Its platform takes customer feedback signals from dozens of places: surveys, reviews, social media posts, complaints, call centre transcripts. It then summarises trends, flags remedial actions and even packages insights for the C-Suite in the Voices smartphone app.
Since its IPO in July 2019, the stock has done OK – judged against other recent tech IPOs – and is up by about 25%. Revenue growth is healthy at c. 20% year on year.
The company has also been on quite the buying spree:
- customer journey analytics platform Cooladata in June 2019
- messaging platform Zingle in September
- co-creation platform Crowdicity in October
- NPS feedback tool Promoter.io announced in January this year
- and last week’s deal to buy video management platform LivingLens.
That makes 5 very different, very interesting additions to the core platform.
This obviously tells us a lot about Medallia’s priorities.
But, more importantly, what does it tell us about the future of Customer Experience Management?
1. Margins will continue to tighten.
Customer experience management is a maturing category.
As one of the early players in enterprise CX, Medallia helped to define the space. It has also commanded a serious premium for its kit.
But despite good top-line growth and top end pricing, profit has been elusive. After tightening up costs before going public, the last two quarters have seen the return of heavy EBITDA losses.
Margin pressure is increasing throughout the CX management category as it matures, and three factors are contributing to this.
If you want to measure and manage your customer experience, you have a lot of choice these days. The tools for capturing and analysing customer feedback are commoditising.
This market map needs updating, but it contains nearly 70 different providers of CX feedback solutions.
That’s a lot of people fighting over the same budget.
Medallia, Qualtrics and the other large CX players offer ‘full stack’ solutions. But dozens of more focused startups have launched over the last few years. These companies target slices of the CX value chain rather than the whole thing.
And they include the crowning achievement of CX feedback: smiley face touchscreens in public restrooms.
New competitors generally have lower overheads, sharper focus and more flexibility. That means more margin pressure for large incumbents.
Competition often comes from outside the core category, and the relatively new discipline of Customer Journey Analytics is one such place.
ENGAGEcx is a customer-aware IoT middleware platform that transforms, orchestrates and analyses data in real-time from physical and digital sources to provide profound new insights into consumer activity enhancing engagement, revenue and brand loyalty.
Medallia’s purchase of Cooladata signals how CX management will have to evolve over the next few years.
Combining behavioural data from CRM, e-commerce and other digital systems will help to offset the commoditisation of purely feedback-based CX platforms.
2. The gap between feedback and action will close.
Here’s a prediction for you: in 2 years’ time, nobody will refer to CX feedback programmes as ‘Voice of Customer’.
It’s a label that’s dying, and deservedly so. Like so many artefacts of market research, it denotes passivity. It’s about listening, not acting.
But the future for CX management is all about action. Not just red-flagging grumpy customers or closing the loop – but fully embedding in sales, marketing and service workflows.
This will come from increased use of behavioural data; better predictive and prescriptive models; and tighter integration with CRM, customer support and communications platforms.
Hotels are one of the biggest buyers of CX feedback programmes. Integrations like this will help them respond in-the-moment with service recovery actions, up-sells or surprise-and-delight offers.
3. Startups and SMEs offer scope for growth.
Do you have at least £1 million to spend?
When Medallia first entered the UK market, this was rumoured to be the first qualifying question used by its sales execs.
It’s almost certainly not true.
But what is true is that Medallia is an enterprise platform – for large customers with complex setups and hefty budgets.
But there is a lot of growth in customer experience management tools for smaller customers with simpler needs and less budget.
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4. Customer experience management will extend to customer collaboration and experience innovation
If gathering feedback and tracking CX metrics is commoditising, where do you look for more premium value?
One place is customer co-creation: helping to innovate customer experiences as well as measure them.
5. Dashboards are dying, storytelling is in.
OK, maybe dashboards aren’t dying.
But remember this next time you create something you think is beautiful, with gorgeous visualisations, drill-downs and trend lines. Most of your users want to scream at you:
Not. Another. Fucking. Dashboard.
The more data we have, the more that customer experience management will need to get creative about storytelling and engaging audiences better.
And this is where much of the value in the LivingLens acquisition will come: using video to tell customer stories for internal audiences. Voxpopme’s VideoCX solution aims to do something similar.
It’s storytelling gold. Once you filter out videos with bad lighting, mumbling, background noise, weird accents and those with nothing interesting to say.
So that’s it.
Expect the future of customer experience management to be more behaviourally-driven, action-oriented, segmented, collaborative and engaging.
Thanks Medallia for showing us what’s coming.
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