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In-app chat vs. SMS: Which option is right for your app?

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Making sure that you can easily communicate with your users – or your users with each other – is an absolute necessity for any app you build, whether it’s for on-demand services like food delivery or ride-sharing, gaming, dating, digital health or an online marketplace. 

Maybe you want to streamline grocery delivery orders by allowing shoppers to notify customers of unavailable items in their order, or perhaps you want to facilitate communication between different buyers and sellers within your marketplace app. Regardless, you’ll need to embed communication of some kind within your app.

Luckily, with the right API, this can be fairly straightforward.

The real question is, will you choose SMS, or will you opt for in-app chat?

SMS and chat may seem similar, but they’re actually quite different means of communication and can serve entirely different purposes. Each has its own strengths and limitations, and which one is best suited for your app will depend on what you need. 

While SMS certainly has use-cases it’s well suited for, it also comes with several limitations that many app users might find prohibitive. And while in-app chat typically offers more functionality and flexibility, it comes with constraints such as needing to be connected to the Internet. 

In this post, we’ll discuss the benefits and shortcomings of each approach. 

SMS and in-app chat

SMS was the first broadly available peer-to-peer messaging service and grew rapidly in popularity. Today, SMS is not just used between friends and family but also widely used in application-to-person (A2P) messaging, which enables businesses to contact their customers by sending a text from their application using an SMS API. One of the most common examples of this is the code your bank sends you when you try to login from a new device.

Over time, ubiquitous and cheap mobile data access coupled with high SMS rates and roaming charges in many countries gave rise to super popular chat applications like WhatsApp, WeChat, Telegram, KakaoTalk, and Facebook Messenger. 

These applications have steadily gained market share, with WhatsApp announcing in 2018 that users send an average of 65 billion messages per day and spend more than 2 billion minutes on voice and video calls daily. And that’s just WhatsApp. 

Source: Statista

Piggybacking on the popularity of messenger apps, in-app chat – where the user can engage in a chat conversation inside of the app they are using – has gained popularity. In-app chat provides real-time communication within an app, using either mobile data or WiFi. Downloading the brand’s app and chatting is typically free for the user, but requires him or her to be connected to the internet unless your chat app supports offline messaging. However, with the rise of cheaper, faster internet, this consideration is not as limiting as it may seem. 

Popular examples of this include customers chatting with their food delivery provider inside of a delivery app, two people chatting to get to know each other in a dating app, or a chat between a doctor and patient to perform a remote diagnosis in a healthcare app. Modern app builders are choosing to keep users inside of the app as much as possible including for conversations rather than popping them out to an SMS thread or even a WhatsApp.

Benefits and limitations of SMS 

The benefits of SMS

  • The major advantage of SMS is that you can reach the user at any time, even when they’re not logged into your app or even connected to the internet, as long as you have their mobile number and permission. One caveat here is that permissions are getting stricter and stricter and laws regulating SMS opt-ins differ by country and change often.
  • SMS open rates are upwards of 90%, according to Gartner.
  • Many consumers have unlimited texting, making SMS feel cheap since the cost is bundled into a larger monthly service fee. 

Challenges and limitations of SMS

  • Users need to leave your app to open SMSes, decreasing the time spent using your application and disrupting their user experience. More importantly, with SMS, you lose control of the user experience altogether. 

For example, if you’re a marketplace app and want to provide users with a product carousel and a buy button in the chat, this is simply not possible with SMS. Or if you’re a community app that wants to provide suggested replies to help keep the conversation going, this is another type of feature SMS isn’t built for. If the user experience and its direction and integration with your own app workflows is important to you, then SMS might be too limiting.

  • Replying to an SMS costs the user money if they don’t have unlimited texting as part of their mobile plan. In many countries, (lower-income) consumers purchase airtime and/or mobile data on a pay-as-you-go basis and may have few or no texts, relying on WiFi instead, preventing them from responding. 

While your business might be pretty US-centric today where SMS is cheap and unlimited plans are common, consider what happens as you expand internationally and you are now faced with passing on SMS rates – as high as ZAR 0.52 in South Africa or MXN $1.09 in Mexico – to your users. This may not seem like much compared to US costs (around $0.20 per out-of-bundle SMS) but it’s considerable to consumers in those countries, particularly when you take average incomes and exchange rates into consideration. 

 

  • SMSs are fairly short and transactional in nature. They are subject to 160 character limits and every SMS costs the platform money – and these costs vary greatly from country to country. The result is short communication that is functional but impersonal and typically lacks the ability to inject personality into the conversation. Reportedly, some 33% of consumers have attempted to respond to automated short code messages with something other than a keyword. This would suggest that consumers expect more of a conversation but don’t receive it.

