12 CPaaS Market Trends That You Need to Know

Communications platform as a service (CPaaS) is a relatively new solution that allows businesses to deploy multiple channels for customer and colleague outreach. This provides teams with a more versatile and customizable solution for conducting business compared to traditional phone communication. There are also several more reasons businesses are investing heavily in more open-ended, cloud-based software solutions like CPaaS.

Recent market trends in the CPaaS landscape and their small business benefits include:

1. Full-stack CPaaS is the way to go for most businesses

(Source: Telestax)

CPaaS delivers convenience for businesses wanting to remain agile in a constantly changing communications environment. When shopping around for a CPaaS provider, you’ll find that you plenty of options. Some providers offer omnichannel components, but in the end, they would have glitches and freeze-ups.

This kind of provider has clearly started with a working communications platform but has also incorporated additional communications connectivity that might not mesh well. This is where a full-stack provider really starts to shine. This type of provider delivers custom application programming interfaces (APIs), allowing your team to build the channels you need into the main application.

With a full-stack provider, there’s less conflict with the software, and since the APIs incorporate as little coding as possible, these solutions are also easy to implement. These providers are also typically built from the ground up, allowing for higher reliability and flexibility.

When adding voice-over-internet-protocol (VoIP) voice calling, text, or video connectivity, since the platform is designed with these omnichannel capabilities, functions tend to interlock and perform well. VoIP-based calling is easily integrated into most CPaaS solutions, so customers can reach your business quickly.

2. The CPaaS industry is consistently growing

(Source: Gartner)

The CPaaS market is currently experiencing an increase in revenue compound annual growth of about 30%. This is because businesses are seeing the value of using software that makes it easy to add communication channels as needed. For example, based on research from Omnisend, with texting alone, campaigns are 429% more likely to end in a conversion.

Statistics like this illustrate why businesses are quickly adapting to their customers’ omnichannel needs. As customer needs change, software that reaches them on their favorite channel will only increase a business’ ability to close.

3. North America is set to represent 45% of the global CPaaS market value within the next 4 years

(Source: Juniper Research)

Thanks to a demand for new technologies that actively engage consumers, the CPaaS market in the North American region is set to expand even further by 2026. One of the chief drivers is conversational artificial intelligence (AI) chatbots, which are being used to improve customer service.

These bots are designed to walk customers through processes while being able to understand conversational cues and help customers make purchases. This is particularly useful as mobile messaging continues to be one of the more favored methods of communication.

4. 88% of companies place delivering a stronger customer experience as a critical goal

(Source: Mendix)

One of the chief drivers of using a CPaaS solution is the ability to comfortably engage with a customer on their channel of choice. When a customer sees that easy communication is facilitated through an app, they’ll have a much more positive experience to report about the company. In the era of the pandemic, businesses had to quickly adapt and add channels so that they could still meet customer needs.

As a result of these new expectations, 88% of businesses in a Mendix study stated that customer experience (CX) is a major differentiating factor when trying to close. CPaaS solutions enhance this CX experience by opening up potential channels for customers to use to make interactions more seamless.

An example would be using a CPaaS provider like Twilio to incorporate a self-service interactive voice response (IVR) system for billing. With the right IVR best practices, customers are able to pay bills without needing to wait on hold or communicate directly with an agent.

5. CPaaS providers bolster contact center revenue by as much as 28%

(Source: Intelepeer, Nemertes)

Even the best business phone system is limited when it comes to high-volume calling. This is why providers such as RingCentral and 8×8 deliver full-fledged contact center as a service (CCaaS) solutions to help businesses with a high number of inbound and outbound calls. CPaaS integrates naturally with the contact center since contact centers rely on omnichannel communication with customers.

While on-premise contact centers have their advantages when it comes to security and technology control, a cloud-based system has multiple benefits as well. For example, a CPaaS solution allows you to incorporate new channels at a low cost and incorporate AI-driven tools that encourage self-service. This is all done through simple APIs, and since everything is cloud-based, costs and implementation efforts are significantly reduced.

6. 85% of businesses say they need to improve connections between people by updating technology

(Source: ALE)

With CPaaS, the entire intent is to help businesses connect with customers and colleagues. Its inherent agility delivers the ability to quickly pivot and add new methods of contact. CPaaS naturally evolves with business needs—simply add or enhance existing services with simple API tweaks. Its capability to add new methods of communication into existing environments means consistently upgraded channels.

