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Twilio Acquires CDP Leader, Segment

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This morning, Twilio officially announced its intention to acquire customer data platform (CDP) leader Segment for $3.2 billion. (The news broke on social media late Friday night.) The purchase is set to complete this calendar quarter. As with Twilio’s 2018 acquisition of SendGrid, Segment will initially operate as a division of Twilio, with the existing management team, headed by Segment co-founder and CEO Peter Reinhardt.
 
My first questions, as a contact center analyst, are about how Segment’s CDP technology will integrate with Twilio Flex, the company’s cloud contact center solution. A thorough reading of the press release gleaned no details, but both the financial analyst call and accompanying presentation were rife with contact center implications.
 
As described by Reinhardt during the call, and shown in the graphic (see below), Segment helps companies collect all their customer data from every source, whether the website or mobile apps, helpdesks CRM, SMS, email ads, etc. Once companies have that data, Segment helps companies take that collected customer data and activate it into downstream communication channels like email, SMS, ads, and so on. “By combining Twilio APIs and marketing campaigns with Segment’s data, companies will be able to dramatically improve effectiveness in marketing, Reinhardt said. From attracting and converting new customers to improving upsell and cross-sell, promoting brand loyalty is an incredibly valuable proposition,” he added.
 

Back in mid-2018, Twilio CEO, Jeff Lawson, announced a portfolio vision for the company, Engagement Cloud. Since then, acquisitions and significant product announcements have been framed in terms of where they fit into the Engagement Cloud scheme. As shown below, Segment’s customer data platform technology will operate as a layer between communications and the application layer, which includes Twilio Flex.

 

In his opening remarks to the financial analysts, Lawson said, “Twilio Flex was the first step in our vision of creating the leading next-generation platform to power amazing customer engagement for every kind of company. But in order to fulfill this vision, the platform needs customer data to drive smarter decisions, and more relevant engagement.” He went on to say that the hodgepodge of systems and monolithic apps that companies use to engage with their customers is one of the biggest pain points that companies, especially B2C companies, face.
 
For those with the right decoder ring, there is an obvious clue in Lawson’s statement, the reference to “monolithic apps.” While not named by Lawson, several financial analyst questions centered on the potential new competition Twilio will face, including from Salesforce and Adobe.
 
Lawson doesn’t specifically address these “monolithic” competitors. Instead, he notes that Twilio and Segment have a different, developer-led approach. Lawson described Reinhardt as a developer CEO, saying, “We share the same model, empowering the developer…focus on the developers is where it all starts, and they are the ones building these next-generation customer engagement solutions.”
 
In summary remarks, Lawson said that the acquisition of Segment means Twilio will be able to help any business make its customer engagement across every channel more personalized, timely, and impactful. The emphasis on personalization is suggestive of Genesys’ 2020 focus on Experience as a Service, which the company bolstered with its recent partnership with Adobe. One before and one after the COVID crisis, both companies are seeking to help companies better address the digital-first nature of customer engagement, accelerated by the current pandemic.

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