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How did Zoho get to ₹ 2700 Cr profits?
Zoho → ₹2,700 Cr profit for FY 2022 🎯
Salesforce → ₹12,000 Cr profit for FY 2022 🤯
Here's the core reason to profitability ⬇️
Quick context 🗓
Zoho made it's financial results public for FY2022 & it's a huge profit machine now with reported revenue of ₹6,711 Cr, a growth of 28% compared to last year. Zoho is the CRM used by start-ups, small and medium businesses.
Salesforce is an ecosystem in the US 🌁
Multiple billion dollar revenue companies exist because of the Salesforce ecosystem. Hitting $1 billion revenue in 2009, it has grown 22X in the last decade.
So, why are Zoho & Salesforce winning? ⬇️
First/ absolute focus one category "CRM" 🎯
Both focus on nailing their own categories. Zoho nails the startup/small business CRM category while Salesforce is a monopoly across enterprise customers in the world.
Second/ playing by strengths 💪🏻
Zoho is fundamentally the most affordable CRM without the expensive price tag. Salesforce focuses on mammoth product/ feature customisation for it's enterprise clients. Ask a salesforce implementation expert & they will tell you how crazy depth of offering really is.
Third/ distribution is the king & queen 👑
Salesforce built the word "Customer Relationship Management". They essentially educated the whole market on why it's a need and build content that would solve for problem aware/unaware audience across the world. Zoho did something similar with small businesses & startups.
Fourth/ category creation & expansion 🛸
You can't build an ecosystem if you don't have others in the ecosystem driving the category itself. Zoho did it with Zoho university & Salesforce did it with their certifications that open up job opportunities.
Fifth/ recurring revenue 💰
This is easier said than done. Zoho did it with annual contracts and simple pricing while Salesforce did it with insanely high sunk cost to exit the Salesforce ecosystem for a customer.
But, more importantly, both did one thing right ✨
They built for users & iterated over the last decade. The level of support they offer to the customers is something else. When there are 10000s of CRMs out there, there is only Zoho that outbids every freaking time.
So what's next for Zoho? 🎯
Short answer - capture the account expansions. Zoho has built it's core moat with small business customers. When these customers outgrow to an enterprise plan, it seems churn to likes of Salesforce. With it's lower cost of building stuff from India, it will always be cost competitive. All it has to do is keep building for the massive "customisation" Salesforce offers.
Bonus for this week 👇🏻
Watch it & thank us later 💙
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