In-app chat vs. SMS: Which option is right for your app?

Connecting to your users via messaging is imperative, which is why in-app chat vs SMS is a continued debate in business communications.

And nobody can deny the power of SMS. Statistics show that text messaging is one of the most powerful ways to reach and engage an audience, with text messages having an open rate of 98% within the first 3 minutes of sending.

Making sure that you can easily communicate with your users–or your users with each other–is an absolute necessity for any app you build, whether it’s for on-demand services like food delivery or ride-sharing, gaming, dating, digital health, or an online marketplace.

But there are limitations to SMS. One of the key differences between SMS and in-app chat is that with SMS, billing can get complicated. Onboarding costs are more expensive, churn is very high. Multi-media messages are a hassle. And SMS is federally regulated. The export process is difficult and expensive if you want to move your contacts to a new provider.

In-app chat streamlines communication by allowing you to own every part of the process. No matter what industry you're in, embedded communication is an added channel that can improve your app's operations and marketing capabilities.

Luckily, in-app implementation can be fairly straightforward with the right chat API.

The real question is, will you choose SMS or opt for in-app chat?

Or, if you’ve already invested heavily in SMS, how can adding in-app chat improve your messaging strategy?

Chat vs SMS

SMS and chat may seem similar, but they’re actually quite different means of communication and can serve entirely different purposes. Each has its own strengths and limitations, and which is best suited for your app depends on what you need.

While SMS certainly has use cases it’s well suited for, it also comes with major limitations that many app users might find prohibitive. And while in-app chat typically offers more functionality and flexibility, it comes with constraints such as needing to be connected to the Internet.

What is SMS?

SMS was the first broadly available peer-to-peer messaging service and grew rapidly in popularity.

SMS stands for short message service, and it is the most common form of text messaging. It has a 160-character limit, and can pretty much only consist of text.

Today, SMS is not just used between friends and family, but also widely used in application-to-person (A2P) messaging, which enables businesses to contact their customers by sending a text from their application using an SMS API. One of the most common examples of this is the code your bank sends you when you try to log in from a new device.

Over time, ubiquitous and cheap mobile data access coupled with high SMS rates and roaming charges in many countries gave rise to chat applications like WhatsApp, WeChat, Telegram, KakaoTalk, and Facebook Messenger.

Sendbird tip: Build a WhatsApp messenger clone in React with this tutorial.

Most popular global messenger apps

Statista

Messaging apps have become the preferred way for people to stay connected and share experiences with each other. Now, businesses are waking up to the potential of messaging as way to not just reach customers but reimagine customer experiences.

What is in-app chat?

In-app chat takes customer relationships to the next level. In-app chat happens when the user can engage in a chat conversation inside the app they are using without having to close the application.

At Sendbird, we believe messaging conversations inside a business’ mobile app will be the next frontier of relationship building and personalized customer interaction. It is the one medium that promises to achieve the holy grail for businesses: deliver personal experiences at scale while driving business goals.

Popular examples of this include customers chatting with their food delivery provider inside a delivery app, two people chatting to get to know each other in a dating app, or a chat between a doctor and patient to perform a remote diagnosis in a healthcare app. Modern app builders are choosing to keep users inside of the app as much as possible including for conversations rather than popping them out to an SMS thread or even a WhatsApp.

Benefits and limitations of SMS

The benefits of SMS

• With SMS, you can reach the user at any time, even when they’re not logged into your app or connected to the internet–as long as you have their mobile number and permission.
• SMS open rates are upwards of 90%, according to Gartner.
• Many consumers have unlimited texting, making SMS feel cheap since the cost is bundled into a larger monthly service fee.

Challenges and limitations of SMS

• Permissions are getting stricter and stricter, and laws regulating SMS opt-ins differ by country and change often.
• Users need to leave your app to open SMSes, decreasing the time spent using your application and disrupting their user experience. More importantly, with SMS, you lose control of the user experience altogether.

For example, if you’re a marketplace app and want to provide users with a product carousel and a buy button in the chat, this is simply not possible with SMS. Or, if you’re a community app that wants to provide suggested replies to help keep the conversation going, this is another feature SMS isn’t built for. If user experience and integration with your own app workflows are important to you, then SMS might be too limiting.

• Replying to an SMS costs the user money if they don’t have unlimited texting as part of their mobile plan. In many countries, (lower-income) consumers purchase airtime and/or mobile data on a pay-as-you-go basis and may have few or no texts, relying on WiFi instead, preventing them from responding.

While your business might be pretty US-centric today where SMS is cheap and unlimited plans are common, consider what happens as you expand internationally. You are now faced with passing on SMS rates–as high as ZAR 0.52 in South Africa or MXN $1.09 in Mexico–to your users. This may not seem like much compared to US costs (around $0.20 per out-of-bundle SMS). Still, it’s considerable to consumers in those countries, particularly considering average incomes and exchange rates.

