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SAP and Qualtrics are Rebranding Branding

The recent merger of SAP & Qualtrics offers lessons for the insights industry to build a foundation of brand health.

Editor’s Intro: There is no doubt that the acquisition of Qualtrics by SAP for an eye-watering 8 billion dollars has been one of the most newsworthy events in the market research industry in quite some time. The hefty price tag has aroused much controversy, and was critically covered in these pages recently by Simon Chadwick. Janet Kosloff and Diane Hayes of InCrowd bring a very different, more positive perspective, focusing on the great sales strides Qualtrics has made to date, and the strategic value they bring to clients. As SAP has said, though, the real value in the deal resides in the synergies from combining SAP software’s operational focus with Qualtric’s customer experience focus. It is the progress they make towards realizing “ 1 +1 = 3” value from these “single-source” synergies that will ultimately determine the success of this acquisition. Others are going down the same path, so don’t expect the Qualtrics acquisition to be the last such deal we’ll hear about.


Discussion continues even now in tech and financial circles about SAP’s $8B acquisition bid for the market analytics innovator, Qualtrics, aptly summarized with Greenbook’s fine post by Simon Chadwick. Many have questioned the value of Qualtrics and the judgement of SAP CEO Bill McDermott, to the point where McDermott has needed to publicly defend the purchase.

While it is true that Qualtrics’s CEO, Ryan Smith, and team, has much to be grateful for this holiday season, for all of those who balked at Qualtrics’s price tag, this was by no means a cavalier nor misguided decision on SAP’s part. Qualtrics has delivered strong and consistent growth for more than a decade with 2018 revenue anticipated to hit $400M. With a host of marquee brands in its customer base of some 9,000 enterprises, Qualtrics has developed a significant global footprint, boasting support of 75% of the Fortune 100. The Qualtrics’s brand itself is a testament to the very value the firm proposes to clients, a value proposition that resonates, perpetuating their growth along with the importance of experience management (XM), a category which Qualtrics created. All highly valuable attributes for the enterprise software giant, SAP.

However, we believe the most salient part of the deal is the elevation of the importance of brand health. Qualtrics’s XM platform manages customers’ experience feedback across their customers, employees, brands, and products. At its most precise, its solutions tie data to specific individual customer interactions, which enables both understanding of issues as well as their recommended resolutions. This hyper-focused brand tracking is critical to the brand health of Qualtrics’s customers, as well as its own.

At InCrowd, we admire the attention Qualtrics has placed on monitoring and enabling brand health at the individual level. In the life sciences world, where InCrowd operates, the ability to link individual perceptions—prescriber perceptions and other healthcare professionals (HCPs) in our case—to feedback and intervene at the individual level is limited due to government regulations surrounding prescriber and HCP influence. Thus, the difficulty with attaining and maintaining strong brand health becomes more complex in this challenging regulatory environment. However, such intense insight is often more critical for pharma-related brands where the implications are generally very serious.

No matter what the sector—retail, CPG, software, what-have you—all of those who build brands seek to make them as healthy as possible. But brand health in the life sciences space can actually mean the difference between life and death for the patients in need of specific brands. As brand managers know, an unhealthy brand is not always efficacy related. Like any product, poor or misaligned messaging, bad data informing inappropriate interventions, market events unfairly tainting entire segments, and the like, can infect market perception of any brand. To mitigate potentially pejorative views of life sciences brands, brand managers need to apply the same rigor of monitoring and assessing feedback that their physicians do when they prescribe the brand (i.e., new medication) to their patients. And they need to do it within compliance of strict government regulations—regulations that do not exist for any other sectors.

To achieve brand health, Qualtrics does three things very well:

 

It optimizes timing.

The firm leverages technology across all of their audiences to acquire real-time insights, providing a more accurate understanding of market perceptions. This practice enables responsive and timely interventions for positive outcomes. In our view of brand health, time-to-respond is one of the most important metrics in ensuring, maintaining, and saving the health of a brand. Timing critically affects the relevancy of data, issue diagnoses, and options for treatment. Despite the complexity of brand health in life sciences, tracking and intervening are possible. By employing blinding methodologies and real-time solutions designed with regulatory compliance in mind, as we have done at InCrowd, brand health is attainable for efficacious life sciences brands. And if Qualtrics is now in a position to promote expectations for such market visibility to more companies, all the better for the rest of us in the insights’ community.

 

It is mobile-friendly.

The technological advancements needed to ensure real-time feedback require Qualtrics to meet their customers’ stakeholders where they are, removing barriers to timely feedback. At InCrowd, we knew that to provide our customers with transformational insights, we needed the capacity to reach our stakeholders in the right moment, where they were, when they could focus. The mobile-friendly solutions that Qualtrics will now further evangelize to SAP’s more than 400,000 customers will serve to help educate consumers on the ease of sharing feedback—in a simple, secure way—while facilitating new customer insights and stronger brands.

 

It pays particular attention to audiences,

helping customers cultivate panels that reflect their respective representative buyers. Quality of data is highly contingent upon getting feedback from such groups. Knowing the audience providing feedback is the right audience comes with a steadfast trust between vendor and customer. Qualtrics has built such a trust with the brands they serve. In our sector, this trust is invaluable, something that must be earned and an area of professional pride for InCrowd. Life sciences brands simply cannot afford to get their audiences wrong. A brand’s health depends on the quality of the data informing it, as does the health of the patients who are prescribed that brand. Discussion in recent news regarding SAP and Qualtrics has centered on the amount of the bid. Perhaps the most important element defining Qualtrics’s true value—and driving that $8B price—is this trust it has earned with its customers. It is invaluable (or close to it at $8B), intangible in many ways (as it is built on strong, ethical leadership that effuses into corporate culture), and elusive to most companies (far too often caught up in transactional, short-term gains).

We admire the vision of CEOs McDermott and Smith and are glad they are raising the awareness, understanding, and expectations for brand health in all sectors. Brands drive the world. They employ billions, fuel economies, save lives, and solve problems. Their vision inspires innovation and disrupts markets—often for the betterment of consumers. Their identities engender feelings and attachments for the collective efforts of all who create, maintain, and passionately support them. And though their worth is often perceived to be immeasurable, those of us in brand health believe that it is indeed measurable.

Hats off to SAP and Qualtrics for reinforcing the importance of brand health and aspiring to proliferate it worldwide.

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Janet Kosloff & Diane Hayes

Co-Founders, InCrowd