In-app chat for boosting engagement: custom or off-the-shelf?

Are you looking for faster, more personal and more efficient than ever ways to interact with your customers? 

In-app chat may be just what you’re looking for. It offers real-time support in resolving customer queries, while fostering user engagement. A study found that the engagement rates of users who receive in-app messages are 131% higher than those who receive no messages.

In-app chat is already a core component of modern user experiences, applied in many industries. In this article, we’re diving into the functionality of in-app chat, the problems it solves, popular solutions in the market, and when it’s beneficial to build a custom solution tailored to your business needs.

What is in-app chat?

In-app chat is a real-time messaging capability integrated directly within a mobile or web application. This chat solution is designed to enable businesses to interact with users without requiring them to leave the app.

It’s a seamless communication channel that supports anything from team collaboration to in-app chat support, ensuring uninterrupted user engagement.

The primary purpose of in-app live chat is to enhance customer interactions. This is achieved by offering instant and contextual responses, enabling multi-channel communication, and fostering better relationships between businesses and their users.

Key functionalities of in-app chat include:

• Customer support – handling customer inquiries, complaints, and troubleshooting in real-time.
• Collaboration – facilitating team in-app communication within enterprise applications or platforms.
• User engagement – sending personalized messages, notifications, and reminders to boost engagement and retention.
• Transaction support – enabling in-app purchases or assisting with transactional queries.

In-app live chat can be broadly categorized into two types:

• Rule-based chats: These operate on predefined workflows and are ideal for simpler tasks such as FAQs or basic query handling.
• AI-powered chats: Leveraging artificial intelligence, these chats use NLP and ML to deliver advanced conversational capabilities.

How does in-app chat work?

In-app live chat relies on robust technologies to enable real-time, secure, and context-aware communication. The key components include:

• Real-time messaging protocols: Technologies like WebSocket, Matrix or MQTT facilitate real-time interactions by ensuring minimal latency during message transmission.
• Natural Language Processing (NLP): Enables the chat system to understand user queries, interpret context, and deliver appropriate responses.
• APIs and SDKs: Allow seamless integration of chat functionalities into existing mobile or web applications.
• Cloud infrastructure: Provides scalability and ensures that chat services can handle high volumes of traffic.

The combination of these technologies ensures a smooth, user-friendly experience that adapts to diverse business needs.

Problems solved by in-app live chat

In-app chat solves a wide range of challenges in customer engagement, operational efficiency, and user satisfaction, unlocking significant advantages through its unique capabilities. Here’s how:

Enhancing customer experience 

The most notable benefit of in-app chat. Instant responses to user queries reduce the frustration associated with waiting for email replies or waiting for connection with an agent through an IVR system. Immediacy is crucial in today’s market where customers also value self-service when it comes to resolving queries (as much as 90% expect to have their queries addressed instantly!).

In-app live chat also facilitates conversational support, which feels more natural and intuitive for users. Quick problem-solving fosters trust and leaves a positive impression, which has a positive impact on customer loyalty.

Improving user retention

Indeed, improving user retention becomes more achievable with real-time interactions enabled by in-app chat. Through features like proactive engagement, apps can send tailored messages, reminders, or updates based on user preferences. For example, a fitness app might remind a user about a missed workout session, or a shopping app could alert users about abandoned carts. Such targeted, relevant in-app communication keeps users engaged, preventing churn and extending their lifetime value.

Streamlining operations

Streamlining operations is another critical advantage, as in-app chat reduces the burden on support teams by automating repetitive queries through chatbots or AI-driven assistants. Common questions about account settings, delivery updates, or subscription renewals can be handled without human intervention.

This not only increases efficiency but also allows customer support agents to focus on resolving more complex issues. The result is improved staff productivity and a reduction in operational costs, which allows businesses to allocate resources more effectively.

Driving conversions

Driving conversions becomes easier when users can access real-time assistance during their purchase journey. In-app chat provides contextual guidance, such as answering product-specific questions, offering recommendations, or clarifying return policies.

