Transcript
Page 1: Five9 Award Write Up

2016 North American Cloud Contact Center

Customer Value Leadership Award

2016

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BEST PRACTICES RESEARCH

© Frost & Sullivan 2016 2 “We Accelerate Growth”

Contents

Background and Company Performance ........................................................................ 3

Industry Challenges .............................................................................................. 3

Customer Impact and Business Impact ................................................................... 3

Conclusion........................................................................................................... 7

Significance of Customer Value Leadership .................................................................... 8

Understanding Customer Value Leadership .................................................................... 8

Key Benchmarking Criteria .................................................................................... 9

Best Practice Award Analysis for Five9 .......................................................................... 9

Decision Support Scorecard ................................................................................... 9

Customer Impact ............................................................................................... 10

Business Impact ................................................................................................. 10

Decision Support Matrix ...................................................................................... 11

The Intersection between 360-Degree Research and Best Practices Awards ..................... 12

Research Methodology ........................................................................................ 12

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ................................................................................................................. 13

About Frost & Sullivan .............................................................................................. 14

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Background and Company Performance

Industry Challenges

Cloud contact center providers are enjoying an upswing in interest and adoption in North

America. The uncertainties that dampened adoption of cloud applications five years ago,

including concerns over reliability, scalability, and security, have mostly dissipated, and

cloud adoption is now at an all-time high.

But with new opportunity comes various challenges, particularly with so many contact

center providers as well as enterprises jumping on the cloud bandwagon. New market

entrants have emerged; while existing cloud participants have added contact center

functionality organically and through partnerships or acquisitions and legacy contact

center systems providers now offer cloud-based versions of existing solutions.

The primary challenge for any provider in this space is to differentiate themselves, proving

real business value now and in the future. This entails excelling at core competencies in

the contact center, while enriching applications to address ongoing challenges that impact

customer service delivery. Cloud providers must help improve agent productivity and

empowerment, increase employee satisfaction and engagement, reduce agent churn,

increase satisfaction, and enhance the Customer Experience.

Customer Impact and Business Impact

Criterion 1: Customer Purchase Experience

With over fifteen years of cloud experience, Five9 is one of the leading providers of cloud

contact center software. Five9 was founded in 2001, introducing its Virtual Contact Center

(VCC) platform in 2003. This early entry into the cloud market has given it a breadth of

experience that many in the industry have tried to match, particularly legacy contact

center systems providers that have only recently introduced cloud versions of their

original products.

Being an early entrant has allowed Five9 to build expertise in cloud application delivery, as

well as innovate faster than most cloud contact center players. The VCC platform provides

a wide breadth of applications, including many features and applications others are just

starting to deploy. For example, it has advanced capabilities such as proactive/predictive

chat functions, and visual support capabilities leveraging WebRTC, with full multimodality,

escalation/de-escalation, and channel blending, to name a few.

In 2015, to ensure that customers receive the most technologically advanced platform,

Five9 rolled out its Freedom Release, which was a complete refresh of its VCC platform.

Freedom is a modern microservices-based Web architecture that includes an HTML5

browser-based agent desktop, a rich REST API layer, and new CRM adapters called Plus

Adapters, which provide deep integration into a growing number of CRM applications.

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All domains were upgraded to the Freedom Server Release in mid-2015. Five9 took into

account the needs of its customers by doing a phased roll-out of its Plus Applications. At

launch, the platform supported both legacy java client and the new agent Web user

interface so that customers could allow their agents to use whichever desktop they were

comfortable with, pacing upgrades and reducing agent churn and onboarding costs. Less

than a year into the launch Five9 has thousands of agents on the new desktop.

This type of care to ensure that customer needs are met is one of the hallmarks of the

purchasing experience for Five9 customers.

Criterion 2: Price/Performance Value

Five9 provides a wide range of contact center functionality for the North American and

global markets on an integrated and efficient platform. The VCC platform was built in-

house, from the ground up, and initially just provided support for outbound dialing, but

has since grown to support the full spectrum of contact center functionality including

inbound, outbound, and blended agent capability for in-house, outsourced, and work-at-

home agents and remote experts. The platform also delivers voice self-service (IVR),

WFM, QM, analytics, and social, mobile, email, chat, and Web interactions.

