Communicating with your customers is a good thing, right? Well, what about when some of your outbound communications end up repelling customers rather than attracting them?
Today we’re going to discuss advanced customer interaction strategies with John Kim, Co-Founder & CEO of Sendbird. We’ll dive into the effectiveness of in-app messaging, the rise of mobile engagement, and the evolving machine-to-machine economy.
About John Kim
John S. Kim is the Co-Founder and CEO of Sendbird (YC W16), the customer communications platform powering 4,000 of the world’s most popular digital applications. 7 billion messages sent and received between over 320 million people every month are routed using Sendbird, whose customers include DoorDash, Match Group, Virgin Mobile, Noom and Paytm. The company has raised $220 million USD to-date, backed by reputable investors including ICONIQ Capital, SoftBank Vision Fund, Shasta Ventures, Y Combinator and more.
John is a successful serial entrepreneur and CEO. His first startup Paprika Lab (social gaming) was acquired by GREE, and he was Korea’s all-time no.1 pro gamer in the Unreal Tournament.
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Transcript
Greg Kihlstrom:
Communicating with your customers is always a good thing, right? Well, what about when some of your outbound communications end up repelling customers rather than attracting them? Today, we’re going to discuss advanced customer interaction strategies with John Kim, co-founder and CEO of Sendbird. We’ll dive into the effectiveness of in-app messaging, the rise of mobile engagement, and the evolving machine-to-machine economy. John, welcome to the show. Yeah, I’m excited to be here. Thank you for having me. Yeah, of course. Yeah, looking forward to talking about this before we dive in, though. Why don’t you start by telling us a little bit about your background and what led to founding SendBird?
John Kim: Yeah. So my name is John, founder CEO of SendBird. So SendBird is a number one customer communications platform delivering one way messaging and two way conversations for business worldwide, primarily across mobile applications, but now extended to omnichannel. Today, we power over 320 million monthly active chat users on favorite consumer apps like whether it be DoorDash, match groups, a lot of dating apps, FinTech and healthcare. We deliver 7 billion plus messages on a monthly basis. And that’s a lot covering whether it be one-way messaging like transactional and marketing messages, but also conversations between two people across customer support, or it could be a thousand people watching live support streaming together. But kind of my personal background is always been a founder CEO ever since, you know, graduating college. Spent most of my career building consumer applications, whether it be social games or, you know, social networks. And that’s kind of where we got this idea around building communication capability, because we actually was looking for this kind of capability as a buyer. And we really couldn’t find a solution that we wanted to use. So we built this stack ourselves and applied to Y Combinator back in 2016. we launched the world and yeah, that’s kind of where we started out.
Greg Kihlstrom: Yeah. Yeah. Well, great, great story. And yeah, I always think it’s a good, it’s a good foundation when it’s a product that you’re wanting to, you know, you’ve, you’ve defined the use case cause you’re, you’re needing it. Right. So that’s, that’s a great, a great way to start, I think. Well, let’s, let’s chat about, you know, just kind of what I talked about at the very beginning brands, want to and need to communicate with their customers, but some outbound communication strategies can be counterproductive. So maybe start by giving an example of, you know, what are some of these outbound communication strategies that repel customers instead of engaging them?
John Kim: Yeah, I mean, probably everyone listening to this podcast have this personal experience. Whether you download a mobile app and you’ve maybe signed up a website, you start immediately getting a lot of like emails that are telling you to buy more stuff. Those marketing communications, you’re bombarded with push notifications. And sometimes you get immediately, you start getting pinged on your, or you’re basically text messaging on your phone. And more recently, we’re seeing more and more of these, for example, you know, like a parking application, you park your car, you’re trying to charge pay for your parking meter on a mobile app. Now you get an email notification that you park your car, then you get SMS to say, Hey, you know, you have an hour. left in your meter, and then you get push notifications. So you’re getting bombarded with these kind of multiple communication that happens on a mobile app. This could start with the parking app, but on your banking app too, you might get an email saying, hey, we have a fraudulent charge, potential fraudulent charge, through email, SMS, now voicemail. Now you call them back, now you have to identify yourself with your home address, your debit card number, you have to punch in your PIN, all those things. So all this communication is being thrown at you left and right, but you as a customer have already seen it. You don’t need that extra on your three, four reminders. And one of those businesses, you could easily be in a situation where you’re frustrated. You bought a product, never got delivered. Now you’re upset with the customer support, but the marketing department sends you a message. Hey, guess what? We’re here. Please buy more when you’re really just having a bad relation with the brand. So the user from the business side don’t have this holistic perspective of the customer experience. So each department is just throwing whatever message they can and will at the customer, you know, driving the customer experience down. So because of this fragmentation of channels, fragmentation of data silos across different departments, what ends up hurting is the customer experience. So I think that’s kind of where we are coming into play to hopefully, you know, fix some of these broken experiences and make the lives of customers hopefully far better.
