By now, it is well known, what it means to be a platform player, and this is also not the main topic of this post. Just as much: In order to be a significant CX player, one quite simply needs to be a platform player.
Also, regardless of whether one has a platform or not, if everyone is a CX and a platform player, then obviously this is nothing that differentiates one vendor from the other anymore. Customers meanwhile nearly expect a set of solutions by one vendor being built upon one platform – or at least to appear like they are built on one platform. This basically means that “platform” as a thing to emphasize on has reached its zenith.
And then, there is an additional problem associated with the platform game.
A platform market is a kind of a winner takes it all market. Following the analysis and argumentation of Ray Wang in his new book Everybody Wants to Rule the World, in a platform market there will be only two major players. All other players are becoming insignificant or will vanish. While this sounds somewhat dystopian the point that I want to make is that there will not be a great many successful and strong players in a platform market. To use a metaphor, at one point in time a few vendors will have created enough gravity to become the entity that customers are attracted to.
It is also visible that the first vendors have understood this and are acting strongly to create this required gravity.
Salesforce seems to be one of the first ones. Regardless of whether one calls Salesforce a platform company by design, it is doing everything to grow. Analysing the company’s last quarterly figures, one can come to the conclusion that it continues to buy growth at the expense of profitability. It essentially copies and transfers Amazon’s successful model to the (wider) CRM market.
SAP is working from its strong ERP and supply chain footprint in a bid to get more ‘share of wallet’ of the enterprise applications, both in the direction of the supply chain as well as into the direction of customer facing applications. SAP practically ‘owns’ business transactions with around 80 percent of all business transactions crossing SAP systems.
Oracle uses its strong technology stack, coming from the home base of the most powerful database, augmented by an integrated hard- and software stack.
Microsoft, finally, comes from a strong productivity, gaming and operating system footing, combined with a wealth of data.
And these are the Titans of the CX applications world, commanding a market share of something between 35 and 45 percent of this market. These four, plus Adobe, already had a market share of more than 36 percent in H2, 2019 according to the IDC worldwide semiannual software tracker of April 2020. The rest of the market is quite fragmented.
Even though this number is quite old, we see that the marketplace is slowly moving towards the consolidation direction that Ray also sees.
All these players also have their share of buzz and their marketing messages.
All of them have a strong ecosystem that surrounds them.
Which makes it difficult for other companies who are in the market, too, and want to differentiate themselves from the others. Of course, they have everything that is needed for a successful ecosystem play, too. Including the very important ecosystem. There are only so many levers that are left to them:
- Connecting one’s brand to strong principles and ethics that are well beyond what the marketplace usually offers.
- Tying one’s brand to strong positive emotions
- Focus on the PaaS parts of the stack supporting easy extensibility and automation
- Providing deep industry experience in a number of relevant industries to become the de facto standard
- A price point that is lower than the competition’s, while still offering attractive functionality
There may be more, but let’s concentrate on these.
These levers are used by the many players, including the tier one vendors. For example, all tier one vendors offer industry solutions. They are also more or less successfully connecting themselves to principles like sustainability or giving back. Often, this runs under the flag of ‘purpose’, one of the industry’s most misused terms.
On the other hand, Zoho does credibly showcase an ethics story, with its strong focus on privacy, rural enablement, humbleness, and employees. It is not a marketing-story, but one that is lived in the company (e.g., check cookies). This story extends into something that is very tangible for customers: Pricing. Zoho showcases that it is possible to benefit from pursuing principles; this strategy reduces Zoho’s own cost, which makes it possible to offer solutions at a low price point while staying profitable. One could call this ‘social capitalism’. It is a very good message that appeals to empathy and rational thinking at the same time – and because it is credible because the company itself also lives it.
Freshworks ties positive emotions to its brand, starting from the company’s name. Fresh is not boring. The recent customer and analyst event took up the name and was called Refresh. The message that was sent out loud and clear during this event was “delight made easy”. This story was also how the event, with all the challenges that a hybrid event has to offer, was run. The website expresses the same. So do most people I had the pleasure to interact with.
This is a strong message, because this is reflecting on something that the whole CRM/CX industry suffers from since its inception: No fun, no ease, no help is offered by the software. And it ties into strong positive emotions. The challenge is to keep up with this message over time because it raises expectations and missed expectations are a great distractor.
SugarCRM is going the route of automation and ease, with the slogan “let the platform do the work”. In contrast to Freshworks, SugarCRM is focusing more on the so-called left brained people and the rational side, talking in outcomes rather than emotions. The outcomes are more accuracy, less effort and faster time to use. These are again arguments that appeal to the ratio, not to emotion – even though the slogan is quite catchy and certainly hits a nerve. It is also a statement that raises expectations that need to be met.
Similar, ServiceNow. ServiceNow focuses on workflow, automation and offers some industry solutions. The company says “Let the work flow from anywhere”, which is closer to an outcome. The most interesting part is that ServiceNow also positions itself as the platform of platforms, i.e., a meta platform. This is a step up in the game. It recognizes that it is probably unlikely to succeed in a head-on clash with the titans but better to focus on connecting different infrastructures, i.e., different platforms. This is a smart move, also considering that many companies do not have a single platform strategy in place often run best-of-breed strategies.
What does this mean?
As said above, with every vendor emphasizing on “platform” and “CX” it is obvious that these terms have reached their zenith. While CX is an outcome – an end customer (or a user if we include employee experience) creates experiences as part of engagements – a platform is more about technology than outcomes. Furthermore, a platform is a means to an end and not an end in itself. This is very similar to “artificial intelligence” or “machine learning”. This means that it is more urgent to think about the term “platform”.
In the short term, for a company it is important to position one’s platform with a suitable story to be visible, recognized and sufficiently differentiated as a player.
Still, while important, some of these ways to differentiate oneself might not lead to a lasting differentiation.
Having said that, tying one’s brand to high ethics and strong positive emotions is a very good thing, given that the company lives up to the promise. The positive emotions might even work better than the high ethical standards. This is because ethics appeal more to the rational being while emotions run deeper. We can see this all the time in (b2b) sales processes.
If you have it, maintain it and tie it strongly to benefits of applications and solutions, to outcomes. If you don’t have it: Build it, but credibly.
On the longer run, there needs to be more.
More focus on outcomes and users.
For users, outcomes revolve around three levers:
- Solutions are available wherever they are, physically and digitally
- Solutions show them what is important, and give them good advice
- Solutions work the way they do. This includes the user interface that needs to cater for text and voice
That way, the platform, that is more interesting for the IT department than the users, gets more into the background in favor of outcomes.
Awesome insights!!! 👍
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