Five9’s offering prices include training, support, and additional value. The company

provides simplified pricing, and typically the basic product includes a set of features and

bundled plans with unlimited talk-time and monthly per-agent fees, but it is also possible

to charge for unbundled pricing.

Delivering from the cloud means that Five9 provides swifter deployment and faster time to

value, giving companies faster access to new product and feature developments. In

addition, it provides greater business agility, flexibility, scalability, and business

continuity/disaster recovery.

Criterion 3: Customer Ownership Experience

Customers have come to expect enhancements to existing capabilities as well as new

applications, often earlier than others in the market. For example, social media as a

customer contact channel gained real momentum around 2010, and contact center

participants began to toy with its use and partner with companies providing it. In 2013,

Five9 had the smarts to acquire one of the most innovative of the social media companies

at the time, when it acquired SoCoCare, a social media monitoring, analytics, and

response company.

One of the key pieces of the acquisition was a natural language processing (NLP) engine,

branded Five9Connect, which processes through all text-based interactions, to influence

routing decisions or provide insight to agents with context and other factors. Business

rules can then automatically route posts to the appropriate agent or agent group for

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response. Responses also can be prioritized by author sentiment, social influence, and

customer value. The company now provides a stand-alone solution called Five9 SoCoCare,

as well as a version that is integrated into the VCC platform, called Five9 Social.

The Five9 social solutions were built from the ground up for contact centers, unlike some

other social media engagement platforms. These applications provide robust agent tools

that offer things like next-best actions based on rules and policy, and a panoramic

customer journey timeline giving agents a complete history of social, email, and chat

interactions with that customer.

Along these lines, in its most recent release, Five9 improved the capabilities of the agent

desktop, giving agents deep visibility into the customer journey, historically and in real-

time. For instance, it introduced a preview chat function that appears when business rules

indicate that a customer on the web is perhaps struggling. This pops up onto the agent

desktop information about the journey that the customer is on, from the pages they have

clicked to, to things like what they are looking at or putting into a shopping cart. It has

presence indicators that change if the customer leaves the website and goes to another

one as well. This tool enables the agent to see how the customer is progressing, along

with predictive scoring that shows if the journey is matching the desired business

outcome. This, along with next best action suggestions, allows the agent to intervene if

necessary, and engage with that customer for help, or click a withdraw button if it appears

that the customer is progressing well on their own. The agent has access to all prior

interaction journey maps as well. This type of innovative agent capability was unheard of

a decade ago.

Criterion 4: Customer Service Experience

Five9 has more than doubled its investment in Professional Services in the last 18 months,

adding skilled and experienced program managers and engineers as well as specialized

contact center experts in the areas of CRM, network connectivity, workforce management,

and other key areas. The company’s professional services resources employ an

established consultative methodology, employing best practices to develop solutions for

each customer’s unique business requirements.

In addition to standard customer support, Five9 offers premium support with a dedicated

account manager. Although this includes an extra monthly fee, customers have been

investing heavily in this. In 2015, its North American customers had a 90% uptake rate

for this service. This premium support differentiates the company from others by ensuring

that it remains customer-centric and keeps the churn rate low.

Finally, in October, 2015, Five9 became one of the few contact center companies to

publish a Trust Site for visibility on reliability that allows anyone (not just customers) to

see its reliability statistics over the last twelve months (the average monthly availability

for the last year). Five9 customers can log in to get more detailed information, such as

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notifications on the API layer, and access other metrics regarding their own operations.

Criterion 5: Financial Performance

Five9 is a publicly traded company (FIVN) with more than 700 employees, 2,000

customers globally, and fields approximately 3 billion interactions per year. Organic

revenue has grown rapidly over time, increasing at a 37% CAGR from 2009-2015. For the

2015 fiscal year, the company had a 25% year-over-year increase of revenue to $129

million, and a record fourth quarter for turn-ups. It now supports 55,329 concurrent agent

seats or 82,994 named seats, which is a 19% increase over the prior year.

