Zendesk clinches Smooch in quest for customer intimacy

In the modern digital economy, brands want to get as close as they can to their customers. Zendesk's announcement yesterday that it has acquired omnichannel messaging platform Smooch firmly aligns its CRM platform to that trend. Smooch integrates a wide range of popular messaging channels into customer engagement platforms so that consumers can converse with suppliers directly from the apps they already use on their smartphones.

Timing several announcements to coincide with its regional New York customer event yesterday with 1,200+ attendees, Zendesk is also unveiling a new sidebar integration of Slack, and extending the reach of its recently launched AWS-native Sunshine CRM platform.

Headquartered in Montreal, Canada, Smooch has had a longstanding partnership with Zendesk along with over a hundred other CRM and CX vendors, from HubSpot and Marketo to Genesys and Salesforce. Serving more than 4,000 business customers, its AWS-hosted, headless platform allows brands to bring together customer interactions across a wide range of messaging channels, including WhatsApp, Facebook Messenger, LINE, WeChat, Telegram, Twitter DM, Viber, SMS text and through native iOS and Android apps, delivering conversations directly into a company's customer engagement applications.

Smooch into conversation

The acquisition allows Zendesk to double down on its existing Smooch partnership to integrate conversations directly into Zendesk Chat, initially from WhatsApp and from other channels in the future. Zendesk is also establishing a specialist team to continue Smooch's work helping customers build personalized messaging experiences on the combined platform. The goal is to allow consumers to have a seamless conversation with a brand that retains context across different channels, explains Shawna Wolverton, Zendesk's SVP Products, who spoke to diginomica earlier this week.

Messaging platforms allow for an ongoing conversation that's more persistent than chat but more immediate than email. They're also more in line with how younger consumers want to interact with brands, she adds:

Especially the younger generation is really looking to interact with companies in the same way they interact with their friends. All interactions happen on their phone, and a lot on WhatsApp ...

We have that foundational conversation and it follows a customer across multiple brands and multiple channels so we capture the entire interaction.

How Sunshine clinched the deal

Smooch raised a $10 million CAD ($7.5m USD) seed round in 2016. Zendesk has not disclosed the terms of the acquisition. Smooch co-founder and chairman Hamnett Hill told Canadian startup news site Betakit that Zendesk's launch of its AWS-native Sunshine platform had paved the way to clinching the deal:

Without that product announcement, there was no way to do a deal ... That’s where this really fits in nicely, because they are embracing an open CRM platform strategy, which is exactly what Smooch has built.

Sunshine provides a unified data model and event model for Zendesk applications that runs natively in the AWS environment, using AWS services to connect to other data sources or to customer and third-party applications built on AWS — including Smooch. Customer take-up has been strong since the launch of the platform last November says Wolverton, with over a thousand switching on the ability to use custom objects on Sunshine:

We are seeing hundreds of customers building apps using our custom objects.

The ability to bring in high-volume sensor data has come up in a number of cases, leading Zendesk to introduce a new license that allows up to 100 million custom object records for IoT and connected product applications.

Ecosystem expansion

Zendesk also announced further expansion of its marketplace of ecosystem partners, adding new third-party application providers in areas such as training and workforce management, tracking KPIs and goals, and monitoring tickets for quality assurance. Existing partners already seeing traction with customers include returns management provider Narvar, analytics platform Domo, experience management platform Qualtrics and IT incident manager OpsGenie. The goal is to provide an integrated view of customer engagement within the Sunshine platform, says Wolverton:

It's bringing all of the ways your customers are interacting with you into those profiles. You need the whole picture of what's happening across all of the interactions your customers are having with you and your partners, and use that data to personalize the experience they have when they call up.

The final announcement yesterday introduces the ability to have a Slack channel presented as a side panel within Zendesk so that team members can stay in touch at the same time as interacting with a customer. A Slack channel can bring together people from different departments or from external partners as they work together on customer issues. Sometimes called 'swarming' this behavior is often used by teams in Slack to quickly resolve issues that require co-ordinated action across several different functions.

My take

The advent of smartphones has given rise to an entirely new landscape of digital-native customer experiences that often remain disconnected from the traditional CRM platforms. In their quest to get closer to customers, brands have to find some way of integrating all these push notifications, messaging apps and other conversational channels into their existing CRM and CX platforms.

In that context, the acquisition of Smooch looks like an especially astute move by Zendesk. This small startup has built a technology platform that acts as a single hub for interacting across all of those conversational messaging channels. Therefore it's a bridge between Zendesk's existing suite of applications and this new smart mobile landscape — all operating on AWS-native infrastructure.

The demands of this younger generation of highly connected consumers are being met by host of new applications offering services and experiences that were never dreamt of in the pre-smartphone era. That gives Zendesk a special advantage against more established CRM vendors with more dated platforms, and this latest acquisition suggests Zendesk means to seize that advantage.