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What Facebook’s CRM Acquisition Could Mean for Apparel Retailers

Facebook has taken another step into the commerce ecosystem in acquiring Kustomer, a customer relationship management (CRM) platform aimed at simplifying the customer service experience for shoppers and agents alike by streamlining conversations from various channels into a single-screen view.

Financial terms of the deal have not been disclosed, but a Wall Street Journal report tags the CRM platform’s valuation and potential acquisition price at “a little over $1 billion.”

Apparel retailers such as Untuckit, Thredup, Thirdlove and Abercrombie & Fitch Co. as well as the Birkenstock footwear brand, are known clients of Kustomer, which is designed to track customer data and prior shopping interactions to help call center and customer service agents personalize services and conversations to individual customer demands.

For example, if a customer reaches out to a retailer via email, SMS or a messaging app saying that the company shipped the wrong size sneakers, a customer service agent can access the order number within the platform and inform the consumer of their replacement shipment immediately.

The all-in-one nature of the platform prevents agents from having to exit the system to retrieve order information, such as the customer’s address, or navigating to a new window to view prior ticket information. Customers would receive the message in whatever channel they started the conversation in.

Rainbow Shops, a fashion retailer with over 1,000 locations in the U.S., Puerto Rico and the U.S. Virgin Islands, recently deployed the Kustomer CRM platform shortly before the peak season to service its e-commerce channel and stores with a staff of just 20 agents. Before rolling out Kustomer, the Rainbow agents reported difficulties accessing siloed information about the customer’s order history, order status, refunds and other issues.

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Within three weeks of the project kickoff meeting, the Kustomer platform was operational, cut customer abandonment rate 60 percent and boosted both agent and customer satisfaction levels. Rainbow Shops plans to add more Kustomer capabilities in January, including Kustomer IQ chat, SMS chat and AI-guided self service.

“Since adopting Kustomer at the end of October, I feel we are well on our way to providing our customers with the real-time, flexible and informed customer service they expect during one of the most critical times for retail success,” Michael Hoffman, director of e-commerce and customer service, Rainbow Shops, said in a statement. Hoffman described the quick deployment ahead of the holiday season as “risky” but said it “could not have gone faster or smoother and it’s already paying off in a big way.”

Facebook would benefit from the Kustomer platform since it would be providing small businesses that advertise and sell on the social network with more features to close sales. If successful, this could lead these businesses to spend more on Facebook advertisements.

Facebook says it plans to support Kustomer’s operations by providing the resources necessary to scale its business and improve and innovate its product offering.

The companies already had an existing relationship. Kustomer’s offerings allow companies to aggregate and respond to customer inquiries that come in through Facebook Messenger. To that end, Facebook recently announced several API updates for both Messenger and WhatsApp, allowing for further integration into partners’ tools and faster onboarding to help businesses manage their communications with customers. With more than 175 million of its more than 1 billion users contacting businesses through WhatsApp, Facebook has another opportunity to extend Kustomer’s capabilities to a massive subset of shoppers.

The announcement comes a little over a month after Facebook announced it was fortifying WhatsApp with in-chat shopping, expanding the ways people can browse and check out available products and even make purchases right from a chat. Companies are already using WhatsApp to present product information and initiate discussions for transactions, with Facebook recently adding QR codes and enabling sellers to share catalog links in chats.

In October, Kustomer said it also began integrating with Facebook’s Instagram messaging, which is where Facebook has concentrated most of its recent commerce ambitions. Instagram introduced a recent “Shop” tab as part of its recent redesign. Within the tab, users can find personalized recommendations from creators, editors’ curated picks, shoppable videos and new product collections.

Facebook later doubled down on this on the business side, updating its Messenger API to allow businesses to manage their communications across Instagram. The update means retailers can now also integrate Instagram messaging into the applications and workflows they’re already using in-house to manage their Facebook conversations, making Kustomer that much more useful across platforms.

The Kustomer platform offers an open API of its own, so retailers already could integrate the technology with systems that their customer service teams were already using. Although Kustomer is heavy on emphasizing live chat and messaging, it supports phone call assistance as well.

Kustomer clients will continue to own the data that comes from customer interactions, but Facebook eventually expects to host Kustomer data on its own infrastructure. In doing so, Facebook will act as a service provider for businesses leveraging the Kustomer platform.

While Facebook says it will not automatically use Kustomer data to inform the ads that a user sees, businesses will have the option to use their data at Kustomer for their own marketing purposes, which may include separate advertising services on Facebook.