Ed Sim

@edsim

Blurring lines in enterprise SaaS; the race to own customer data

I’ve written before about the competitive nature of SaaS and the amount of entrants in every category.

Lately after every conversation, I feel like the world is being divided into two camps and there is a massive battle going on in terms of who is going to own them and how. To oversimplify, I’ll call it pre-customer and post-customer domination. And there are companies looking to blur both of those categories as well.

It’s pretty hard to create a new system of record these days as Salesforce, Marketo, Gainsight and the like are building tighter lock-in around their products. That’s not to say it can’t be done as those companies have larger fish to fry, mainly huge enterprise customers and $1mm + deals. Opportunities abound in the SME (small, medium enterprise), and we’ve seeded a number of founders going after that space.

The Race for the Customer — Owning the Central Repository for Customer Data

After every pitch, I seem to hear one thing — we will be the central place where all customer data resides to make intelligent decisions. Forget about web analytics, marketing automation, email platforms, customer support, customer success, and sales intelligence. The world is moving towards an all-in-one place and holistic view of the customer. This is the blending of tons of different SaaS segments and every company is adding more data to their approach. With APIs everywhere, this is making it easier for companies to start integrating data from multiple sources. Doing that is not the hard part; getting in the mind of the end user of these apps and ensuring seamless workflows will be much harder. At the end of the day, the more you know about your customer, the easier you can understand their mindset, and increase their happiness, and thus your revenue.

Data-driven platforms like segment, looker, and mixpanel have an interesting view as a central repository for customer data which feeds into apps. Mixpanel, it seems, is going one step further trying to capture more value from their customers by creeping into customer success. App players in various segments like zendesk want to move beyond customer support and into proactive marketing campaigns. Gainsight is pitching how to operationalize the customer lifecyle with cross-functional collaboration and proactive marketing. I can go on and on. This race also plays into another theme, automation and intelligence. Once the data is clean and in one place, it is easier to analyze and make predictions. We made an investment in March of 2013 in Preact, a SaaS platform for customer success which sold to Spotify. The company never completed its mission but big on Gooley’s mind was proactive intelligence. I now believe we have the tools and customer understanding to start to pull this off.

What Are Buyers of SaaS Doing?

As this is happening, more forward-thinking companies I’ve been speaking with are starting to organize their teams around a total customer happiness experience. What this means is onboarding to success to renewals and expansion are starting to fall under one leader. In addition, they have 3–4 various systems where customer data resides and separate teams for success and support and marketing are attempting to integrate data for their workflows. Lots of money and time is wasted and these companies are looking for a better way. Some more technical startups are even building home-grown solutions to solve this problem.

This all makes sense because at the end of the day what companies really want is a holistic view of their customer. This includes every touch point from first web site visit to email conversion and sign up to onboarding to customer success and expansion and finally to customer support. All channels should be monitored and when a support rep answers an email, call or chat, all of that information should be at their fingertips with no hunting around. When a marketer wants to send out a new email campaign, they should be able to segment based on how many interactions with the customer support team, customer success team, and sales and drive a better data driven email. When looking to expand account size, customer success or reps need to understand every touchpoint and interaction, they need to know the sentiment, and have that all in one place to convert.

Who is Going to Win?

My bet is that a startup will win this battle, one that is not burdened by legacy customers, one that can be Switzerland sitting on top of all of the other platforms, and one that will build real intelligence (using machine learning) with the data they are extracting from all other systems. It may start from an application first view solving a specific problem (customer support, customer success, CRM, email) with expansion into gathering more data or from a data platform/analytics first approach with further expansion into applications. Ultimately though, what’s needed is not just a unified data layer but also a single pane of glass to allow any workflow to seamlessly communicate with customers. As the team at kustomer likes to say, “customers are the atomic unit” and all decisions should be driven off the customer as the unique ID and not tickets or other tech jargon.

Whoever wins this race will surely be a massive company, and I look forward to watching this play out over the next few years.

originally published on BeyondVC

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