Why Dynamics 365 Will Soar Past Salesforce

A window has opened for Microsoft to overtake Salesforce in the B2B Customer Relationship Management (CRM) space.

I know. Salesforce has first-mover advantages and a commanding lead in market share in the crowded CRM category. Many software companies have built products on the Salesforce platform. Salesforce has always been cloud-only. The Trailhead training is a big advantage. The list goes on and on. A formidable competitor, for sure.

That said, I saw this movie 25 years ago. At the time, Novell was the definitive networking software company, with its flagship Netware software. The Internet was dawning, increasing the importance of corporate networks. For Novell, back then, brand recall among decision-makers hovered between an astounding 86 and 91%. Novell also had an army of Certified Netware Engineers both in the channel and in the end-user accounts. IT loved Netware. The channel loved Netware. The company had Eric Schmidt (the future CEO of Google) running the show. The future couldn’t have looked brighter.

In very little time, Microsoft crushed Novell, destroying the company on multiple fronts.

Now, only we old-timers have ever heard of Novell.

Of course, Salesforce is a much, much more formidable competitor than Novell ever was. And CRM players like SAP, Oracle, and HubSpot are not going to willingly surrender to Microsoft.

However, there is a significant window of opportunity for Microsoft. The company has rediscovered its growth groove since promoting Satya Nadella to CEO in 2014. At the same time, the Pandemic has changed B2B buying behavior, opening another window of opportunity. Meanwhile, Microsoft has been building and buying key elements of a new sales ecosystem that is perfect for the looming sales transformation. Finally, Microsoft’s own sales transformation will enable the company to capitalize on these windows of opportunity.

You know how much Microsoft loves windows, right?

The Microsoft Renaissance

When the average person thinks about the giants of innovation, names like Apple, Amazon, Google, and Facebook probably come to mind, but not Microsoft. Microsoft is living off its past Windows and Office glory, right?

No.

Under Satya Nadella, Microsoft has undergone a renaissance of innovation with products like Azure, Teams, Surface, and Cortana, to name a few. Microsoft has also reimagined Office as a cloud productivity tool called Microsoft 365. In short, Microsoft is innovating its way into impressive growth.

It has also made shrewd acquisitions over the last seven years, like GitHub (the developer community, where Microsoft got its start with various developer tools), Mojang (makers of Minecraft, which has enormous potential to gamify learning and is helping Xbox take its share from PlayStation), LinkedIn and now Nuance Communications, the leader in conversational AI.

Of course, when you talk about the strategic advantages of Microsoft, you start with its enormous global base of Windows and Office/Microsoft 365 customers. Cross-selling a CRM solution to them is a much easier job than what Salesforce.com must do, which is winning new customers to grow market share materially. Plus, Microsoft has what should be high conversion pockets of customers. Start with LinkedIn subscribers. Next, think about the customers who started with the back office modules of Dynamics, like finance, operations, commerce or HR. Then there is the growing group of companies who will migrate to the cloud with Azure.

One piece of data confirms my point: the value of Microsoft stock today is greater than that of Google, Apple, Facebook, or Amazon, the darlings of innovation in the minds of many. This renaissance at Microsoft is especially impressive when you consider how rare it is. Only two tech companies were great, fell from the top, and climbed back again: Apple and now, Microsoft.

The Pandemic: A Turning Point

In many B2B companies, “sales” means face-to-face meetings, client entertainment, and lots of travel. Generations of sales leaders believe that is how you land the huge, needle-moving deals. From time immemorial, they have been right. Think old school.

In such scenarios, a lot of information lives in the mind of the salesperson, not in the CRM. When the rep leaves, so does what he or she knows. “Phone” reps? Well, that’s for the low-end stuff that doesn’t matter much.

Then COVID happened early last year. By May of 2020, very few clients were in the office. They certainly weren’t going to invite sales reps over for dinner.Suddenly, a lot of field salespeople had to sell without meeting face-to-face. Everyone was a “phone” rep.

