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Last week, news broke that Salesforce was thought to be in advanced talks to acquire Slack. This inevitably fuelled much excitement and debate, not least because of the scale of the potential acquisition. Slack’s market capitalization was about $17 billion before the news broke and jumped to almost $23 billion soon after.
And with Saleforce’s earnings call scheduled for tomorrow, we could be in for an official announcement soon.
Salesforce is buying the workplace messaging app Slack for $27.7 billion, it announced on Tuesday. The deal is Salesforce's largest acquisition ever and represents a more aggressive foray into. Salesforce for Slack Brings Just What You Ordered Sales teams use the Salesforce for Slack integration to search and share new leads with their team members. They receive alerts when a new lead has been generated, or when a deal has been moved to the next stage. The integration is designed to help your sales team get work done.
There’s no doubt this would be a major acquisition for Salesforce. It wouldn’t be its first of this scale — Salesforce acquired Tableau in 2019 for over $15 billion in an all-stock deal — but there would need to be a rock-solid argument for such a decision.
Why would Salesforce buy Slack?
To maintain the high rate of growth that it has achieved for the last few years, Salesforce has been investing in various initiatives that enable it to expand its reach in customer organizations. Some of this has been happening organically, for example improving its cross-selling and upselling within each customer. However, acquisitions have played a significant role here too.
Salesforce’s most recent acquisitions, MuleSoft and Tableau, were both designed to build out the Salesforce platform, enabling it not just to become embedded in CRM processes but to extend across customers’ entire operations. Despite these growth efforts, the bulk of Salesforce’s current applications portfolio doesn’t give it significant reach beyond sales and marketing teams.
The company wants its applications to be critical to every employee with an organization; to be the place they go to get their work done. And it has long been eyeing the collaboration software space as a way to achieve this.
It launched Salesforce Chatter in 2010, followed a couple of years later by Community Cloud, but neither really provided that extended reach outside sales. Salesforce’s $750 million acquisition of real-time document creation company Quip in 2016 was another step in this direction, but although the product has found a strong purpose in enabling work in the CRM environment, Quip hasn’t significantly expanded Salesforce’s reach.
Acquiring Slack, however, would finally give Salesforce the boost it’s been looking for. Although Slack was initially successful in tech-savvy IT teams, usage has spread significantly over the last couple of years — something that has accelerated dramatically with the increase in remote working due to the pandemic. The Slack team also has a good understanding of how to drive adoption and business change within customers, which would augment Salesforce’s customer success organization.
Plus Slack has made investments in areas that would be interesting to Salesforce. It has a large developer community, and is strong in bots and app development. And, much like Salesforce, Slack has been investing in low-code technology with its Workflow Builder tool, which enables individual, non-technical employees to automate day-to-day tasks. Finally, Slack Connect enables B2B collaboration and is gearing up to allow the creation of a B2B business network, which would be another great opportunity for Salesforce. Alongside Slack’s extensive list of customers, each of these areas provide differentiation and growth opportunity that could underpin a potential acquisition.
Why would Slack agree to a deal?
There have been rumors about tech companies wanting to acquire Slack for several years — arch-rival Microsoft was reportedly considering a purchase back in 2016 — for a much lower price, needless to say. However, the deal never came to anything. Microsoft decided to build its own competing solution, and Slack continued to grow at an astonishing pace.
Things are a bit different now.
Slack’s revenue growth has been starting to slow over the past 18 months, with its fiscal 2021 (which ends January 31) expected to show about 38% growth, versus 82% in fiscal 2019. It has seen a significant boost in 2020 in terms of adoption of the Slack application, with paid customers up 20,000 in the past six months, compared with an increase of 15,000 in the whole of 2019. Slack has also seen its number of large-ticket customers (with over $100,000 in trailing 12-month revenue) double since 2019.
Despite this, Slack has disappointed investors who were hoping for Zoom-like revenue growth in response to the pandemic. Although Slack and Zoom were the same size a year ago, Zoom is expecting to have grown 280% this year, dwarfing Slack’s 38% guidance.
Slack is also facing ever-stronger competition from Microsoft Teams. Slack still has some considerable points of differentiation over Teams, not least the two areas I highlighted above. But the effects of the pandemic and the shift to remote working have made the competition with Microsoft even tougher, especially given Microsoft Teams’ strength in video meetings, an area that has become business critical this year.
With strong ambitions, Slack now needs a way to step up its market reach and product investment, but doing that as an independent can be very challenging. Salesforce could provide a great platform for Slack and has plenty of experience and success in integrating major acquisitions, which would give Slack’s customers confidence if the purchase does go ahead.
