Glassbox Faces Off Against IBM Spinoff In $500B Customer Experience Analytics Market
COVID-19 is driving more people to interact with financial institutions solely via an app or the Web. While more consumers are using these virtual payment methods, the spike in demand is exposing problems with their systems. If financial institutions do not become aware of these glitches and fix them promptly, it could cost them business.
The market for analyzing how people behave virtually is enormous. And the competition for market share between two companies — IBM spinoff, Acoustic, and startup, Glassbox — suggests to me that the advantage goes to the company that can get their system up and running fastest.
Customer experience (CX) technologies — which companies use “to provide a better experience for their customers and to differentiate themselves from their competitors” — was a $508 billion market in 2018 and was expected to grow at an 8.2% annual rate of $641 billion by 2022, according to IDC.
Tracking customer engagement is the biggest problem that CX technologies will solve. Craig Simpson, IDC’s research manager, Customer Insights & Analysis said that the most important uses of this technology include "customer care and support followed by order fulfillment and interaction management” while growth in enterprise spending on the technology will be fastest for “AI-driven engagement, interaction management, and ubiquitous commerce.”
Acoustic Spins Off From IBM To Private Equity
Last July IBM spun off its marketing software division to Centerbridge Partners for an undisclosed amount, according to ClickZ — dubbing the company, Acoustic.
Acoustic was offering what it called the Acoustic Marketing Cloud to offer “experience analytics, content management, personalization, customer journey analytics, promotion capabilities, a payment gateway and campaign automation like email marketing,” according to ClickZ which speculated that Centerbridge was betting that once out of from IBM’s thumb, Acoustic would become “more agile and focused.”
Lack of agility harmed IBM’s efforts to win new customers. As Jefferies wrote in a July 2017 report, IBM had “one of the most complete cognitive platforms in the industry. However, many new engagements require[d] significant consulting work to gather and curate data causing some organization to balk at engagements with IBM.”
Acoustic is confident that its product is helping its customers. As a spokesperson, explained in an April 23 interview, its “Experience Analytics service helps digital teams across industries (including the financial sector) understand how customers are behaving on a website or app through heatmaps, and secure session replays.”
Acoustic’s aim is to notify companies about customer problems with the website or app — which it dubs ‘moments of struggle.’ Examples include “buttons that don’t work, content that doesn’t display properly, or customer support codes that have expired. When these moments of struggle take place, Acoustic notifies the client’s digital experience or marketing team and zeros in on the struggle point so a fix can be made quickly,” he said.
Fast-Growing Startup, Glassbox, Challenging Acoustic
London-based Glassbox, which supplies “an analytics platform designed to automatically record, index and analyze 100 percent of digital interactions,” has been doubling its revenues for the last few years.
Founded in 2010, its CEO since 2015 has been Yaron Morgenstern who told me in an April 23 interview that Glassbox’s annual recurring revenue is in the “tens of millions” and it employs over 150 people and is continuing to hire. On April 7, the company raised a $40 million Series C round — bringing its total capital raised to $70.5 million.
COVID-19 is increasing demand for Glassbox’s service because consumers can’t go into bank branches. That means that “digital is the only channel for consumers to transact with financial institutions. Digital transformation from the physical world to the digital one happened in a matter of weeks. Elderly people are highly motivated to make that switch,” Morgenstern explained.
It seems natural that a large enterprise might fear buying from startup that could leave them stranded were it to run out of cash. However, Glassbox is overcoming that fear. “We have a really large number of Fortune 500 customers in the financial services industry that I can’t name. We have six of the 10 largest banks and other financial institutions. We also work with [a fintech] SoFi,” Morgenstern said.
Its software enabled SoFi [in which I am an investor] to identify a glitch in its service that was costing it nearly 11,000 loan deals, Glassbox estimated. SoFi fixed the problem the day it was discovered.
This kind of benefit is one of the reasons that Glassbox is winning customers. “We help make the customer experience intuitive and safe. We show companies which customers are struggling to complete a transaction. They might have a problem with an app and try to solve it on the website. We help companies understand why customers are struggling,” Morgenstern said.
Glassbox and Acoustic Square Off
Glassbox says it wins in competition with Acoustic. “We win because we are faster. We are on top of the latest and greatest technologies that financial institutions are using for apps and the web. Since our service is delivered over the cloud, we can generate quick value for the customer. Acoustic is not changing fast enough,” he said.
Acoustic begs to differ. “Customers choose Acoustic when they are looking to comprehensively understand how to create better customer experiences, without jeopardizing customer privacy. Acoustic pioneered “Privacy Mode,” an industry-first feature that allows financial institutions to mask all data and only allow non-sensitive customer information to be captured. During the replay of the actual sessions, the sensitive data will not be available for display,” said the spokesperson.
Acoustic emphasizes that its privacy and AI-powered analytics help it win. “Customers like PayPal PYPL use Acoustic Analytics to detect these moments of struggle and fix them quickly, saving them revenue and the time it would take to identify the cause of the struggle point. Multiple Acoustic customers have switched to Acoustic from Glassbox because of our Privacy Mode and AI-enabled analytics,” he continued.
Acoustic cited a Forrester report that calculates the payback period for a customer’s investment in Acoustic Experience Analytics is less than 6 months.
Glassbox said large companies favor its products over Acoustic. “Tens of customers — [some of the largest financial services, telecommunications, travel and retail companies] — have already replaced IBM-Tealeaf (now Acoustic) with Glassbox and this trend is only intensifying,” Morgenstern reiterated.
So What? Declining Big Systems Integration Projects
The consulting projects that Jefferies referred to in its report could become a thing of the past when it comes to installing CX systems. Glassbox’s much shorter payback time — “hours and days” — compared to Acoustic’s “less than six months” seems vastly preferable from the customer’s perspective.
Meanwhile, its recent capital infusion suggests that Glassbox could continue to capture the growth created by the COVID-19 driven move to 100% online customer experience.