This capability helps alleviate customer hesitations that might otherwise prevent a purchase. For instance, a user shopping for a technical product may need quick reassurance about compatibility or features, which in-app live chat can deliver instantly, ensuring the buying process remains seamless and user-friendly.

Fostering collaboration

Fostering collaboration is a standout advantage for enterprise apps, where in-app chat facilitates communication between team members. Features like group chats, file sharing, and task management integrations streamline workflows, enabling teams to stay connected and aligned.

Whether for remote teams or on-site staff, this seamless interaction reduces delays, improves coordination, and drives overall productivity.

Ensuring security and compliance

Ensuring security and compliance is vital in an era where data protection is paramount. Chat in app platforms incorporate robust encryption protocols to safeguard user information, ensuring in-app communications remain private. Additionally, these systems are often built to meet stringent regulatory standards, such as GDPR for data privacy or HIPAA for healthcare applications. This compliance not only protects users but also builds trust in the app, demonstrating the company’s commitment to data security.

Overall, in-app chat becomes a powerful tool for addressing key business challenges while enhancing user engagement and operational success, expressed in the aforementioned benefits.

Popular in-app live chat solutions

With the growing demand for in-app communication, several chat platforms have emerged as leaders. Below are five notable solutions:

Twilio Conversations: A developer-friendly in-app chat API

Twilio Conversations is a highly flexible in-app chat API that allows developers to build custom chat solutions tailored to their app’s requirements.

• Pros: Developer-friendly, highly customizable, supports SMS, WhatsApp, and in-app chat.
• Cons: Requires technical expertise for implementation.
• Top use cases: Ideal for businesses with in-house development teams.

Intercom: The all-in-one solution for customer communication

Intercom provides businesses with a robust platform for customer support and engagement. Its in-app chat feature is highly customizable, offering tools for automated workflows, personalized messaging, and integrations with third-party apps.

Source.

• Pros: Highly scalable, AI-powered automation, and extensive integrations.
• Cons: Expensive for small businesses.
• Top use cases: Ideal for SaaS businesses and e-commerce platforms looking to enhance customer support and engagement.

Zendesk Messaging: Tailored for support-centric businesses

Zendesk Messaging delivers a user-friendly interface for handling customer inquiries within apps. It integrates seamlessly with Zendesk’s broader customer service ecosystem.

• Pros: Easy integration, robust support tools, and AI-driven response capabilities.
• Cons: Limited customization outside the Zendesk ecosystem.
• Top use cases: Best for businesses prioritizing customer support.

Drift: A sales-focused chat tool

Owned by Salesoft, Drift’s conversational chat tool focuses on enhancing lead generation and sales. Its in-app chat feature includes proactive messaging, video calls, and meeting scheduling.

• Pros: Excellent for lead generation, integrates with CRM systems.
• Cons: Less suited for non-sales use cases.
• Top use cases: Best for B2B businesses prioritizing lead nurturing.

Sendbird: An in-app communication powerhouse

Sendbird provides a comprehensive platform for in-app messaging, voice, and video. It’s designed to meet the needs of both customer engagement and team collaboration.

• Pros: Multi-modal communication, secure, and scalable.
• Cons: Higher cost for advanced features.
• Top use cases: Suitable for apps requiring diverse communication tools.

Custom vs. off-the-shelf in-app chat

When implementing in-app live chat, the decision between custom-built and off-the-shelf solutions depends on your business needs, budget, and long-term goals.

Off-the-shelf in-app chat solutions

Advantages:

• Faster deployment and lower upfront costs
• Proven reliability with predefined features
• Subscription-based pricing for predictable costs

Disadvantages:

• Limited customization and branding options
• Generic user experiences

Best for: SMEs needing basic chat functionalities for in-app chat support or engagement.

Custom in-app chat solutions

Advantages:

• Fully tailored to meet unique business needs and workflows
• Scalable and flexible for future growth
• Superior branding and customer experience

Disadvantages:

• Higher initial investment
• Longer development cycles

Best for: Enterprises requiring advanced features, integration with legacy systems, or highly personalized interactions.

