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How Zendesk plans to crack the enterprise market

Zendesk has been courting enterprises by billing itself as a customer experience software company and is leaning on its design smarts to stand out among bigger rivals

With an early start in cloud-based customer service software, Zendesk has built a strong following among startups and mostly smaller companies that use its software to manage their customer service operations since it was founded in Copenhagen in 2007.

Its 145,000 customers – of which 90% are small businesses – have helped Zendesk to achieve an $800m run rate so far. The company is expected to hit the $1bn run rate by 2020, according to its chief operating officer Tom Keiser.

In the past three years, Zendesk has been courting larger enterprises by billing itself as a customer experience software company that provides a full suite of cloud-based customer relationship management (CRM), sales force automation and reporting capabilities, pitting itself against the likes of SAP, Oracle and cloud-based CRM pioneer Salesforce.

To bolster its enterprise pedigree, Zendesk has acquired a slew of products to bolster its portfolio, including the Base sales force automation tool, which has been rebranded as Zendesk Sell, as well as Smooch, an omnichannel messaging platform that lets businesses interact with customers over messaging apps such as WhatsApp and WeChat.

“We’ve been building up more enterprise-type sales momentum as our products have evolved,” Keiser told Computer Weekly on the sidelines of Zendesk Showcase in Singapore. “We’re selling more into the mid-market and enterprises, as where our revenue comes from versus our customer base are on opposite ends.”

Gaining a foothold in large enterprises, however, will require the help of partners that implement, customise and support the software for an organisation’s unique needs and business processes.

If you look at Salesforce, more than 50% of their sales comes through partners. For Zendesk it’s less than 10%, but we have a goal over the next three years to make it a significant part of our business
Tom Keiser, Zendesk

Keiser said although Zendesk has not had a big focus on growing its partner-driven business, that changed in the past 24 months after it hired a leader to build a partnership organisation.

“If you look at Salesforce, more than 50% of their sales comes through partners. For Zendesk it’s less than 10%, but we have a goal over the next three years to make it a significant part of our business,” Keiser said.

To keep up with a business that has been growing at around 35% a year, Zendesk decided to migrate its cloud infrastructure to Amazon Web Services (AWS).

The move, completed around a year ago, not only alleviates the need for the company to manage its own datacentres, but enables it to take advantage of native AWS capabilities such as the Amazon Elastic Block Store service.

Asked if Zendesk could support enterprises that would like more flexibility in deployment options, such as hybrid cloud and a choice of where their data is hosted, Keiser said companies can use public cloud connectors to integrate with where they want to move their data to.

But Zendesk data held in native Zendesk applications will remain in AWS, Keiser said.

“If you went back three or four years ago, no retailer would allow AWS or Amazon to touch their data, but the reality is AWS is years ahead of all the other public cloud providers, and for the most part, we just don’t hear that anymore.

“Mostly every company has embraced the fact that AWS is part of how they’re going to need to get things done if they’re going to use the best software that’s out there.”

On how Zendesk has been setting itself apart from rivals, Keiser cited the company’s “modern, design aesthetic approach” to customer experience as a key differentiator.

“As we’ve expanded, we’ve kept that perspective on how you should feel when you’re using a Zendesk product as a customer, and as a customer service representative. We also differentiate ourselves on speed and agility,” he said.

In Asia-Pacific, Zendesk claims to have more than 20,000 customers, including in key markets such as Australia, New Zealand, Japan and India. Keiser said the company wants to see higher growth from the region, where it has been scaling up operations in areas such as sales and customer success, as well as consulting.

“We certainly monitor what’s changing in the region’s economies, but in general rising customer expectations is pushing businesses to invest more in customer experience software, and that creates more opportunities for us,” he said.

Read more about customer experience in APAC

Read more on Customer relationship management (CRM)

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