Messaging is becoming an increasingly popular channel for businesses to interact with customers. With the rise of messaging apps like WhatsApp, Facebook Messenger, and WeChat, more and more customers expect to be able to message businesses in the same way they message friends and family.
This presents a huge opportunity for businesses – messaging enables convenient, personal conversations that can improve customer satisfaction and loyalty. However, taking advantage of this opportunity also comes with costs. Just as with any other customer service channel, there are infrastructure, software, and labor costs associated with managing messaging conversations at scale.
That’s where cost per messaging conversation comes in. This metric allows businesses to understand the costs associated with supporting customer messaging and make informed decisions about investing in messaging channels.
What does cost per messaging conversation mean?
Cost per messaging conversation is calculated by taking the total cost of supporting messaging across your business and dividing it by the total number of messaging conversations over a given time period. Here is the formula:
Cost per messaging conversation = Total messaging costs / Total messaging conversations
Let’s break this down into the two main components:
Total messaging costs
This includes all costs associated with supporting customer messaging, including:
- Messaging software costs – Any software, subscriptions, or tools used to manage messaging including chatbot platforms, CRM systems, agent desktop software etc.
- Agent costs – The labor costs of staffing agents to handle messaging conversations
- Overhead costs – Other overhead costs like compliance, security, and relevant portions of IT, real estate, and management labor.
Total messaging conversations
This is the total number of messaging conversations your agents have with customers over a period of time – usually per month. This could include conversations on platforms like:
- Facebook Messenger
- Apple Business Chat
- Google Business Messages
- Text/SMS
- Web messaging/chat
- Line
- Telegram
- In-app messaging
How is cost per messaging conversation useful?
There are two main ways businesses use cost per messaging conversation:
1. Understanding overall messaging costs
Cost per messaging conversation helps businesses understand their overall costs associated with supporting customer messaging. This helps make well-informed decisions about investing in messaging – like whether to add new messaging channels or make changes to your messaging operations.
For example, you might find out your cost per messaging conversation is $0.50. Knowing this cost baseline helps assess the ROI of future investments to improve the customer messaging experience.
2. Continuous optimization
By tracking cost per messaging conversation over time, businesses can measure the impact of efforts to optimize their messaging operations. The goal is to maintain or improve service levels while reducing costs.
For example, if you implement a new agent training program and see your cost per messaging conversation decrease from $0.50 to $0.40 while service levels remain steady, you know your training program is effectively improving efficiency.
What’s a good cost per messaging conversation?
There is no single benchmark for “good” cost per messaging conversation, as it depends on many factors unique to your business. These include:
- Business model – B2C vs B2B, retail vs SaaS, etc
- Industry vertical
- Location – Labor costs vary significantly by country
- Channel mix – Platforms have different cost structures
- Conversation complexity – Simple vs highly customized conversations
That said, looking at relevant benchmarks can provide a helpful starting point.
According to Gartner, average cost per messaging conversation for leading companies is around $2.50. They break it down further by channel:
| Channel | Cost per conversation |
| SMS/Text | $1.00 – $1.50 |
| In-app messaging | $0.50 – $2.00 |
| Web chat | $3.00 – $8.00 |
So if your cost per messaging conversation is significantly higher than these averages for your main channels, it likely represents an opportunity to optimize.
How to calculate cost per messaging conversation
Figuring out your exact cost per messaging conversation takes a bit of work, but following this step-by-step guide makes it very doable.
1. Document all messaging channels
First, make a list of all messaging channels you currently use to interact with customers. This provides the basis for adding up your total conversations.
For each channel, include details like:
- Platform name
- Number of agents staffing
- Volume of conversations per month
2. Calculate total monthly messaging conversations
Next, calculate the total volume of conversations across all your messaging channels per month. You can pull this data from platform reports.
If you don’t have historical data, make a reasonable estimate based on current traffic. The goal is to get an accurate overall number.
3. Add up all messaging costs
Now it’s time to calculate your total monthly costs for supporting messaging. As mentioned previously, this includes:
- Software costs
- Agent labor costs
- Overhead costs
Pull this data from your budget, vendor contracts, and team managers.
4. Divide costs by conversations
With your total monthly messaging costs and total monthly messaging conversations, you can now calculate your cost per conversation:
Total monthly messaging costs / Total monthly messaging conversations = Cost per messaging conversation
5. Analyze and improve
Compare your cost per messaging conversation to industry benchmarks to identify areas for improvement. Possible optimization strategies include:
- Renegotiating vendor contracts
- Increasing agent efficiency with better tools
- Reducing labor costs with conversational AI
By regularly tracking this metric, you can see the impact of changes over time. Use any cost savings to invest back into the customer messaging experience.
Key takeaways
Here are the key things to remember about cost per messaging conversation:
- It’s calculated by dividing total messaging costs by total conversations over a period of time
- Provides insight into overall messaging costs and opportunities to optimize
- Benchmarks are around $2.50 per conversation for leading companies
- Reduce costs by improving vendor contracts, agent efficiency, and leveraging automation
- Regularly track over time to measure impact of optimization efforts
By understanding your cost per messaging conversation and keeping it optimized, you can provide excellent self-service customer experiences across today’s popular messaging channels in a cost-effective manner.
Frequently asked questions
How do messaging costs compare to phone call costs?
Many studies have found that messaging conversations have a significantly lower cost compared to phone calls. According to Gartner research, the average cost per voice call is $6-$8 vs. only $2-$3 for the average messaging conversation.
There are a few key reasons for this cost difference:
- Messaging is mostly asynchronous, so agents can juggle more conversations
- Conversations are lighter weight with quicker resolution
- Automation handles common recurring questions
What metrics are important to track with cost per messaging conversation?
In addition to monitoring cost per messaging conversation over time, it’s important to track metrics like:
- Number of conversations handled per agent
- Agent utilization rate
- Customer satisfaction (CSAT) scores
- First response time
- Conversation resolution time
This allows you to optimize costs while maintaining (or improving) key service levels.
How can I optimize cost per messaging conversation?
Top ways to reduce cost per messaging conversation include:
- Leverage automation – Chatbots handle common questions
- Improve agent training – Increase skills and efficiency
- Refine staffing models – Align staffing to conversation volumes
- Upgrade technology – Tools like CRM and knowledge management
- Lower vendor costs – Renegotiate contracts with vendors
It’s also important to set targets and benchmarks and continually measure progress against those.
Is it feasible to hit $0 cost per conversation?
Getting extremely low, near $0 cost per conversation is likely not feasible or sustainable for most businesses. Even highly automated conversational experiences require ongoing investment in tools, platform fees, bot training, and agent teams.
The goal should be driving cost as low as viable while maintaining high quality service and customer experience. For most companies, $1-$3 per conversation is a realistic and achievable target range.
How often should I be tracking cost per messaging conversation metric?
For most businesses, calculating your cost per messaging conversation on a quarterly basis is recommended. This provides a regular cadence to monitor costs and see the impact of any optimization efforts.
Calculating on a monthly basis can be prone to more variance and noise. Annually may not provide enough visibility to respond quickly. Depending on your needs, anywhere from quarterly to twice per year can be reasonable.
Conclusion
Cost per messaging conversation provides valuable visibility into the costs of supporting today’s popular messaging channels. By understanding current costs and tracking over time, companies can optimize their messaging operations while providing excellent customer experiences.
Using a combination of automation, refined processes, and the right tools, many companies can achieve cost per conversation results on par with top performers. This ensures messaging delivers significant value to both customers and your business.