In this June, it was reported that Software-as-a-Service (SaaS) provider, Zendesk would lay off eight percent of its workforce amounting to 320 employees The decision was based challenging macroeconomic environment and the company’s recognition of heightened competition in the market. Zendesk reported a 30% increase in revenue of $416.9 million for the quarter ended September 30, 2022, over the prior year period. GAAP net loss for the quarter was $59.1 million. The company further announced that due to Zendesk’s pending acquisition by an investor group led by leading investment firms Hellman & Friedman Advisors LLC and Permira Advisers LLC that was announced on June 24, the Company is suspending its financial guidance for the year ending December 31, 2022 in light of the pending transaction.
In a conversation with BrandWagon Online, Norman Gennaro, president of Sales, Zendesk talked about the reason behind the layoff, innovations in the customer experience space and more. (Edited Excerpts)
How has Zendesk brought in innovations in the customer service space given that so much of innovations and parallelly different technologies are coming up. How has Zendesk upped its game?
For over 15 years, Zendesk has been at the forefront of the industry, continuously driving innovation in customer service and technology. Recently, the company introduced a new product focused on AI, Conversational Commerce, leveraging their internal large language models and integrating ChatGPT to enhance the customer experience. This advancement empowers agents by increasing their efficiency and enabling them to handle more complex inquiries while also transitioning into Conversational Commerce to offer insightful advice to customers. Moreover, Zendesk is expanding the capabilities of its customer experience platform, as evidenced by their acquisition of Tymeshift, which optimises agent scheduling and system utilisation. These developments not only improve customer experiences but also enhance agent satisfaction and productivity within the system.
How does Zendesk’s data infrastructure help in giving more personalised experience to customers?
Having accumulated trillions of data points from years of customer interactions, Zendesk harnesses this information responsibly to generate valuable insights. The company offers a CX Trends report, utilising anonymised data to comprehend customer responses and behaviours. Moreover, Zendesk uses this data effectively within its extensive language models, fine-tuning them to align with customer intents and actions. This approach allows Zendesk to deploy customised, customer-specific models rather than relying solely on generic ChatGPT methods. Leveraging data enables Zendesk to optimise actions, provide agent benchmarking analytics, and discover effective solutions, ultimately enhancing the customer experience. Data plays a pivotal role in Zendesk’s ability to deliver exceptional results in a user-friendly manner.
How has Zendesk proliferated in the SMB market? How is it placed in the enterprise space?
We are a dominant player. We are the primary provider of customer experience in the SMB space and that’s where our business actually started. Zendesk is utilised by more than 100,000 customers, including startups, SMBs, and smaller businesses. It’s so easy to get up and running. They don’t need an administrator, they can self-administer the platform, and they can be up and running on it very quickly. The commercial mid-market space is a huge opportunity for us.
In the enterprise space, we work in two areas. One is pure customer support and another is employee experiences. So if you think of any internal team that may need a help desk, you’ll often see us doing that inside of Zendesk. We work with companies including Minor Hotel Groups, Accent Group, Afterpay Corporate Services Pty Ltd, Tesco, Ryanair, Discord, Gol Linhas Aereas, Virgin Pulse, Honeywell International. For airline companies, think of us in terms of cargo, airline pilots, stewardesses, their own customer experiences direct to the consumers, they would use us, but across that entire enterprise, they have multiple implementations of Zendesk to deal with that employee experience piece that I was talking about.
How is Zendesk placed in the India market? What kind of companies do you see focusing more towards customer experience?
We are very strong in the startup space. We’ve been there for a while in the SMB space as well. If you think of the commercial mid-market businesses in India, you’ll see a number of them using us. But one of the opportunities in India is large call centers that India has and in the enterprise space, this is where you see us pushing. So we will continue to drive across all three segments.
Across India, every sector is very relevant for us. And we’ve been present in all the segments of the market whether it’s fintech, entertainment, hospitality, travel, transportation besides segments such as e SMB, commercial, mid-market and enterprise. We have built use cases whether it is an internal use case to support finance teams, or a legal help desk or a vendor help desk or a supply chain or it is external, which is your customer help-desk kind of thing. Irrespective of the use case, we’ve got customers across industries and across segments. In India, we work with companies including Unacademy, Dream11, Nalli Silk, greytHR, 63 Moons and others.
When one compares the pricing, Zendesk is fairly on the costlier side. Is there a plan to drop prices to make the business more competitive?
There are a couple of different aspects to that. One is, the product set that we offer, we do believe is best in class. There is a value which companies and customers obviously understand around that. So, paying the lowest possible price doesn’t always get you the best solution. But we also realised, especially in the customer experience business in India, there are different challenges that the market has. We have realised that just a global price list and a global consideration doesn’t necessarily work in the regional markets. We’re making changes to the pricing part in India and we want to make sure that our price is reflective of the situation on the ground here.
The recent layoffs that happened in the company were a result of going very aggressive and competitive in terms of going more profitable?
In November, we transitioned to private ownership, implementing a value-creation plan to re-evaluate and optimise our business strategies. Amid the market downturn, like many companies, we adapted and rethought our approach. As part of this, we recognised the significance of India and increased our investment and workforce there to benefit both the local and global markets, particularly in AI and customer experience technologies. Acquisitions such as Tymeshift reflect our focused commitment to customer service. While we did undergo a reduction, we transparently aimed to streamline and ensure a profitable and results-driven company. Balancing growth and cost has become essential in a market that values both equally now. Our efforts are geared towards being a customer-centric, sustainable, and successful organisation.
Has your marketing budget also dropped?
No, the marketing budget hasn’t dropped. I would say we’ve refined the marketing budget. In terms of what we’re spending money on and really making sure that that money that we spend on the marketing translates into actual value for the company. And in some cases, I would say we’re spending substantially more than we were spending in the past. But it’s differentiated between the activities and how we think that it actually turns into an ROI.
What’s your plans going forward?
Indeed, there are a couple of notable changes we’ve made. Our rebranding efforts include refreshing our colors and market approach. AI has become a focal point for us, representing what we consider the crucial third wave of computing. However, we understand that AI alone is not the ultimate solution. We recognise the challenges related to data privacy and accuracy. To address these concerns, we devote significant effort to thoroughly audit and curate the AI-driven experiences and recommendations provided to agents and customers. Ensuring the correctness and reliability of AI outcomes is of paramount importance to us.