7. 90% of organizations will adopt CPaaS solutions within the next year, thanks to its versatility

(Source: Gartner)

Being able to add specific communications channels into already existing software is a useful feature. And to be able to do this without changing back-end infrastructures is a critical reason why CPaaS adoption rates are steadily increasing. In several industries, CPaaS is consistently growing. Here are a few examples of recent CPaaS trends affecting modern business:

• CPaaS in healthcare: Perhaps one of the most affected fields by CPaaS, healthcare has changed dramatically since the pandemic. Telehealth is powered by this technology, and it allows patients or customers to communicate with medical professionals via voice, text, and video conferencing.
• CPaaS in marketing: CPaaS allows marketers to create fully omnichannel experiences for their customers. Rather than simply presenting a customer with a campaign, a CPaaS solution allows a business to push conversations to help empower the process. Additionally, since all channels are fully trackable, gleaning key campaign metrics through a CPaaS platform is oftentimes uncomplicated.
• CPaaS in retail: With modern CPaaS solutions, as customers make purchases, they can be sent targeted messaging through a business’ app, via email, or through SMS. A CPaaS solution allows you to incentivize your customers to make purchases on their preferred channel.
• CPaaS in customer service: During the ordering and delivery process, businesses are using CPaaS solutions, like Twilio, to provide push notifications. As a package moves through the shipping process, automated texts are often sent to customers through each stage.

8. Customer engagement platforms are being adopted by 80% of enterprises (more than half of which will be implemented using CPaaS)

(Source: IDC and Sinch)

As you no doubt understand, businesses are reaping the benefits of CPaaS by using its ability to seamlessly integrate communications channels. With the tech, you communicate with customers across channels without losing valuable context. For example, the same application that fosters a voice conversation with a rep to set an appointment can also send an SMS reminder about the same appointment.

This seamless meshing of communication technologies helps improve the customer experience; as a result, 80% of companies are investing in technologies that foster this. Customers want tailored experiences, so it’s no surprise that half of these technology investors are putting their money into CPaaS.

9. SMS-based contact using a CPaaS solution is potentially more than 99% cheaper than phone contact

(Source: Plivo)

While mileage may vary from provider to provider, text-based contact with customers is significantly less expensive than voice. This is due to the fact that CPaaS solutions use artificial intelligence and machine learning to reach out to customers during the purchasing journey.

Compare this to using voice, which CPaaS also facilitates, and you’ll realize how much cheaper automating contact is. With voice, the cost per contact is increased thanks to the presence of representatives and the time it takes to engage with customers.

This is illustrated by the Plivo client, Deckers, which lowered its cost per contact by utilizing SMS rather than voice contact. In fact, thanks to automated tools, things like track-package calls have decreased by as much as 20%.

10. Email, voice & social media are major, but SMS accounts for 56.3% of CPaaS spend

(Source: Mobilesquared)

While its omnichannel capabilities are a major driving force behind the growth of CPaaS, its most popular business application is SMS. With the text-based communication afforded by CPaaS, conversational customer engagement solutions have really taken off for mobile users in the post-pandemic era. As a result, SMS text messaging has become the go-to method for many companies looking to interface with customers.

11. CPaaS provides businesses with more flexibility than comparative solutions like UCaaS

(Source: ComStar)

No one’s knocking unified communications as a service (UCaaS)—they provide some excellent channels for reaching customers and collaborating. Still, with that said, for many businesses with customer-facing structures, CPaaS is a more flexible solution. With CPaaS, you tailor the overall experience to your company’s needs.

Some VoIP/UCaaS solutions have customizable APIs. A good example of this would be RingCentral, which handles text, calling, team messaging, and video. Still, a dedicated platform like Twilio is much more agile when it comes to incorporating new communication options, which may be more in line with the business needs of some companies.

With a CPaaS solution, you are allowed to pick and choose all of the communications connections needed in your application. This means nothing goes to waste. For instance, if you’re not planning on supporting video conferencing through your app, with CPaaS, you can opt not to include it or add it later when needed. This is done all without having to implement a brand-new back-end.

12. CPaaS grew by 33% year-over-year because of COVID-19

(Source: Capacity Media)

The pandemic has deeply affected business in a wide variety of ways. For example, conferencing solutions have experienced a growth of 64% year-over-year. Similarly, since the beginning of the pandemic in March 2020, CPaaS has experienced a 33% year-over-year growth, with Twilio and Vonage maintaining their position as market leaders. Compare these solutions to on-premise ones, and there’s a clear trend toward cloud-based technologies.

Bottom Line

Businesses that want to enhance their customer experiences are moving to technologies like CPaaS. CPaaS not only opens up your ability to increase your number of communications channels, but several providers provide low- or no-code APIs so that adding channels is done easily.

This article looks at some of the emerging CPaaS market trends that have come into being in recent history. Factors like consumer behavior and emerging communications channels will clearly affect CPaaS as a technology. Not sure about choosing between a unified communications (UC) solution and a CPaaS one? Check out our guide on UCaaS vs CPaaS to make a more informed decision.