Zendesk think elegant and beautiful software is the future of cloud computing, the stockmarket seems to agree with them.
Cloud helpdesk service provider Zendesk today debuted on the New York Stock Exchange with the stocks seeing a 49% surge on their IPO price, taking its value to just under a billion dollars.
Svane is an enthusiastic, open guy and clearly passionate about customer service – a field that’s the ugly stepsister of modern business. As Svane himself says, “no-one ever gets the girls by working on the helpdesk.”
‘Beautiful and elegant’ is a phrase Svane uses to describe his software and it’s notable how many other founders of cloud services use those words about their products – Xero’s Rod Drury even uses it as the company’s slogan.
Like many cloud services, both Xero and Zendesk are still not making a profit and a big fat stage for a stockmarket listing is always a worrying sign that an IPO might have been undervalued.
At the moment though, the initial stockmarket success of Zendesk is a win for some nice guys.
Customer service needs to pervasive through modern organisations says Salesforce’s Alex Bard
When it comes to customer service businesses, Alex Bard calls himself a ‘career entrepreneur’, having founded four startups in the field since the mid 1990s.
In 2011 he sold his most recent business, Assist.ly, to Salesforce and became the company’s Vice President for Service Cloud and the Desk.com customer service offerings.
Bard tolds Decoding the New Economy last week how social media and Big Data are radically changing how organisations respond to the needs of their clients.
“I’ve been in the industry for twenty years and I’ve never been excited as I am now,” Bard says. “The real transformational things that’s happening now are these revolutions – the social revolution, the mobile revolution, the connected revolution.”
The philosophy of customer service
“What they’re really driving is this idea that customer service is no longer a department, it’s a philosophy.”
“It’s a philosophy that has to permeate throughout the organisation. Everybody in the company has a role in support. It’s not just about a call centre or a contact centre or even an engagement center which is what these things are called today.”
“I really don’t like the word ‘centre’ because I really fundamentally believe that everbody in that company has to interact with customers, has to engage and has to the information – no matter they are – about that customer to provide context.”
Abolishing the service visit
With the Internet of Things, Bard sees GE’s social media connected jet engine as illustrating the future of customer service where smart machines improve customer service.
“They’re going to capture more data in one year than in their entire 96 year history prior,” says Bard. “With that data they’ll be able to analyse and do things on behalf of that product or service that’ll reduce the number of issues.”
“Because the best service of all is one that doesn’t have to happen.”
“Connecting devices is an extraordinary thing,” says Coffee. “It takes things that we used to think we understood and turns them inside out.”
“If you are working with connected products you can identify behaviours across the entire population of those products long before they become gross enough to bother the customer.”
For Alex Bard, the customer service evolution has followed his own entrepreneurial career having evolved from being personal computer based in the 1990s to today’s industry that relies on cloud computing, big data and social media technologies.
As these technologies roll out across industry, businesses who adopt the customer service philosophy Bard describes are much more likely to adapt to the disruptions we’re seeing across the economy. Changing corporate cultures is one of the great tasks ahead for modern executives.
The problems for YouTube channel owners illustrates the business risks of relying on one social media service.
For owners of YouTube channels life has been tough in the last few months as Google plays with the service and its features.
The first irritant for YouTube administrators was the integration of Google Plus into the comments that now requires commenters to have an account on Google’s social platform.
Google’s reasoning for this is some transparency in YouTube’s comments will improve the services standards of conversation and there’s no doubt that YouTube comments truly are the sewer of the internet with offensive and downright deranged posters adding their obnoxious views to many clips.
Unfortunately the objective of improving YouTube’s comment stream doesn’t seem to have worked which casts the effectiveness of Google’s identity obsession into doubt, but it has had the happy – and no doubt totally unintended – effect of boosting user numbers for the struggling Google Plus service.
The latest blow for YouTubers has been Google’s copyright crackdown where the service is removing posts it claims are in breach of owners rights. Many channels, particularly game review services, are being badly hit.
Of course the Soviet attitude to customer service that Google shares with many other Silicon Valley giants doesn’t give these folk many options of getting their problems resolved.
Watching this play out, it’s hard not wonder how vulnerable services like YouTube are to disruption, while they have the network effect of being the leader it’s not hard to see how alienating the people who create the platform’s content opens up opportunities for new players.
The evolution of Roamz into Local Measure tells us a lot about how businesses can use social media and online local services.
What do you do when paying customers tell you they would rather your product be different to what you were offering? This is the predicament that faced Jonathan Barouch when he discovered the real market for his Roamz service was in social media business intelligence.
How Jonathan dealt with this was the classic business pivot, where the original idea of Roamz evolved into Local Measure.
Originally Roamz was set up to consolidate social services like Twitter, Foursquare and Facebook. If you wanted to find a restaurant, bar or hotel in your neighbourhood, Roamz would pick the most relevant reviews from the various services to show you what was in your neighbourhood.
The idea for Roamz came from when Jonathan was looking for places to take his new baby, jugging several different location services to find local cafes, shops or playground is hard work when you have a little one to deal with.
