Chatting Up a Customer: Conversation with Lead Ovum Analyst

Jean: How popular are chat apps, exactly?

Pamela: Well, we know that WhatsApp and Facebook Messenger have more than 1 billion monthly active users each, and Tencent’s WeChat is up over the 800 million MAU mark. So you can see that these apps are extremely popular among consumers, and most consumers use at least two chat apps. Also, much of the chat app usage remains where it started, that is, on mobile phones. According to Ovum’s OTT Messaging Forecasts, there will be just over 2 billion mobile monthly average users (MAUs) of chat apps by end-2016 — we’re not double-counting here — and another 264.9 million fixed-line MAUs. In terms of traffic, Ovum is forecasting that mobile chat app users will send a massive 39.1 trillion text messages in 2016. So we are also seeing high levels of engagement with chat apps.

Jean: But chat apps are not just for sending instant messages anymore, are they?

Pamela: That’s right — chat apps started out with text-based messages, i.e. instant messages, group messaging, sending pictures and videos. But most chat apps have rapidly evolved their communications capabilities, adding voice calling and, more recently, video calling. WhatsApp added video calling just last week, making it among the last of the chat apps to do so. Chat apps have radically changed consumers’ expectations of what a communications service should be, and that’s been enabled by the increasing penetration of broadband networks and Wi-Fi, increasingly sophisticated mobile devices with better screens, and also, for video calling, we have had companies like Skype and Apple, and multiple video live-streaming start-ups, acting as a catalyst. In addition, chat apps such as WeChat, KakaoTalk and Line have successfully transformed their chat apps into platforms for content and other types of services, including payments. And so as consumers’ expectations of what a communications service should be are changing, that’s having an impact on the way that they expect their brands and service providers to communicate with them.

Jean: Does this mean that chat apps are replacing all other communication modes?

Pamela: Not quite, but I think that to some extent this is true. Certainly we are seeing a decline in person-to-person (P2P) use of SMS, although there has been an increase in brands and service providers using SMS to send messages to consumers. E-mail seems to have weathered the storm a little better, and this is because it is used by consumers for communications with their personal contacts and with various businesses, and also to access a range of online services, including social networks. I think that voice is still a relatively strong customer communications channel, but the big change there is the move towards free or low-cost VoIP and away from traditional telco voice services. What I’m saying here is that although the use of SMS, e-mail and voice may be less or different — post the rise of the chat app and IP-based communications — consumers will still use these channels, depending on what they need to do.

Jean: Then how can a brand choose from all those different channels?

Pamela: One size certainly does not fit all — brands will need to use multiple communications channels, and the choice of channel will depend on which segment of customers they want to reach, and with what type of information or content. For example, if a brand wants to be able to reach all of its customers on mobile, to send say, an appointment reminder, then it would use SMS. But if the brand wants to send a rich media campaign to its younger customers, then it might opt to use a chat app (assuming it was set up to do this). One difficulty for brands in using chat apps is that the penetration of chat apps varies by market, for instance, WeChat is popular in China and other parts of Asia, similarly Line is very popular in Japan, and Facebook Messenger has more of a foothold in the US than WhatsApp, which itself has huge penetration in markets such as Brazil and South Africa. So brands that want to engage with customers via chat apps in multiple markets will need to know which chat app has the greatest penetration market-by-market.

Brands may also use multiple communications channels within a single interaction with a customer i.e. the omni-channel approach. So for example, if a customer is browsing the brand’s web site, the brand might offer a click-to-call or chat capability. If the customer accepts that, and then asks for additional information during the call or chat, they could opt to have that information sent to them via e-mail or chat app, or shared during the online chat session. If the outcome of the conversation is a purchase, the brand might send the customer a confirmation of their order via e-mail, SMS (or chat app), and offer an SMS-based tracking service; the brand may also follow up with a survey that could be delivered via SMS or potentially, via a chat app. The omni-channel approach also allows for brands that are using chat apps, to ‘fall-back’ to SMS in the event that they can’t get a message through to the customer via their chat app.

Jean: What does the rise of the chat app mean for brands?

Pamela: Chat apps represent another communications channels for brands that, in the short-to-medium term at least, they should explore using alongside their existing communications channels to their customers. Since it’s likely that a proportion of a brand’s customers will be using at least one chat app, it makes sense that the brand tries to reach those customers on their chat apps, especially for 2-way communication. It is also likely that chat app users will welcome brand interaction — assuming it’s relevant to them — since it means that they won’t have to open up another service or app on their device. Using a chat app also gives brands the opportunity to send mobile messages that can contain richer content than an SMS or an MMS, and which are potentially more accessible than an e-mail. Many chat apps include location, so it is also possible for the brand — with the customer’s consent! — to send location-based messages, special offers and so on. In addition, a number of chat app providers have enabled chat bots, which represents another way for a brand to interact with their customers, by offering automated, keyword-based access to content and/or services.

Jean: So, what are the challenges that a brand might face when adding chat apps to their communications mix?

Pamela: Yes, there are a few challenges! For example, not all of a brand’s customers will use chat apps and, of those who do, they will probably not all use the same app. Brand integration with chat apps may be more complex than brands realize, and the effort involved will depend on how many chat apps the brand wishes to use. Sending messages to chat app users on multiple telco networks represents another layer of complexity for most brands, even more so if the brand wishes to engage with chat app users in multiple markets. Finally, chat bots are still relatively immature as an engagement channel.

Jean: How can brands optimize their engagement with chat apps?

Pamela: First of all, brands need to decide whether they want to engage with their customers on all of the chat apps their customers are using, or if they wish to focus only on the one or two apps which are being used by most of their customers. They will then need to determine whether their chosen chat app(s) has application programming interfaces (APIs) that will enable them to access their platform(s), and if so, whether the brand itself has the resources to be able to integrate its services into the chat app platform. While most chat apps are very keen to enable brands to engage with their users, and have made available APIs that enable brands to access their platforms, some chat apps (WeChat, Line, KakaoTalk) are further ahead than others (Facebook Messenger, WhatsApp). As with SMS, brands may find value in working with an intermediary in order to be able to access the users of multiple chat apps, whether that’s on multiple networks within one market or within multiple markets. Also, brands will need to make sure that their engagement with consumers via chat bots is relevant, else it runs the risk of being viewed as spam.

[TO EXPLORE USE CASES FOR USING CHAT APPS FOR CUSTOMER ENGAGEMENT, GO HERE.]