Greg Kihlstrom: Yeah. And so, you know, I’m there’s there’s probably a lot of reasons why, but I’m hearing kind of two themes of of ideas. And I’m wondering if you can speak to. since you work with a lot of companies, maybe the strategy is behind this, but I’m hearing there’s the, well, we want to make sure the customer is informed because there’s the thought that an informed customer, that’s a good thing in the relationship. And yes, that’s true. But to your point, there’s being over-informed probably too. And then I think the second part is, you know, company brands are held to, you know, making sales and growing customer relationship, you know, cross selling, upselling. And so, you know, in other words, a lot of this is best intentions, but you know, what do you think’s going wrong from a strategy perspective that’s leading to either those two scenarios or others that you run into?
John Kim: Yeah, so I think, What ended up happening was, if you look at the evolution of all the channels over the years, we probably started with either a mobile phone number, or email, or something else, whether it be direct mail. So initially, we didn’t have so many channels to engage with customers. But as the years went by, especially with the rise of mobile devices, Now we have so many different channels as a business that can reach out to customers. But we kind of overused it because, well, different departments have different set of tools that they’re using. And generally, departments don’t have visibility of what’s being communicated to customers from other departments. So this data silo, fragmentation of tools, all these things start to create that. And it was a slow evolution that happened over the past two decades. But now what we’re realizing is that that’s great. The business have more tools and more, you know, superpower to engage with their customers. But we’ve never really seen from the customer side how that experience is, you know, start to accumulate over the years. So on average, any customers in US would get anywhere from 20 to 50 push notifications a day. And that’s just the ephemeral push notification you get on your iPhone or Android devices. And on top of that, would it be email and all those things? So would it be Gmail or whatnot? They’ve been investing so much into the spam filters and making sure all these messages are not bombarding them. So it’s a fight that’s constantly happening from protecting the customer experience, but also making sure the brand can still reach out to their customers. So this fragmentation has certainly been a slow evolution that happened over time. And I think why that’s especially driving a lot of this behavior is one is just lack of that perspective or lack of that holistic monitoring of what’s being communicated to the customer. But the other is the fear of opportunity, fear of losing out, whether it be marketing, or customer support, they all have their own KPIs or OKRs. So they have their goals, they have their budgets. So when they have their budgets, they probably want to continue to reach out to customers to hit their goals. But also, when they’re streaming these communication channels, we call them message governance. Are you, as a brand, having a perspective on what’s being communicated to customers and throttling them? when needed, but each department because they have a fear of what if we turn off a channel? What if we send one less message? How’s that going to impact their KPIs? So because of their fear, they are very hesitant, reluctant to turn off or throttle any of their messages. So how customers are reacting is, you know, shows up in the KPIs. They’re unsubscribing from emails. They’re saying stop to their SMS. They’re turning their push notifications off. So over time, the businesses are actually losing more and more of that relationship with their customers. But because of the fear of not being able to hit their goals is continue to drive their behavior of just sending more and more messages to customers out of desperation.
Greg Kihlstrom: Yeah. Yeah. And that’s that’s such a I see it as a common theme as far as either misaligned or just not aligned goals and incentives as well. And so that’s this is a really interesting use case here. One last question kind of on this overall strategy. Do you have some advice for those marketers out there that they’re trying to fight the good fight and send messages and keep customers informed and make their quotas, so on and so forth, but they’re trying to now balance between too little and too much communication with their customers, you know, how, how could they start in trying to, you know, measure and determine what’s most effective?
