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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Five9 driving customer experience solution success with a thoughtful and collaborative global partner program

Survival of every business depends upon customers, and 2020 saw a ground-breaking year when customer intimacy (acquisition, retention, experience & satisfaction) drove technology adoption and business process evolution within the SMB and midmarket segments. Businesses in general, and SMBs in particular, have many poorly automated or un-automated tasks and processes that they could meaningfully improve by using focused SaaS applications. 59% of small businesses, 86% of core midmarket firms, and 95% have prioritized customer experience solution deployment. Still, IT staff within 38% of small businesses, 47% of core midmarket firms, and 55% of upper midmarket firms face challenges in deploying customer experience solutions.

Five9, a cloud contact center software provider, aims to lessen the IT challenge by “reimagining customer experience” through fully customizable solutions that empower customer agents to address customer needs. Deploying customer intimacy is a little bit like making Baked Alaska: the promise is delicious, but the method is mysterious. The journey from IT systems to a better customer experience isn’t a matter of magical alchemy that wreathes unlikely ingredients with an alluring halo. Instead, it results from a roadmap that starts with digitizing data and processes, moves forward through connected systems that encourage and support fact-based customer-facing activity, and result in an organizational capacity to understand and respond to customer needs. Midmarket businesses understand the appeal of the outcome – and they need guidance from suppliers like Five9 that can define the recipe for customer experience.

Five9 knows that contact center software is only one component of a set of sales, marketing, and customer service solutions. It knows that, with customer experience, it’s the mystery of how to aggregate data and integrate it with customer-facing activities successfully. Recent global SMB and midmarket research from Techaisle shows that within US small businesses, customer-focused SaaS business application adoption increased by 49% in 2020 and will rise by another 33% in 2021. Techaisle data shows that by the end of 2021, 76% of new SaaS adoption within SMBs will be customer-focused. Similarly, within the US midmarket firms, the adoption reached 82% in 2020, with 74% planning to add adjacent customer-focused applications in 2021. Europe research shows similar trends. To deliver on the promise of “reimagining customer experience,” extending the functionality of its solutions, and automating entire customer-facing business processes, Five9’s software must integrate with CRM, online retail, automated quoting, eCommerce, social chatbots, email, forms management, help desk, and queue management.

Integration is a crucial impediment to customer experience. Executives often see examples of organizations using data drawn from integrated internal systems, or from social media, from far-flung sensors, or third-party services, or from a mix of all of these sources – to improve the critical operating parameters of their businesses. However, these answers aren’t simply a result of having technology within an organization. Instead, better customer experience results from linking technology (and the data it collects, shares, and enhances) with front-line functions, which requires understanding how to develop technical competencies and integrate them within the organization.

Five9 has identified several partner types, especially CRM solution providers, UC suppliers, and ISVs, to deliver an integrated customer experience solution. Five9 has built an adapter to enable clients of all sizes to seamlessly integrate its CTI with CRM solutions such as Kustomer, Microsoft Dynamics, NetSuite CRM, Oracle, Salesforce, ServiceNow, and Zendesk.

For the CRM solutions providers, Five9 follows three distinct engagement models, each of which can establish Five9 and its partners as a partner of the customer, invested in their business success. At the same time, if executed correctly, the models enhance the revenue stream of Five9 and its partners.

  • Sell into the customers who are already using CRM solutions from one of the Five9 integration partners
  • CRM solution providers get introduced to the Five9 installed base to help with total CX transformation
  • Joint selling into new customer accounts who are evaluating CRM and contact center solutions

The above is not a simple, straightforward set of changes to embrace. However, the changes are central to transitioning to where the opportunity is growing – and this, more than any adherence to tried and true practices, is the goal to position its businesses for long-term viability. The nature of the partner relationship is a critical determinant of Five9 success. From a strategic sales enablement perspective, Five9 is focused on alignment with its sales team to create a better system by educating its sales team on the benefits of selling together with its CRM partners.