Against this backdrop, at the height of the pandemic, Chris Weber, Corporate Vice President, World Wide Commercial Business at Microsoft, made a provocative prediction: “In the next three to five years, the discipline of sales is going to transform more than it has in the last 100 years.”

You’re probably thinking, “Really? More than it has the last 100 years?” Look at how much change there has been in sales in the last 30 years: The Internet, email, social selling, telephony integration, smartphones, just to cite a few examples.

The Role of the Pandemic in the Digital Transformation of B2B Sales

Forget three to five years. The pandemic forced a transformation of sales overnight. Face-to-face meetings, travel, and live events—the lifeblood of field sales teams—have largely, and in many cases entirely, disappeared since April 2020. In fact, the search term “virtual selling” reached a five-year high in July of 2020 when there was suddenly no clear end in sight for the CDC regulations.

Of course, COVID didn’t just impact sales. Customers and prospects were working virtually, as well. In fact, COVID turbulence has forced the C-Suite to accelerate digital transformation initiatives because the existing infrastructure simply could not support a remote workforce at scale. (Think about the security issues alone.) That kind of business agility is a simple reason digital transformation isn’t just marketing jargon but a key ingredient for survival.

The Long-Term Changes in Business Buying Behavior

While vaccines will likely end the pandemic globally in the months ahead, the wake of the pandemic will change how businesses operate, including how they buy from and sell to other businesses.

Specifically, many workers found they enjoyed working from home. They didn’t miss the commutes. They found they could get more done without the constant interruptions in the office. Others liked being able to more readily attend to family matters.

I’ve personally heard many of my sales colleagues, who annually earned double-platinum status for flying 100k+ miles a year, express the hope that they can travel (a lot) less in the future.

In a PwC survey conducted in November and December 2020, 71% of employees found working from home to be successful. Employers were even more optimistic, with 83% calling remote work successful.

As a result, companies are looking at adjusting their real estate portfolios and their talent recruitment and retention strategies. Moving forward, many employees want more flexibility to work at home at least part of the time. In our own survey across 13 countries, 41% of the 6,158 people working from home prefer working remotely. These kinds of findings will give talent advantages to companies who embrace work-from-home strategies.

No doubt, many B2B leaders are assuming things will go back, more or less, to the way they were, once the pandemic has passed. They won’t. B2B buying behavior is going to change. More decision-makers and champions will not be in the office, and more of them have found virtual meetings worked just fine.

Sure, some workers don’t have an ideal environment to work from home. Others enjoy the comradery of work. To be sure, spending time in small groups, face to face, strengthens relationships and helps instill culture.

Still, a lot more people are going to work remotely in the future, and remote buying and selling is going to grow. Think about the huge pool of more experienced sales professionals who either have families or want families and would like to spend more time with them instead of alone in hotels.

If demand for remote work by both B2B buyers and sellers grows, the question will be which CRM vendor will be more prepared to enable virtual selling?

Next Generation B2B Virtual Selling

Successful virtual sales teams leverage a number of existing tools typically. While the exact set of technology and data varies from company to company, the best teams usually have some combination of these capabilities:

• Sales automation / CRM like Dynamics 365 and Salesforce.com
• Multiple sources of company and contact data like Zoominfo, D&B, Crunchbase, Bombora, DemandMatrix, and HG Data
• A Customer Data Platform, like the one from Microsoft, 6Sense, LeadSpace, LeadCrunch, or Lattice Engine
• Microsoft’s Linkedin Sales Navigator
• Sales engagement software like Salesloft and Outreach that enable reps and leaders to set up structured outreach sequences across phone, email, text, and LinkedIn, including using video emails, and streamline sales processes across the customer journey
• Video Conferencing software like Teams, GoToMeeting, WebEx and Zoom
• Calendar sharing/scheduling software like Calendly, Chili Piper, and Doodle
• Electronic signing software like DocuSign, Adobe Sign, HelloSign, PandaDoc
• A marketing automation system for teeing up sales-ready leads
• An Account-based marketing (ABM) platform like DemandBase or Terminus (this category is getting absorbed in marketing automation platforms).
• An analytics/attribution engine that can help marketers attribute revenue when there are multitple potential contributions. Bizable, Full Circle are two of many such tools

