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Why Facebook’s acquisition of Kustomer boosts its ability to own business conversations

Kustomer opens up new opportunities for marketers and for Facebook.

Facebook’s acquisition of CRM startup Kustomer is the latest – and biggest – sign that it is serious about allowing business marketers to better interact customers, while also allowing it to own more of the path to purchase. Here’s why.

When Facebook announced in October enhanced ways for businesses to manage conversations with people in Instagram and Whatsapp, it heralded the significant growth in interactions between people and businesses on its platforms.

This served as foreshadowing for Facebook’s acquisition of the customer management technology firm Kustomer. If approved, the reported $1bn acquisition will bring a robust set of tools into the Facebook fold that will give marketers new ways to automate customer service responses as well as improve interactions with customers – even when conversations happen outside of Facebook. The Kustomer platform boasts a “single screen view” of interactions across email, phone, web and messenger. This gives customer service agents a full understanding of the request at hand.

The acquisition also represents Facebook’s mission to claim more of the land along the pathways consumers take en route to spending money with businesses. Once Kustomer is integrated with Facebook, “Facebook gets more aggregate data about consumer behaviors and customer service and path-to-purchase,” Forrester Research principal analyst Ian Jacobs tells The Drum.

Less clutter than email

Daily conversations between people and businesses on Facebook’s Messenger app and Instagram increased by more than 40% during the past year, according to Facebook.

But while the pandemic has forced more online buying and pushed some conversations between businesses and consumers into virtual environments, the increase also indicates a more general shift by people away from using things like phone calls and email to ask questions about products or services, make a complaint or inquire about a shipment.

Michelle Rainbow, vice-president of media and campaign management at Atlanta-based Response Media, says her clients are starting to use Facebook Messenger more to communicate with customers – in part because it is a less-cluttered environment than email. “There’s a huge opportunity to communicate with people in a very uncluttered way. We find that [Messenger is] a very effective channel for CRM acquisition.”

Part of the allure of Kustomer is “it allows the [marketer] to know what the customer did through web chat and then just restart the conversation when they appeared in Messenger”, says Jacobs.

The technology also uses machine learning to automate simpler conversations and categorize inbound consumer messages so more complex inquiries are filtered to human beings.

Facebook’s CRM push in Instagram and WhatsApp

In October, before it had announced its agreement to buy Kustomer, Facebook introduced automated CRM capabilities for Instagram, enabling businesses to respond immediately in the platform to consumer inquiries. Facebook said brands including Adidas, H&M, Michael Kors and Sephora had been participating in the beta program to test the automated tech. The company also said several partner firms, including Kustomer and its competitors in the social CRM space such as Zendesk and Hootsuite, had been testing the automated Instagram capabilities.

Facebook at the same time unveiled a new option for businesses to manage their WhatsApp messages via Facebook hosting services, suggesting it would ease sales, consumer communication and inventory management.

Facebook wants to ensure consumer conversations with brands inside its walled garden not only grow but do not drift onto other turf, says Kate Leggett, Forrester’s vice-president and principal analyst. “Facebook faces increased pressure from newer social media platforms, such as TikTok, that have the potential to erode its customer base, and this strategy is a way to hold onto and grow its business customers,” she wrote on the research firm’s blog.

Antitrust and optimizing to benefit Facebook

Less than two weeks after Facebook announced its intention to acquire Kustomer, the Federal Trade Commission – along with more than 40 states – sued Facebook, accusing it of buying rivals such as Instagram and WhatsApp in an effort to kill competition. Whether the antitrust pressure on Facebook has an effect on approval of its acquisition of Kustomer remains to be seen. However, buying the company could give Facebook a leg up when it comes to keeping marketers inside its universe when communicating with people.

Facebook already allows marketers to use a variety of CRM software from other companies. Yet, Forrester’s Jacobs says, because Kustomer manages CRM interactions outside Facebook, owning Kustomer could give it better insights into how people in aggregate use other channels to communicate with businesses, such as email. “That data is data that Facebook was not able to get before Kustomer, since it didn’t know what channels you used other than Facebook – or brand’s websites that were instrumented with Facebook tags.”

“And that data will be very useful for Facebook”, he says, because it will allow the company to make suggestions for optimizing consumer interactions that keep people inside Facebook channels. For example, he says, Facebook might be able to tell marketers: “Your customers don’t find the answers they need in SMS and often jump to Twitter. So, to fix that, create new knowledge articles that your agents can send links to via SMS — that way customers don’t need to channel switch.”

At this stage, it’s not clear just how granular the data that Facebook would be able to access from Kustomer would be. When asked to comment for this story, Facebook pointed to a company post about the acquisition, which states: “While Facebook will not automatically use Kustomer data to inform the ads that a user sees, businesses will have the option to use their data at Kustomer for their own marketing purposes, which may include separate advertising services on Facebook.”

For marketers, Facebook’s acquisition of Kustomer “gives Facebook a little bit more of a stickiness”, says Response Media’s Rainbow. “It kind of puts their tentacles a little deeper into the business.”

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