Facebook Buys Kustomer

Social media giant Facebook has acquired Kustomer, a provider of CRM systems that enable businesses to manage customer interactions across channels. Though financial terms of the deal were not officially disclosed, the deal is said to be valued at $1 billion.

The move comes as Facebook increasingly looks to help companies do business on its site and makes a larger push into social commerce.

Kustomer is an omnichannel CRM platform that brings customer conversations from various channels together into a single-screen view. It helps businesses automate repetitive tasks for customer service agents.

"Kustomer is one of many solutions in this arena, and we'll continue to support the numerous options that businesses have to integrate their CRM platform of choice with our messaging services. We want businesses of all sizes and across all industries to discover the value of messaging, and having a vibrant partner ecosystem is critical in providing our customers with choices," Facebook's Dan Levy, vice president of ads and buisiness products, and Matt Idema, chief operations officer of Facebook's WhatsApp, wrote in a blog post announcing the deal.

Paul Greenberg, founder and managing principal of CRM consultancy The 56 Group, sees the deal as a way for Facebook "to provide a business communications platform for businesses to interact with customers. They, I think, see this as a way to use Facebook to interact with customers when customer service is necessary.

"The advantage, aside from the ubiquitous use of Facebook despite the acrimony directed at the company, is that Kustomer will aggregate and organize the social data needed to understand the customer who is engaging in the service interaction with whatever company is using Facebook Kustomer," he adds.

But Greenberg has doubts about whether Facebook will succeed in that effort. "Facebook itself, and those who have attempted to use Facebook as a CRM plaform or even receptacle, have pretty much failed in the effort over the years. I don't know that Facebook has the expertise to do it. Find the right people to lead the effort at Kustomer or elsewhere, they have a shot. Looking at their past experience with CRM or one or two of the pillars, it remains to be seen," he says.

Facebook expects to host Kustomer data on its own infrastructure. While Facebook will not automatically use Kustomer data to inform the ads that users see, businesses will have the option to use their data at Kustomer for their own marketing purposes, which may include separate advertising services on Facebook, Levy and Idema wrote.

Kustomer already had a relationship with Facebook, allowing companies to collect and respond to customer inquiries via Facebook Messenger. In October, Kustomer launched an integration with Facebook’s Instagram And in September 2019, it launched an integration with WhatsApp Business.