Facebook announced its intention to acquire Kustomer for $1 billion, adding digital customer service to its portfolio.

Why the focus on customer service? Its because customers hold the power in interactions with companies. Customers demand easy, effective service that values their time and provides them with personal experiences that are in context of their actions. They increasingly use self-service and digital channels to interact with companies as these channels meet their expectations. If companies deliver experiences in line with customer expectations, customers will keep their business with them, buy more from them, and serve as company advocates. This has a direct — and quantifiable — impact on revenue. 

Kustomer is one of many digital-first customer service solutions that supports automated and agent-assisted digital engagement over synchronous (chat, voice) and asynchronous (messaging, social) channels. These solutions have seen increased adoption since the pandemic as customers looked for easier ways to connect and avoid the frustratingly long wait times for callsThey’re also easy to deploy, allowing companies to add automated and digital channels to their customer service operations.

What’s unique about Kustomer’s agent workspace is that it displays customer interactions in chronological order, so agents can organize around the customer — not a ticket — and deliver more personal experiencesConversations in Kustomer can contain messages from any channel  digital, voice, and social — and be synchronous or asynchronous. Agents can switch between channels if the conversation or customer requires, and the platform maintains a continuous thread that exists as one event in the timeline. Kustomer’s open APIs allow it to bring in data from commerce and order management systems, which it uses to determine the right business process to follow. Agents can also use Kustomer to proactively engage with customers, like sending SMS notifications about shipping delays or offering a discount code for a product. 

This is a great exit strategy for Kustomer, which competes in a crowded and growing field of digital-first customer service vendors.

For Facebook, this acquisition opens up new challenges in competing in a customer service vendor ecosystem comprised of behemoths like Microsoft, Oracle, Salesforce, and SAP and smaller players like Pegasystems, Verint, and Zendesk. A large number of digital-first customer service vendors also add complexity to this vendor ecosystem.

Facebook gains from this acquisition by:

  • Growing its walled garden in communications. Facebook is committed to growing its platform to allow businesses to connect with its customers over Facebook Messenger, Instagram Direct, and WhatsApp. There are over 175 million users of Facebook today who use this platform either to connect with their customers or wholly run their businesses on Facebook or Instagram. 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. Additionally, Facebook places itself at the center of customer service messaging conversations — even when those conversations take place on non-Facebook-owned properties.
  • Betting on messaging. Facebook initially thought that chatbots would be the way to dominate messaging conversations. The acquisition of Kustomer is a tacit acknowledgement that human agents are needed to meet the challenging demands of today’s customer service delivery requirements. Asynchronous messaging — automated or agent-assisted — will grow to be the preferred communication modality for customer service for simpler inquiries. It allows customers to start and stop conversations without losing the thread. It allows customer service operations to be more efficient as they do not need to precisely staff to the peaks and troughs of customer interaction volume. Facebook wins by monetizing messaging as asynchronous messaging becomes more popular.
  • Learning even more about its customersFacebook will be able to leverage the data exhaust from all customer interactions over any channel handled by Kustomer — not only the ones that Facebook owns. This allows better ad targeting and monetization of customer data.

What this means for Kustomer’s customers is an increased support for Facebook’s asynchronous messaging channels, giving them new ways of connecting with customers. For Facebook business customers who already use the vendor’s messaging services, Kustomer will enable a holistic solution to engage with customers over a broader set of channels.

However, Kustomer’s average deployment size is still small, and enterprises will have to test the scalability and performance waters before signing up.