John Kim: Yeah, I think it’s just kind of going back to the basics. If you think about what constitutes a good communication with, with their customers, one, it has to be like relevant, right? Relevant addresses the question of why, why am I receiving this message as a customer also has to be contextual. So meaning what, what am I actually receiving? What is it? What is that offer? And then also it has to be timely because customers don’t react to all the channels on the same manner. Sometimes some people are more of a, you know, respond better in the early part of the week. Some people respond better in the later part of the week, the afternoon on the Fridays, right? And the channels, every customer have a slightly different preference when it comes to channels. and the tone. So just understanding the fundamentals of, you know, from the perspective of the customer, are we communicating, you know, the message, the what and the whys and the whens and the wheres appropriately, and then understanding the overall volume. So are we communicating too much, not too little, and making sure that customers are building that relationship. So think about how you’re communicating and building relationship with any of the, not just brands, but your family members, your coworkers, You don’t want too much, but you also don’t want too little. So building that regular cadence, managing customers’ expectations well through making sure that those fundamental foundational pillars are well addressed. I think that’s super key. And also, like I touched on earlier, now is really a good time to start understanding what’s happening across different departments. Because usually, generally, 90% plus of customers and prospects we talk to don’t really know what’s being communicated across different departments. Does the customer have a bad issue in the customer experience side or customer support side of things? Does marketing have visibility into what’s being communicated and what cadence? So having that holistic perspective will certainly help them understand what the customer is going through. from the experience perspective so that they can, they know and can actually provide better governance around that overall experience. And then maybe we’ll touch a little bit around why like in a messaging and then communicating over your own platform versus a third party platform start to matter a lot more specifically addressing some of these issues.
Greg Kihlstrom: Yeah, that’s exactly what I want to get to. And, you know, just talking about some of the advantages and some of the things to keep in mind about in-app messaging. And so why don’t you continue there then? You know, why do you believe that that can be an effective way to reach and engage customers?
John Kim: Yeah, prior to kind of the mobile app economy, most of the channels that we could reach out to customers and engage with them was, you know, the legacy communication channels, the emails, the phones, the SMS text messages, or even direct mailing, in-store experiences, of course. But businesses around the world have been investing more and more, especially with the digital transformation becoming a major economical trend, have invested a lot more into their websites, but also their mobile applications. And the real benefit of having a mobile-first in-app messaging strategy is because customer have given you the permission to reach out to them. Customers have given you that they’re authenticated. They have told you who they are as a customer. So by engaging with them on your own platform, like your mobile app or your website, you can provide better context to the customers around using their data that they volunteered to communicate the contextualized messages that are hyper-personalized, but also with greater relevancy. And overall, the side benefit is that all of this communication happens on a secure, authenticated environment. So let’s use maybe like a banking as an example. when you get communicated over emails or SMS that you have some fraudulent, potential fraudulent charges over email or SMS, the first kind of intuition or instinct that we experience as a customer is that we actually are skeptical of this message. Is this a phishing attack? Is this a scam attack, right? So when you want to reach back out to your banker, you have to be very careful which link you click on. Even when you get a phone call from a bank, You know, I personally hang up and dial the bank myself so that I know that this phone call that I’m receiving inbound is not a scam, right? And U.S. alone, we’re losing, you know, hundreds of millions of dollars a year just on these kind of calls and engagement with the banks due to fraud and scams. But when the communications happens right within your banking application that you have logged into, you know you can trust this communication. that would be charges that happens on your mobile app that you see, you know that’s secure and relevant. So you no longer have to doubt and have skepticism around the communication from the bank. And also it removes a lot of friction in the communication too. Because when you’re dialing to a bank, you have to stand in line to talk to the next customer support representative. You have to give all this personal information just to get them to know who you are. Whereas if you’re dialed in or logged into your mobile app, you have all the contact, you’re authenticated. So you can get straight to the business without the long wait and then just be able to get your job done and leave. And so all of that term is set on the mobile app. And we believe that’s a much better customer experience and just for customer experience, but also for brands to to build that trusting relationship with customers.
