There was a time when companies only competed on price and product offerings. However, around 70% of today’s consumers would not think twice before switching to a competitor, owing to just one poor experience; over two-thirds of the workforce feel disengaged. The sad reality is that – companies believe they deliver exceptional experiences, but the customers have a different story to tell.
This is known as the experience gap. Industries are being transformed by companies that deliver superior experiences. This includes direct-to-consumer brands that rely on a user-friendly mobile app and website with a seamless checkout process and personalized experience, manufacturers that deliver superior product quality, service providers that offer increased convenience, and organizations that focus on their employees.
These organizations that thoughtfully shape interactions with their customers and employees to create differentiated experiences are in the best position to win. The success of organizations today depends on the quality of the experiences they deliver to constituents across four critical areas: customer experience, employee experience, product experience, and brand experience.
They say the Future is Experience, and Qualtrics is one such company that has pioneered Experience Management for businesses around the world. As a Strategy enthusiast, let us decode the different aspects of the business model of Qualtrics and understand what does Qualtrics do and how does it work.
Starting with the question, what is Qualtrics, anyway?
To understand Qualtrics, let us first understand the term Experience Management.
Experience management is about delivering an empathetic, seamless, personalized, and memorable experience for customers and employees, which goes beyond just the product or service. Since the onset of the covid-19 pandemic, how people work and interact has seen unprecedented changes.
The transformation has brought the need to reinvent, rethink and reset how businesses across the globe operate and interact with their employees, customers, and stakeholders.
Companies that fail to cater to the changing preferences in the post-covid digital world will face widening experience gaps, which will undoubtedly result in disengaged employees, unsuccessful product launches, customer churn, and brand irrelevance.
This is where Qualtrics comes in. Founded in 2002 by Scott M. Smith, Ryan Smith, Jared Smith, and Stuart Orgil, Qualtrics is a US-based experience management company with joint headquarters in Seattle, Washington, and Provo, Utah. Qualtrics works on a subscription-based business model.
What does Qualtrics do? How does Qualtrics work?
Qualtrics XM is a system of action that allows organizations to manage all four core experiences on a single platform. It gives organizations powerful tools to design and continuously improve customer, employee, product, and brand experiences.
It uses smart features and capabilities that make feedback collection, analysis, and action-taking simple enough for any employee.
Listening Engine: Capture sentiment across all channels and touchpoints
Qualtrics provides easy-to-use tools to listen to solicited and unsolicited customer, employee, product, and brand sentiment across any channel. Qualtrics’ listening engine allows organizations to engage with stakeholders at the moment it’s most critical via chat, text, Facebook Messenger, WhatsApp, IoT devices such as Alexa or a smartwatch, or any other preferred channel.
Organizations can run real-time topic and sentiment analysis during a phone call or automatically analyze video-based feedback at scale.
XM Directory: Centralize all collected experience data in one place
The Qualtrics XM Directory gives the ability to log, organize, access, manage, and update all experience data for the entire organization — in one place.
By centralizing all experience data, organizations can create individual experience profiles that represent the emotions, needs, interests, and expectations of customers and employees — helping organizations provide highly personalized experiences at critical moments in the customer and employee journey.
iQ Smart Analysis: Surface alerts and recommend actions
Qualtrics’ powerful analytics suite, Qualtrics iQ, analyzes each piece of feedback collected using deep statistical analysis and machine learning, then generates recommended actions, ensuring teams focus on the changes that drive the highest return on investment.
Alerts can be configured for the most important actions using a simple interface. These alerts could be a manager alert about a shift in employee morale, a change in a product bundle recommendation, or even a shipping process overhaul.
Experience Workflows (xFlow): Eliminate experience gaps by assigning and routing actions to the people in the best position to drive improvement using workflow automation
The Qualtrics XM Platform can automatically route recommended actions to those in the best position to close experience gaps or close the loop with customers or employees automatically using experience workflow automation.