(Note: Marketing automation and ABM platforms are typically owned by marketing. Enterprise marketing teams will often have many additional tools to generate and optimize lead generation, including robust tools like Bizzable to measure pipeline contribution, and e-commerce software and services (if applicable). A somewhat similar set of tools exists for recruiting, onboarding, and developing the ongoing pipeline of sales talent an enterprise needs. Often, the best companies use a high-tech/high-touch combination that in many ways mirrors the approach used to move customers and partners through their own journeys.)

Most of these players have integrations into Dynamics 365 and Salesforce, plus Outlook, where applicable. Both Microsoft and Salesforce check all these boxes, with Microsoft having frontline products like Sales Navigator, Teams, Outlook, with the potential for tighter integration.

If both of these add-on capabilities are more or less on par, what is Microsoft doing that might give it a competitive advantage in winning the hearts and minds of sales teams, especially those wanting to transform their sales motions?

The Emerging Sales Ecosystem at Microsoft

In addition to the key strategic advantages Microsoft has in general, like its gargantuan installed-based of Windows customers, you can break the sales-specific technology assets of Microsoft into three groups:

• On-ramp products that introduce Microsoft to salespeople and make cross-selling and adoption easier
• Strategic game-changers that transform B2B sales
• The hybrids that do some of each

Then there are the table stakes: a CRM, first and foremost. Azure and the Microsoft Customer Data Platform are not table stakes, but they give the Dynamics Customer Experience platform significant credibility. So does GitHub. At one time, Microsoft was the king of software development, but Apple, Salesforce, and Google have made huge gains, especially in the all-important area of mobile computing. Microsoft will need to re-evangelize the developer community to build on the Microsoft foundation of Dynamics, adding value to vertical solutions and rounding out rapidly evolving sales solutions.

Those are table-stakes and credibility-building products. Let’s look at the hybrids that are both onramps and transformational.

LinkedIn

Right before Microsoft acquired LinkedIn for $26B a few years ago, there were conversations with Salesforce, which wanted $75B. I suspect Microsoft used the money to buy what was then the crown jewel of B2B data sources.

There are not many B2B salespeople who do not live on LinkedIn, to target prospects, find something relevant to say, and even use LinkedIn for outreach. The LinkedIn platform, therefore, gives Microsoft the opportunity to cross-sell Dynamics 365 from the bottom up and the top down. Moreover, the more Microsoft integrates LinkedIn into Teams, Outlook, Dynamics 365, and even Cortana, the more compelling the Microsoft sales ecosystem will become.

On the transformation front, think about the potential of LinkedIn data sources for more accurate targeting of decision-makers, influencers and companies. Perhaps the most compelling aspect of this data asset is the potential to track motion. That is, most B2B data sources are static. These data answer the question, what’s the current situation? Because LinkedIn asks for historical job data, LinkedIn can potentially detect any of these types of changes:

• Growth (or decline) of a company
• Growth of a department within a company
• Trend lines for the industry experience of the workforce of a company, the tenure of that workforce, the educational attainment and pedigree of that workforce
• The job postings of that company
• The leadership org chart of the company
• The achievements of the leadership team in prior jobs
• The acquisitions of the company
• The talent pool variations by region
• The level of virtualization of the workforce

The technical skills that might shed light on the tech stack, including the technology behind the firewall.

Marketing and sales could even track where their advocates go when they change companies or get promoted. What a treasure trove of B2B data! When Microsoft overlays more third-party data (e.g., more accurate industry classification of businesses) and, more importantly, continues to leverage machine learning, natural language processing and better search functionality, the value of this B2B data will only grow and, in the process, bring a great deal of efficiency to sales and marketing.

