Customer experience platform Zendesk has entered into a definitive agreement to acquire Australia-based Contact Center as a Service (CCaaS) firm Local Measure. Citing pending regulatory approval, the deal’s financial terms were not disclosed—it’s been reported to be $100 million—, but both companies expect the deal to close in May 2025. The move aims to bolster Zendesk’s AI-powered voice capabilities while deepening its relationship with Amazon Web Services.
“Voice is one of the most personal and powerful ways businesses connect with their customers and employees, and managing it at scale requires a solution that is both intelligent and adaptable,” Tom Eggemeier, Zendesk’s Chief Executive, said in a statement. “By acquiring Local Measure, we are fast-tracking our ability to deliver a fully integrated, AI-powered voice solution that combines the strength of Zendesk’s platform with the flexibility, security, and scalability of AWS’s cloud infrastructure. This move positions Zendesk to lead in the next generation of AI-powered service.”
What is Local Measure?
Founded by serial entrepreneur Jonathan Barouch in 2014, Local Measure is a customer intelligence platform servicing businesses in the retail, telecommunications, financial services, travel and hospitality, and public sectors.
In a joint interview with Eggemeier, Barouch tells me he started the firm because he saw a “gap in [customer experience], particularly in the hospitality space” and envisioned building a “mini-Zendesk for the hospitality sector.” However, like many businesses, the COVID-19 pandemic took a toll on Local Measure, and it needed to shift strategies. Ultimately, it found its future in the contact center space and banked heavily on its pre-existing AWS relationship.
Citing Australia’s regulatory laws, Barouch declined to share how much his company raised in venture funding, though he revealed that Local Measure has over 50 shareholders. That said, Barouch disclosed that the organization has 60 customers, consisting of “some of the world’s largest organizations, from travel brands to state to federal governments to… telecommunications companies,” and that revenue has “been doubling year-on-year for about two to three years in a row.”
Should the acquisition meet regulatory approvals, Barouch expects Zendesk to make offers to all Local Measure employees. “From my understanding, this isn’t about taking cost out,” he remarked. “This is about exponentially growing the business because of the quantum, scale, and magnitude of the opportunity.” He points out that the voice channel makes up “50 to 60 percent” of all interactions globally. “They live in a big market, and sometimes the [total addressable market] for the voice portion is large—larger than the digital channel. So, this is many magnitudes the size of the TAM that perhaps either of us would have been able to go after on our own.”
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Helping Zendesk Build a Better Voice AI
“Local Measure put together a great application from a user interface, routing perspective, and integrating the agent workspace as well,” Eggemeier stated. “This is not going to be an acqui-hire. We’re really going to leverage the Local Measure product, the application layer to work on top of—and with Zendesk—to provide an integrated voice solution along with all the other channels we offer. And it’s going to be powered by Amazon Connect behind the scenes.”
This is the latest move Zendesk has made to enhance its AI-powered voice offering. It already has Zendesk Talk, its cloud-based call center software, and in October 2024, the company introduced artificial intelligence via its partnership with PolyAI to reimagine what an interactive voice response (IVR) system looks like.
Although Zendesk Talk is a good product, Eggemeier admitted it’s more suited for “smaller use cases.” He pointed out a rise in customer demands for a more scalable platform: “They wanted us to have a robust, upper market voice solution.” This led Zendesk on a soul-searching process, searching for potential acquisitions from “small companies to…companies with hundreds of millions of [annual recurring revenue] in the voice space.”
“What we kept coming back to is we wanted something…that’s natively integrated into Zendesk and the whole…platform, everything from AI to voice to [workforce engagement management] to messaging to chat to—you name the channel—email to web form,” Eggemeier added. “That’s what our customers were asking for, and they wanted to make sure it was an innovative solution. And the more we got into it, the more we wanted to be partnered with Amazon Connect. But we knew…it was going to take some time to develop an application that made sure that Amazon Connect natively integrated with Zendesk from an application layer from the workspace, from routing, from all this.”
