While many have taken a well-earned break this summer, the world of CX SaaS mergers and acquisitions has been operating full-steam ahead, with deals signed for values that are as long as telephone numbers. Qualtrics announced their purchase of Clarabridge for $1.125bn (1) and Medallia were taken into private hands for $6.4bn (2).
In this our Launch Editorial, we speak the big players and voices in the industry and gather a range of views and opinions on the effect this consolidation will have, both on the market, the technology, the clients, the people, and of course, the customers.
Here in Part 2, we look closer at the Qualtrics / Clarabridge acquisition and the Medallia purchase in the VoC space, and we ask, what is the impact of these changes on the market at large and the thousands of organisations using this tech to power their voice of the customer programmes?
“Even with the highest R&D headcount of the VoC vendors assessed by Gartner in the November 2020 wave report, Qualtrics decided to buy Clarabridge to supercharge their Text Analytics (TA) engine… Perhaps a telling insight into the strength of the current platform TA capability” says Lorraine Rough, Director of CX Planning at Ipsos MORI
“My prognosis is this is will only serve to strengthen the XM solution and is designed to future proof the tech, as the demand for making decisions using unstructured customer data increases (3). This is clearly a significant and strategic buy out to leapfrog further towards the top right of the magic quadrant.
If there was any more proof needed that Medallia was a technology provider first, this is it. Thoma Bravo is a software investment firm that wants a piece of the growing experience management industry! I expect the acquisition will lead to investment in the technology, further accelerating growth in the competition to offer a rich suite of capabilities to capture customer feedback signals and turn them into actionable insights.
What’s reassuring is the acquisition will not affect the business operating model and way Medallia serves its customers – either directly or through their closed partner network.”
“Both of these acquisitions have a similar rationale – a need for serious investment to stay head of the pack. Enterprise customers have ever broader needs for in terms of technology, with omni channel data growing exponentially, and the need to be predictive and accurate in terms of next best actions. Always on is no longer a nice to have option, it is essential for organisations to really understand the true Voice of the Customer. This means more data, better AI, sharper analytics – and all this integrated into a single platform. Medallia and Qualtrics are both on a (capital intensive) path to achieve this.” says Maurice Van Der Heijden, Head of Partnerships at Kantar CX
What does this mean for the Clients?
“Qualtrics and Medallia will be a step ahead in terms of breadth of offer and capability, but not every customer needs this”. says Maurice
“Across the industry we are seeing increasing numbers of organisations who have customer data and feedback coming through a single digital channel which makes narrower technology offers easier and often more cost-effective to implement. For instance, many on-line retailers have web-chat functionality as their main communication tool with customers, which often includes a rating at the end of the process.
Text analytics specialists like Thematic and Chattermill create valuable customer insights out of this huge volume of data without the requirement for a full VOC platform. This coupled with the increase use of review sites such as Trust Pilot means the spotlight on ROI of Experience Management platforms is greater than ever.”
Rowan Jackson is chairman and co-founder of Promising Outcomes, who specialise in measuring and improving relationships to improve retention and business revenue and profitability. Whilst industry transactions generate interest within the sector, for him the real question is the impact on customers.
“In our recent conversations with CEOs, they have expressed dissatisfaction from their investment in CX measurement and analysis, because it’s not helping them drive returns and reduce risk. What they’re looking for is real insight, to help them diagnose and prioritise areas for improvement and support investment in customer retention,” commented Jackson.
“Most were already adapting to digital transformation and automation. This accelerated the demand for higher quality insight. The pandemic significantly increased the pressure. Investors cut them some slack during lockdown, but that’s gone now. Companies understand they need to reconnect and build stronger relationships with customers, but to do so they need a way to effectively assess the quality of that relationship now.”
So what do you believe the future holds?
Lorraine “The acquisition of Maritz by InMoment (4) is testament to the shrinking number of players at the top end of the market. These providers are all working hard to stand out from the pack and as a result – mergers, acquisitions and continued investment will be common place in the next few years.
My bet is on providers that can grow, while staying true to their vision for experience measurement and management; Those who get lost in a sea of services and solutions that work in isolation but not as a collective, will fall short in the overall value they deliver to organisations.”
Maurice “As well as demand for pioneering technology, here at Kantar we see an increasing ask for CX consulting services, organisations needing specific consulting expertise to understand how they can activate the customer feedback they have to actually better change the experience for the customer. Whilst some of this can be achieved through the technology, more often it requires dedicated strategies and governance across the organisation to orchestrate this positive customer change.”
Jackson sees a fundamental change. “The pandemic revealed a new paradigm. For many customers their needs have not changed (“I need to buy food to eat”) but their expectations of how they fulfil this need have changed seismically (”I now order groceries online, even though I could go to my regular supermarket or restaurant”). The consequences of this? It is still necessary to understand customers’ needs but that no longer sufficient. Understanding expectations is now a part of the deal and a critical area for all companies.”
That’s the take of those in the know, who represent hundreds of organisations in this space each day. Acquisitions of eye watering numbers, the benefits of which will need to be realised at scale and at pace. The development of the CX Tech will undoubtedly continue at a rapid scale, but the question remains how will organisations operationalise all this data and insight to improve their businesses for the benefit of their customers. KG