A notable feature of Roamz was the use of geotags to determine relevance. Even if the social media user doesn’t mention the business, Roamz would use the attached location information to determine what outlet was being discussed.
Enter Local Measure
While Roamz was doing well it wasn’t making money and, in Jonathan’s words, it was a “slower burn, longer term play”. On the other hand businesses were telling him and his sales team that they would pay immediately to use the service to monitor what people were saying about them on social media.
“People said, ‘hey this is cool, we want to pay for this.” Jonathan said of the decision to pivot Roamz into Local Measure.
“I want to say it was a really difficult decision but it wasn’t because we had people saying ‘we want to pay you if you continue with this product.’”
Local Measure is built on the Roamz platform but instead of helping consumers find local venues, the service now gives businesses a tool to monitor what people are saying about them on social media services.
The difference with the larger social media monitoring tools like Radian6 is Local Measure gives an intimate view of individual posts and users. The idea being a business can directly monitor what people are saying are saying about a store or a product.
For dispersed companies, particularly franchise chains and service businesses, it gives local managers and franchisees the ability to know what’s happening with their outlet rather than having to rely on a social media team at head office.
The most immediate benefit of Local Measure is in identifying loyal users and influencers. Managers can see who is tweeting, checking in or updating their status in their store.
Armed with that intelligence, the local store owner, franchisee or manager can engage with the shop’s most enthusiastic customers.
Customer service is one of the big undervalued areas of social media and Jonathan believes Local Measure can help businesses improve how they help customers.
“It makes invisible customers visibile to management,” says Jonathan.
An example Jonathan gives is of a cinema where the concession’s frozen drink machine wasn’t set currently. While the staff were oblivious to the issue, customers were complaining on various social media channels. Once the theatre manager saw the feedback he was able to quickly fix the problem.
Employee behaviour online is also an important concern for modern managers, if employees are posting inappropriate material on social media then the risks to a business are substantial.
“From an operational point perspective we’ve picked up really weird and wonderful things that the business doesn’t know,” says Jonathon. “Staff putting things in the public domain that is really damaging to brands.”
“We’ve had two or three cases of behaviour that you shudder at. I’ve been presenting and it has popped up and the clients have said ‘delete that, we don’t want that up’ and I say ‘that’s the whole point – it’s out there.’”
That’s a lesson that Domino’s Pizza learned in the US when staff posted YouTube videos of each other putting toppings up their noses. Once unruly employees post these things, it’s hard work undoing the brand damage and for smaller businesses or franchise outlets the bad publicity could be fatal.
Local Measure is a good example of a business pivot, it’s also shows how concepts like Big Data, social media and geolocation come together to help businesses.
Being able to listen to customers also shows how marketing and customer service are merging in an age where the punters are no longer happy to be seen and not heard.
It’s the business who grab tools like Local Measure who are going to be the success stories of the next decade, the older businesses who ignore the changes in customer service, marketing and communications are going to be a memory.
Qantas Airlines learns the hard way that social media doesn’t sleep, unlike its marketing department.
One of the truths of social media is it gives idiots an opportunity to expose themselves for what they are.
For businesses using social media idiots posting stupid or offensive content on the company’s site or Facebook page can do a lot of damage to their brand and reputation.
This is the problem Australian airline Qantas faced last week when some fool posted a pornographic image to one of the company’s promotions pages.
As the Sydney Morning Herald reports, the father of an eight year old reported an inappropriate post to the airline after his son found the image while visiting the Qantas Wallabies page. He was allegedly told by the company’s social media staff “there was nothing we can do about it.”
The father points out correctly that both the airline and Facebook are 24 hour operations so claiming a post that is put up at midnight – one assumes Eastern Australian time – is out of hours seems to be disingenuous.
Until recently, businesses had given social media responsibilities over to the intern or the youngest person in the office. While organisations like Qantas have moved on from that, they largely leave these tasks with the marketing department.
While marketing is a valid place for social media responsibility – it’s probably the most obvious area to establish a return on the functions – it leaves organisations vulnerable to out of hours customer service and public relations problems.
Social media doesn’t knock off at 5pm and spend the evening a bar like the marketing department, it’s on all the time and customers are using it to complain about problems while twits and trolls are gleefully posting things to embarrass businesses.
For those businesses who do operate on a 24 hour basis, and probably all big corporations, it’s no longer good enough for the social media team to just operate during office hours.
Smaller businesses have a different problem – most don’t have the resources to keep a 24 hour watch on their Facebook page but the effects of a social media disaster could be proportionally far greater – so they shouldn’t be overlooking regular checks on what people have posted to their business sites.
What’s happening in social media is part of a broader trend in the global economy that’s been going on for thirty years as the pace of business has accelerated. It’s something that all managers, entrepreneurs and company owners need to understand.
Microsoft and Apple discover the downside of being multinationals in China
Among expats in Thailand the saying was “the locals can ignore the law, but multinationals can’t.”
Thailand has some pretty strict laws on employee wages, workplace safety and council permits. Pretty well every business ignores them except the multinationals.
Generally Thais don’t complain about businesses not complying with the rules and the authorities are reluctant to take action.
