To get a better picture of the market itself I would like to present various angles from how you can differentiate the participants of the business messenger market:
Differentiation by problems
In my opinion, the most important one is the type of problem the companies who acquire business messenger products want to solve. These problem types range from a very easy support task like a pre-sales question about a product to a very complex software on-boarding over several weeks. Knowing that the problem definition is different it is not really surprising that there are products for each of the following problems:
- Help requests / Support
- Product support (e.g. on-boarding)
- Feedback channel
Differentiation by businesses
These different problems are closely tied to the type of business that acquires a business messenger to communicate with their end user. A local shop like a restaurant has completely different problems to solve than a SAAS or a large company. The restaurant owner is more likely searching for a solution where a waiter can easily respond to a table reservation while serving other customers. A SAAS company with a dedicated sales or customer success team instead really relies on the quality and accessibility of the business messenger. The team uses the messenger and its features 40 hrs a week. They need additional data to improve their performance and they also rely on support as well as onboarding by the business messenger’s customer success team. According to this, companies are very different in terms of money and time they are willing to spend for the service and to set it up.
Differentiation by end users
Furthermore, the end users of these two businesses are in a completely different situation while contacting the business. The end user who wants to reserve a table at the restaurant maybe never heard of the restaurant before and needs to find information about it before. The end user of the SAAS business instead knows the product really well because it probably took him several months to close the deal and implement it.
What is equally important is where the end users are in the moment they have a request. Are they already within the product experience or the website/app of the business or did they just discover the business on a social network or got it recommended by a friend and first need to get more information about the business in general.
Differentiation by product
Different problems require different types of business messenger solutions. Is the reply to a support request generated by a bot, is a real person chatting or even a mix of both? The more complex a conversation is the more likely it is that a real person can give better assistance to the end user than a bot that is pretty restricted in terms of understanding complex questions. The bot approach is pretty great for smaller businesses that don’t have a dedicated support team but a lot of similar and easy solutions to their end users problems that could be automated. The restaurant example could be solved easily by a messenger bot that displays available tables and time slots for possible reservations. The SAAS product instead requires a more complex understanding of the end users problem and therefore a real person with the background knowledge to solve the issue. The conversation can also become more valuable to the user if the messenger offers suitable ways to support the end user with rich content to the solution like video tutorials or video messaging.
Companies that offer business messengers are very different in terms of their core business. Intercom, Zapier or Olark, for example, have made it to their main goal to fix the business communication between a company and an end user. For Facebook and Apple business messaging is just a suitable addition to their portfolio — not their core business. This also affects how the products are different in terms of scope, design, user experience and features.
Differentiation by technological orientation
A big difference of the current business messenger solutions on the market is their technological orientation. This means on the one hand which deployment type the product has and on the other hand where the end users are able to use the service.
The deployment type could be differentiated in an on-premise application and cloud-hosted products like Intercom for example. For some larger companies, this could be an exclusion criterion during their acquisition of a new business messenger because they are really interested in where their data is stored.
Another important technical aspect is where a messenger is technically integrated. There are several different ways: for example, the messenger is integrated into the company’s website or app (Intercom, Olark, Zendesk Chat, Drift), within the own product ecosystem (Facebook Messenger) or operates as a standalone app (Apple).
How is the market developing in the next years?
There are two possible scenarios how the market develops: Proliferation or Consolidation.
1. Pro proliferation = More market participants
- The market is growing in the next years
- New generations of customers expect new ways of communication from companies
- Messaging is becoming a key communication experience and business interface of the future (e.g. shopping within the Facebook Messenger or WeChat)
- Digital transformation for SMEs is still ongoing
- A fragmented market is large enough for multiple solutions
- Split by needs (local businesses, SAAS companies, large enterprises ..)
- Split by areas and countries (e.g. WeChat and Line are big in Asia not in Europe or the US)
- A growing and fragmented market attracts more businesses to enter the market or fill niches
- B2B is very attractive in terms of making a new business profitable
- New businesses don’t need to reinvent the wheel to start off
2. Pro-consolidation = 1–2 players winning the market
- The scenario that a big player disrupts the market and offers a free and integrated solution to businesses and end users.
- The big player doesn’t have to rely on the income made with the business messenger in the beginning
- They integrate the messenger into an already successful product with lots of user awareness → fast market access
I believe that there will be rather a consolidation of business messengers in the next couple of years than a proliferation. But I also can imagine that the size and fragmentation of the market and the problems to solve allow that several bigger players can operate in parallel. They certainly have different customers, scenarios and market segments.
I would currently see two companies in the lead for two different parts of the market:
For local and small businesses I see Facebook in the winning position. For the business communication about more complex issues and with a higher value I would consider Intercom.
Facebook has a huge advantage in already having most of the SMEs (on Facebook Pages) and their target audience (over 2bn users worldwide) on the platform. Furthermore, they have launched a Messenger that a lot of users acquire on a daily basis for all sort of things. That means that they are already familiar with the interface and the environment. Opening the messenger API to companies who can build their own bots and integrations into the messenger if a richer communication is needed also has helped to establish the Facebook Messenger as a serious competitor. The fact that the service is free for both parties, companies and end users attracts a lot of new customers to integrate parts of their business into Facebook Messenger.
In terms of the leading solution for more complex and especially software business communication, I see Intercom in the leading position because their vision of keeping business messaging simple and at the same time delivering a highly innovative and user-centered product that scales for different companies in various stages of complexity.
The fight for the winning position in this market segment is rather contested. Most of the competitors like Olark, Drift, Zendesk and others are having a similar feature set. Therefore, the customers are comparing and deciding on the basis of prices, support, integrations and API accessibility and possibilities to customize. In the long run, I believe the company with the highest ability to adapt fast to environmental influences and changes of the market (e.g. natural language and voice) is able to take a leading role. An important aspect is also how aggressive one of the competitors is by making sure to secure exclusive partnerships, integrate the product into emerging platforms and how fast they can develop new features ahead of the competition. I think that if Intercom manages to take the step from an early adopters audience to the early majority and becomes known as “the solution for business communication” it is in a good position to dominate.
To be considered as the de-facto messenger for business the product would need to solve several different types of communication problems between customers and businesses as outlined in the answer for the first question. It also very depends on the situation and the context the end user is in. Therefore, I would assume that the business messenger market is too big and fragmented that we can speak from a ‘one solution fits all’ product. Again, I see here the two market players I have outlined in the previous question, Facebook Messenger and Intercom, in the leading positions to be considered the de-facto messengers for business in their specific market segments by solving different types of problems.
- Facebook Messenger because it has a mature set of features around the core messaging product that supports end users and companies of different industries in various kinds of simple communication problems. These features include in particular the Facebook Pages for businesses, but also their platform infrastructure which makes it easy to implement bot services and built-in shopping experiences. Technically, Facebook can cover most of the SMEs business communication (Support, Sales, Marketing etc.) directly by the Facebook Messenger.
- If the business communication requires a more complex setup that goes beyond chats where it is also necessary to educate, engage and get richer data about end users over a longer time period I would acquire Intercom as the de-facto business messenger.
I hope this has given you an idea of how the business messenger market looks at the moment.