At this point, Zendesk found its spotlight cast on Local Measure. Barouch’s team was already an Amazon Connect partner, had developed what Zendesk was looking for at scale, and had created a native integration with Zendesk. Following due diligence, the two companies formed a strategic partnership.
Barouch offered a similar complementary message about Zendesk: “As a small company, you get approached from time to time by large businesses, and obviously, we take that very seriously, but it never really felt like a good fit. And the thing that I think impressed us about Zendesk is we’re a culture- and a values-driven business. We’re small. We have a very great team that is kind of tightly integrated. And so, for us, finding an organization that had an alignment around those cultural values was really important. And what’s really interesting is everything Zendesk committed to throughout…the partnership, or…the process to get to know whether this would be a good fit, they stuck to.”
Today, a more native tie-up with Local Measure enables Zendesk to craft a platform “no matter what channel a customer wants to interact with the company.” It’ll also help shore up Zendesk’s defense against increasing competitors, including Google, Twilio, Replicant, Sansas, Crescendo, and Sierra.
Connecting with Amazon Connect
Throughout our conversation, Eggemeier and Barouch repeatedly stressed that this deal brings Zendesk closer to AWS and its Connect offering. What is Amazon Connect? It’s Amazon’s cloud-based contact center and customer service software that launched in 2017. The platform utilizes AI to empower contact center agents with insights and advice to respond to customer queries. And like other AWS products, Amazon Connect is being infused with generative AI technology.
“From our perspective, AWS is incredible at building these primitive capabilities that developers can then add their own special sauce on top of,” Barouch explained. “If you look at the world’s most iconic software businesses, if you look under the hood, many of them have AWS components sitting underneath. Amazon Connect…has a suite of tools for developers that are unlike anything else that’s on the market.”
He noted that developing resilient global telephony is challenging, especially when creating a system from which developers can build on top of it. AWS is renowned for this capability. As such, Local Measures has capitalized on this to produce an application “that’s differentiated at the edge, meets customers’ requirements,” and can be rapidly innovated to “do all the cool things that we love.”
Eggemeier equated Zendesk’s partnership to being like a three-legged stool. The first leg is AWS, on which the Zendesk application is built. The second is Amazon Connect—Zendesk added support for it in 2019. Finally, the third leg is Amazon Bedrock, where Zendesk can gain access to a multitude of large language models. The company announced support for this platform and Anthropic last year at its Relate conference.
He disagrees that Zendesk and Amazon Connect are in direct competition. Rather, Eggemeier claims Zendesk “very rarely” overlaps with AWS’ call center platform. However, he said such a partnership is necessary since he believes there will be more so-called “co-opetition” in the marketplace.
Zendesk and IVR
“Just like we think over the next three to five years, 80 percent of digital interactions will be automated…80 percent of voice interactions is going to be automated as well,” Eggemeier claimed. “You got to live in both worlds. In our view, customers have a choice…Sometimes they’re going to go and want to do email, sometimes web forms, sometimes they’re going to want to make a call, sometimes they’re going to want to send an Apple business message. Sometimes, they’re going to want to send a WhatsApp to a customer or Line if you’re in Japan or South Korea. To the companies we serve, we got to meet their consumers and employees where they’re at and integrate all that information across channels.”
This reasoning is why Zendesk is extending its AI agents to more channels, with its most recent investment in the call center. When asked about the state of its IVR transformation, Eggemeier revealed that his company ended 2024 with over 10,000 customers using its AI solutions and anticipates doubling that by the end of this year. He also shared that more than 30,000 customers use the platform’s knowledge base Help Center.
AI voice will be a primary focus of Zendesk’s growth strategy. Eggemeier believes customers prefer using a voice bot instead of an IVR system, which he calls “an unsatisfying solution.” Today’s announcement is important because the company is positioning its Local Measure purchase and its Amazon Connect relationship as core to the strategy’s success.
Featured Image: Zendesk Chief Executive Tom Eggemeier gestures on stage during his keynote address at the company's 2024 AI Summit in New York City, New York on October 9, 2024. Credit: Ken Yeung
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