Uncertain times fuel the need for Experience Management - Qualtrics CEO Zig Serafin on bringing more certainty to customer and employee experience

Qualtrics reported a net loss of $292.3 million for Q1 2022, compared with a net loss of $199.9 million a year ago. But revenue was up 41% to $335.6 million against $238.6 million last year, while subscription sales shot up 50% to $280.8 million. Other stats of note from the quarter included:

• A Q1 net retention rate of 128%.
• There are now 2060 customers spending more than $100,000 per annum, up 41% year-on-year.

For CEO Zig Serafin, the numbers are validation of the need for Experience Management solutions:

Every CEO that I speak with has customer and employee experiences in their top priorities. They're trying to figure out how to find [and] how to keep customers, and then retain their best employees…In our two decades as a company, we've seen that in uncertain times Experience Management is more important than ever. In fact, happy customers spend 37% more than unhappy customers. And an engaged employee who trusts their manager is 60% more likely to stay in their job for the long-term.

He cited Mexican food chain Chipotle as a customer exemplar:

[Chipotle] has more than 90,000 employees, who are navigating dine-in and pick up options, third-party drivers and mobile app users. In Q1, they chose Qualtrics Employee Experience Management to deliver a more seamless hiring and onboarding process, and to drive better employee retention. And as a result, their teams will deliver better customer experiences that increased loyalty. 

Another use case he pointed to was US grocery giant Kroger:

In the pandemic, Kroger led the way in connecting with their shoppers through new digital initiatives and they use Qualtrics to improve their experiences. In Q1, they added XM Discover to get a single view of all customer feedback, both structured and unstructured, to understand what's important to customers, based upon what they're saying on social media. And this is just another way that Kroger is deepening their relationships.

Verticals

Qualtrics is able to play horizontally and vertically in terms of target markets, said Serafin:

The way that we've designed this company and the way that we've designed our technology, it scales horizontally and it has the ability to make an effect and an impact across many different industries…When it comes to specific industries, they create unique points of extending on [Qualtrics] value and getting deep and rich, specific to the markets that we're playing in…We tie into very specific business problems in those industries, unique urgent things that organizations are looking to solve, and then we can tie  into, because of the nature of our platform, those systems that operate in those industries.

The healthcare industry is proving to be a lucrative vertical market for Qualtrics, he added:

As an example, the integration we have with health records management platforms in healthcare and the way that we end up tying in with the patient lifecycle and then how that nicely tunes into - and much more authentically tunes into - the way that the patient experience evolves, in fact before the person even becomes the patient and the way that providers end up interacting with their customers and frankly, the health and well-being of the provider as well.

He pointed to a use case from the sector to back up his point:

In Q1, we formed a new relationship with Providence. They chose Qualtrics to understand their patient satisfaction with the price of their healthcare services, the billing experience, and cash collection at their 52 hospitals and more than 1,000 clinics. Using Qualtrics Customer XM and XM Discover across their contact center, digital and in person channels, Providence will improve their patients financial experiences and increase the value they receive.

Uncertainty 

Geographically, the firm is looking at Europe as a market for expansion, Serafin said:

I think the biggest thing here is that we continue to see long-term growth on all over the international front. I think we're just in early days of what we see is potential given the relatively smaller percentage of our overall business that is international today and that's why you see us investing.

At present Europe accounts for around 20% of overall business, with Russia and Ukraine accounting for less than one percent. The war in that region and the general instability across Europe are clearly factors in future growth prospects for any tech firm with a European footprint, but Serafin argued that Qualtrics is well-placed, despite a small number of customers delaying decisions:

I think frankly the company is naturally advantaged, especially in times of uncertainty, to be able to create highly relevant product and capability that helps people to navigate their markets, whether it's navigating inflation, whether it's navigating the war for talent. Part of the idea of Experience Management is we help organizations get closer to the customers and the workforce that they're dependent on and we'll be able to run their businesses. 

And it is an uncertain world, he acknowledged:

We're obviously in a market today where we all see inflation, we see geopolitical situations. We see a war for talent, many other factors - macro-economic, micro-economic depending upon where you are. What makes our technology special and the solutions that we build on [it], is that we help companies to get closer to the markets that they serve and, in a much more timely way, be able to make the proper pivots, decisions, pricing, packaging, re-orientation, how they serve their customers, which markets are going after, where they may [want] to go and go after other markets and opportunities, where they've got an opportunity [for] wallet share expansion.

He concluded:

Not any one market is all the same. We see different things happening in Europe, we see different things up in US. Some are common and [some] are different. And so that's a really important factor of how the technology helps us to actually accommodate a lot of the philosophies and values we have and how we're running the company.

My take

A solid start to the new fiscal year at a time when, sadly, Serafin's thesis about the firm's ability to thrive in a time of global uncertainty is being put to the test in the most unfortunate of ways.