Refresh 2019 - Freshworks CEO warns about "old, clunky CRM" - and puts their CX strategy to the enterprise test
- Refresh 2019 found Freshworks in an ambitious mood, claiming a winning approach to CX while announcing an important new product, Freshsuccess. Here's my day one conference analysis.
I was planning on spending a domesticated labor day week in my bunny slippers. But after reading my colleague Derek du Preez' s Freshworks CEO - "What if there's an iPhone moment in business software?" , I made a different call: Freshworks' Refresh 2019 user conference was worth an on-the-ground look.
Freshworks CEO Girish Mathrubootham didn't disappoint. In his day one keynote, he put the 700+ Refresh 2019 attendees on notice:
And we have our first reference to "clunky old CRM systems." :) #refresh19 off and running with @FreshworksInc Freshworks CEO @mrgirish keynote..... pic.twitter.com/N3DGsFfUHJ
— Jon Reed (@jonerp) September 4, 2019
Mathrubootham went on to share Freshworks' vision of customer experience, and why so many vendors are falling short of today's demanding customers.
It's all about the master customer record for Freshworks
Let's face it: Freshworks is hardly the only company pushing a CX mindset. It's a good pitch, if you want to tie together your sales/marketing/support offerings (though Freshworks also has an IT service management solution called Freshservice). Freshworks has some differences worth noting. The big enterprise CX vendors are all pushing customer data platforms, or CDP - Freshworks is not.
You don't hear bandwagon talk about CDP at Refresh 2019 (CDP is my early nominee for most tedious acronym of 2019). That's because Freshworks is all about one master customer record, unified across their platform.
But will this one-customer-record model hold up as Freshworks moves upmarket, where data integration is more complex, and application sprawl is everywhere? And can Freshworks avoid the pointed critiques I usually raise when CX vendors gush about "delighting customers"? That will keep me busy for two days of pesky questions.
Freshworks has already undertaken its own transformation. Originally focused on service via the name Freshdesk, the company name was changed in June 2017 to Freshworks to achieve bigger product ambitions. Now with almost 200,000 customers in 126 countries (2/3 of them in U.S. or Europe), Freshworks was recently valued at $1.5 billion.
Freshwork's ambitions to move upmarket were already clear in Mathrubootham's remarks to du Preez. He told Derek they've rolled out a "twin engine model" for pursuing the SMB and midmarket, including separate marketing, sales, and customer success teams.
So with Freshwork's enterprise ambitions in mind, what did I think of Freshworks' CX differentiation? Did they stand out from the pack?
Mathrubootham told Refresh 2019 attendees that the customer experience has fundamentally changed: the customer is now completely in control. Familiar disruptive examples were rolled out, e.g. Lyft-over-taxis and Netflix-over-Blockbuster. When you look at the economic surge in subscription models, and the emphasis on loyalty programs across industries, the idea of earning - and keeping - "customers for life" makes sense. That's what Freshworks says its platform can deliver.
The four components of customer engagement
But as Mathrubootham pointed out, that means data across customer-facing apps must have real-time integration. Alas, that's enough to keep an enterprise IT department stressed out for years. It's the data headache/opportunity CX vendors are finally taking on, at least on the keynote stage. Salesforce's acquisition of Mulesoft is just one acknowledgement: data silos turn CX dreams into customer nightmares.
Freshworks steers clear of the customer data platform marketing blitz. For Freshworks customers, the Freshworks platform IS the CDP. Their sales, customer support, and marketing apps feed into the same constantly-updated master customer record. Add Freshservice to the mix, and you have the basis for a fairly complete, real-time view of the customer (aside from financial applications, which Freshworks does not offer, but can potentially integrate with).
So how can you act on that so-called "360 view"? Freshworks spent a good chunk of their day one keynote in demo mode, showing how the pieces tie together for a coordinated, real-time response - one that can include communicating with customers in their preferred messaging environment. The goal? Delight customers, of course. or, as Mathrubootham puts, it, "give them a wow moment." Mathrubootham walked us through the four components of Freshworks' recipe for delight:
Here's my rundown:
- Contextual engagement - Yep, we're back to context again. But unlike my anti-contextual experience rant, this definition of context makes sense. Mathrubootham considers this the most important of the four forms of engagement. It's all about giving customer-facing employees the real-time "context" of everything they need to know about a customer in real-time, from social signals to customer support ticket history. This is where that master customer record approach is intended to pay off big time.
- Predictive engagement - The canine pictured above is the face of Freshworks' AI brand, Freddy. Freddy is the Freshworks omni-channel bot, intended to be an employee's helper - not a replacement. Predictive engagement is about moving from reacting to customers to pro-actively engaging them, perhaps aided by Freddy's "next best actions," or prescriptive tips.
- Anywhere engagement - What you'd expect - "anywhere" gives Freshwork customers the tools to engage with their customers at any time, on any device.
- Collaborative engagement - Pulling team members together to solve a customer problem, via Freshconnect's embedded collaboration.