Employees can log into a role-based account and receive alerts relevant to their role, and be given specific actions to drive improvement.
Ecosystem: Robust ecosystem of integrations for automating and connecting entire experience management
With Qualtrics, teams can build and save experience workflows that can be shared and scaled across departments, retail locations, or global deployments. Built with a completely open API architecture, Qualtrics’ highly configurable platform provides a robust ecosystem of integrations for automating and connecting the entire experience management process.
What is the business model of Qualtrics?
Qualtrics provides a single, connected platform – Qualtrics XM, to manage the four critical experiences of any business. Those are customer, employee, product, and brand experience.
- CustomerXM assists businesses in reducing churn, increasing customer engagement, and enhancing customer lifetime value, or LTV, by collecting customer feedback from all channels and taking actions based on the insights.
- EmployeeXM helps boost employee retention, increase workforce engagement, and enhance productivity by continuously seeking employee feedback to deliver better workplace experiences.
- ProductXM helps businesses to develop products people love, shorten the time to market, and increase their share of wallets by understanding and meeting customer demands, requirements, and expectations.
- BrandXM allows businesses to establish a robust community of loyal followers, attract new customers acquire new customers, and boost market footprint, all while ensuring that the brand resonates and appeals to target buyers at critical interaction points.
- Design XM provides a comprehensive, advanced market research solution that combines experience feedback, advanced research techniques, and analytics.
- XM DSCVR allows businesses to learn what people are talking about them and where these conversations are going on.
- Core XM is a market solution that uses advanced analytics tools and a user-friendly interface to enable employees to conduct comprehensive market research and derive quality insights in no time.
- Ability to Address Experience Holistically: Qualtrics XM platform integrates the data it collects across customers, employees, products, and brands.
- Integrated Analytical Capabilities: Qualtrics XM platform has a proprietary analytics engine that enables companies to tackle demanding research projects. The XM Platform leverages the potential of AI and NLP techniques to empower users to derive a correlation between events, develop predictive models, that too, without the need to plug into any third-party tool, identify vulnerable customers and employees, and proactively suggest corrective actions to drive improvement and impact.
- Built for Action. With Qualtrics xFlow, companies can streamline the experiences by integrating with their existing systems or opting for Qualtrics xFlow. This capability eliminates human intervention, reduces the TAT, and proactively provides recommendations and feedback to the relevant teams, ensuring employee or customer issues are addressed promptly.
- Comprehensive Data Collection. Qualtrics XM platform lets companies personalize communications with their stakeholders through optimal channels such as social, web, in-app, voice, SMS, and operational systems.
- Real-time Insight. Qualtrics XM Platforms provides instant feedback, insights, and analysis. The promptness affects the outcomes, such as – reduced churn rate, increase in sales, and boosts in engagement, to list a few.
- Flexible Configuration to Meet Specific Needs: Qualtrics’ interface allows users to independently design, deploy or alter programs that involve intricate and advanced workflows without taking a lending hand from the IT or professional services.
How does Qualtrics make money? Decoding the Revenue Model of Qualtrics
In 2022, Qualtrics earned total revenue of $1,075 Million. The business model of Qualtrics makes money from sales of subscriptions to its XM Platform (~80%) and related professional services (~20%).
Subscription Revenue: One of the primary modes of revenue of Qualtrics is by selling annual or multi-year contractual subscription-based access to its XM platform. Along with this, Qualtrics also charges for service support provided to its customers.
Professional Services and Other Revenue: Qualtrics provides two more types of services:
- Research services: Research service is a helpful solution provided to existing subscribers, offering access to unique arrangements and services beyond their subscription.
- Professional services: Qualtrics also generate revenue by offering professional services to support new and growing customers seeking implementation, integration, and additional services.
The business model of Qualtrics relies on rapidly and efficiently landing new customers and expanding our relationship with them over time. As of December 2021, Qualytrics had more than 16,750 customers using its XM Platform in more than 120 countries.
Results of Operations
As per Qualtrics’ 2021 annual report,