Salesloft, one of the industry leading sales engagement platforms, has acquired Drift, the industry leader of conversational marketing (aka website chatbots). No financial terms were disclosed.
The merger combines Salesloft's AI revenue orchestration platform, including Salesloft Cadence, with Drift's premier AI chatbot. It's a move that - according to the official press release - will result in a powerful end-to-end AI revenue orchestration platform servicing the entire buying journey.
But what does this merger mean for the wider sales technology market? And what does it mean for B2B buyers?
What's our take on the Salesloft Drift acquisition?
Firstly, it's a sign from the market (and their investors) that individually they could not meet projected valuations and revenue outcomes, but when combined together, the synergies might stand a better chance. As Salesloft CEO David Obrand puts it, the acquisition "introduces to the market the first and only AI-powered Revenue Orchestration Platform."
Except they weren't the first. The category of AI-powered Revenue Orchestration Platform had already been claimed.
For years, other companies like 6sense and Demandbase had been building around the idea of combining the sales technology and the marketing tool stack into an all-in-one solution to automate workflows on top of. Similar to Drift, 6sense and Demandbase primarily focused on the enterprise.
Warmly was the first AI powered revenue orchestration platform purpose built for the SMB. And it does so by giving you the option to plug in your existing tech stack.
SMBs typically require more automation because they don't have the same access to marketing teams, sales people, and resources as enterprises do. So we adapted to that need.
We call it signal-based revenue orchestration.
Trends in Sales and Marketing Tech Stack Consolidation
The Salesloft Drift acquisition seemingly follows an ongoing trend of sales and marketing tech stack consolidation, where market leaders are trying to become the all-in-one unified go-to-market solution.
Here's what we mean.
SaaS Mergers: Improving Sales Development?
ZoomInfo acquired Chorus back in July 2021 for $575 million, allowing them to compete with Gong.io, the industry leader in call recording and intelligence. But it's part of their larger acquisition strategy to increase net retention revenue outcomes year over year by upselling existing customers on new offerings that keep them sticky to ZoomInfo's platform.
Apollo.io took a different approach of natively unifying the sales tech stack by building everything in-house. The company started as a B2B contact database, then combined that with email sequencing, and recently raised $100MM in funding led by Bain Capital Ventures in August 2023 to create the full-stack sales technology platform. 60% of the funds are invested into product development. They have a PLG sales motion which has saved them from having to invest as heavily into a large salesforce.
Hubspot, the SMB CRM of choice, went the reverse of Apollo and started as marketing automation software that then added CRM capabilities later. And in November 2023 Hubspot acquired Clearbit, one of the top B2B data providers. For the first time, CRM, B2B contact data, buyer intent signals, and workflow all came under one roof.
As Whitney Sorson, CTO of Hubspot, puts it, "Picture having complete data on over 20 million companies right inside HubSpot. All with over 100 rich data points about the companies and their decision-makers. Then imagine being able to easily find high-fit prospects natively within your CRM. Finally, imagine that once those companies and contacts are in HubSpot, being alerted when those companies are showing buying intent."
With the rise of AI and ChatGPT, you can start to see sales technology giants leaning into consolidating the tech stack not only to improve the entire customer experience, but also because it breaks down data siloes to seamlessly integrate data across systems.
Entering the Era of Revenue Orchestration
Data is the new oil. It's the lifeblood of the orchestration. But data alone is not enough to accelerate pipeline conversion rates.
It needs to be combined with action.
As we combine sales workflow, data, and AI and automation, we move into the new era of revenue orchestration. And that means an ongoing arms race to reach B2B buyers.
Drift and Salesloft: A Tale of Two Giants
Let's zoom into the Salesloft Drift acquisition for a second, because there's a deeper story here.
Back in in 2021, Vista Equity acquired a majority stake in Drift, which valued the buyer engagement platform at $1 billion. In 2022 Vista paid an estimated 23x multiple for Salesloft, which valued it at around $2.3 billion.
These were during the good times of SaaS. But SaaS has taken a turn for the worse as we headed into 2023.
Drift: The Hero of SaaS
There was a time when Drift was the darling of B2B sales technology. Initially, it was Intercom that started the real push of website chat, especially in B2B. But while intercom pushed more into support, Drift moved into marketing.
The eventually created the category and movement around conversational marketing and got chatbots to appear on all the websites. Their key pillar of its growth was B2B buyers from the SMB market.
Anybody could add a script tag to their site and you'd see the iconic Drift chatbot icon on the bottom right hand corner.
The Drift sales development team grew revenue quickly by doing one-call closes using their own product.
The sales team would chat directly to website visitors, post a Zoom Link in the chat, and close a $6,000 to $8,000 a year deal right on the website.
Drift grew from $6 million in revenue to $47 million in revenue in 2 years. It was insanity. It was around this period that that Vista Equity stepped in.
Enter Private Equity
After Vista Equity entered the proverbial chat, Drift was forced to move upmarket and stopped caring about SMB/the lower-middle market B2B buyers. SMB just isn't seen as a place to stay for an aggressive PE firm that wants predictable revenue outcomes. Small companies churned too quickly.
Plus, companies with high website traffic typically received the most value out of Drift, which by and large is a marketing tool designed to capture leads passively visiting the site. The more site visitors, the more leads.
Consequently, it was easier to prove ROI and justify a higher price tag. PE saw enterprise revenue as more stable, which meant a higher multiple could be attached to the conversational AI company.