Unified communications is another technology area where most SMBs and midmarket firms have high planned adoption rates. However, the inhibitor is the inability of a hosted solution to adequately meet the needs of an SMB organization which demands many feature sets - call hand-off, integration with CRM solutions, integration of vertical applications, group calling/directory, and regulatory compliance. To enable such features necessitates customization or integration expenses which wipes out the cost savings. Five9 has partnered with Nextiva, Microsoft Teams, fuze, Zoom, TetraVX, and Mitel to integrate contact center and back-office, which augments the telephony and conferencing solutions to enable agents to be more efficient in solving a customer problem. Since many UC suppliers work with resellers as well, Five9 has aligned its partner program to understand how to build complementary routes to market options to capture as much market share together as possible.

ISVs are essential to cloud suppliers serving all types of customers. For example, cloud vendors, such as Five9, looking to build an enterprise-level platform need ISVs to provide critical capabilities to the core offering. In addition, vendors attempting to penetrate target markets work with a specific application vendor to demonstrate the relevance of their services; the ISV, in turn, relies on the platform vendor to provide evidence of a trustworthy application delivery platform. And cloud solution suppliers may position cloud applications as an extension of their core relationship with a customer, even as the ISV involved views them as a resale channel with excellent access to a high-value target buyer community.

Five9 has a formal ISV partner program with co-sell agreements, provides development support and accreditation, and promotes ISV solutions via Five9 CX Marketplace. Five9 already has 70+ ISVs in its program. These ISVs get access to the development environment, documentation, APIs, and SDKs to build integrations. Once the ISVs have built their integrations, they get accredited, and solutions get listed on Five9’s marketplace. To drive success, Five9 has a two-way referral initiative along with a co-sell motion. As a result, the program is growing every quarter, with an increasing number of partners wanting to partner with Five9.

Five9 is anchoring its global partner program on white-glove service, empowering partners, certifications, and development support. This year, Five9 is moving to target the right partners and provide new and improved professional certification options. It is also focusing on specific routes to market around certifications. In Five9’s own words, “…our special sauce is aligning with the Five9 sales team, demonstrating value, building mutual interest and trust, through initiatives such internal newsletter.” Partner Loop, a monthly newsletter, keeps all of Five9’s salespeople in the loop on sales wins, resources, all the great things happening with the partners, and why they should continue to win together with the partners. In addition, to accelerate time to market for its sales teams, Five9 has a partner locator, partner profiles, and CRM and UC integration guides to reduce the complexity of sales conversations. Partner Hello is an onboarding and activation concept that is seeing tremendous success and driving engagement. Five9’s amplify education webinar series provides training to its partners on new services and products. Five9 is addressing essential partner requirements. Techaisle partner survey shows that onboarding training and webinars are the two most crucial training options for partners with certification programs and web training modules representing the next-most important training options

To top it all, Five9 has also launched its Five 9 Global Partner Advisory Board and new Five9 Partner Hello Onboard and Welcome Guide in June.

Modern IT generally delivers systems that improve sales process efficiency and visibility. The drive to develop new customers and retain existing ones directly impacts the desire to emphasize solutions that support business growth, including social media, mobility, and analytics. Additionally, growing business confidence affects all business-relevant solution areas, freeing up resources for new solution exploration, adoption, and optimizing or redesigning business processes. Besides pure SaaS business applications, including cloud solutions, analytics, marketing automation, customer service, CRM, and other adjacent solutions, data shows that SMBs are planning to increase spending in AI, Chatbots, voice assistants, UCaaS, and mobility solutions.

Five9 is positioning itself to be a key player in the customer experience solution segment by successfully embracing an industry-wide trend away from rigid solution definition towards fluid, flexible configurations that integrate multiple components and moving from opportunistic to strategic. In addition, it is accelerating collaboration across partners for predictable, rapid responses to customer demands, becoming proactive in building effective relationships with trusted allies.

