A social media giant is stepping into the Customer Relationship Management Realm.
On November 30, Facebook announced that it had acquired the CRM platform Kustomer for a deal valued at a whopping $1 billion. Founded in 2015, Kustomer boasts to be a customer service focused platform that is made to support high volume transactions. In a statement on the company’s website, Kustomer CEO Brad Birnbaum believes that the platform’s complementary relationship with Facebook will create a mutually beneficial relationship.
“With our complementary capabilities, we will be able to help more people benefit from customer service that is faster, richer and available whenever and however they need it–via phone, email, text, web chat or messaging.” Birnbaum said, “In particular, we look forward to enhancing the messaging experience which is one of the fastest-growing ways for people and businesses to engage.”
The move may seem unusual at first. In the past, Facebook has opted to purchase customer-facing applications and software, instead of back-end applications. Such purchases include Spanish cloud video gaming company PlayGiga in 2019, and popular gif catalog service Giphy this past May. These applications are often used to build out new features for Facebook’s core platform and users.
Considering Facebook makes around 99% of its revenue through advertising, however, the acquisition makes sense. Through Kustomer, Facebook hopes to provide better support to companies wishing to use the social media conglomerate as a channel for attracting customers. By providing end-to-end support for these businesses, Facebook hopes to drive revenue and become a core channel used to sell products and services.
Only time will tell if the investment in a CRM platform can help drive companies to use Facebook as a primary sales channel. Ultimately, the end goal for Facebook is to increase its advertising revenue, and one could expect the organization to integrate Kustomer with popular existing applications like Instagram and Whatsapp.
The acquisition will have to pass a regulatory review, however, before Kustomer can officially become part of the Facebook family. While that is likely to go off without a hitch, Facebook needs to handle some bigger regulation issues before it can take advantage of its new CRM software.
Patrick Auger is a management consultant and entrepreneur who resides in Austin, Texas. He has a Bachelor of Arts in Business Management from Western Illinois University, and is the Founder and Principal Consultant at Auger Consulting Group, LLC. When he's not writing for The American Genius, he's writing about the business of Mixed Martial Arts for The Body Lock or learning how to cook, one burnt recipe at a time.
Thomas Johnson
December 22, 2020 at 9:31 am
Great. Now all your off Facebook customer data will get vacuumed up to be sold to your competitors. They will know what offers have been sent, what contracts are being negotiated and when. I’m sure Facebook will assure some kind of firewall which when discovered to have been breached by the
‘Customer experience team” will be apologized as the victim loses their customer list.
Pingback: Apple takes a bite out of Facebook's tracking policies