When Mathrubootham pointed out the limitations of messaging tools like Microsoft Teams and Slack, I was worried. Yes, those tools often lack an enterprise context, requiring users to cut and paste info into messaging, or fumble with document sharing.
That's why embedded collaboration like Freshconnect has an important place - but vendors can't expect to compete with the user traction of collaboration messaging from Microsoft Teams, Slack, and Workplace by Facebook. Here, Freshworks is going for a best-of-both-worlds approach. Their own embedded Freshconnect also has integrations to Teams and Slack. I need to see more on how a Slack/Teams user can collaborate inside and outside of Freshworks before I grade this out. But, as my colleague Phil Wainewright recently pointed out, cross-vendor collaboration is a market-wide issue at the moment, which no one has solved.
Standing out from the CX pack
I have fundamental problems with how vendors proclaim the CX imperative.
- I don't believe the customer is all-powerful. Try telling that to a Comcast customer like me in an area where that's our only broadband option. Tell that to a United customer living next to a United Airlines hub. A customer's power varies by industry and status level.
- Customers aren't as portable as CX vendors trumpet. Yes, they might switch brands after one bad experience, but they aren't always free to do so. Loyalty programs and termination/setup fees often lock us in, making us loathe to extricate and leave our points behind.
- Delighting customers now and again isn't really the hard part. Consistency of experience across channels is the winner. The hotel I'm staying at once "delighted" me with a suite. They fall down on small stuff most every time. Consistency eludes them. The good-time suite fades under waves of smaller service fails. Nor has this hotel managed to use their considerable data about me to improve anything about my frequent stays - before, during, or after.
My day one take
The good news for Freshworks? All these issues are about positioning, not product. The whole point of exceptional CX is to earn loyalty for the right reasons, and help your customers compete against giants who still exploit some level of lock-in. I believe that's what Freshworks is trying to do with their customers - but that language could be sharpened to deviate from the CX norm. One thing's for sure: the modern customer journey is a lot like taking Freddy for a walk.
One thing I definitely agreed with from #refresh19 - the customer journey is no longer linear and doesn't resemble a funnel. Looks more like a dog walking around a park getting distracted by sensory input :)
From Freshworks CEO @mrgirish keynote pic.twitter.com/REnEBbe4Rd
— Jon Reed (@jonerp) September 4, 2019
That moves data integration to the top of the list. It's the biggest question Freshworks will face as they move up market, encountering companies that may not want to standardize on their platform - or they may have multiple cloud integrations to juggle. As one Freshworks customer raised in a session today, if you're heavy into mergers or acquisitions, you may quickly inherit customers with a different data model. Suddenly your customer master record is not so easily maintained. As Derek wrote:
Freshwork's approach to 360 may fall down given that very for enterprises go for a rip and replace - they may have already even invested in multiple SaaS vendors, which is why they focus on integration. Mathrubootham is relying on the fact that this concept of 'customer 360' is also being amplified by Freshwork's larger competitors, which he claims aren't really able to solve it. An opportunity?
Yep - an opportunity indeed. During a late afternoon chat with Freshworks executives, they told me they hope to avoid the messiest of those data integration issues by staying in the midmarket, rather than moving higher still. A choose-your-battles approach, if you will. That will help, but anyone who says they have a data platform gets the integration battle as well. It's what customers want and expect.
What Freshworks didn't say onstage may be the biggest CX key of all. The biggest CX vendors are not exactly a great customer experience at the contract negotiation table. I believe buyers will increasingly be drawn to vendors with simpler pricing models (Freshworks qualifies here), less hardball negotiation styles (e.g. license audits), and exceptional user adoption.
Customers want less CX hypocrisy and less old school SaaS lock-in. They want consumer-grade app experiences that many older SaaS vendors don't offer (except according to their marketing teams). The Freshworks customers I spoke with today all brought up UX as a reason for their success.
There's another area where Freshworks can really cut through the noise: Freshsuccess. Freshworks has been developing an internal customer success model for years now; their recent acquisition of Natero bolsters their customer success data play, as well as their data science capabilities. In Q4 2019, the first iteration of Freshsuccess will become available. The potential for Freshworks to tie in all their CX components with aggregated/anonymized customer success data, bringing that know-how to their customers in the form of dashboards, benchmarking, and prescriptive actions, is pretty heady stuff. Natero already has 100+ customers, so this isn't some aspirational lab wizardry. In his May piece, Derek wrote:
I think where Freshworks needs to improve its approach is offering a viewpoint that no other vendor in the market is. What's your core purpose and what future problems are you solving for companies? We will be watching with interest.
I would argue that Freshsuccess, formally announced at Refresh 2019, is the clearest example yet of how Freshworks can carve out a vivid story in a crowded CX field. A deeper look at Freshworks' enterprise push, and the potential role of Freshsuccess in particular, is the subject of my next Refresh 2019 piece. I'll have more to say on their AI strategy as well.