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Causation or correlation - The link between approaches to digital transformation and business success

Techaisle’s 2021 US SMB and Midmarket Digital transformation adoption trends research covering businesses from 1 to 4999 employees (collectively named mainstream businesses by Techaisle) shows a correlation between digital transformation and business growth. Unlike many IT market terms, which tie to specific technologies, digital transformation is most often used to indicate an amorphous state. A state in which firms can seamlessly deploy new digital capabilities that streamline current or next-step processes, eliminating the friction inherent in basing these capabilities on manual tasks and physical documents/inputs. SMBs and midmarket firms view digital transformation as a proxy for business process efficiency. For many years, it has been a management goal, embedded, usually without a consistent set of steps and defined outcomes, in the IT plans of a substantial majority of small businesses (1-99 employees) and more than 90% of midmarket (100-4999 employees) firms. The pandemic brought urgency to these plans. The speed reflected the management’s understanding that highly automated processes are essential in a business environment where physical interactions are awkward or forbidden, adding necessity to efficiency as compelling reasons to invest in digital transformation.

Digital transformation segments

To refine the current and planned digital transformation adoption status perspective, Techaisle segmented the market to one of four phrases to characterize organizations’ attitude or approach towards digitalization of existing processes –

  • Holistic: Digitalization is an essential aspect of overall business strategy
  • Inclusive: Digitalization is a meaningful but non-essential aspect of overall business strategy
  • Siloed: Digitalization strategies are underway in some departments, but there is no overall digitalization strategy for the business
  • In the shadows: Digitalization may be occurring in areas of the company, but it is neither a departmental nor overall business strategy
  • Nonexistent: Business has no digitalization activity or plan; firms have yet to begin digital transformation adoption.

Small business adoption of digital transformation is still at a primary stage. In 27% of small businesses (1-99), digital transformation is either “nonexistent, “in the shadows,” or “siloed.” However, this is vastly lower from 51% in 2020, indicating that small businesses drastically improved their approach to transformation within the last year. Midmarket firms, which have higher overall digital transformation adoption rates, are also much more advanced in their approaches. 90% of midmarket firms take either an “inclusive” or “holistic” approach to digital transformation today. Data shows that there has been an increase of 34% within midmarket firms (100-999) and a corresponding increase of 26% within upper midmarket firms (1000-4999) in their approach to holistic digital transformation from siloed or inclusive approaches.

Digital transformation and business growth

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SMB and Midmarket Hybrid work is here to stay – not so fast, says the data

The industry is abuzz with hybrid work discussions, home office, safe return to the office, shared space, meeting room, and hot desk. Although most agree that hybrid work is here to stay, many cannot ascertain the trend's longevity because forecasts tend to be very wrong in volatile times: the companies that issue them revise them frequently. Forecasts extrapolate from current conditions – an approach that works well when current conditions vary from previous periods only incrementally, which doesn't work when the present is changing in ways that don't follow clear, recent patterns. To understand the hybrid work trend, Techaisle surveyed 2096 US SMBs and midmarket firms with employee sizes from 1 to 5000. The results are fascinating.

58% of employees within the US SMB and midmarket firms expect to work from home at least till the end of 2021, in sharp contrast to pre-pandemic in 2019 when 29% of small business (1-99) employees, 9% of employees within midmarket firms (100-999), and 7% within upper-midmarket firms (1000-4999), who worked from home. However, the work from home trend may not play out in the longer term. Encouraged by the increasing rate of vaccinations and economic recovery, 61% to 67% of firms plan to bring back all employees to the office by early 2022. Only 22% are planning for a phased or staggered approach to re-opening offices as soon as it is safe to do so. Higher employee size businesses are likely to be more aggressive in their re-opening plans than the smaller businesses. 11% of firms will most likely permanently adopt an approach allowing some of their employees to work from home indefinitely.

Overall, 97% of mainstream businesses (1 to 5000 employees) feel unprepared to having a long-term remote and hybrid workforce work environment. Between 17% and 44% of small businesses to upper midmarket firms' IT staff is challenged in identifying and deploying hybrid workplace solutions.

