We sat down with India’s first SaaS unicorn Freshworks Chief Revenue Officer Sidharth Malik to discuss what true customer engagement looks like, the challenges of driving cross-regional sales growth and why Singapore is O! So hot for tech startups in ASEAN.
Freshworks offers SaaS products and claims to create ‘compelling customer experiences’ that enables businesses a 360-degree view of customer intel.
Founded in October 2010, Freshworks Inc. is backed by Accel, Tiger Global Management, CapitalG and Sequoia Capital India.
With its headquarters in San Bruno, California, Freshworks has global offices in India, UK, Australia and Europe. Its cloud-based suite is used by over 150,000 businesses around the world including UK’s NHS, Honda, Rightmove, Hugo Boss, Citizens Advice, Toshiba and Cisco.
By opening its first regional hub for the ASEAN market in Singapore, Freshworks Chief Revenue Officer Sidharth Malik says they aim to expand adoption of their customer engagement suite and increase their network of partner resources to meet accelerating demand in the region.
“ASEAN is an exciting market for us. We look forward to supporting businesses to scale and achieve full potential. Tech companies from India are leveraging Singapore as a launch pad into the region to access new markets. Freshworks’ new regional headquarters is an exciting addition to Singapore’s vibrant digital ecosystem. Businesses are focusing on technologies to help them innovate and deliver great customer experiences – and we look forward to continuing the momentum,” says Malik.
Within the ASEAN market, Freshworks claims to have registered 45 percent year-on-year growth as of December 2018 and has achieved a revenue milestone of USD 100 million annual recurring revenue. The company has an extensive partner and reseller network in ASEAN covering Malaysia, Thailand, Philippines, Indonesia, Vietnam, Hong Kong and Korea.
The company raised USD 100 million in its most recent round of funding from Accel Partners, Tiger Global, Sequoia and CapitalG (formerly Google Capital) in July 2018.
According to Malik, Freshworks is digitally transforming enterprises that have been let down by traditional legacy solutions. Their offering includes cloud-based customer support, CRM, call centre software, internal collaboration tools, and marketing automation solutions for SMBs and SMEs.
“Under the umbrella company of Freshworks, we have a total of nine different products today. Our primary product is Fresh Desk, followed by Fresh Service. Everything caters to customer experience. In 2017, we invested in chatbots, like Freddy, our AI engine, and we’ve done a bunch of acquisitions in that space, which works in conjunction with every other product of ours,” says Malik.
According to Malik customer experience falls into two avenues. One is external customer facing and the other is internal employee engagement; and Freddy is deployed firmly in both camps. Their investment into Freddy and other AI capabilities have paid off, with Freshworks on-market valuation hitting USD 1.5 billion as of 2019.
After joining the Freshworks team in 2017, Malik says his first goal was to see how they can expand into the Southeast Asian market.
“We’ve been predominantly based out of India although we’ve operated in this region for almost four or five years with our channel partners and we saw the opportunity with Chat and AI tech being driven from this region, so we felt the need for our presence here,” says Malik.
Freshworks was the first off-shore company Google Capital invested in, and according to Malik, the attraction was largely due to there being very few SaaS B2B SPs who built their core business model on serving SMBs.
“I think this approach attracted Google because their focus was also mostly SMBs and now they’re trying to move towards the enterprise side, from a B2B application perspective. When you’re trying to focus on the SMB industry, your business model and product strategy has to be self-intuitive and easy to use on your own. It shouldn’t require a lot of money on implementation and high-end consulting. That focus helped us to disrupt the cloud business software industry,” says Malik.
While Freshworks is focused on mid-market and enterprise-level too, Malik says one of their differentiations is that they still very much cater to SMBs too.
“We do have an encouraging focus on SMBs. Most SPs start their business by focusing on SMBs then move to SMEs and forget about their roots. But we want to be true to our roots. The reason SPs move away from SMBs is that they’re not able to create a business model which is viable because SMB means higher velocity deals, smaller returns, how do you justify the cost and so forth. But Freshworks has been able to disrupt through a scalable business model which is profitable too,” says Malik.
We asked Malik whether their brand has had challenges with regards to perceptions by SMBs around affordability now that Freshworks cater to SMEs.