Teams

One of the reasons Salesforce spent $27.7B for Slack is that Slack is viral. Vendors ask clients to use it. Clients ask vendors to use it. Teams is the same thing. However, a) Microsoft can bundle Teams with Microsoft 365 (or Windows for that matter), and b) Teams has a much, much better video conferencing capability than Slack, which means that lots of people will get exposed to it just by getting invited to a meeting with people outside the company. Microsoft will also allow soon Slack-like chat collaboration with vendors.

Minecraft

What? Gaming? Yes, this product has vast potential for teaching. In B2B sales, knowledge matters a lot. If you expose the army of new salespeople to the Microsoft ecosystem before they make their first sales call, and you help them ramp up faster and become more effective, well, that’s a pretty big gold star for Microsoft.

Consider the depth of knowledge required to be at the top of the sales profession:

• The ever-evolving theories of sales and the synthesis of those theories into a practice for an individual sales professional, including sales leadership
• The products and services you sell and their comparison to alternatives
• The industry landscape of the sales professional
• The industry of her customer
• General business acumen of the salesperson
• The tools the salesperson uses to do her job

Now, imagine Microsoft marries this gamification software with all the sales training content available on LinkedIn (through LinkedIn’s acquisition of Lynda.com). Gamifying knowledge is a big deal. (Full disclosure: my company uses Minecraft to train the outsourced inside sales and sales development teams we provide to our clients.). Better, faster development of sales teams? That’s a game-changer.

These are both onramps to the Microsoft sales ecosystem and strategic game-changers. Onramps make cross-selling Dynamics 365 to an installed base possible. Another onramp product is Office/Microsoft 365, and especially Outlook, which still has a significant share as a corporate email client. (Of course, salespeople are not exactly strangers to slide decks and spreadsheets either.) Salespeople live in email when they are not on LinkedIn. I expect Outlook to get absorbed by Teams in time. Teams already has a calendar and a directory. Surface is another potential onramp technology. The innovative 2-in-1 idea behind Surface is perfect for salespeople who need tablets to access, read and watch information when they are not at their desks as well as to make calls and send emails and instant messages.

In terms of game-changers, I believe there are two: Nuance and Cortana. Both use speech understanding and natural language processing, and both are or will be infused into Teams, Outlook, Dynamics 365, LinkedIn, and the rest of the Microsoft technology. Cortana, in particular, represents the biggest threat to Google Search as people transition from typing search queries to speaking them. For sales teams, Cortana can play a bigger and bigger role as a sales admin. Think about that.

In that same interview cited earlier, Chris Weber, the Microsoft sales VP, said something profoundly insightful: “In the very near future, a face-to-face sales call will put a sales rep or a sales team at a massive disadvantage.”

Think about that perception. Most sales leaders, pre-pandemic, loved old-school wining and dining. The pandemic forced every B2B sales leader to adapt virtual selling strategies, not because they thought it would give their teams an advantage over face-to-face selling but because there was no other choice. Chris Weber sees a future where virtual selling will give sellers an advantage over face-to-face.

Conversational AI: The Future of B2B Sales

When Microsoft acquired Nuance for $16B, the emphasis in the press release was on the healthcare vertical. However, there is a huge horizontal play with the conversational AI capabilities of Nuance. Where? Throughout the buyer’s journey, where very important conversations happen between a company and its prospects and customers.

In B2B sales, those conversations have largely been dark to all but the parties involved. Not all reps take good notes. Not all who do take notes enter them into a CRM. Not all conversations get recorded (in fact, most don’t), and those that do rarely get stored in the CRM. Of course, salespeople will need to learn emotionally intelligent and legally compliant ways to get permission from all parties to record and transcribe calls, but the benefits are worth it.

What product manager wouldn’t value real-time quantitative and qualitative feedback from customers and prospects, by segment, stage in the customer journey, level of likely authority, and whatever other data you have in your CRM? What marketer doesn’t want to better understand the challenges and priorities of customers by all those nuances of segmentation?