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We do not sell, customers purchase - Raju Vegesna reflects on 25 years of Zoho

Zoho was founded in 1996, twenty-five years ago, with a mission to deliver easy-to-use and deploy CRM solutions to the SOHO market segment (Small Office, Home Office). Even the Zoho name was a spin from SOHO. In the last 25 years, Zoho has transformed from a fledgling startup to an enterprise serving small, midsized, large, and public sector organizations. In contrast, Salesforce was founded 22 years ago. It is a similar timeframe as Zoho, but each is at different levels – revenue, awareness, customers, and employees. How does Zoho keep itself grounded with such a lopsided competition? Today's business world admires Unicorns, applauds valuations, overlooks SaaS suppliers' profitability. Not that there is anything detrimental about chasing unicorn status with little to show profitability, Zoho founders have been tracking employee empowerment and customer success. In the last 25 years, Zoho has become well-known for its easily deployable, easy to use, full-featured applications. Recently Zoho is being recognized for its top-down driven, empathetic culture.

What is more critical to Zoho, delivering customer success or empowering organizational culture? Each organization goes through several essential points of decision in its journey. What were some of those decision points? Would a different decision have changed the trajectory of Zoho and on a collision course with Salesforce? Did Zoho ever reach a crossroad, break-it, or make-it stage? Many questions had been swirling in my mind, which I decided to address to Raju Vegesna, Chief Strategy Officer, Zoho.

True to the initial mission of empowering employees, Raju has no regrets. Instead, he describes Zoho's achievements as fulfilling. He has great admiration for Salesforce but quips that Zoho does not sell, customers purchase, and he is thrilled to be on the path Zoho has chosen.

Read on, excerpts from my very detailed interview with Raju Vegesna.

Fulfillment is the name for Zoho's 25-year journey

Can you describe Zoho's 25-year journey in one word? What is that word?
It's tough to describe our journey in one word. There is an internal perspective which is fulfillment. If we do not have that, we cannot have confidence in what we are doing and satisfaction with what we are doing. The feeling of fulfillment started early on and has continued. Even on Zoho's website's homepage, we showcase it as a life's work which is only possible if we inner fulfillment.

Customer success vs. organizational culture

What is more critical to Zoho, delivering customer success or empowering organizational culture?
We cannot separate customer success and organizational culture. They are two sides of the same coin. If we do not have organizational empathy and that culture right, then it will show up on the customer side. And if we do not have one side right then, the other side is not going to work. We often say, when you have a customer problem, it means you also have an employee problem. These are interlinked - one is external facing, and the other is internal facing. And if you have that inner empathy to humility, it will show up as a positive impact when servicing a customer. And this is ingrained and built into the organization. It is a simple mandate. If it is an employee's responsibility to keep the customer happy, the employee should have the freedom to think and act, and so it has to be built into the organization's DNA.

Chasing Unicorns

How do you keep yourself grounded?
We do not pay too much attention to valuations. We do not think about it. We have been through multiple bubbles, up and down cycles, so they do not bother as much. Then we also realize that the market, to some extent, is biased towards public companies. How often do you hear about private companies? For example, Tableau versus SAS, which is a private company. Or Walmart versus Aldi. There is an inherent bias in the market. Bias puts private companies at a disadvantage because they don't have the mindshare. Why didn't someone hear about Zoho earlier, partly because private companies do not get enough exposure? They are not talked about it because there's no inherent gain for other people. But then there are also a few things that are on our side that public companies don't. So, what, how do we play the advantages. For example, we don't have a timeline and a time horizon to operate. Now we can plan out a decade in advance. Some projects have been in the last 6-9 years in Zoho that haven't seen the light of the day. And when you have a public company running on a quarter-by-quarter basis, they don't have the advantage to plan it out. We try to focus on the process and what is in our control and do it the right way.

Critical decision points

What were critical decision points? Do you think those decisions changed the trajectory of Zoho? What would have happened if you did not make those decisions?
I'd say some early lessons helped a lot. Initially, our primary customers were optical companies. When the telecom bubble burst. We had about 305 customers, of which 300 or 301 of them died. Over a year or two, imagine that when 99% of your customers vanish, you might as well. We had zero debt, and we had some savings. And we had very hungry engineers. We took all the savings and invested in the engineers, and pivoted. Even from the beginning, we always believed in zero debt, which is a crucial reason for survival. Another lesson we learned was that diversification becomes vital for the product. Now we are fully diversified - product portfolio, regions, countries. We don't have a customer that is contributing to more than 1% of our revenue. The exciting thing is that not all the products we created back then exist today, but most of the employees who made the products still exist and are just creating new products. One hundred people have been with the company for at least 20 years, and they are just creating new things.

