- The CEO of Vlocity, which Salesforce bought for $1.33 billion, showed that Salesforce was doubling down on the industry specific sales strategy introduced by former co-CEO Keith Block.
- Vlocity's CEO recently said that Salesforce's industry cloud products saw 71% growth in average order value from a year prior and have 4,000 customers and 2.8 million monthly active users.
- The industry specific strategy could lead to "stickier" customers that tend to stick with the products and pay more over time, one analyst said.
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Salesforce $1.33 billion acquisition of Vlocity, which closed in June, is already showing signs of success.
The startup made software for specific industries, like insurance, healthcare, and the public sector, that sat on top of Salesforce's platform, and the acquisition was seen as Salesforce's way of doubling down on the industry-specific sales strategy that former co-CEO Keith Block introduced before he left the company.
Vlocity's CEO and founder David Schmaier, who was named CEO of Salesforce industries in June, shared at the company's developer conference last week that the average order value of Salesforce's industry cloud products grew 71% from a year prior. Those products now have 4,000 customers and 2.8 million monthly active users, Schmaier added.
At the time of the acquisition, Salesforce had five industry specific cloud offerings: financial services, health, government, manufacturing, and consumer goods. Vlocity added more capabilities to the first three and added industry-specific tools for communications, media and entertainment, and energy and utilities.
Industry cloud was "already a big part of Salesforce," Schmaier said, "And it's one of the fastest growing product lines and one of the fastest growing parts of Salesforce today."
When Salesforce announced the acquisition, several analysts saw it as an effective way for the company to continue building out its industry specific sales strategy as Keith Block left. These new metrics show progress and are a good sign because industry-specific customers tend to stick with the products and pay more over time, according to Baird analyst Rob Oliver.
"We have long been bullish on CRM's vertical industries strategy and believe Vlocity is poised to accelerate those growth efforts by broadening and strengthening CRM's current vertical market offerings," Oliver in a research note to clients after the conference. "Our thesis is that vertical customers are stickier and willing to pay more over time."
The industry-specific strategy has resulted in more value for both Salesforce and its customers because the tools being offered are truly helping to drive digital transformation for companies, Oliver said. Additionally, the strategy is growing Salesforce's total market opportunity, as the specialized tools are more attractive to organizations that may not have thought they needed customer relationship management software, he said.
Now that the acquisition has closed, Vlocity added 1,000 employees to the team working on Salesforce's industries products, bringing the total to 3,000, with Schmaier leading the charge.
As of now, Salesforce's Health Cloud is the fastest growing industry cloud option, especially given the contract tracing and Work.com tools for reopening safely that Salesforce recently introduced.