Qualtrics and Clarabridge - what happens next? CEO Zig Serafin has a plan

Profile picture for user slauchlan By Stuart Lauchlan October 21, 2021 Audio mode
Summary:
What Qualtrics does next - life after the Clarabridge acquisition, according to CEO Serafin.

experience

At the top of this month, Qualtrics completed its $1.1 billion stock acquisition of Clarabridge, a deal announced back on July to add what the firm pitched as “industry-leading conversational analytics to its platform, the gold standard for engaging with customers and employees”. It was a big gambit and one that received the approval of many commentators, including analyst firm Forrester, which stated:

This is a great move for Qualtrics. In one swoop, it has secured the best-in-class analytics capabilities that will define the future of voice-of-the-customer programs as firms decrease their reliance on surveys and focus instead on understanding customers based on analysis of unstructured data.

Forrester did however point to some potential ‘gotchas’, most notably tech integration - although this wasn’t deemed likely to be a particular challenge in this case - and culture, noting that Clarabridge would need to “pivot hard” to focus all of its attention on Qualtrics rather than having a wider worldview.

With the acquisition now complete, Qualtrics CEO Zig Serafin yesterday used a large part of the firm’s quarterly post-results analyst call to dive deeper into the reasons for making a move on Clarabridge and what to expect next. He said:

With our acquisition of Clarabridge, the leader in omni-channel conversation analytics, we can help our customers discover what's being said about them across all of these unstructured sources. This feedback exists at such a scale that, without Clarabridge, companies might never find the meaningful, actionable insights that drive business outcomes. So, this acquisition, along with our acquisition of journey orchestration leader Usermind, puts us even in a stronger position to listen and act on experience data.

All of this has one purpose - to strengthen Qualtrics position in the expanding Experience Management (XM) market space, he added:

If you look at Clarabridge, they're the industry-leading AI-powered NLP, Natural Language Processing, natural language understanding capability when it comes to experiential data. Infused into our platform, it will help people to be able to capture actionable insights from any form of customer interaction, any form of feedback channel. It could be social, it could be product reviews, it could be chat, call center, contact center, conversational-based interactions that are taking place.

The two firms and their tech are complementary, Sarafin said, with about 40% of the Clarabridge customer base also using Qualtrics:

If you think about Qualtrics, Qualtrics is a system that helps you to be able to ask the right question at the right time, based upon the context of what a human being is doing, customer and employee. Clarabridge basically captures and connects with what people are sharing regardless of what's been asked. It's what they volunteer to tell people through different channels. What's their intention? What are their emotions? And that often comes in the form of unstructured signal, unstructured data, right? So, that combination just changes the game on the capability set that's available in the market in Experience Management.

Beyond partnering

The acquisition follows four years worth of working in partnership, he said, noting that his own background experience in natural language understanding has led to an appreciation of what Clarabridge’s tech can bring to the table for Qualtrics:

There's something deeply to appreciate about how the Clarabridge team has built the platform focusing on industries. They have about 150 industry models that can analyze text and speech using deep and specific industry use cases. They can capture important nuances in conversational context as well as just basically any form of unstructured information.

But the idea of applying that to industry-specific scenarios, like say a health care insurance provide and what the signal might be between a provider and a member or between an online shopper and a virtual associate on a chat, they have unmatched capabilities in the marketplace in their ability to be able to hone in and be able to not just understand and analyze the words, but having the ability to leverage the power to discover and understand critical human nuances, such as effort, emotion, intent, where is the friction? There is nothing like that in the market that's operating at this level of scale, 23 languages+, that that system supports.

He added that there is also untapped potential to be explored:

The form of data can be any form of human expression…You’re actually using that technology to indicate something about an experience that helps to be able to connect more with what human beings are even telling you indirectly. That can be applied to social context. It can be applied to chat. It could be applied to contact centers. There's other use cases we've seen inside companies where they want to be able to pull in data that they have access to through just behavioral browsing patterns and they want to be able to better understand use cases in that sense.

So, we're not going to limit that. But at the same time, there's some really natural places where we're able to advance what our customers are doing today and give them even more value. And that was part of what we had outlined when we announced the acquisition, where we said, ‘Look, if you think about Qualtrics to this point, we've helped companies to be able to engage with their stakeholders, their customers and their employees by asking the right questions at the right time in the context of what that person is doing. And now, what we're doing is we're enabling the ability to discover the hidden signals and other things that are things that people are telling you in the context of customer care, in the context of the digital experience on a website or on an app’.

He concluded:

This is simply accelerating what customers were already doing and wanting to expand into more use cases and, frankly, more customers wanting to take advantage of the combination of the two systems. One other thing I'll reiterate is all the respect that we built for the Clarabridge team and the Clarabridge technology as we worked with them and realized how much depth of innovation and IP was in that platform and that frankly the combination of bringing that together under one roof, connecting that to the XM OS would unlock new opportunities in the marketplace as well as in the ways that customers can use the system.

My take

A helpful ‘deep dive’ that coincided with some strong Q3 numbers for Qualtrics.Revenue in the quarter rose to $272 million, which is up 41% year-over-year. Subscription revenue rose to $220 million, up 49% year-over-year. Third quarter net loss was $ 286 million.

Other points of note from the analyst call:

  • Qualtrics net retention rate is now 125%, above pre-COVID levels of 122%.
  • New customers included DoorDash, L.L. Bean, NASCAR, the NBA, ServiceNow, Kyoto University, MercadoLibre, NL Post, Repsol, Sky and YMCA New South Wales all chose Qualtrics to power their experience transformations. 

The firm has also seen positive response to its latest platform offering, Experience ID, which is pitched as delivering a single unified view of all the feedback customers and employees want a company to know about them over time. Serafin said:

It enables companies to zoom in on the detailed preferences of individual customers to personalize their experiences. And then they can zoom out to get powerful views by segments, such as teams or geographies, to identify new market opportunities while also giving companies the ability to build deep, trusted relationships at scale.

The single life continues to suit Qualtrics, it seems.