Deciding product roadmap

How did you decide to develop which apps and in which order?
It's one of the extremely simplest ways to decide. What are the apps that we do not use to run our business? What are the apps that we need to run our own business? And, and if there is a missing piece, we build it. So we believe that if we run our entire business on our own products and benefit from it, other companies will have the same benefits. We have 50 apps now, but I look at the road ahead and say we still have a long way to go. More importantly, can we make the boundaries between these applications disappear and appear as a single application? Why should users pick and choose the apps they want? Why can't everything contextually tie together? Why are there walls? A business may not have segregation between a front office or a back office. Why should there be a separation in software, support, sales system, marketing system, and several vendors that serve the needs? As simple as that. And that segregation has to, and separation has to go away. And that is one of the walls. So, it's a journey, but our tools and the missing pieces define our roadmap.

Surviving and thriving

Did you ever reach a crossroad, break-it, or make-it stage?
Survival instinct comes immediately after the break or make moment. I vividly remember when we pivoted, we created a product to address the IP market. And we demonstrated the product at a Vegas show. We were so tense because our future was dependent on that product. As we kept on demoing the product, more and more people started liking it. And that is when we said; now we have a future. Survival was a priority. And then, later, we started focusing on expansion and thriving.

Mentors and learnings

Who do you turn to for learning and mentoring?
We have a tightly-knit team. The management team has been sitting next to each other for a couple of decades. We go through the journey together. We also learn a lot from external companies. We study companies. How did all the private companies become one of the top leaders, for example, Aldi? Or the makers of M&Ms, which have been around for 100 years. Or how has Marvin Window been successful for the last 115 years? Or take a company like Bata. If you grew up in India, it is ingrained in you but is not an Indian company. It is a company out of the Czech Republic.

Salesforce admiration – purchasing vs. selling, small and enterprise customers

Salesforce started with a focus on small businesses but pivoted to enterprise customers. Now it is re-engaging with SMBs. Did you ever want to become a Salesforce?
There is one area that I admire in Salesforce. It educated the market about SaS. I have respect for the Salesforce platform on the technology front because they lead the way. But on the sales and distribution model, we decided to take a different approach. We are primarily an engineering-centric company, so and won't be a sales and marketing-centric company—money matters. We instead re-invest the money in our engineers than on sales and marketing. We like the bottom-up approach, where we started selling to small businesses. We named Zoho itself after Soho, small office, home office market. Slowly, we started serving larger companies. It is the customers pulling us into their organizations and not Zoho selling to those organizations. It's a subtle but essential difference. In other words, in a lot of cases, our products are chased, not sold. And that changes the dynamics. We see lately an increase in mid to large size customers adopting Zoho. If you look at our sister division ManageEngine the target market is mid-sized to large enterprises, and 60% of fortune 500 companies are our customers.

Respect for competition

Do we ever want to become a Salesforce or SAP? We are not sales-focused. We have a good number of salespeople, but it is a tiny percentage of the total workforce. We will continue to be an R&D company. We understand that there is competition, and we respect them. But then we respect our customers a lot more. We will build products, focus on R&D, and have these local, transnational teams, which will be on the ground, looking at customers developing solutions to meet their needs. Our business model is relatively simple, mainly because we are a private company. We only worry about two sets of people – customers and employees - because the third set, investors, are no longer at play.

Next 25 year changes – transnational localism

What will you change in your evolution for the next 25 years?
There are a few things that won't change - culture, values, people, and the investment in R&D. What will change is what we call transnational localism, which means we will have local teams available in multiple countries, geographically. We are strengthening our local presence in every country we are present in to serve the local customers. And that's an important strategy. We are present in about 20 countries, and we will see our team expanding in each of these countries, and that team will be solving the local customer's problems.

 raju vegesna headshot

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