SAP & Qualtrics: What it means for our market

My OCD has gone into overdrive since SAP announced it would acquire survey vendor Qualtrics for $8B just days before Qualtrics was due to file their IPO. I just can’t get enough of the news.

Admittedly, I have some personal interest in this as it all hits close to home for me. First, I am the CMO of a company that also offers survey software, although it’s just one part of our integrated research and customer engagement solutions. Secondly, my former boss and most of my former colleagues came from SAP leadership so, in the game of Six Degrees, I’m about half a degree removed from Bill McDermott himself. But last and most importantly, I am a marketer—a marketer that has spent the past 5 years focused on transforming marketing to a personalized, content-driven, digital-first engine built on a MarTech stack designed to be data-driven.

So, the fact that SAP, who is best known for finance, logistics, and human resources back-office systems is taking this step into Marketing, Customer Experience and MarTech with a survey vendor is fascinating. Let’s unpack that.

The Importance of Customer Experience

In an interview following the announcement, SAP CEO Bill McDermott was asked a very expected question, why didn’t SAP just acquire Survey Monkey and his answer was that they were more interested in “inventing customer experiences.” Make no mistake, Qualtrics, like Survey Monkey, is a survey software vendor but what they’ve done is template and brand their products into “Experience” software packages—Customer, Employee, Brand, and Product. What this means in the simplest terms is that Qualtrics created survey templates that allow companies to fill in the blanks, plug in their own information and run the research–a cookie-cutter plug and play solution.

From a customer experience standpoint, the most valuable data a marketer can gather on what your customers think of you or your products comes from the customer themselves obviously. Go and google customer experience and results run the gamut. It’s a huge market as all companies are focused on trying to create an outstanding customer experience. Truth is, though, that only a few–not coincidentally those recently valued over a trillion USD–have truly mastered it. The rest are still looking to get there which is why there are so many vendors that claim to sell customer experience solutions.

I’ve written a lot about customer experience over the years, what it means and how marketers are responsible for it. It all comes to one thing: data. So while we’ve been busy building marketing stacks and trying to harness big data, many of us, (myself included) lost sight of the data you could get from your customers simply from asking them. SAP seems to know that and was willing to put up $8B to bring Qualtrics capabilities into their customer base above all other MarTech.

The MarTech Stack

Speaking of MarTech, according to Gartner, CMOs will spend more on technology next year than headcount. In fact, they say marketing spend on headcount, agencies, and advertising will all decrease in 2019 but spend on MarTech will climb 7% next year. Think about that for a second, more on technology than people or programs, and it’s all aimed at real-time personalized customer experiences ala Amazon.

Here’s the problem with that spend, no matter how much money we spend on automation, big data and analytics, if you still don’t understand your customer, you may as well burn the money.

Digital transformation is forcing the enterprise to transform into a digital-first, rapidly evolving data-driven business. This has been based on big data (which McDermott called “O data”). But customer loyalty is increasingly difficult to maintain. That’s where small data (McDermott called this “X data”) comes in. Small data is the human insights necessary to understand what your customer thinks and feels. This is where SAP gets it and why this acquisition is so interesting. But it’s not just using surveys that capture meaningful insights that lead to human-driven decisions, there needs to be a qualitative side to that data to move beyond the voice of the customer to understand why they think, feel, act the way they do.

The Value of Knowing Your Customer

This digital world has given brands a myriad of data points, but those methods do not measure the metrics that matter: customer truth. The most powerful element that can be used by any business is authentically understanding, engaging and connecting with their customer. Not just the voice of the customer through a set of data points—whether they’re Xs or Os–but their mind, their true perspective. Why they do what they do. How they think, feel, act—the customer truth.

The brand that truly understands their customer truth, will be able to connect their story with their customer’s story. Think Nike here. Those who don’t understand what their customers’ think and feel will not be able to become part of their customer’s story. And I do want to point out, it’ll take more than adding survey data to the mix. It’s achieved only by looking through multiple lenses—quantitative and qualitative–to give you a holistic view of your audience and the motives behind their behaviors.

Of course, I could be completely wrong, and the SAP play here is to sell Qualtrics into their HR and ERP customers to gather employee sentiment, add quantitative data to supply chains, networks, employees and core processes which makes sense too. But in my opinion, it’s the marketing stack that’s really compelling. When companies use the right methodologies and data to look beyond the voice of the customer to truly understand their customer truth, that’s when they’ll be able to drive the best customer experience. And here’s where I couldn’t agree with McDermott more, it’s customer experience that drives businesses forward.

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