Freshworks on 29/08/2017 announced that it acquired Zarget, a conversion rate optimization software startup. With this being the ninth acquisition in about two years Freshworks is continuing to augment its development by adding missing functionality from outside while adding talent to the teams. Zarget’s software is helping marketers measuring and understanding how users interact with their websites, which is important information when it comes to assessing reasons for users not becoming customers. For Freshworks this acquisition also marks a first step to close the functional gap that marketing still is for them. With Freshworks founder and CEO Girish Mathrubootham having been an angel investor into Zarget this is also a natural choice.
An interesting piece of information comes as a quote by Girish: “ At Freshworks, our ambition is to emerge as the de facto cloud-based business software platform for businesses of all sizes”.
The Bigger Picture
There are a couple of interesting facets to this acquisition.
Freshworks, by virtue of its rebranding from Freshdesk, has made a bold statement that they are not striving to cover customer service only. This, of course, was clear earlier when looking at their range of products and solutions but this naming implies an ambition. I have commented on this this earlier.
While they are still concentrating on the wider CRM area with bot acquisitions, a recent release of Freshteam, a CRM for recruiters, there is a tendency to divert into different areas. This time it is about starting to close a fundamental gap in Freshworks’ CRM offerings: So far there has virtually been no marketing functionality.
Looking specifically at marketing software Freshworks looks slightly off the beaten path by not zeroing in on a-mail marketing, but are looking at web sites, which are still highly important, especially for SaaS software providers. More than in e-mails it is crucial to find out here what works and what not.
And then there is Girish’s statement.
So far Freshworks had a laser sharp focus on the smaller end of the SMB market. This market is estimated to be severely underserved by CRM software with e-mail and spread sheets being the main tools of the trade. So far I have seen them mainly following a strategy that is similar to Zoho. Apparently this has changed. “Companies of all sizes” now hints at the ambition of looking into tier 1 customers and entering the territories of the Salesforce’s, Microsoft’s, SAP’s and Oracle’s of this planet – not to mention another roster of smaller vendors.
MyPoV and Advice
Strengthening their marketing functionality is an important step for Freshworks. There is no CRM that does not cover all three pillars. I have said this a number of times, and am looking forward to what comes next. Data capturing is one thing, being able to automatically personalize and to set up multi channel campaigns based on it is yet another one. But the picture is getting rounder.
Becoming the de-facto business software platform for businesses of all sizes is a bold vision and I’d recommend starting this from the S end of the market. All of the above mentioned companies have the same objective, and for good reasons.
When going too bold the risk of getting disrupted by other companies is just too big. Look at how Salesforce rolled up the CRM market. Surely, with SaaS they had another business model than the incumbents, but Salesforce successfully attacked them from below.
Or the other way round observe how Microsoft is currently clawing its way back to smaller companies, with the help of Nimble and lots of other partners.
From a customer point of view there is a serious alternative to Zoho emerging, especially where fast sales cycles and great customer service requirements are involved. It is worthwhile having a look at Freshworks in this case.
Regardless, it is also important go gain a good understanding of the strategy and road map.