“I don’t think that’s been the case. Our business model is transparent. If you want to know about our pricing, it’s available on the website. There are no surprises for a prospect or customer once they start the buying journey. In fact, our enterprise and mid-market customers are also very cost conscious and when they see our pricing, the first question we are asked is often, is this real? The second question is are these features available for everyone? So we are economical and feature rich. We focus on user experience first, and the user experience in respect of a 10-member team or 1,000 member team still has the same set of problems and we solve it for both. We don’t treat SMBs and mid-market customers differently,” says Malik.
According to Malik the demand to digitize customer experience and CRM is largely driven by the ecommerce sector – which is predominantly where most customers either complain or want to be heard – and, naturally, because the exchange has monetary value.
“In terms of reach, we have pretty much every vertical from travel, hospitality, retail, banking and Government. We are starting to see a lot of banks move to digitization of internal systems. The first system they want to touch is the customer support and the customer experience they provide,” says Malik.
Malik says their brand promise centres on delivering the ‘wow moment’ for customers. As every other organization makes the same claim, we asked him to unpack what this looks like in action for him.
“We had a client in Europe who lost his wallet. As he cancelled his cards, the first bank agent said ‘Fine, no problem, are we going to block it, and you will get a new card in five days. He called the second bank. They said the same thing but, they also said, ‘we see you have a gym subscription payment due tomorrow and we will honour that so your access doesn’t get blocked. Now, you can imagine when the second response happened for the customer; ‘wow, I’m not even thinking about that,’ right? So that’s what we focus on. We have three tenets we live by. One, if you’re talking to a retail customer, your software should be able to provide you contextual information; two, your software should be able to provide collaboration, because no single agent can solve all the technical problems, he needs to collaborate at the back end without breaking the experience for the customer. For the customer, it means that a very seamless experience. Three, the whole engagement needs to be productive for both parties – where time and effort is saved for both agent and customer,” says Malik.
Malik’s story is one of growth. Prior to leading Freshworks global GTM teams, Malik helped grow Akamai Technologies organization from 700 to 2000+ employees within five years. He also served as the Managing Director for South Asia at Telelogic AB, Country Manager with IBM India, led the Platform Business for Microsoft in India and served as Area Vice-President at Salesforce.com.
Over his 25 years of working in business development in the tech space, we asked Malik his thoughts on how tech has given companies deep insights into consumer behavior to help them serve us better, however, is the value-exchange worth the sacrifice of privacy for absolute convenience?
“How the engagement between a prospect and principal happens today has definitely changed if we compare what it was ten years back. There was a time when the company had to answer three questions for the prospect – why change, why now and why me? The ‘Why me’ in the earlier days were given 70% by the sales team and 30% by the marketing team. Now, the customer is highly educated about what he wants to buy, he is self-aware on his needs, and he follows industry trends. So that is a huge shift. I wouldn’t say that we only know more about customers today than before, I think customers know a lot more about us too!” says Malik.
With such a focus on perfecting customer-experience, Malik says Singaporean consumers are a perfect example of customer sophistication. Ranked second among global economies in the ease of doing business by the World Bank, Singapore’s rapid urbanization and digitization are driving demand for customer engagement solutions across sectors. According to the Forrester APAC Tech Market Outlook 2017-18 report, Middleware SaaS subscription services doubled from USD 2 billion in 2015 to USD 4 billion in 2018 at a 20% CAGR.
“Singaporean consumers are technology centric so a lot of our products would really appeal to this market. Particularly because in SE Asia, tech is being initiated, rather than ‘catching up’. As we go deeper into ASEAN, there are so many different countries and cultures here, so that’s one of the reasons we want to be close to this ecosystem; getting to know our customer base enables us to channel that feedback into our product models. It is also easy to do business in Singapore as the Government provides all the right support,” says Malik.
While having a footprint in a region helps to understand and translate customers, we asked Malik to share some parting smarts on how to build and motivate sales teams who are geographically dispersed across all regions. For Malik, knowing your customer and your territory is a recipe for customer success and conversion.
“I follow what I call a Diamond Model. The first fundamental is to know your territory and how you’re going to cover it. Second is have clarity in terms of accountability and ownership, like, who owns what territory and what are the rules of engagement there. Getting that right is very important and I have seen many big companies fail on that aspect. Thirdly, have a clear expectation on what you expect to extract from your territory on a daily basis. Know your customers, because their challenges are changing and their environment is rapidly changing as well. We focus on customer success rather than customer satisfaction. For me, customer success is the goal, and satisfaction is a subset of customer success. If your focus is making your customer successful all the time, you will become an advisor to them, not a sales agent. Lastly, build a structure to provide real time response because customers want instant gratification, everytime,” says Malik.