Drift initially did have a vision to expand outside of its conversational marketing wedge and help service the entire customer experience from top of funnel marketing to bottom of funnel sales, as well engaging customer experiences post-sales .
But ever since Vista took over, Drift shut down all expansion and focused product development on enterprise features and sticking to the marketing use case.
Remember the days when you could add a Drift chatbot to your site for a couple hundred a month? Those are gone.
Today, Drift's lowest tier is $2,500/month ($30,000/year), which is ironically desc "For Small Businesses."
$2,500/month: Small Business?
For Drift's Advanced and Enterprise tiers, we've heard our customers being quoted hundreds of thousands of dollars to upwards of millions a year. For Drift, the economics of the lower end of the market didn't make sense.
This showed in the product and buyer experiences as well. Complicated workflows, long implementation sessions, high price tags. It became a best-in-class point solution instead of an end-to-end platform, which put a ceiling on its growth.
There was a point where Drift wasn't even integrated in the CRM, a gap that Qualified exploited by building natively on top of the CRM to streamline the sales use case.
But moving up-market proved to be more difficult for Drift. Growth started to slow. And at the bottom, new entrants started popping up everywhere.
Chatbot software listed on G2
At this time, sales technology company valuations dramatically decreased; many investors were told not to deploy capital and to hold; and B2B buyers stopped buying. And as a result, churn and downgrades increased across the board.
It's no surprise that Drift had layoffs, releasing 159 employees in 2023. Case in point: Drift's employee growth rate has regressed 20% in the last 2 years.
Drift's Employee Count For the Past Two Years
Drift and Salesloft: A Merger of Equals
It made sense for Vista to combine Drift with Salesloft, two complimentary market leaders in sales development and customer engagement that are struggling to keep their dominance and justify their valuation multiples individually.
Salesloft has similarly come up against stiff competition from entrants like Outreach.io, Instantly.ai, Gong.io, Hubspot, ZoomInfo, and Apollo, all of which have their own sales prospecting capabilities that rival Salesloft's.
Tack on the fact that 93% of outbound emails these days are automated, with response rates generally reaching less than 2%, and it's obvious: the category of email sequencing is reaching a point of diminishing returns for its buyers.
Salesloft's acquisition of Drift, which we see more as a merger, is an opportunity for both companies to decrease costs, improve revenue outcomes, and leverage new synergies, especially fulfilling both company's initial visions of expanding beyond their own stage of buyer journey.
Salesloft CEO David Obrand posted on LinkedIn “[The acquisition] introduces to the market the first and only AI-powered Revenue Orchestration Platform that serves the entire buying journey. By closing the gap between sales and marketing, which has long been a major pain point in the revenue motion, go-to-market teams can now orchestrate a hyper-personalized, omnichannel buyer journey at scale.”
Typically, marketing tools don't cross over into sales, outside of ABX platforms like 6sense and Demandbase, so this would be one of the first acquisitions of its kind.
Naturally, it will take time to fully integrate the two sales technology platforms to create the AI-powered revenue orchestration experience that David Obrand has promised. And it won't be cheap: the point of consolidation is also to upsell offerings, especially if you're aiming at improving the entire buying journey.
What would that look like?
Sales reps could do things like sequence prospects via Salesloft, then continue the conversation with the prospect when they visit the website using Drift.
Drift can cookie and track session activity for all website visitors, and once a target company is identified, teams can use Salesloft to multithread the conversation with all key stakeholders in that target account by adding them all to sequences.
All of this orchestrated by Conductor AI of course.
Salesloft and Drift: Legacy Software Under Fire
As Salesloft and Drift are sorting through the acquisition, there will be a window of opportunity for new entrants to claim the AI revenue orchestration category for themselves by adapting to the changing landscape of how companies successfully go-to-market. We predict that these companies will move quickly to establish themselves.
There will be companies like Apollo.io who will opt to build the unified go-to-market solution natively in-house. This is better than the acquisition approach because data can move seamlessly across all their sub products.
And there will be other companies that will keep themselves platform-agnostic and act as the unified API layer that stitches together the sales and marketing tech stack, resulting in the entire customer experience becoming more coherent. Call it go-to-market middleware.
It's difficult for a single platform to be #1 at every use case. There will always be niche use cases that are better served by specific tools.
In this scenario, you would be able to plug in your favorite tools that you're already using.
Maybe you like ZoomInfo data better than Apollo's, Outreach more than Salesloft, 6sense more than Demandbase. It would give you the opportunity to mix and mash the best-in-class point solutions for your specific market and revenue outcomes.
I think Zach Howland, a sales tech stack expert who has implemented multiple CRM and sales tools across various companies, said it best.
"Flexibility is enhanced utility. The market needs to be more nimble for the coming scramble to modernize sales technology as AI becomes more robust."
Warmly, the Signal-Based Revenue Orchestration Platform
Hi! We're Warmly, the signal-based revenue orchestration platform, purpose built for the SMB market that Salesloft and Drift are neglecting.
Instead of building everything natively or consolidating, we give you the flexibility to plug in your favorite sales and marketing tools.
We then infuse your tech stack with the best-in-class intent and enrichment data from 6sense, Clearbit, and Bombora to automatically orchestrate the right sales workflows at the right time.
We're AI powered. We're free to get started. And you can be fully setup in minutes.
And you can save yourself the $30,000/year because we built a Drift competitor chatbot natively into our platform as well.
Find out how D2DExperts closed $80,000 in revenue from Warmly in the first 12 days of use.