Greg Kihlstrom: Yeah. Yeah. And so I’m wondering if you could talk a little bit more about I know you use the hypothetical example of the bank, but if you could talk a little bit more about, you know, from a features and functionality standpoint and from an engagement standpoint, you know, have you seen some examples you could maybe share of how customers have seen some significant engagement improvements through this in-app messaging?
John Kim: Yeah, absolutely. We work with a lot of, you know, financial institutions, fintechs, and healthcare, which are heavily regulated, you know, high value customer relationship businesses. And one of the largest fintech company out of Philippines, they’re super modern, cutting edge, have a really rich and, you know, high function mobile application. They were communicating with their customers over SMS, just like any U.S. bank, too. Recently, they started partnering with us, now about a year ago. And this was when our product called Sember Business Messaging was fairly young. It was, you know, like a soft launch. There are existing customers, so we embedded deeply with them. What ended up happening was, before they were using SMS, and if you think about any kind of SMS or text messaging experience, you get, you know, a couple hundred characters of pure text. and then some countries actually ban you from sending any links because of fraud and scam attacks so you’re getting this very kind of low-resolution communication that’s purely text, and you don’t have a lot of context, and you get this message from this random phone number that you’re not sure if this is actually coming from the bank or not. So they switched over to in-app. Now, all the communication that’s being sent to their customer can have attachments, visual images, PDFs, could have any kind of rich communication that’s contextualized, that can be a lot more richer in multimedia, and also hyper-personalized. And what they saw was overall dramatic increase in the customer engagement. They’re opening their messages, they’re engaging with their messages a lot more. But again, that comes with extra layer of security. But the side benefit was that they started saving so much money because they are no longer sending this very expensive communication like SMS. So they saw 90% plus in cost savings and overall customer support, cost of customer support dropped by half. as well. And then customers are just happier and engaged a lot more because of that ability to personalize, ability to send it in a timely manner. And also, it’s no longer just chronological. They can set priorities on which message shows up at the top. So customers can know which are the important messages that they need to act on immediately versus some are just for your own information. that you can engage or choose not to engage. So all these kind of features and functionality around personalization, prioritization, adding rich multimedia, security, all this benefits the customer, but ultimately benefits their business because they’re able to retain their customer relationship far better than any of their other competitors out there.
Greg Kihlstrom: Yeah, I mean, from a cost, from a trust issue, and even just from an efficiency of, you know, it sounds like a lot of benefits there. That’s great. I want to switch gears a little bit and talk about something else. And this is something I don’t think we’ve talked about this on the show before. So preparing for the machine to a machine economy. And so first, I think it would help if we got kind of a definition of it. And then, you know, have a few questions for you about it.
John Kim: Yeah, this is a super fascinating topic. So, I mean, everybody is now fully aware of what’s happening with the AI, the chain AI. Of course, there are some people who are super scared of what’s going to happen, but I’m an optimist. And what I think about this machine to machine economy, let’s first do a quick I guess a rough definition of what that actually means, right? And actually, if you think about machine-to-machine economy, it’s already here. It’s just not evenly distributed yet, quoting William Gibson, you know, famous science fiction writer. So if you think about a financial stock market today. 90% of trades that happen on the market today is happening between the machines. We think we are trading with another human being, but vast majority of the trades that happen in the market today is happening between machines. Why is that the case? Because obviously AI and old machine learning techniques have evolved to optimize towards financial gains, but because machines are a lot faster and financial markets are fairly well-structured when it comes to the data and the protocols to interact with each other. Now, where this kind of becomes super interesting for us as humans is that with the advancement of Gen AI, now it doesn’t have to be as structured in a closed environment like financial stock markets. Now, machines can interact with other machines across different platforms in a loosely coupled way. And what I mean by that is we don’t no longer have to talk in numbers and specific, you know, API calls or technical interactions. It can actually be a conversation between a human to machine like we’re having with an AI chatbots, but a machine talking to another machine using a human language. So to give you an example, maybe two example is one, Now there’s a lot of AI startups that are trying to become your personal assistant that can get your job done for you, whether it be booking an appointment or