If You Don't Want to Say Goodbye to Customers, Say Hello to CPaaS



It's never been easier for consumers to switch suppliers. Often, they're moving not for cheaper prices but for better customer service. So how can established firms update their communications to provide rich and instant feedback to consumers? Step forward Communications Platforms as a Service (CPaaS)…

If the biggest problem in your life is finding the perfect pair of jeans, you're in luck. For two reasons. First, because the biggest problem in your life is finding the perfect pair of jeans. Second, because Levi has a 24 hour advisor waiting to hear from you. In fact 'Virtual Stylist' is an AI-powered bot, which the company revealed last year for Facebook Messenger. In natural language, it asks questions such as "How would you like your jeans to fit through your hips and thighs?" Thus, desperate shoppers can simply chat their way to the perfect pair of jeans.

This is a little anecdote, but it says a lot about big changes in how customers talk to companies. For starters, they don't always speak. They email. Or text. Or chat by WhatsApp, Facebook Messenger or Twitter. Sometimes they switch between all of the above. But however they communicate, they want the answer as soon (and as personal) as possible. For established companies this represents a huge challenge. The days of responding to an email in three days or sending callers to voicemail are over.

Why? Because so many new and better communications options are available. Indeed, some new start-ups are building their entire offers around these tools. For example insurance challenger Lemonade uses a bot to process claims in just seconds. It says digitizing the process makes its customer acquisition costs 90 percent lower than those of its traditional rivals.

Now, it should be stressed that this new era is not a bot thing. In fact, the vast majority of companies don't use bots. Instead, this is about the requirement for companies to innovate around customer service to attract and retain customers. They need to invest in channels that deliver rich and instant interactions. And it's becoming urgent. Why? Because without this innovation, customers will leave. In fact, they already are. According to Accenture's 2016 Pulse Survey (across 33 countries and 11 industries), 52 percent of consumers said they had switched providers in the previous 12 months due to poor customer service. Accenture estimates that in the United States alone, the cost of customers switching is $1.6 trillion.

So is it possible for established businesses to quickly build a new kind of communications set-up? Happily, it is. And it's all thanks to a relatively new technological model called Communications Platform as a Service (CPaaS).

To grasp the impact of CPaaS, it helps to understand what it has replaced. Historically, when companies wanted to send bulk messages to customers, they paid intermediaries to do it. Thess third parties would have the systems in place to send the messages or place the calls and the necessary commercial and legal relationships with telcos to route them. CPaaS has turned that process into software. Now the intermediaries provide application programming interfaces and software development kits instead. Companies then use these codes to embed voice, video, and messaging capabilities directly into their own systems.

The result is transformative. For example, when companies want to send marketing messages to thousands of users, they can do so from inside Salesforce.com, Microsoft Office 365, and similar business software. There's no complex set-up or commercial negotiation. Instead, companies pay a simple per-message or per-minute fee.

And from a user point of view, there's a huge benefit too. Imagine a customer is on a retail app and wants to ask a question. Without CPaaS, she would have to exit the app to make a call or send an email. With CPaaS, she can simply tap to start a live chat with an advisor in app. And she can choose from a variety of channels, including SMS, WhatsApp, or video calling, to do it.

Many big companies have already adopted CPaaS. For example, the travel giant Booking.com worked with communications specialist Sinch to integrate communications APIs into its systems. This led to many operational benefits. But it also meant Booking.com could handle calls and chat sessions inside its app. That was convenient for customers, but it also reduced the revenue leakage that can occur when users make bookings outside the system.

Today, one could argue that without CPaaS some of the world's fastest-growing companies simply would not exist. Take Uber. Its service depends on drivers and passengers being able to message each other from inside the app. This is only possible because of communications APIs.

Analysts agree that CPaaS is now set for rapid expansion. Juniper Research says the market grew by 50 percent in 2017 to more than $1.6 billion and will quadruple to $6.7 billion by 2022. IDC is even more bullish. It forecasts a market worth $8.2 billion by 2021.

One reason for their optimism is the fact that communications tech is getting richer and more diverse. The last decade has seen the rise of new channels, such as social, video, and chat. Looking ahead, it seems inevitable that there will be more.

Take RCS. This is the next generation of SMS, which enhances plain messaging with rich features like group chat, read receipts, GIFs, video, maps, and even payment forms. Telcos are already rolling out RCS as a consumer service, and businesses such as Subway and Nissan are now testing it.

RCS is already being talked up. Some observers believe it could turn messages into mini-apps and create new opportunities for companies. This is up for debate. But what's certain is that when RCS comes of age, CPaaS will be the best way for companies to embrace it. RCS will be just another API to add, with all the complex back-end stuff being handled in the cloud by the CPaaS provider.


Rob Malcolm is vice president of CLX Communications. After 15 years at Mblox, holding management positions in sales, engineering, and product management, he joined CLX following the acquisition in 2016. As a board member for the Mobile Ecosystem Forum, he is highly active in shaping the industry and often contributes in blogging and speaking events on innovation in messaging.