After quitting his job at Yahoo Jan Koum went on a trip through Argentina for several months. An enthusiastic and exciting decision that was only dulled by the outlook to not be in contact with family and friends. He would never know whether they’d be available for a phone call or not because in 2008 there was no easy way for them to tell him. What Koum also did not know: This problem and his phone, the Nokia 6610, were the starting point of a billion dollar business idea. He called WhatsApp to live. A service that would enable users to send status updates via mobile phone to each other so they would know what the other person was up to.
WhatsApp’s downloads were not bad but a real increase in usage was only seen in 2009, once Apple launched the ability to send push notifications. Now users would be notified when some of their contacts updated their status and did not have to manually check. That's when the real magic happened: Users started communicating with the help of status updates. This triggered the idea to develop WhatsApp into a chat app. WhatsApp as we know it today.
In spite or because of that change of use WhatsApp had an impressive increase in user numbers. In August 2013 there were 300 million active users worldwide, by August 2014 that already pretty high number had doubled. In that same year the US-based company Facebook Inc showed interested in WhatsApp and without further ado bought the messaging service for several billion US dollar.
Over 1 billion daily active users worldwide in August 2017 and availability in over 60 languages - the potential of WhatsApp does not need any further proof. A worldwide survey among Android users suggests that WhatsApp is the favorite app in 109 countries. Just to give you an idea of the meaning of this fact: Facebook Messenger is the favorite app in “only” 49 countries. WhatsApp has successfully established itself as one of the most important applications for communication within private context.
But there is no monetization in place as of now. So far WhatsApp is nothing but a cost factor in Facebook Inc’s balance sheet. When the app founders were still in charge the focus was on strong user numbers, not on a well thought through payment system. Over the years several payment models for the user were tested such as for free, one-time payment or an amount to be paid every year, ultimately resulting in the decision to keep WhatsApp free of charge for users.
So the only other opportunity for monetization is to open up for businesses. That is indeed happening right now. Potentially this can create a win-win situation offering businesses the chance of reaching customers in their most loved channel and helping WhatsApp to monetize. Three of the largest messenger companies have already announced that they are opening up for businesses (Apple’s business chat, Google RCS and Facebook Messenger) indicating the trend. So WhatsApp is simply taking the logical next step that was announced by Facebook for their subsidiary firm earlier in 2017.
According to YouGov every 5th German feels that communication to businesses in WhatsApp is overdue. Consequently, many German businesses started to use the instant-messenger as a channel for customer communication - even before WhatsApp opened for businesses. But without the accompanying business logic in the background WhatsApp is currently being used for simple use cases such as ordering from the go-to bakery or sending special offers.
So far this sort of interaction is very rudimental. For once because WhatsApp's terms and conditions prohibit commercial usage meaning that the customer has to initiate the contact to allow the business to send messages. Additionally,businesses have the struggle of conveying trust and authenticity in this (for them) new channel of communication. Especially germans often suspect businesses to use the channel simply to gather data.
The current process of communication between business and customer is as follows: The customer has to save the businesses number on their smartphone in order to send an initial message on WhatsApp to the business. Only then the business is allowed to send messages. For the customer, this does not feel like a trusted, personal procedure and for businesses it is a highly inefficient process.
At this current state, it can be said that WhatsApp is merely a channel for pushing information to a customer. But exactly this is supposed to change with opening up to businesses.
By opening up, WhatsApp is aiming to offer a simplified way for businesses to interact with customers. The business version helps businesses from various areas such as e-Commerce, banking or air transportation to map different processes.
Airlines, for example, can issue boarding passes, communicate flight times and gate changes via WhatsApp to passengers. The benefit in comparison to other channels: a fast and direct exchange with the customer. Additionally, it is one of the customer’s preferred channel for communication in their daily life already, so the business simply fits their communication into the user’s habits.
The opportunities that are opening up are endless. With a verified business account within WhatsApp, there is an official, authentic presence towards the customer. WhatsApp offers functionalities that help businesses with communication and simplify the process.
Payment-wise they differentiate between SMEs and large enterprises. While SMEs can use WhatsApp business for free, globally operating businesses have to pay. The exact price ranges are not public just yet. Costs could be based on number of users or sent messages or are calculated as a fixed monthly amount. Either way, it will most definitely be cheaper than SMS or postal contact to customers.
Why do more than 60% of Germans use WhatsApp? It’s pretty simple: WhatsApp allows users to chat to friends and family and exchange messages, pictures, and other content. They can stay in contact whenever they want to adapt the communication to fit their daily routine.
With the next steps of integrating businesses into WhatsApp, there are some things that change for users. What stays the same is the typical interface, making the communication with businesses as intuitive as it is with friends and family. They know how to send messages, start conversations and record voice mails, thus they will be able to do exactly the same interacting with businesses.
What changes is that business messages appear yellow and not green as they would with friends and family. This allows fast distinguishing between the sort of receiver of messages and prohibits sending a message to a business instead of a friend by mistake. Business accounts with a verified phone number will also appear with a green check mark, similar to the way social media account are marked as verified.
Beneficial for the user is that sending messages to a business via WhatsApp is much faster than via e-mail. Accordingly, users expect an equally fast reply but also experience less inconvenience when a message stays unanswered for some time as they are not hanging in a hotline listening to some repeating jingle.
At this point, users might question whether communicating to businesses via WhatsApp might be a step too personal. Thus we would suggest being transparent to the user about the terms and condition of interaction - especially in data-sensitive Germany.
Opening up to verified businesses is an important step for WhatsApp and an equally important sign for businesses. For the chat application, it is a serious possibility to monetize their service. Also with this step WhatsApp is actively participating in the competition among Google, Apple, Facebook and Co for users and in the race of being the preferred platform for interaction.
WhatsApp has gathered an impressive amount of users on their platform. They have the ability to take learnings from billions of messages and transfer these into business context. But without the steps towards business customer interaction, the future of WhatsApp might be limited.
When talking about customer business interaction the idea of chatbots is never far off. If and in what depth chatbots will be able to be implemented into WhatsApp is not clear yet. At the current state WhatsApp does not allow integration into existing processes or external systems. This means that in comparison to the Asian pendant WeChat, WhatsApp does not allow in-chat transaction and no third parties to build services within WhatsApp. Let's see how and if that will change.
But the business version is still in beta with a batch of chosen businesses testing the service. The messaging provider’s aim is it to cultivate strong feedback culture and implement learnings into the platform. Only the future can show how strong WhatsApp will be and which role it will play in the area of business messaging.