smartphone the customer's issues with the company. Once the difficulty is posted, the entire enterprise that subscribes to or is friended by the salesperson could provide answers. The wall concept keeps the comments posted so that the answers to the issues can be incrementally refined. The benefit is that salespeople can cast a wider and more-focused net to professional colleagues to help during a sticky sales situation. However, there is a slight catch. Gartner has seen a clear difference between Facebook-literate users and non-facebook-literate users. Salespeople who have Facebook accounts immediately understand how to use Chatter, but those who don't will struggle to see how it can help them. Example Customer Service and Support Use Case: B2B Scenarios B2B service organizations, and especially slower-moving customer support or customer care centers, could benefit from the collaborative capabilities of salesforce.com's Chatter. The reason for narrowing the immediate relevancy to B2B scenarios is that consumer-facing customer support centers are much more likely to face high call volumes, and use agent measurement tools that focus on efficiency. The change management required to introduce Chatter in a B2B environment that is already familiar with salesforce.com is slight. The value of collaboration is high. Technical support teams are stymied by outdated software that makes it difficult to share the trouble ticket or case in real time with colleagues. It is also difficult to have visibility into the full range of discussion surrounding the potential solutions to a problem, or the suggested content, information or videos. It is cumbersome to gain a view into which employees or partners have already interacted with the customer and what the outcome was. With Chatter, all participants on the system can have role-based access to information. The rolebased aspect is important, as there may be situations where not everything about an account should be shared. For example, pricing information or contract details may need to be hidden. The Chatter approach is not entirely unique, reinforcing our position that the use of a Facebooklike interface for customer service will become a standard model. Product Strategy Salesforce.com is one of few vendors focusing on B2B social CRM, and is now the leading vocal proponent of embedding social capabilities in CRM applications. Salesforce.com has a two-prong product strategy: The first is to bundle Chatter free of charge with Sales and Service Cloud. The second is the viral growth of Chatter in a company by allowing free usage with Chatter Free. Salesforce.com hopes that Chatter Free users will be converted to Chatter Plus users (the list price for Chatter Plus is $15 per user per month). Salesforce.com has augmented internal R&D with targeted acquisitions of GroupSwim (in 2009), and Dimdim (in 2011). Gartner expects salesforce.com to continue making acquisitions to add to its collaboration platform. Strengths Here are the strengths in the salesforce.com strategy: Publication Date: 24 February 2011/ID Number: G Page 4 of 7

5 Challenges Viability and marketing: Salesforce.com is the third-largest CRM vendor, with over 75,000 customers and more than 2 million users. Salesforce.com possesses considerable mind share in the market, as well as highly effective sales and marketing operations, and has already demonstrated aggressive promotion of Chatter in key accounts. Functionality: Salesforce.com has introduced social tools for sales via a two-track approach, providing in-process sales support and necessary data services. It has also embedded social capabilities within its existing CRM applications, particularly for sales, to support internal collaboration and less-structured communications among different parties (leveraging personal profiles and real-time feeds from contacts and applications). Customers can extend Chatter by incorporating business rules with workflow rules. In addition, the Jigsaw acquisition for data-cleansing services leverages a community that is encouraged to create and update contacts. Data service: With the acquisition of Jigsaw, salesforce.com can provide data services that help salespeople maintain up-to-date contact information vital to prospecting and account management. The Jigsaw offering is based on a community of 1.2 million members that are offered free access to information in return for maintaining cleanliness of business contact data for approximately 21 million contacts\profiles. About 36% of these customers elect to share data under this arrangement. Jigsaw has extremely high accuracy rates and completeness of information, as compared with other business contact data providers. Price: Chatter is free for all current CRM and Force.com subscribers. Here are the challenges in the salesforce.com strategy: Maturity: Chatter was released for general availability in June Salesforce.com will require a period of learning through engagement with clients in order to master applying social tools to improve structured business processes and unstructured sales work practices. Lack of B2C focus: Salesforce.com does not offer a platform for supporting public communities with some measure of autonomy from corporate sponsors. The vendor also lacks the social listening capabilities to track commentaries on the Web it has partnerships instead. In addition, salesforce.com has not been proved for B2C marketing and service requirements. User fatigue: Users of the Jigsaw service initially added many contacts and spent time cleaning data in return for credits, but they may grow tired of the effort over time. While the service grows rapidly, new users mask the drop-off rate of old users. Similarly, evaluators of Chatter have expressed concern over users becoming overwhelmed and distracted by volumes of streamed information, alerts, threads and entries. Users can use filters or prioritize feeds over a period of time. Chatter.com value currently has some limitations: On the one hand, Chatter.com is free, but it is not as clear that users will find value outside the context of CRM applications. Governance of information: Information governance and security compliance requirements need to be addressed by geographical region. Publication Date: 24 February 2011/ID Number: G Page 5 of 7

6 Impact on organization structure, role and culture: Many organizations are not flat, but have a hieratical structure. Increased collaboration and transparency impact the role, culture and structure of an organization. Even among largely synergistic departments like sales, marketing and customer service there are virtual boundaries. So, open collaboration can have unattended consequences. Competitive Analysis Salesforce.com is competing against other tools that complement applications such as CRM. The key differentiator for salesforce.com is that it has embedded social technology into the user experience of the application. This increases the opportunity for adoption, since it is free for CRM users. However, outside the CRM base, where the use cases and/or embedded experience are less of a value proposition, salesforce.com will have more-competitive challenges. Consider This Product When Companies that possess a culture of collaboration and initial use cases that are focused on CRM processes in sales or related services should consider Chatter. Consider Alternatives When Companies looking for an enterprise platform will find less-expensive alternatives than Chatter Plus, although salesforce.com need not be eliminated from consideration in these instances. RECOMMENDED READING Some documents may not be available as part of your current Gartner subscription. "Jigsaw Buy Will Give salesforce.com Data Services in the Cloud" "Magic Quadrant for Social CRM" "Top Use Cases and Benefits for Successful Social CRM" "The Concise Social CRM Vendor Guide, 2011" Publication Date: 24 February 2011/ID Number: G Page 6 of 7

7 REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT U.S.A European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Japan Headquarters Gartner Japan Ltd. Aobadai Hills, 6F 7-7, Aobadai, 4-chome Meguro-ku, Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Publication Date: 24 February 2011/ID Number: G Page 7 of 7