• SMSs are fairly short and transactional. They are subject to 160-character limits, and every SMS costs the platform money–and these costs vary greatly from country to country. The result is short communication that is functional but impersonal and cannot typically inject personality into the conversation. Reportedly, some 33% of consumers have attempted to respond to automated short-code messages with something other than a keyword. This would suggest that consumers expect more of a conversation but don’t receive it.
• With SMS, similar to losing control over the user experience, you lose control of information as you no longer own the data and are at the mercy of providers like Apple for iMessage or the telecom providers for access to the analytics about conversations your users are having.

If you are a marketplace and want to correlate sentiment and keywords within the chat thread to the likelihood of a product being sold, you’re out of luck. Or, if you want to look at the chat transcript if you get a complaint that a user was rude, you’re relying on screenshots or he-said-she-said.

• SMSes sent from anonymous phone numbers can resemble spam.
• Consumers can also perceive receiving an SMS from a brand as an unwanted interruption. Many consumers see SMS as part of their personal lives, just like phone calls. And just like no one wants to pick up their phone and talk to a solicitor, they may not want businesses texting them on a channel where they typically speak to their loved ones.

In-app chat as an alternative to SMS

There is a ceiling to the value messaging that lives outside a business’ mobile app experience. SMS cannot replace the context that a business’ mobile app offers for messaging.

As consumers increasingly expect a seamless customer experience, in-app messaging is gaining traction as an attractive alternative to other communication means including email and text. Brands are accelerating entire customer journeys with messaging inside their apps.

One of the key advantages of in-app chat is that it drives traffic to your app and boosts retention, which is one of the key challenges applications face in today’s saturated app marketplace. Whether you’re building a new app or rebranding an existing one, it’s crucial to take the user experience (UX) into account and do everything in your power to keep users coming back for more.

In-app chat can send private one-to-one messages or communicate in groups of two to several thousand, building bonds and a sense of community among app users and giving them a reason to return.

In-app chat has a UX advantage in that the user doesn’t need to leave the app, whereas leaving the app to open an SMS interrupts your user experience. Moreover, in the absence of a chat feature, the user will need to locate contact details should they wish to contact the business, and then leave the app to make contact, resulting in a disjointed user experience.

Paired with push notifications, in-app chat can boost engagement and user retention and improve conversion rates. Push notifications serve to alert the user that they’ve received an in-app message, either from the brand or from another user, and entice the user to open the app. Push notifications can display rich elements such as images on the user’s home screen.

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Benefits and limitations of in-app chat

• With in-app chat, users do not need to hand over their phone number, which many users are reluctant to do.
• Push notifications alerting users to chat messages from other users draw users back to your app.
• Some chat platforms provide offline messaging, caching unsent messages and sending them when the user comes back online so they don’t have to worry about deliverability issues.
  

  The benefits of in-app chat:

  • Chat allows you to interact with users in a more human way. Conversational signals like presence and typing status make the conversation feel more synchronous and helps build engagement. 70% of respondents in a recent customer survey believe that in-app messaging and chat would enhance their customer support experience.
  • In-app chat gives app builders much more flexibility and control over the experience. You can send rich multimedia messages, including (long) text, images, video clips, GIFs, emojis, audio recordings, or even structured or templated messages, coupons, and barcodes.
  • You can brand and design your user’s messaging experience exactly the way you want it.
  • Chat provides rich data and allows you to hook your company's systems and processes into the chat workflow.

  For example, a buyer on a marketplace chat thread can look at a product image, watch a video, click on a coupon code, initiate a purchase, track their order status, and fill out a review from within the chat. Companies like WeChat have led the way in making chat the command center of a transaction.

"With Sendbird's developer-friendly Chat API and SDKs, we were quickly able to build in-app chat" - Director of Product Management @ Accolade.

Challenges and limitations of in-app chat:

• In-app chat requires users to download and install your app on their mobile device.
• Users need to have an internet connection to send and receive messages.
• Users can opt out of push notifications, in which case they will not see any messages received via in-app chat unless they are already in your app or open it.

In-app chat triumphs over SMS for modern businesses

Instant messaging applications like WhatsApp, Messenger, and WeChat have paved the way for in-app chat by making mobile chat commonplace and creating norms and expectations such as presence and typing indicators, group chats, and rich multimedia capabilities.

While SMS may be better for purposes such as delivering short functional messages and two-factor authentication messages and its value as part of a holistic digital communications strategy shouldn’t be ignored, in-app chat is more applicable for modern app builders and product owners seeking to deliver rich, contextual user experiences.

For many applications, chat of some kind is core to helping the app live up to its purpose. For applications such as delivery and marketplaces, in-app chat is crucial in allowing users to communicate effectively in the context of a transaction rather than outside of it. While for other apps like dating and gaming, app builders will want to offer a richer user experience than SMS can offer, while also eliminating the need for users to exchange phone numbers or become WhatsApp buddies. Finally, in education and healthcare apps, app builders may want to provide a richer experience than what a text thread can provide, even seamlessly expanding the experience to video, all within the app.

Whether it’s protecting privacy, having tight integration into your own app, or just providing a more human brand experience, in-app chat offers more options and flexibility for modern app builders than SMS.

Ship it faster with Sendbird's chat API.