Xerocon — Xero’s annual partner event held this year in Brisbane — has become the dazzling destination event for accountants, bookkeepers, and ecosystem app partners. The energy and excitement from the crowd was palpable, with Xero executives jumping up on stage with exuberance as an array of DJs pumped out tunes.
But it was not the glitz or glamor that stole the show.
Instead, it was Xero’s commitment to customers, community, culture, people, and products that stood out:
- Customers. What resonated throughout the event was Xero’s focus on its customers. A Xero customer was featured on almost every other slide when executives presented and recounted conversations that they’ve had with individual customers, specifically the customer needs and problems to address. Xero links the firm’s success to their customers’ success; it was as much — if not more — a celebration of customer successes as it was Xero’s. Individual accountants, bookkeepers, and small business owners were called out and celebrated onstage. Its customer-first, not bottom-line-first, approach is exemplified through the launch of Small Business Energy Check, a free online tool to help small businesses find out if they are paying too much for energy, born out of a partnership with the Australian government and AlphaBeta.
- Community. Network effects underpin the dynamics for Xero. The firm embodies the ethos of openness and collaboration. Xero has grown rapidly by building on services that already operated at scale. Scale enables Xero to develop a gravity of its own, attracting more creators and consumers. The larger the community is, the more attractive it becomes. Xero’s app marketplace features more than 800 apps that customers can integrate into. For developers, Xero announced its single sign-on feature that helps them onboard customers more seamlessly and lets Xero integrate with third-party apps more easily.
- Culture. Xero’s values create the culture that the firm wants to build and are integral to how the firm creates products and engages with its customers. These values are: human, ownership, champion, challenge, and beautiful. These values guide how teams prioritize initiatives, organize themselves, collaborate, and measure success. For instance, these values drive constant informal communication and formal, regular, regional forums — held three times a year — to bring leadership, sales, product, technology, partner, and business development teams together to share ideas and collaborate to address customer needs and problems that are ubiquitous across the region.
- People. Xero believes that great customer experience comes from the actions of the firm’s people and places emphasis on developing and empowering employees. At the heart of customer success is also ensuring the well-being of Xero’s employees. On Day 1, Xero’s managing director of New Zealand and Pacific Islands, Craig Hudson, bravely took the stage to talk about his personal journey with mental health. To support mental wellness of its employees, “sick leave” is now called “well-being leave” at Xero to make employees feel comfortable taking leave for their own personal well-being. This support is also extended to Xero’s customers. With an understanding that many small business owners are under tremendous stress and that mental well-being is often overlooked in this sector, Xero launched the Xero Assistance Programme in New Zealand, the pilot that provides counseling services free of charge to more than 5,000 Xero small business owners, their employees, and families.
- Products. Customer needs and problems drive product design and development at Xero. With the understanding that cash flow is the top priority for small- and medium-sized businesses, Xero launched auto-pay functionality to help customers get paid faster while optimizing the invoicing process. The firm also announced its integration with Stripe so that customers can accept both debit and credit card payments and account for and reconcile Stripe transactions. With small, autonomous, cross-functional teams, Xero has managed to double the number of products released year on year in the last five years.
And the result? Over the past three years, the stock market valuation of Xero has risen by $6.3 billion to $8.8 billion; the firm also recorded subscriber growth of 31% and revenue growth of 32%.
It’s only just the beginning.
Xero is on a growth trajectory as the firm experiments with emerging technologies such as artificial intelligence and machine learning, further expands into markets, and offers business insights to customers. Xero will face challenges as it grows, and its long-term success will depend on:
- Maintaining culture. Culture is integral to how Xero develops its strategy and products and how it engages with its customers. And it’s this culture that has played a significant role in Xero’s success. As Xero grows and scales at speed across existing and new markets, it’ll be important for the firm to foster and maintain the customer-centric culture across the organization. Xero will have to continue to maintain its culture by keeping the lines of communication open, articulating what these values mean to every single employee and translating that into action, and hiring talent with the right culture fit.
- Localization. As Xero expands into the Asian market, a major challenge that the firm will face is localization. Xero focuses on English-language-speaking countries, but many Asian countries do not use English as a business language, specifically when it comes to invoicing and billing. Furthermore, the fragmentation of payment services poses another challenge for Xero. Xero’s expansion success will depend on its ability to localize in Asian markets, but the firm doesn’t have to do it alone. There is potential for Xero to tap into local developers to develop products and services for local markets, but this hinges upon how Xero can attract these developers and support them.
- How — and for what purpose — insights are generated. To help small businesses better understand the health of their businesses and improve cash flow, Xero is focusing on developing business insights for its customers. One such tool that Xero has developed based on insights from aggregated and anonymous data it has gathered is the Small Business Energy Check. It was a pilot, essentially to understand if there is an appetite for business insights, customer sentiment toward using these insights, and to discover new use cases. Being able to communicate how Xero collects data from customers and to commit to using data solely for the benefit of customers it serves will be key to the firm’s success.
- Partnerships. Partnerships — specifically, partnerships with financial institutions — will be key to how Xero will generate more value for its customers. More than 100 banks globally connect to Xero via bank feeds to help customers reconcile invoices faster and to give them more visibility of their cash flow. And there are more — and larger — opportunities on the horizon. Xero’s success will depend on its ability to develop partnerships with not just incumbent firms but also digital-only financial services firms and nonbank lenders that provide valuable products and services for small businesses.