RightNow Gives a "Big Sky" Experience to Consumer-Focused Enterprises

RightNow Technologies (NASDAQ: RNOW) wants to help consumer-focused enterprises deliver an "exceptional customer experiences at lower costs." In a way, this is a return to its eService roots.

Bozeman, Montana, USA

Greg Gianforte founded RightNow in 1997, offering a simple web-based FAQ system. Setting up shop in Bozeman, Montana, far from established tech cities, was a bold (perhaps even a little strange) move at the time. But it's an example of Gianforte following his instincts and doing what he believes, not following the crowd.

The Bozeman decision has paid off. RightNow attracts bright graduates from nearby Montana State University and has less job hopping because employees, like their founder/CEO, love it in Big Sky country.

Growing Up, and Going Up-Market

Starting from humble beginnings, RightNow has built a comprehensive multi-function CRM solution, gone public, and booked over $100M in revenue in 2006 while serving 1,800 customers worldwide.

Not bad for the first decade's work.

Greg Gianforte, RightNow CEO

Now Gianforte has his eye on the next big milestone: $1 billion in annual revenue. As he put it, when we sat down for a chat at RightNow's HQ recently, $100 million is a "no man's land" for software companies. You either grow through it or get acquired.

RightNow has been growing its recurring revenue at an impressive 38% per year since 2004. And increasingly, RightNow is getting business from large consumer-oriented companies. Currently some 60% of its revenue comes from enterprises with over $1B in revenue, or from government-related institutions.

But the company's 2007 numbers will take a hit because of a decision to stop selling conventional software licenses. Although this was a small part of the revenue mix, nevertheless the transition to a subscription only model will stall revenue growth for 2007. Longer-term, the shift should make it easier for Wall Street to understand RightNow's financial picture.

RightNow Vs. Salesforce.com? Not Really

Some media reports would have you believe that RightNow and Salesforce.com are competing head-to-head on every deal. Not so.

Although both have moved up-market, RightNow tends to focus on service-intensive opportunities where robust self-service and contact center solutions are required. Salesforce.com's strength, despite its own multi-function CRM expansion, continues to be in sales force automation, especially B2B.

Where RightNow needs to catch up is in its partnering strategy. Signs of progress are showing, with recent deals signed with Vcommerce and Demandware for integrated e-commerce and CRM solutions. And, to ease the integration task of connecting on-demand to on-premise systems, Cast Iron Systems recently announced new RightNow appliances. I expect this capability will be popular in larger enterprises with long-term investments in Oracle, SAP and other legacy systems.

Other partners worth noting include Sterling Commerce, which acquired Comergent last year, and Lithium, a provider of industrial strength forum technology.

But RightNow is still way behind Salesforce.com in creating a partner ecosystem. More development and channel partners are needed to give the company leverage in the market. With partner-savvy Scott Creighton in charge of business development, I expect a lot of improvement in the next year. Gianforte told me that he’d like to see 30 percent or more of RightNow revenue derived from partners, including integrators, consultants and outsourcers.

Improved Product Strategy and Release Schedule

RightNow 8, released earlier this year, offers a load of improvements highlighted by a new .NET smart client desktop, improved ease of use, analytics/reporting capabilities that don't require a pocket protector, and vertical editions.

But customers waited a long time for that update and now they've got a lot of work to upgrade. RightNow, unlike most SaaS vendors, allows customers to control their upgrade cycles. RightNow's new approach is to put out a fresh release each quarter, and automatically distribute "service packs" with bug fixes. That should make life easier for both developers and customers.

Over the next couple of releases RightNow will improve customization options (without requiring professional services), add a new "eService widget" that can be placed on non-RightNow web pages via a simple RSS feed, add analytics for text feedback, and deliver full compliance with the Microsoft Office Fluent™ user interface.

I think all of this shows that RightNow is not only serious about the eService business, but also recognizes that it has to play nicely in a multi-vendor world.

The RightNow Experience

RightNow has consistently earned industry recognition for leadership in customer service applications, and for being a customer-centric company. Focusing on the customer experience has helped the company stand out in a market full of automation vendors.

All in all, I'd say RightNow has done a great job delivering on its promise to customers. After making enhancements to the company's business model, product strategy and partnering approach, the stage is set for RightNow investors to feel more love in the future, too.

Bob Thompson is CEO of CustomerThink Corp., an independent research and publishing firm focused on customer-centric business management, and founder of CustomerThink.com. Thompson is a popular keynote speaker, blogger and author of numerous reports, articles and papers, including Five Warning Signs for Danger Ahead on Your Customer-Centric Journey. Follow Bob on Twitter.