When to invest in a custom in-app chat

Building a custom in-app live chat solution is ideal when:

You have complex or specific requirements

If your app requires unique features, such as advanced analytics or deep integration with existing systems, custom development ensures these needs are met. This could happen when you need:

• Advanced analytics dashboards for monitoring user interactions in real time
• AI-powered chatbots tailored to your industry, capable of understanding domain-specific queries
• Custom workflows, such as transferring chat data to internal CRM or ERP systems

Scalability is critical 

For apps expecting significant growth, a custom solution offers the flexibility to adapt to evolving user demands. Off-the-shelf tools often come with limitations on the number of concurrent users, integrations, or chat history storage.

For apps that expect high user activity, custom solutions ensure:

• Real-time performance, even during traffic spikes
• The ability to incorporate new features, such as video or voice chat, as your needs evolve

Brand identity is key

Custom chat solutions enable businesses to deliver a unique, branded experience that sets them apart from competitors. A generic chat interface can feel disconnected from your app’s design and brand. Custom solutions allow you to:

• Fully align the chat UI and UX with your app's branding, from color schemes to font styles.
• Incorporate features that enhance customer engagement, such as in-chat animations or gamification elements.
• Provide a distinctive experience that differentiates your app in a competitive market.

Security and compliance are essential

Industries with strict regulatory requirements benefit from custom solutions designed to meet compliance standards. For industries like healthcare, finance, or legal services, compliance with regulations (e.g., HIPAA, GDPR, PCI DSS) is non-negotiable.

Custom solutions can be tailored to include:

• End-to-end encryption and secure storage of chat data.
• Role-based access controls for sensitive information.
• Compliance audits and custom reporting for regulatory bodies.

Long-term dependency on third parties is out of the question

With off-the-shelf solutions, you are reliant on the vendor’s updates, pricing, and availability. A custom-built chat system gives you:

• Full ownership and control over the software.
• The flexibility to make changes or enhancements without waiting for vendor updates.
• A predictable cost structure in the long run, as there are no ongoing licensing fees.

Integrating with proprietary systems is required

If your app relies on proprietary software or needs to work seamlessly within a larger digital ecosystem, custom chat solutions are a better fit. They ensure smooth data flow between systems like inventory management, support ticketing, or analytics platforms. For instance, a retail app that integrates chat with a live inventory system to allow users to check product availability during a conversation.

Who benefits most from custom in-app live chat?

• Large enterprises or startups with a focus on growth.
• Apps in regulated industries, requiring strict data security and compliance.
• Businesses seeking to establish a strong, cohesive brand identity in highly competitive markets.

How much does it cost to build a custom in-app chat solution?

The cost of building a custom in-app chat solution varies based on complexity, features, and team location. Here’s a rough estimate:

• Discovery and planning: $5,000–$10,000
• Design: $10,000–$20,000
• Development: $50,000–$100,000
• Testing and QA: $10,000–$25,000
• Deployment: $5,000–$15,000
• Maintenance and updates: $2,000–$10,000/month

Additional costs for hosting, in-app chat APIs, and compliance certifications may apply.

Key considerations before investing:

• Development time and cost: Custom development typically requires a significant upfront investment of time and resources. However, this is balanced by the potential for long-term savings and tailored functionality.
• Maintenance and upgrades: You’ll need a dedicated team or reliable partner to handle ongoing maintenance, updates, and scalability.
• Alignment with business goals: Ensure that the unique features and capabilities of the custom chat directly align with your app’s core objectives and customer needs.

Who benefits most from custom in-app chat?

• Large enterprises or startups with a focus on growth and differentiation.
• Apps in regulated industries requiring strict data security and compliance.
• Businesses seeking to establish a strong, cohesive brand identity in highly competitive markets.

Drive growth with in-app chat: Next steps

In-app chat is no longer an optional feature; it’s a necessity for businesses looking to stay competitive in today’s digital landscape. Whether you choose an off-the-shelf solution or invest in a custom-built option, integrating chat into your app can enhance customer satisfaction, improve operational efficiency, and drive business growth. We can help you, whether you opt for one or the other.

If you’re ready to transform your customer interactions with in-app chat, contact us today and we’ll help you get right straight to it.