 

  • With SMS, similar to losing control over the user experience, you lose control of information as you no longer own the data and are at the mercy of providers like Apple for iMessage or the telecom providers for access to the analytics about conversations your users are having.

If you are a marketplace and want to correlate sentiment and keywords within the chat thread to the likelihood of a product being sold, you’re out of luck. Or if you want to look at the chat transcript if you get a complaint that a user was rude, you’re relying on screenshots or he-said she-said.

  • SMSes sent from anonymous phone numbers can resemble spam.
  • Consumers can also perceive receiving an SMS from a brand as an unwanted interruption. Many consumers see SMS as part of their personal lives, just like phone calls. And just like no one wants to pick up their phone and talk to a solicitor, they may not want businesses texting them on a channel where they typically speak to their loved ones.  

In-app chat as an alternative to SMS

As consumers increasingly expect a seamless customer experience, in-app messaging is gaining traction as an attractive alternative to other communication means including email and text. 

One of the key advantages of in-app chat is that it drives traffic to your app and boosts retention, which is one of the key challenges applications face in today’s saturated app marketplace. Whether you’re building a new app or rebranding an existing one, it’s crucial to take the user experience (UX) into account and do everything in your power to keep users coming back for more.

In-app chat can be used to send private one-to-one messages or to communicate in groups of two to several thousand, building bonds and a sense of community among app users and giving them reason to return. 

In-app chat has a UX advantage in that the user doesn’t need to leave the app, whereas leaving the app to open an SMS interrupts your user experience. Moreover, in the absence of a chat feature, the user will need to locate contact details should they wish to contact the business, and then leave the app to make contact, resulting in a disjointed user experience. 

Paired with push notifications, in-app chat can boost engagement and user retention and improve conversion rates. Push notifications serve to alert the user that they’ve received an in-app message, either from the brand or from another user, and entice the user to open the app. Push notifications can even display rich elements such as images right on the user’s home screen. 

Benefits and limitations of in-app chat

The benefits of in-app chat:

  • Chat allows you to interact with users in a more human way. Conversational signals like presence and typing status make the conversation feel more synchronous and helps build engagement. 70% of respondents in a recent customer survey believe that in-app messaging and chat would enhance their customer support experience.
  • In-app chat gives app builders a lot more flexibility and control over the experience. You can send rich multimedia messages, including (long) text, images, video clips, GIFs, emojis, audio recordings, or even structured or templated messages, coupons and barcodes.
  • With chat, you can brand your user’s messaging experience exactly as you want it.
  • Chat provides rich data and allows you to hook your companies systems and processes into the chat workflow. For example, a buyer on a marketplace chat thread can look at a product image, watch a video, click on a coupon code, initiate a purchase, track their order status, and fill out a review – all from within chat. Companies like WeChat have led the way in making chat the command center of a transaction. 
  • With in-app chat, there’s no need for users to hand over their phone number, which many users are reluctant to do.
  • Push notifications alerting users to chat messages from other users draws users back to your app
  • Some chat platforms provide offline messaging, caching unsent messages and sending them when the user comes back online so they don’t have to worry about deliverability issues. 

Challenges and limitations of in-app chat:

  • In-app chat requires users to download your app and install it on their mobile device. 
  • Users need to have an internet connection to send and receive messages. 
  • Users can opt out of push notifications, in which case they will not see any messages received via in-app chat unless they are already in your app or open it.

In closing

Instant messaging applications like WhatsApp, Messenger and WeChat have paved the way for in-app chat by making mobile chat commonplace and creating norms and expectations such as presence and typing indicators, group chats and rich multimedia capabilities.

While SMS may be better for purposes such as delivering short functional messages and two-factor authentication messages and its value as part of a holistic digital communications strategy shouldn’t be ignored, in-app chat is more applicable for modern app builders and product owners seeking to deliver rich, contextual user experiences. 

For many applications, chat of some kind is core to helping the app live up to its purpose. For applications such as delivery and marketplaces, in-app chat is crucial in allowing users to communicate effectively in the context of a transaction rather than outside of it. While for other apps like dating and gaming, app builders will want to offer a richer user experience than SMS can offer, while also eliminating the need for users to exchange phone numbers or become WhatsApp buddies. Finally, in education and healthcare apps, app builders may want to provide a richer experience than what a text thread can provide, even seamlessly expanding the experience to video, all within the app.

Whether it’s protecting privacy, having tight integration into your own app, or just providing a more human brand experience, in-app chat offers more options and flexibility for modern app builders than SMS. 

Tags: Insights