The pandemic-induced digitization of everything has been well-documented as businesses had to shut their doors and find a different way of interacting with customers via digital initiatives.
Prior to the pandemic, digital transformation was something most companies were just thinking about. Post-pandemic, it’s something most companies rely on to transact business and provide service and everything else in the customer lifecycle.
One of the challenges of making the hard pivot to digital is the risk of dehumanizing the experience for the customer. Websites often treat all customers the same or use very basic demographics to customize content, but the reality is that people are all different and have unique needs and wants. The better a company can create a bespoke experience, the higher its brand loyalty will be.
Digital experience analytics provider Contentsquare has been focused on making the digital world more human. In the past year, the company has rolled out a number of key new features, including artificial intelligence capabilities and a cookieless solution, acquired two companies, opened a number of new offices globally and hired 700 people, with a current staff of 1,500 people.
Recently Contentsquare announced its next growth investment round, which is comprised of a $400 million Series F venture backed round and a $200 million line of debt financing, led by Sixth Street, a private equity firm that has completed investments in companies that include Airbnb, Spotify, SnapLogic, Wind Power and sports teams Real Madrid and the San Antonio Spurs.
In May 2021 the company closed a $500 million Series E round, led by SoftBank, which was a year after its $190 million Series D, led by BlackRock. This brings the total funding to $1.4 billion over the six rounds, inclusive of the debt.
One of the notable aspects of the round is Contentsquare’s valuation of $5.6 billion, which is double a year ago — a testament to the growth of the company and the important market need and opportunity. My surprise has less to do with Contentsquare and more to do with the overall macro and valuation of publicly traded companies. The financial markets have cut the market capitalizations of many of the high-flying pandemic-related companies by as much as 90%, while Contentsquare’s has doubled.
This highlights several key points. The first is that the intense focus businesses have on improving the digital interactions is not a pandemic bubble, but rather something that will create long-term market leadership for companies that do it right. Although investors have bailed on many “work from home”-oriented companies, they seem to be increasing investments in companies that have a direct impact on customer experience.
This also validates Contentsquare’s leadership in this market. Digital experience analytics is a relatively new market and there is no de facto leader such as Salesforce Inc. in customer relationship management. Contentsquare has used its previous rounds to quickly add new capabilities both organically and inorganically to create an experience platform that not only collects and analyzes data but also provides actionable insights.
“It’s not enough in today’s digital environment to judge success purely on traditional KPIs, like clicks or conversions,” says Contentsquare Chief Marketing Officer Niki Hall. “Today, understanding intent, frustrations, delight – all of that matters and creates value to brand and customers alike. Surfacing insight that represents the end-to-end customer experience empowers brands to make meaningful decisions and take intentional action, improve in real time and, if using Contentsquare, do it all while maintaining the highest levels of privacy and trust.”
We are still in the early innings of this technology, and I imagine Contentsquare will use much of the investment round to grow its customer base rapidly and continue making significant headway on the $34 billion total addressable market. It currently has more than 1,000 enterprise customers, but that’s still a small piece of the overall pie. Right now, winning deals is more a land grab and that requires investments in marketing, sales and more local presence globally.
I also expect the company to continue to grow its platform capabilities to be a true one-stop shop. The company has a five-product strategy for its platform that includes analytics to analyze customer journey and content, optimization of mobile apps, finding and fixing surface errors and load times, merchandising for product and pricing analytics, and recommendations for benchmarking and scoring. All of these products can help businesses create an experience that is unique to each person.
Digital is certainly the preferred way forward for most customers, but brands have to be careful to not overdigitize experiences where consumers feel their needs are not being met. Contentsquare has done an excellent job of meeting the needs of its customers. Evidence of this is the growth and funding. With this round, I expect to see the company to step on the gas and accelerate what’s possible with digital experiences.