Twelve quarters

Posted: April 7, 2009 in CRM
Tags: , , ,

A couple of weeks ago at Salesforce.com’s ServiceCloud announcement in New York, something Marc Benioff said stuck in my mind.  In the afternoon session for financial analysts, he spoke about management style and how his company operates as if each month was a quarter.  In other words the same discipline of selling and forecasting that most companies put into 13 weeks is compressed into just four.

As a practice and in a business where your customers can leave you each month it makes a good deal of sense.  Attrition is so much easier in a SaaS business than in a conventional software model so you have to be vigilant.  It’s not enough to work for new business you have to protect what you have and that translates into some remarkable customer attention.

Good for them, I thought, it seems to be working.  More interestingly, though, the idea of managing like each month is a quarter, takes me back to earlier recessions.  They were different times, without the same emphasis on SaaS but astute managers still took up the discipline of managing the month like a quarter.

You do something like this when you simply don’t have the visibility to see 90 days into the future, like right now.  It’s good discipline and, truth be told, it’s the way Salesforce has been managed for a long time, even in good times.  The lesson for the rest of us is that in these extraordinary times greater attention to the details of pipeline management might be good practice.

More to the point, in a business where your customers can leave at a moment’s notice this kind of attention to detail is becoming essential.  The on-demand nature of so many markets today makes the idea of monthly management almost essential.  We might not have a clear idea of the sales pipeline but it might look positively predictable compared to the attrition pipeline that exists but that most of us never understand until it’s too late.

Until the recession begins to look like it has bottomed out, monthly quarters might not be a bad thing.  For certain it will enable companies to budget better and be more responsive to the turns in the economy.

So, what did you think?

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