Unless you’re a multinational, in which case the slightest irregularity in pay risks a visit from the police.
A few days in the Bangkok Immigration Gaol while the misunderstanding is sorted out is a good lesson for any sloppy farang country manager who hasn’t been ticking all the boxes.
What’s fascinating though is how the complaints against Microsoft and Apple are part of the rising Chinese consumer movement.
It’s a tough life being a consumer advocate in China, leading protests against well connected local companies or their government cronies could be a career limiting move, or much worse.
On the other hand it’s safe to criticise an American corporation and its much more likely to get results.
So managers of foreign companies in China have to be far more responsive to complaints than their local counterparts as Apple and Microsoft have learned.
For multinationals there is an upside to this, foreign companies tend to get better staff as they don’t mess people around with pay and their products are seen as being better because they do honor warranties.
It ends up being swings and roundabouts, but it does emphasise the traps for inexperienced expat managers who can unwittingly get themselves in trouble.
Apple and Microsoft have learned their lesson about customer service in China, you wonder how many others are still to do so.
How a cloud computing service wants to radically change customer service and business
“Nobody got girls on the helpdesk” says Mikkel Svane, founder of online customer service company Zendesk.
Mikkel hopes to make customer service sexy again as businesses find they have to focus on keeping clients happy.
This is a reversal of management thinking of the 1980s where, as Mikkel says, “customer service is a cost centre, outsource it, don’t spend any time on it and don’t let customers steal any of your time.”
Now the internet gives customers to tell the world about a company’s service, the days of outsourcing or disregarding support are over.
Mikkel Svane and Michael Hansen of Zendesk
Cloud technologies are changing how software is used in business, as Mikkel found when he and his partners started Zendesk.
It became very obvious that building something that was easy to adopt, web based and integrated with email, websites. Something easy to use that didn’t clutter the customer service experience.
Something that moved from managing the customer service experience to focusing on customer service.
We built it, put it out there and customers starting coming.
A lot of these companies thought they could never implement a customer service platform. Suddenly small companies found they could compete with bigger competitors.
The appeal to investors
Having customers signing up proved to be a big advantage in Silicon Valley, no-one knew anything about a Danish company, but with local customers starting coming on board US Venture Capital firms understood what the company does.
That customer base proved powerful as Zendesk has to date raised $84 million dollars over four rounds of VC funding and is looking at a stock market float with an IPO in the next few years.
“Silicon Valley has a great tradition of building businesses.” Says Mikkel, “coming to Silicon Valley was such a big step for Zendesk, in taking it from being some little startup to being a real company that could scale very quickly.”
A question of scale
Groupon is a good example, when Mikkel and his team first met the Groupon team the group buying service was a team of four guys in Detroit. Groupon founder Andrew Mason personally signed off on the initial Zendesk subscription.
“What the hell is this company, we don’t get it.” Mikkel said at the time.
Three years later Groupon was the fastest growing company in history with thousands of support agents on their systems supporting hundreds of thousands of products.
Despite Groupon’s recent problems, Svane is proud of how Zendesk helped the group buying service with growth that no business had seen before.
“With Zendesk they got not only a beautiful, elegant system they also got the scale and the trajectory. Imagine if they’d tried to do that with an Oracle database? You’d have never been able to grow so quickly.”
On being a good internet citizen
In the past we talked about platforms – the Oracle platform, the Microsoft plaftorm – today the Internet is the platform.
“We are a good citizen on the Internet platform,” says Mikkel. “Shopify is a good citizen of the internet platform, these type of tools are easy to integrate. We are all good citizens of the Internet platform.”
Having these open system is the great power of the cloud services, they way they integrate and work together adds value to customers and doesn’t lock them into one company’s way of doing things.
The threat to incumbents
Vendor lock in has been a curse for businesses buying software. The fortunes of companies like Oracle, Microsoft and IBM have been built holding customers captive as the costs of moving to a competitor were too great.
Cloud services like Zendesk, Shopify and Xero turn this business model around which is one of the attractions to customers and it’s why huge amounts of money are moving from legacy solutions to cloud based services.
Another reason for the drift to cloud services is the reduction in complexity, the incumbent software vendors made money from the training and consulting services required to use their products.
Having simple, intuitive systems makes it easier for companies to adopt and use the new breed of cloud services.
Focusing on the business
Mikkel’s aim is to help businesses focus on their customers and products rather than worry about IT and infrastructure. In the long term it’s about helping organisations establish long term relations with their clients.
“Companies today realise that it doesn’t matter how much it matters how much I can sell to you right now, it pales into in comparison of how much I can sell you over the lifetime of our relationship. This ties into the subscription economy. It’s much more important for companies to nurture the long term lifetime relationship.”
Having a long term relationship with customers is going to be one of the keys for business success in today’s economy.
The days of transaction based businesses making easy profits from skimming a few percent off each sale are over and companies have to work on building long term relationship with customers.
Services like Zendesk, Xero and Salesforce are those helping new, fast growth companies grab these opportunities. For incumbent businesses, it’s not a time to be assuming markets are safe.