Historically, Five9 has catered to the small- to mid-sized market. However, it entered the

enterprise space a few years back and is now supporting healthy growth in the enterprise

market as well, with 38% growth year-over-year in enterprise subscription revenue in

2015, which further accelerated to 39% for the last 12 months ended March 31, 2016.

Also, enterprise revenue represented 65% of total 2015 revenues and increased to 66%

for the last 12 months ended March 31, 2016, driving a strong annual dollar-based

retention rate of 98% through Q1 2016.

Moreover, Five9 continues to execute on its path to profitability, achieving two

consecutive quarters of positive adjusted EBITDA through Q1 2016 with breakeven

operating cash flow. This is primarily due to the enterprise business driving high marginal

profitability of 64% for the last twelve months, compared to an average of 10% for the

SaaS universe (Marginal profitability is measured as the percentage of revenue growth

that drops to the adjusted EBITDA line. The SaaS universe is comprised of 57 companies).

Criterion 6: Growth Potential

Five9 has an attractive offer in a growing market, and continues to enhance its solutions

based on anticipating and paying attention to evolving customer requirements. In its

latest summer release of its Freedom architecture, the company introduced attractive

enhancements to existing features/applications. These included enhancements to increase

omnichannel engagement, proactive and predictive engagement functionality including

predictive web analytics, and customer journey analytics including visual display of the

lifetime customer journey on the agent desktop. Five9 also added to or improved CRM

integrations, including those for Microsoft Skype for Business, Microsoft Dynamics and

Zendesk.

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Conclusion

Contact Center stakeholders are looking for providers that offer a wide breadth of

customer care functionality, flexibly, reliability, and at competitive price points. They are

also looking for suppliers who can add features that keep pace with today’s rapidly

changing customer care needs. Five9 provides a reliable, scalable, feature-rich platform

and a continual stream of innovative solutions for its customers. It’s for these reasons and

others that Five9 has earned Frost & Sullivan’s 2016 Customer Value Leadership Award for

Cloud Contact Centers in North America.

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Significance of Customer Value Leadership

Ultimately, growth in any organization depends upon customers purchasing from your

company, and then making the decision to return time and again. Delighting customers is

therefore the cornerstone of any successful growth strategy. To achieve these dual goals

(growth and customer delight), an organization must be best-in-class in three key areas:

understanding demand, nurturing the brand, and differentiating from the competition.

Understanding Customer Value Leadership

Customer Value Leadership is defined and measured by two macro-level categories:

customer impact and business impact. These two sides work together to make customers

feel valued, and confident in their products’ quality and long shelf life. This dual

satisfaction translates into repeat purchases and a high lifetime customer value.

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Key Benchmarking Criteria

For the Customer Value Leadership Award, Frost & Sullivan analysts independently

evaluated two key factors—Customer Impact and Business Impact—according to the

criteria identified below.

Customer Impact

Criterion 1: Price/Performance Value

Criterion 2: Customer Purchase Experience

Criterion 3: Customer Ownership Experience

Criterion 4: Customer Service Experience

Criterion 5: Brand Equity

Business Impact

Criterion 1: Financial Performance

Criterion 2: Customer Acquisition

Criterion 3: Operational Efficiency

Criterion 4: Growth Potential

Criterion 5: Human Capital

Best Practice Award Analysis for Five9

Decision Support Scorecard

To support its evaluation of best practices across multiple business performance

categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool

allows our research and consulting teams to objectively analyze performance, according to

the key benchmarking criteria listed in the previous section, and to assign ratings on that

basis. The tool follows a 10-point scale that allows for nuances in performance evaluation;

ratings guidelines are illustrated below.

RATINGS GUIDELINES

The Decision Support Scorecard is organized by Customer Impact and Business Impact

(i.e., the overarching categories for all 10 benchmarking criteria; the definitions for each

criteria are provided beneath the scorecard). The research team confirms the veracity of

this weighted scorecard through sensitivity analysis, which confirms that small changes to

the ratings for a specific criterion do not lead to a significant change in the overall relative

rankings of the companies.

