The best corporate managers are always one step ahead. Salesforce is the second coming of Amazon.com, but a tenth the size. Shares are a Strong Buy on pullbacks, says Jon Markman, who's presenting at MoneyShow Dallas Oct. 3-4.

The best managers are able to live in the future, by keeping customers happy in the present.

In a video posted by CNBC Sept. 13, Amazon.com (AMZN) CEO Jeff Bezos explained how building products that customers love is what shapes the business.

It’s a lesson for managers. It is also a cipher for investors.

Bezos is not your typical business chieftain. He laughs too heartily. He has a quiet disdain for me-too businesses. He doesn’t worry about stock prices or current financial results.

In the past, these attributes have led many to question Amazon as an ongoing business. Tom Brokaw, the legendary newsman, once asked him if he knew how to even spell profit. Wryly, Bezos responded, P-R-O-P-H-E-T.

The homonymic rejoinder was clever. Ultimately, it was foretelling.

Since 1994, Amazon has been about delighting customers. Bezos, who graduated magna cum laude from Princeton, quit his high-paying Wall Street job to start an online book-selling business. He settled in Seattle, home to Microsoft (MSFT).

Recruiting software engineers was important. Being close to the largest book distributor in the country, Ingram, didn’t hurt, either. The combination made for a great software experience and fast delivery for customers.

Far too many other companies get this wrong …

Bezos says companies worry about competitors when they should be wholly focused on customers.

Understanding and maintaining those relationships should be the lifeblood of any company. It should inform everything managers do. Happy, loyal customers allow managers to look far into the future … experiment with new ideas … and plan every detail of products and services that may not launch for several years.

Amazon has accumulated 100 million Prime members. In the U.S., these shoppers pay $119 a year for fast shipping, occasional sales and perks like free streaming music, videos and picture storage. Customers love Amazon so much they are willing to pay a fee for the right to shop.

Related story: Now, Amazon wants to take you out to the movies

Building things people love is not easy. Apple (AAPL), Costco Wholesale (COST) and Tesla (TSLA), among others, have clearly cracked the code. Their customers are fiercely loyal. This allegiance gives managers a lot of leeway to experiment.

A big part of the ability to experiment means being able to fail without losing customers’ trust …

Amazon launched the Fire phone in 2014. Its take on the modern smartphone featured a gesture-based user interface, mixed 3D functionality and computer vision software. Scanning objects in the real world produced a link to buy the product on Amazon.com. Cool, except Fire phone was a dud. In the first six months, Amazon wrote off $170 million. A year later, it was dead.

Bezos took it all in stride. Failure, he explained in a 2017 letter to shareholders, is the inseparable twin of invention. It’s the cost of hitting home runs that pay off 100 times.

And even in the ashes of Fire phone, there was success. Alexa, Amazon’s popular digital voice assistant, is the product of mistakes learned from Fire.

echo dot
 Amazon Alexa is a virtual assistant developed by Amazon. It is capable of voice interaction, music playback, making to-do lists, setting alarms, streaming podcasts, playing audiobooks, and providing weather, traffic, sports, and other real-time information, such as news.

Even Amazon is surprised by how much people love Alexa, according to a Quartz article. Alexa users get earlier access to many deals than regular Prime members, along with other exclusive perks. And they reward Amazon by spending more money there.

Amazon might be the poster child for positive customer experiences. But where Bezos blazed a path, another company is daring to tread … and winning.

Salesforce.com (CRM) takes customer service to the next level. The San Francisco company built the world’s dominant customer relationship management (CRM) platform, with 150,000 paying customers.

The software is used by 88% of Fortune 100 companies, and many more lesser-known companies.

Back in 2005, Salesforce managers had a skeleton staff and a bold idea. CEO Marc Benioff had to convince large, conservative companies to stop using CRM software made by giants like Oracle (ORCL), and embrace cloud-based software tools.

Benioff cultivated a vibrant ecosystem of partners and developers. He put together an app store. Today, that community is so large that partners earn $5.18 for every $1 in Salesforce revenues.
And nothing makes customers happy like turning $1 into $5. (See how I help my subscribers do just that. Click here to learn more.)

Now Benioff is betting big on artificial intelligence …

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Salesforce’s Einstein AI platform will help developers build software that is more-predictive and more actionable for enterprise clients. This strengthens the overall platform, making it even more essential for customers.

IDC Corp., an IT industry research firm, has named Salesforce the leading CRM application every year since 2014. Salesforce increased its market share in 2016 more than the other top 10 vendors combined.

Customer loyalty has shown up in the financial numbers. Subscription revenues surged. Fiscal 2018 sales jumped 24.9% to $10.5 billion.

Managers are busy working in the future. They have a credible plan to reach $20 billion in revenues by 2022, and $60 billion by 2034. It begins with keeping customers happy in the present.

Best wishes,

Jon D. Markman

P.S. Salesforce shares are a bargain at $155 vs. Amazon’s $1,900. But don’t bypass these stocks because of their big-ticket prices. Remember what I said earlier about Salesforce turning $1 into $5 for its members? I can show you a way to do the same thing in your portfolio … and I have the real-time track record to prove it. Click here to get all the details, and see how you can put my strategy to work in your own account.

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I’ll be speaking at the Money Show Dallas Oct. 3-4. It will be a great show, with all sorts of experts sharing their insights. You can find more about that incredible conference by clicking here. I hope to see you there!

Jon Markman's 5 tech stock picks, in a short video.

Picks: GOOG, AMZN, MSFT. Companies turning the hardware of the cloud into software: Arista Networks (ANET), Nutanix (NTNX).

Recorded: MoneyShow San Francisco, August 24, 2018.
Duration: 5:13.