New Kids in the Customer Interaction Management Space: Twilio
In August 2016, Twilio dropped a mini bomb in the Contact Center space announcing that ING Bank, one of the largest financial institutions in the world would replace its 17 separate legacy call centers systems with one global solution built on its APIs. Twilio has been growing steadily its presence in the customer interaction management space and it is time to explore its solution set. I was able to discuss with Al Cook, who heads its Contact Center Business.
An early focus
Twilio popped on the radar screen of the industry when it provided Uber with the infrastructure to enable drivers to seamlessly communicate with customers in the context of their ride. We became accustomed to such capabilities. However, when it was released, it was a breakthrough and set a new bar for digital experiences. A significant fraction of Twilio's projects are enterprises leveraging its communication-Platform-as-a-Service (cPaaS) to enable such new customer experiences. With 1.9 million developers, the company has grown into a powerhouse. It elevated its customer interaction management capabilities last May when it rebranded them as Twilio Engagement Cloud. During its December Analyst conference, the company further positioned it as a strategic growth driver.
Beyond contact center augmentation
The ING project signaled that some companies were going beyond "augmenting" their existing infrastructure with cPaaS and building their Contact Center infrastructure on top of it. Building a contact center is not a simple task and the announcement left many pundits dubious. Twilio doesn't provide many references of full-fledged contact centers built from the ground up using its APIs. Eighteen months after the announcement, the deployment is underway in the Netherlands with several departments already using the solution. ING Spain has also started to use video for high-value interactions. Last November, the company announced the National Debt Relief was able to replace its legacy contact center technology in 90 days to support 1,300 agents and employees.
A different approach
If Twilio wants you to know you can build a contact center using its API and toolset, it is touting a different, “hackathon” approach. Developers can create new communication experiences one at a time in a continuous way. These experiences can get added to existing solutions without having to rip or replace them. This model brings speed and agility to enterprises in a domain where changes have always been difficult and taken time. Companies can improve their existing contact center in an iterative way and may or may not over time decommission their legacy infrastructure.
The desire to become agile was the key driver for ING when it chose the do-it-yourself route. The Dutch bank wanted the flexibility of being able to create its own, differentiated customer experiences. Many software providers also found this approach compelling to add voice capabilities to their products.
Twilio has embraced a use case approach for its development as well. It put agility at the center of its mission. The company has built a learning culture and machine around use cases. Despite its 800 employees, it has preserved an organization in small autonomous teams that learn from what customers do with their APIs, and deepen the capabilities that enjoy the most traction. Twilio has been able to scale this model by having these focused teams negotiate what they need from each other in the form of APIs.
The second distinctive element of Twilio's philosophy is an approach not limited to contact centers. It has named its platform, Customer Engagement, purposefully. Probably the best way to appreciate it is to look at representative solution partners:
- AirCall, NewVoiceMedia, Serenova, and Talkdesk for contact centers
- ServiceNow and Zendesk for customer service
- Outreach, RingDNA, Salesforce, and Salesloft for sales automation
- It is now "tip-toeing" in the marketing category with call tracking analytics.
Its bigger promise is to enable customer experiences that cross the traditional Marketing-Sales-Service boundaries.
This broad ISV support also had DMG Consulting credit the company with an installed base of 299,000 seats in July 2017. It placed the company in the number 2 position of the Cloud Contact Center market, second only to the combined Cisco and Broadsoft. I estimate on my end customer engagement to represent about 25% of Twilio's $400+M business.
Twilio has not just been adding new APIs, expanding beyond the two, historical, SMS and voice use cases. It has lately provided more ready-to-use components to accelerate development:
- Task Router, a matching engine to route interactions to agents
- Studio, a voice self-service development kit
The company has also started to groom a partner ecosystem and assemble a marketplace. The size of the market opportunity is such that some vendors have started to plug some of the functionality gaps. Most notably, Ytica has integrated its analytics package to Task Router in an attempt to convert its event stream into a more usable set of reports.
I tried to summarize Twilio overall capability footprint using my upcoming blueprint:
Another concern raised about Twilio is the telecom cost. Indeed Twilio is a broker reselling network access. Despite the buying leverage it is gaining as it grows, this middleman position puts the company at a disadvantage in a price-sensitive market. This struck me particularly when Amazon launched its Connect solution with telecom prices significantly lower. Al was quick to point out that I was comparing apples and oranges as Twilio prices bundle telecom and API usage. He also stressed two unique features of Twilio Super Network. It makes local phone number provisioning easy across the world and offers unique reliability levels by being able to reroute traffic from one provider to another in case of an issue. The cost issue burst when the company announced that its largest customer, Uber, would scale back its usage and explore most cost-effective solutions. It has put Twilio's gross margin, lower than typical software companies, under the scrutiny of investors.
Twilio has grown into a major player of the customer interaction space. If building from the ground up a contact center based on its API and toolsets remain a significant undertaking, the company offers many compelling augmentation solutions. In an industry still plagued by complexity and silos, its presence and role will continue to expand.