So Salesforce had a rough quarter. While overall growth met Wall Street’s projections, their guidance for next year was down. For the first time ever, Salesforce projected only single digit growth for next year. I.e., less than 10%.
Salesforce predicts annual growth to fall below 10% for the first time ever
No rebound here quite yet pic.twitter.com/h0hRcJFUwX
— Jason ✨🇬🇧SaaStr LDN June 4-5✨ Lemkin (@jasonlk) May 29, 2024
Marc Benioff and team were clear on the challenges:
- Sales cycles remain longer
- Deal sizes are under pressure, and some new customers cut back projected spend in deals
- Need much more sales enablement in deals
- While the end of the year saw a bit of an upturn in demand, this quarter is back to the same tough dynamics as the past 24 months. HubSpot saw the same thing.
So for classic “B2B2B”, it’s clearly still tougher times.
Net net, what does that mean? Marc in an unguarded moment answered this:
Salesforce now needs 3x pipeline coverage, vs the 2x it needed before the “downturn”:
Now pipeline coverage is a metric that can really vary based on what stage you are at. A typical startup might aim for 5x coverage, i.e. that 20% of your pipeline converts to paying customers. And that you have 5x more in your pipeline than you need to hit the plan. Salesforce is more enterprise, more proven, and more likely looking at a stage down the funnel. So more pipeline might be expect to convert. Whatever stage you use, however you measure pipeline-to-close … measure it consistently.
And Salesforce is now seeing it needs 3x the dollars of deals in play to cover each $1 of bookings now. 24 months ago, it only needed 2x.
All things being equal, that means working 50% harder to hit the same bookings number.
That feels about right.
A bit more from HubSpot here:
