Qualtrics’ $1.125B Acquisition Of Clarabridge Upends The Customer Feedback Management Market
Yesterday evening, Qualtrics announced that it’s acquiring Clarabridge in an all-stock deal worth $1.125 billion. This is a great move for Qualtrics. In one swoop, it has secured the best-in-class analytics capabilities that will define the future of voice-of-the-customer programs as firms decrease their reliance on surveys and focus instead on understanding customers based on analysis of unstructured data.
We’ve been expecting someone to acquire Clarabridge for at least two years. Based on its exceptional integration and analytics capabilities, Clarabridge was a Leader in both this year’s The Forrester Wave™: Customer Feedback Management Platforms, Q2 2021 and last year’s The Forrester Wave™: Customer Feedback Management Platforms, Q1 2020. Those capabilities made it a highly attractive acquisition target for any vendor seeking to leapfrog the competition and achieve sustainable differentiation.
This move positions Qualtrics to catapult itself to the front of the customer feedback management (CFM) pack. Clarabridge’s text analytics/natural language processing (NLP) capabilities are so advanced that Forrester included the platform in The Forrester Wave™: AI-Based Text Analytics Platforms (People Focused), Q2 2020, an evaluation usually reserved for text analytics pure-plays. Although Clarabridge always chose to go after customer experience (CX), employee experience, and social media analytics use cases, as well as multichannel aggregation, it checks off all of the boxes required for an enterprise-grade text analytics/NLP platform: multichannel data aggregation and management; multilingual capabilities; knowledge (domain ontologies and linguistic rules) and machine-learning-based text analytics; and advanced natural language understanding functionality beyond simple topic and sentiment extraction such as emotion, effort, and intent.
Clarabridge brings holistically integrated speech analytics capabilities to Qualtrics’ otherwise undifferentiated speech and speech-to-text offering, analyzing “acoustics” of, say, call center conversations recording for signals that are lost once speech is transcribed to text. Typical advanced speech analytics capabilities include identifying speakers, a speaker’s volume and speed, long pauses (which may indicate an inefficient call center agent looking up information), and interruptions and other emotions that can be derived from the tonality of voice. And the last icing on the cake is Clarabridge’s powerful data visualization/dashboards/analytics capabilities that rival leading business intelligence platforms.
The deal is not without potential “gotchas” that are always concerns for tech acquisitions:
- Technology integration. This is unlikely to be a challenge for Qualtrics and Clarabridge, as the latter excels at integrating with CFM platforms and half of Clarabridge’s large customers are already Qualtrics customers. Qualtrics is already describing a new future product set that extends Clarabridge’s capabilities across all of its Experience Management solutions, whether for consumer or employee feedback management, so it should be assumed that the integrations are planned for everywhere and anywhere that Qualtrics already plays.
- Culture. Both firms have a strong grounding in a belief that customer feedback management is critical for CX and business success, but the ways in which they approach it are different — which can shape both the internal philosophy about feedback management and the culture that enables the technology design and development. Additionally, after years of developing a platform that can (and does) integrate with any of the other major CFM solutions, Clarabridge will need to pivot hard to focus all of its attention on Qualtrics.
What it means for:
- Qualtrics customers. This is good news. You will have the potential to add advanced analytics to your voice-of-the-customer program, which can take you into a future where the limited capabilities of surveys continue to lose what power they still have due to survey fatigue, even as rich unstructured data proliferates.
- Clarabridge customers. Expect to have Qualtrics sales teams knocking down your door. Keep in mind that there is no immediate need to replace the other customer feedback vendors in your portfolio with Qualtrics, so take your time thinking about which vendors you want in your best-of-breed tech portfolio. Pricing in this space can be wildly inconsistent, so always negotiate hard no matter what path you take.
- CFM platform vendors. If you have a differentiated offering, now is the time to double down. That could be channel expertise (such as with SMG and physical locations) or social listening (like Reputation) or cost-effectiveness (such as Khoros/Topbox). If you are one of the other big CFM platforms, now would be a good time to build (or, more likely, acquire) your own superior analytics capabilities.
- SAP. The German software giant that famously bought Qualtrics and then spun it out still retains majority ownership in the firm. This is an opportunity to add the Qualtrics/Clarabridge capabilities to SAP’s late-to-the-game customer data platform offering to differentiate it from competitors (that largely focus on structured data and marketing use cases).