How Zendesk is Preparing for Growth in APAC
Wendy Johnstone, senior vice president and chief operating officer (COO) for Asia Pacific (APAC) and Japan at Zendesk, was appointed at an opportune time when organizations in the region were prompted by the pandemic to deliver better customer experiences through digital channels.
According to IDC, many organizations in the region have made new investments in the customer experience, particularly in data management and customer data platforms, to drive greater value from customer data, improve resilience and accelerate time-to-market. growth.
Zendesk, along with its competitors, benefited from demand for customer experience management software, increasing its global revenue 29% year-over-year in the second quarter of 2021.
In an interview with Computer Weekly, Johnstone provides an update on Zendesk’s business in the region, its progress in penetrating the enterprise market, and how the company is approaching mature and developing markets.
Can you give me an idea of what Zendesk is doing in the region?
Johnstone: I joined the company at the start of the pandemic as COO of APAC and this was the first time that we appointed regional COOs. I’m responsible for the organization here operationally, and very focused on our growth agenda in the region.
To give you an idea of the business momentum we’re seeing at Zendesk, we were thrilled late last year to hit the $ 1 billion annual revenue target. It was something that our CEO set as a target in 2016. So, despite the global pandemic, we have reached this milestone.
In our recent second quarter, we recorded global revenues of $ 318 million, growing 29% year-on-year. This quarter has been very strong for us, with growth up 26% from the first quarter.
In Asia-Pacific, we contribute around 10% of global sales, which is a significant contribution to our global sales. We are seeing tremendous demand for our solutions here in the region.
I understand that one of Zendesk’s strategies for growing the business is to enter the enterprise segment. How is it going on that side?
Johnstone: We have a balanced focus on all segments. The SME segment (small and medium-sized enterprises) has been essential for us, but increasingly we are focusing on the enterprise segment where we see good momentum and demand for our solutions in this segment.
To give you an idea of what this looks like on a global scale, we recently added 50 new client accounts with annual recurring revenue (ARR) of over $ 250,000. This is now around 35% of ARR, down from around 29% a year ago, which is really encouraging.
We see that momentum here in the APAC region. We are acquiring great clients here through our Suite offering which was an answer to a lot of things our clients were facing due to the pandemic. Businesses, especially in the corporate space, wanted to deliver better, faster, and easier customer service. We believe there are huge opportunities with large organizations, and we continue to grow our business to support large organizations that have more sophisticated needs.
What is the typical profile of a Zendesk business customer? You talked about the need for them to respond faster and improve customer service amid the pandemic, but what drives them to Zendesk?
Johnstone: The pandemic was an opportunity for many organizations to take a step back and refocus on the heart and what was important to them. I think we’ve seen the recognition and recognition of the importance of customer experience. Everyone had to embrace a digital way of operating – there was no other option as more and more people wanted to engage with organizations digitally.
On the one hand, we have seen a sharp increase in the use of social messaging in APAC following the pandemic. Our Suite offering allows us to provide this ability for organizations to communicate with their customers through social and native messaging capabilities.
What we did with Suite was streamline pricing to meet a company’s budget or maturity. We had good momentum with Suite, which now represents around 16% of our ARR. That’s more than doubled since the first quarter of this year. We have had over 8,000 customers adopting it since its launch in February.
Do Suite customers tend to abandon another competitor’s platform? Is Zendesk gaining market share over its competitors during this period with Suite?
Johnstone: It is a combination of new and existing customers. From a competitive advantage perspective, we see the conversational business as the future and we are playing a leading role in enabling customers to effectively interact with their customers through messaging channels.
We’re also seeing self-service gaining momentum, so people can find answers to their questions on their own. This helps our customers to increase their response times through features such as artificial intelligence. These are some of the major trends on which we are capitalizing with our solutions.
I understand that one of the main value propositions of the Zendesk platform is the ease of scalability and connectivity to other applications, especially through Zendesk Sunshine. Could you talk about this because it is something that would be of interest to many companies as they seek to improve the integration between customer experience systems and what is happening elsewhere in their organization.
Johnstone: You are absolutely right. We provide the ability to extend our solutions through a unified Zendesk platform. This not only allows us to continue to innovate with our solutions, but also allows customers to do it themselves. We continue to be very focused on this from a development perspective.
From an innovation perspective, we continue to forge strong partnerships with our ecosystem in the context of this shift towards messaging and conversational activity. We have also established a very strong partnership with Facebook, in order to be able to offer APIs (application programming interfaces) in many Facebook messaging platforms.
At the end of the day, it’s about listening to our customers. As you know, we have two engineering hubs in the APAC region, which in my opinion is a competitive advantage. We have one in Singapore and another in Melbourne. This closeness to customers is gold and allows us to listen to customers so that we can continue to innovate to help them deliver customer experiences to their customers.
Could you tell us more about the work that takes place in these engineering hubs? Are they part of the global engineering team or have they been tasked with developing localization features?
Johnstone: It is a combination of the two. They are part of the global organization and we also have a distributed approach to engineering. They are also connected to local markets and engaged with customers, looking at things not only from a global perspective but also from a local perspective as we know that APAC is an incredibly diverse region. There are many countries at different levels of maturity, so it is important that we have links to local markets.
How does Zendesk support its partners in the development of its activity? I understand that the business volume of your partners is relatively low compared to other market players.
Johnstone: We recently hired a new senior executive here in the APAC region to lead our team and our channel ecosystem strategy. She has extensive experience and under her leadership we are currently finalizing our strategy to continue supporting the partners we have today.
We already have great partners in the APAC region, from global systems integrators to trading partners. We’re also looking at the partner-centric approach to help us scale and grow in certain countries.
From a technology perspective, your partnership with AWS seems to have grown over the past couple of years, especially thanks to Zendesk Sunshine which allows customers to connect more deeply to the AWS ecosystem. Could you talk about your partnership with AWS and how it benefits Zendesk customers who might not be AWS customers?
Johnstone: If you look at data centers and data locality, our infrastructure is built on the AWS platform. We keep looking at how we can extend this as we grow and evolve. At the moment, we have two delivery points in the region, one in Japan and one in Australia. We have just announced an extension to data tracking solutions for our customers and it has been well received.
How do you do things differently in emerging markets versus mature markets?
Johnstone: In terms of focusing on the APAC region, we are very focused on Australia, New Zealand, Singapore and India, where we have a strong presence. Right now, we’re very much focused on Japan from a growth and operational perspective. We have made investments in mergers and acquisitions in Japan, and we have seen a lot of benefits in doing so in terms of customer acquisition.
We’re also working to make sure we’re up and running to continue supporting Japan in the right way, so we’re doing whatever it takes from localization to translation. We’re already doing this from a product perspective today, but we want to make it easier for customers to do business with us in Japan and that’s something I spend a lot of time on right now.
We will continue to research where the greatest growth opportunities lie in the region, such as small emerging markets where we may not have a presence today, and whether there is an opportunity for us to strengthen our presence through a partner-oriented model.