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The results of this analysis are shown below. To remain unbiased and to protect the

interests of all organizations reviewed, we have chosen to refer to the other key players

as Competitor 2 and Competitor 3.

DECISION SUPPORT SCORECARD FOR CUSTOMER VALUE LEADERSHIP AWARD

Measurement of 1–10 (1 = poor; 10 = excellent)

Customer Value Leadership

Customer

Impact

Business

Impact Average Rating

Five9 9 9 9.00

Competitor 2 8 7 7.50

Competitor 3 7.5 7 7.25

Customer Impact

Criterion 1: Price/Performance Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market

Criterion 2: Customer Purchase Experience

Requirement: Customers feel like they are buying the most optimal solution that

addresses both their unique needs and their unique constraints

Criterion 3: Customer Ownership Experience

Requirement: Customers are proud to own the company’s product or service, and have a

positive experience throughout the life of the product or service

Criterion 4: Customer Service Experience

Requirement: Customer service is accessible, fast, stress-free, and of high quality

Criterion 5: Brand Equity

Requirement: Customers have a positive view of the brand and exhibit high brand loyalty

Business Impact

Criterion 1: Financial Performance

Requirement: Strong overall financial performance in terms of revenues, revenue growth,

operating margin and other key financial metrics

Criterion 2: Customer Acquisition

Requirement: Customer facing processes support the efficient and consistent acquisition of

new customers, even as it enhances retention of current customers

Criterion 3: Operational Efficiency

Requirement: Staff is able to perform assigned tasks productively, quickly, and to a high

quality standard

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Criterion 4: Growth Potential

Requirements: Customer focus strengthens brand, reinforces customer loyalty and

enhances growth potential

Criterion 5: Human Capital

Requirement: Company culture is characterized by a strong commitment to quality and

customers, which in turn enhances employee morale and retention

Decision Support Matrix

Once all companies have been evaluated according to the Decision Support Scorecard,

analysts can then position the candidates on the matrix shown below, enabling them to

visualize which companies are truly breakthrough and which ones are not yet operating at

best-in-class levels.

DECISION SUPPORT MATRIX FOR CUSTOMER VALUE LEADERSHIP AWARD

High

Low

Low High

Bu

sin

ess I

mp

act

Customer Impact

Five9

Competitor 2

Competitor 3

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The Intersection between 360-Degree Research and Best

Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research

methodology represents the analytical

rigor of our research process. It offers a

360-degree-view of industry challenges,

trends, and issues by integrating all 7 of

Frost & Sullivan's research methodologies.

Too often, companies make important

growth decisions based on a narrow

understanding of their environment,

leading to errors of both omission and

commission. Successful growth strategies

are founded on a thorough understanding

of market, technical, economic, financial,

customer, best practices, and demographic

analyses. The integration of these research

disciplines into the 360-degree research

methodology provides an evaluation

platform for benchmarking industry players and for identifying those performing at best-

in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN

THE CHAOS

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Best Practices Recognition: 10 Steps to Researching,

Identifying, and Recognizing Best Practices

Frost & Sullivan Awards follow a 10-step process to evaluate award candidates and assess

their fit with select best practice criteria. The reputation and integrity of the Awards are

based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria Examine eligibility of all

candidates Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized award candidates

6

Conduct global industry review

Build consensus on award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible award candidates, representing success stories worldwide

7 Perform quality check

Develop official award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice award recipient

Review analysis with panel Build consensus Select winner

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform award recipient of award recognition

Present award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of award and plan for how recipient can use the award to enhance the brand

10 Take strategic action

Upon licensing, company may share award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess award’s role in future

strategic planning

Widespread awareness of recipient’s award status among investors, media personnel, and employees

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About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best in class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in

partnering with Global 1000 companies, emerging businesses and the investment

community from 31 offices on six continents. To join our Growth Partnership, please visit

http://www.frost.com.


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