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Why Salesforce chose Wealth Management as first vertical market

By Bernard Lunn

Marc Benioff, Founder and CEO of is one of the great thought leaders in the software business. He invented Cloud. So when he decides to make his first big move from horizontal to vertical and chooses Wealth Management as his entry point, we should all pay attention.

During 2010 I created a series of Quarterly Reports on publicly traded pure-play SaaS companies called SaaS Insights. My objectives were to:

The answer to 3 was no, and I learned what I needed from 1 and 2, so I discontinued this.

One takeaway from this was:

Don’t bet against

Their stock always seems expensive. Waiting for it to get cheap has been a losing strategy.

That chart tells short traders “go ahead, make my day”.

The recent move by into vertical markets, starting with Wealth Management, is the third of a series of brilliantly executed strategic moves:

Move # 1. Take a simple feature – contact records for sales people – and move them into something that they called cloud. Benioff is a thought leadership sales genius. Their No Software logo was an inspired way for an upstart software company to tap into customer frustration with the software incumbents. Then Salesforce created the Cloud logo and the whole Cloud concept. They first invented, then defined, then branded and led a new market. The disruption is still playing out and Big Tech is now defined primarily by how well they are making the transition to Cloud (think how investors rate companies like Microsoft, Adobe, Oracle, SAP and IBM by how advanced their Cloud transition is).

In our terminology at Daily Fintech, first Salesforce won Mindshare and then they won Marketshare. The Salesforce story is one of three (the other two come from my personal experience) that illustrates the chapter entitled How To Define And Lead Your Own Market (which you can read in this extract on Daily Fintech).

Move # 2. Not content with just the Sales department, Salesforce expanded horizontally into marketing, customer service and business analytics. All of these – sales, marketing, customer service and business analytics – had three things in common:

Salesforce needed to make this horizontal move for two reasons:

Salesforce needed a market where Sales would be key. Wealth Management fits. The target clients are consumers but very rich consumers. You still sell to individuals and their families. Yet if you target a family with $10m to invest at an average AUM of 1%, you deal size is $100k pa. Assume you keep them for 10 years, which is pretty conservative and that is a $1m Life Time Value (LTV). That is like a B2B sale in end result.

Software is eating the world. Salesforce agrees and is saying with this move that the first part of the world that it will eat is Financial Services. That is the market thesis on which Daily Fintech was founded, so we clearly agree. Yesterday’s post was about how Banks will have to focus on the same core metric as Fintechs – CAC/LTV. Salesforce is now bringing it’s huge resources to bear on this challenge.

In their Press Release, Salesforce focused on the NetGen challenge as Wealth Managers call it:

“In the next five years, more than $2 trillion in wealth is expected to transfer between generations. Today’s financial advisors need to meet the needs of clients set to inherit this wealth, and who are increasingly social, mobile, connected and seeking significantly more collaboration.”

A vertical move is tough. The needs of the Wealth Management industry are complicated by regulation and a complex value chain that works differently in different countries. Yet, as I learned from my SaaS Insights days, betting against Salesforce is usually unwise.

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech.


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