booking a restaurant, planning your trip on a business trip, or even your family trips. So a lot of these things will start to happen, and AI becoming almost like a personal assistant to you. And when these AIs are deployed in the wild, this machine will start talking to other machines with the businesses to book your travel, book your flights, make sure you get a car rental when you arrive. All those things will start to happen. And then machines will start communicating to other machines to make those appointments. And historically, if you think about any kind of these kind of integrations, we’re usually done behind the scenes by developers and engineers reading technical documentations to provide those integrations. But going forward, those jobs, those work becomes completely unnecessary because now machines can simply talk to another machine to make those bookings. And we believe that is the future that will happen in the next 5 to 10 years. And also from B2B perspective, if you think about most of the B2B technical partnerships, how that happens today is very similar to what I just described, is having a set of engineers come online, they look at the technical documentation, they integrate something called the API, Application Programming Interface, where they’re tightly integrating two different technologies to come together and exchange data. And the risk with this current model is that because it’s such a tightly coupled system, any changes on one side, any kind of server error on one side can completely create the outage for the other side of businesses. So you’d have service becoming unavailable, and some of these feature functionality will start to fall apart. So then the engineers on call will get an alert. They have to go back in and change their integrations to a lot of this firefighting. But in the future, this integration will no longer happen on a tightly coupled system. You will basically be telling your own side of your device or machine to say, hey, these are some of the goals you were trying to achieve. These are the security level clearance you have to provide the data to the other side of the machine. And then off you go. And your machine will talk to the other side of the machine to get to an agreement. form a partnership and be able to start exchanging this data and get the job done. And if one side of the machine changes things, it’s okay. They can always have this conversation with the other side of the machine to make adjustments, and the system will continue to run without you interfering and going and doing all the firefighting. And this will become the new reality, and we believe that will drive what we are now calling the machine-to-machine economy.
Greg Kihlstrom: Yeah, yeah. So, I mean, to your point, some of this is already being used. Some of us are using it on a regular basis and may not even know it. For those companies that are maybe not using it yet, but need to prepare, you know, how does a company prepare for this shift and, you know, what do they need to have in place and what do they need to be thinking about?
John Kim: Yeah, first, I think just like the digital transformation, a lot of these businesses who will benefit from this will actually be not just new startups, but existing businesses who have a lot of customers and a lot of customer data. And how we should be obviously be thinking about this is as a company, you need to start deploying kind of AI first mindset, understanding how to use AI in their day-to-day work, workflows and automation, and start to think about how can AI come in and automate a lot of this manual work that are done by humans. Now we can obviously be worried about, hey, what does that mean in terms of my job? But I think it’s going to superpower a lot of these folks out there to increase their productivity. Because before, when you’re forming partnerships with other companies, you’re basically doing a lot of this manual work, taking forever to do technical integrations. be anywhere from taking months to quarters to do this kind of implementations. Now it can be done in a matter of hours, if not days. So you, as somebody who’s forming partnerships and integrations, you can be doing, creating so much more value for your customers. All of that starts only when you start actively leaning into adopting some of these AI technologies. And then two is starting to think deeply about your policies and your policies and processes around handling your customer data and then create creating tiers and priorities around what’s accessible illegally and ethically and between the businesses. So once you have these strict policies defined, in advance of these kind of machine-to-machine economy, you can then partner with other companies without a fear of exposing your customer data. But this requires a lot of deep thinking because machines don’t really have a boundary in terms of what they can reach if you give access to them. So investing a lot into compliance and security, so you have tight guardrails around what data can be reached by some of these AIs, so that can be provided across different businesses. And this will, before was all done by humans, but now because machines will have access to their data warehouses, different CDPs and CRMs, making sure that all these policies are tightly defined, I think it’s going to be super critical to making sure that this business can leverage this kind of new trend.
Greg Kihlstrom: And how do you see SendBird playing a role in here? You know, where do you see some opportunities for your company?