If it does acquire Slack, Saleforce would likely continue to operate Slack as an independent business unit, in the same way it has done with Tableau or MuleSoft. An acquisition would inevitably mean much deeper integration across the breadth of Salesforce’s portfolio, which will only be positive for the many Slack customers that are already Salesforce customers. Slack already integrates with Salesforce in multiple ways, including with Sales Cloud and Service Cloud via Chatter, and with Quip for document collaboration. However, there’s scope for integration with the rest of the portfolio, and the Chatter capabilities could even be completely replaced by Slack.
An opportunity to team up against Microsoft
Overall, if they can agree on a deal, this could be a very positive and exciting move for both Slack and Salesforce, and one that would see them joining up against Microsoft — not just in business applications, where Microsoft is increasingly challenging Salesforce with its Dynamics 365 business, but in employee productivity and collaboration as well. One thing’s for sure, with such a big price tag, the pressure is on to make sure the impact on growth lives up to investors’ expectations.
Angela Ashenden is Principal Analyst of Workplace Transformation at CCS Insight.
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Learning Objectives
After completing this unit, you’ll be able to:
- Describe Slack and the Salesforce for Slack integration.
- Explain how sales teams collaborate using this integration.
Note
This module was produced in collaboration with Slack, which owns, supports, and maintains the products, services, and features described here.
What Is the Salesforce for Slack Integration?
Imagine a restaurant. Diners rely on the waiter to bring the menu, alert them to the specials, and bring their food all from the comfort of their table. The cook relies on the waiter to tell her what customers want to eat, deliver food to the table, and alert her to compliments to the chef or requests for modifications. In this way, the waiter makes everyone’s lives easier by bringing together the dining room and the kitchen.
Salesforce Slack P
Slack is the table where all the sales and service teams are, their collaboration hub. From the comfort of the table, teams collaborate about work and ideas they’re having about upcoming projects. They’re talking about their pets.
Salesforce is the kitchen. It’s where leads are heating up. It’s where cases are simmering. Business operations is coming up with new recipes.
So think of the Salesforce for Slack integration like that friendly waiter. It connects sales and services teams to key account information within context to manage the sales pipeline more efficiently. It allows colleagues to share messages, records, and alerts without having to switch back and forth between applications. Thank you, waiter!
Salesforce for Slack Brings Just What You Ordered
Sales teams use the Salesforce for Slack integration to search and share new leads with their team members. They receive alerts when a new lead has been generated, or when a deal has been moved to the next stage.
The integration is designed to help your sales team get work done. It allows your sales team to collaborate more efficiently with groups from across the organization—including service agents, finance, and even legal.
Let’s dig deeper into how sales teams get the most out of this integration, starting with searching and previewing Salesforce records in Slack.
Collaborate on New Sales Leads
Meet Johann. He’s a sales rep at Simple Enterprise, which provides financial and risk management services to small and medium businesses. He’s been having a discussion in Slack with his teammates about getting more leads.
He’d like to connect with an executive at a hot new company and pitch how Simple Enterprise’s risk management software can meet its business needs. While in Slack, Johann searches for “Edge Communications” and previews the Salesforce account record. He sees his colleague Jennifer, a business development rep, has already been working on the account. He messages her in Slack to see if she can connect him with a decision maker.
Stay in the Know with Customized Notifications
What else can this integration do? With the Salesforce for Slack integration, sales reps receive customized notifications immediately in Slack, so they don’t have to stop what they’re doing and log in to a separate tool.
Let’s check in on Johann. He had a discovery call with the VP of Risk Management at Edge Communications and is ready to add the VP as a new lead. In Salesforce, he adds the new lead. Back in Slack, a notification is pushed into the account channel, so other team members have all the context they need and can start discovery and work on converting the lead into an opportunity.
Collaborate Across Sales and Services by Sending Records Directly to Slack
Salesforce for Slack also allows you to collaborate across the organization more effectively. Sales teams can easily share Salesforce information with colleagues across the organization by sending records directly to Slack, and then by sending Slack conversations back to records to ensure all activities are tracked.
Johann’s updating a lead with a note that the VP wants to talk to someone in services; they have questions about the service tiers. He wants to immediately let Anca in the customer support team know, so they can set up a meeting.
With the integration, Johann can choose where and with whom he wants to share the record. His team members can connect with each other within the account channel to set up further meetings. They can tag team members and share meeting agendas, all within Slack without missing a beat.
Next Up, Service
Salesforce Slack
You now understand more about how your sales team can harness the power of the Salesforce for Slack integration to search and preview records in Slack, receive notifications on new leads and opportunity stage changes, and collaborate with teams across the organization by sending records from Salesforce directly into Slack.
Salesforce Slack Sec
Next let’s take a look at how the service team can use this functionality to quickly resolve customer issues and collaborate with product teams to ensure the most efficient customer service operation possible. Let’s go!
Salesforce Slack Merger
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