More importantly, Conversational AI is a tool to help frontline teams have better conversations with customers and prospects. The onboarding will be better because companies can more readily identify the best questions to use during discovery, the best ways to handle objections, the best way to solidify next steps to advance the decision, and the best way to get commitments. For salespeople, just listening to the sequence of conversations of the best reps will be a leap in sales training from where it has been.

For years, I’ve found it extremely useful to listen to a recording with a rep. I can pause the playback and ask what a customer meant, ask the salesperson what question he or she should have asked, or suggest a better message. The rep has context. In professional development, context really helps.

With conversational AI, the technology can highlight key words across recorded conversations like “pricing”, “demo”, “next steps”, the names of competitors, and so on to surface just those elements a sales manager or sales trainer wants to understand. Of course, coaches and trainers can segment those key words on any stage of the journey, any size company, any level of decision-maker and so on.

Imagine a company has 100 or 1,000 salespeople. With conversational AI, that company can compare the conversations of the top 5% of reps to the rest of the reps to understand what the best reps do differently. Sales enablement and professional development teams can build playbooks on objective facts, not intuition or limited experience. Imagine the playbooks that will emerge.

At the same time, instead of a rep having to divide her attention between listening and taking notes, she can give her undivided attention to the customer throughout the conversation and practice active listening on every call. After the call, she can share back an accurate summary of the call and the annotated transcript. Plus, with Conversational AI, the technology can guide the rep to ask the right questions and share the right information at the right time, all based on what works.

How is that not a better experience for everyone?

Now think about chatbots. Conversational AI makes it possible to replicate simple interactions, only escalating to a human when the situation warrants. Similarly, conversational AI will begin to understand inbound email and respond to some and prioritize others for human touch. It’s not that salespeople are going to go away. Rather, AI will unburden the salesperson of more and more repetitive and tedious tasks so that they can focus on the parts of the sales process where only a human can add value.

In short, the benefits of conversational AI are immense. This technology is going to have a massive transformation impact for product management, sales enablement, marketing, customer success, account management, partner management, customer service and tech support.

Microsoft’s Own Sales Playbook

Microsoft’s installed base, product strategy, strategic acquisitions, and growing sales ecosystem are one thing. Capitalizing on those assets is another. In that regard, the Microsoft sales organization underwent its own digital transformation, according to Judson Althoff, executive vice president of Microsoft’s Worldwide Commercial Business. That transformation consists of these five pillars:

• Vertical Alignment: If you want to help a customer with digital transformation, you have to deeply understand her business and business processes. A digital sales organization can ultimately extend the vertical focus to many more industries because there will be no geographic constraint the way there is with field sales teams. Such teams will be a boon to the ISV and channel, as Microsoft vertical sales teams learn which partners have vertical expertise.
• Developers on the Frontlines: Microsoft saw the value of putting actual software developers on the front lines with the sales teams and the customer in order to solve the problem with the most elegant technology solution.
• Customer Success Excellence: There has been an adage forever that it’s a lot less expensive to cross-sell an existing customer than to get a new customer. However, sales and marketing budgets are often tilted significantly toward customer acquisition. Finally, senior leaders are really investing in onboarding the customer so that she actually likes what she has purchased. If you’re planning to renew, upsell and retain customers, you first need to make sure they like the product(s) they bought.
• Digital Sales Transformation: Microsoft wants to transform its own sales and marketing organizations to make them more aligned/collaborative and digital/virtual. That’s called walking the walk. It’s also a more efficient way to use sales and marketing resources.
• Partner Collaborative Selling: Microsoft wants to help ISVs and integrators sell into the Microsoft customer base and help land new customers. This approach will allow Microsoft to deliver more complete solutions that solve larger problems. At the same time, by inviting partners into deals, Microsoft will engender good will that results in partners prioritizing bringing Microsoft into opportunities that partner is working on.

In summary, Microsoft has a window of opportunity, and you know how much Microsoft loves a window.

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