John Kim: Yeah, so we have, it always start with a small innovation, right? We have something called a bot interface where our customers can plug in a bot to a conversation. Now, in most cases, this is used to enable conversation between a human and an AI chatbot for whether it be customer support or qualifying a marketing lead. So we’re starting to see a lot more of that. But in the future, using a feature like this can start enabling two bots in a conversation, three bots in a conversation to triage a problem. So leveraging these kinds of technologies, businesses can start thinking about, okay, what happens if I put AI in front of another AI? I mean, you probably have seen these memes on Instagram or YouTube where you know, Siri is talking to another pod, you know, and those are usually, you know, fun things to just see and observe. But in the future, that will certainly become a reality, not just over voice, but over text or data. And then more and more AI will have a conversation with other AIs in real time. which can sound like a scary thing, a little bit dystopian future, but hopefully we can continue to invest in the alignment problem to make sure that what they’re talking about can benefit the end users and the customers. And by leveraging things like our bot interfaces and some of our AI chatbot technologies, businesses can really test or pilot what this experience could potentially look like for their customers. And it’s very, very easy to do even today.
Greg Kihlstrom: Nice. So getting back to the, the first topic that we talked about, the topic of customer communication, you know, you’re certainly spending a lot of time thinking about this as well and ways to improve and where things are headed. What trends are you seeing in, in the realm of customer communication that, you know, you’re keeping an eye on that, that brands and marketers listening to the show should keep an eye on as well.
John Kim: Yeah, I think there are two maybe super important trends that we’re seeing. One is what I like to call the smarter, you know, omni-channel or even omni-channel 2.0. Because when people think about marketers, customer support, everybody thinks about omni-channel, it’s usually communicating to their customers all at once in all the possible channels like we talked about earlier in this podcast. But instead, brands will become a lot smarter about how to engage customers in omnichannel. For example, we talk about sequencing with our customers. Instead of bombarding your customers in every single possible channel, first communicating using, let’s say, your in-app or mobile channel first. If customers have seen it, opened it, engaged with it, don’t send it to SMS, don’t send it to email. So making sure that you’re routing and having a smart governance around what’s being communicated to your customers, so that customers continue to choose to engage with your brand and build a relationship. So that smarter omnichannel will become super critical. Second is a hyper-personalization using AI. Because most of today’s marketing, how it happens across marketers is that we would look at a customer segment, look at their behaviors, set up a campaign, And that segment could have a million customers, right? Then you send out this marketing campaigns, send it to a million customer. The only personalization you would have on that campaign, it might be a customer’s name that you see on an email. Hello, John Kim. You know, we have this offer, new iPhone, you know, 16 pro. And then because you’re, you know, platinum tier customer, you get 10% discount. Like that’s the level of personalization we’re seeing today, vast majority of businesses. But that personalization will turbocharge by 100x, 1,000x using AI. Now, imagine if you have a marketer who only cares about a single customer. Because with AI, if you have a million customers, you can literally have a million AI marketers communicating with them, not just with a single blast, but in a contextual and conversational way. So having, let’s say, health care, You know, that AI agent may know that you really care about intermediate fasting, that you are doing 16 to eight hour, whatever, intermediate fasting cycles, you care about certain diet, then can do a hyper-personalized recommendation around food recommendations, your sleep patterns, your next wearable device you want to get, really based on your previous usage patterns and purchase history. So it almost becomes like a personalized consultant, if you will. And that level of hyper-personalization is coming fast. We’re starting to see that across some of our customers who are aggressively adopting AI chatbot to provide personalized meal recommendations, personalized financial product recommendations, and that will feel very, very personal. So that level of hyper-personalization is something, a huge trend that we’re expecting to roll out more aggressively in the next couple of years.
Greg Kihlstrom: John, well, thanks so much for joining the show. One last question before we wrap up, something I’d like to ask all the guests on the show. In your role as CEO and co-founder of SendBird, what do you do to stay agile in your role and how do you find a way to do it consistently?
John Kim: So this may sound like a cliche answer, but I try to read a lot. So I read a lot of books, read online articles, and listen to podcasts, but also meeting people who are at the frontier of their respective fields, whether it be AI, physics, biology, neuroscience. So I have a personal tracker that I keep track of all the habits. And one of them is an area called social connections. So I try to have a consistent rhythm in terms of how I engage with new people or people who are experts in their own fields so I can learn from them rapidly with the goal of keeping myself, you know, my openness to experience as high as possible. So that’s how I stay agile in my role.
