What is CPaaS? Benefits, use cases, and tips for choosing your CPaaS provider

In 2024, the concept of digital transformation might sound like a thing of the past, but the truth is, it’s a never-ending process of learning and adjusting digital resources to shifting customer expectations, business needs, and new technology developments.   

From conversational AI to messaging channels and social apps, customer engagement tools represent an ever-growing part of companies’ spending on digital infrastructure, and it’s no wonder why. Consumers nowadays want to interact with brands in real time, on their own terms, on the channels that suit them.

So how can businesses enable always-on, two-way customer engagement, on the right channels – and do so at scale? That’s where technology like Communications Platform as a Service (CPaaS) comes in handy.   

Read on to understand what CPaaS is, how it works, and how businesses can make the most of CPaaS solutions.

CPaaS stands for Communications Platform as a Service. It describes cloud-based platforms that allow businesses to easily integrate real-time communication capabilities into their existing applications. In other words, you can use a CPaaS communication solution to quickly add voice, video, chatbots, email, or other functionality to your business’ communication stack. 

CPaaS solutions are typically offered by CPaaS providers, which offer communication APIs like:  

• Messaging APIs — for transactional and marketing messages, reminders, alerts, and two-way conversations  
• Voice APIs — for seamless voice calls globally  
• Email APIs — to send, receive, and track emails effortlessly  
• Verification APIs — for a more secure customer journey  
• Video APIs — for high-quality in-app video experiences

…as well as advanced functionalities like bots, live agent communication solutions, campaign management, conversational engagement, and analytics.  

What really sets one CPaaS vendor apart from another isn’t really what they do, it’s how they do it — how they make sure communications happen. Businesses in need of scale, reliability, and quality might want to consider a CPaaS provider with end-to-end control over its connectivity infrastructure and direct connections to operators, channel providers, and postmasters — more on this later. 

CPaaS solutions are cloud-based and are offered through an Application Programming Interface (API). Developers can use the communication API to integrate SMS, MMS, RCS, WhatsApp, video conferencing, email, interactive voice response (IVR), and other real-time messaging solutions into their software without building or managing any complex backend infrastructure or hardware. 

Most CPaaS providers offer software development kits (SDKs), documentation, and support to make integration quick and easy for developers. Many CPaaS vendors have also developed low-code and no-code applications for conversational AI, customer service, marketing, and more, allowing non-technical users to add real-time communications capabilities into their workflows without advanced coding skills. 

CPaaS vs UCaaS

Curious about the difference between CPaaS and Unified Communications as a Service (UCaaS)? Both give businesses a range of cloud communication features, but they go about it in distinct ways.  

CPaaS is a set of communication APIs that lets businesses and developers turn devices and apps (like telephony and messaging) into communication tools. You can choose specific APIs to add to your existing communication system without creating an entirely new backend.  

Meanwhile, UCaaS offers a ready-to-use platform with various built-in functionalities. With UCaaS, you get immediate access to communication features like phone services, video meetings, usage reporting, and call reporting.

Want to learn more? Check out our guide that goes into CPaaS vs UCaaS!

Long gone are the days when people were okay running from store to store to find what they need, holding in a call center queue forever, or emailing customer support and waiting days to get questions answered.   

Fortunately, gone too are the days when businesses had to spend a lot of time, effort, and money creating and evolving complex legacy communications infrastructure or stitching together countless solutions to accommodate customers’ channel preferences and engage with them reliably, no matter where they are or what telecom provider they use.   

So, what exactly makes CPaaS such a game changer for businesses? Let’s examine the main benefits of CPaaS solutions.

• Simplicity. With CPaaS, there’s no need to manage your own communications infrastructure or get an entire IT department up and running. Using the CPaaS provider’s APIs and SDKs, developers can quickly and easily integrate real-time communications features into their business applications and systems.    
• Cost efficiency. CPaaS solutions eliminate the costs associated with evolving legacy systems. Instead, businesses can build the exact setup they need and only pay for the features they use. And because CPaaS vendors manage high volumes of communications, they can derive better deals from telecoms and channel providers and pass those savings on to you! 
• Flexibility and scalability. Communications APIs make it easy for businesses to customize, scale up, and upgrade their comms stack with new channels, features, and capabilities. Plus, global connectivity means businesses can easily expand their reach to new markets and audiences. 
• Omnichannel readiness. Communicating with customers across channels can be overwhelming. CPaaS providers solve the complexity of omnichannel communications with tools that bring multiple channels under one roof. The result is a consistent, more valuable experience for customers across their journey, no matter the communication channels they use.   
• Security and compliance. With digital fraud on the rise, trust and security have become the building blocks of customer engagement and loyalty. The right CPaaS provider will ensure all your communications are secure and compliant with data privacy rules and regulations, no matter where your audience is. Most CPaaS providers also offer multi-factor authentication solutions to help businesses secure sign-ups and logins and keep customers safe.

There’s no doubt about it: Meaningful, seamless customer engagement is the key to better customer experiences, long-term customer loyalty, and sustainable growth — and CPaaS is how brands can make it happen. 

CPaaS solutions serve a range of industries and use cases with customer-facing needs, like:

• Healthcare: With patient communications, telehealth appointments, automated reminders, and more.  
• Financial services: With tailored notifications, reminders, updates, and multi-factor authentication.  
• Travel and hospitality: With real-time notifications, streamlined reservation and booking management, up-front crisis communication and guest safety initiatives, and more.  
• Retail: By automating repeatable processes like shipping notifications, order confirmations, account alerts, deals, and abandoned cart notifications. Also helps with conversational commerce.  
• Logistics: With tracking notifications and alerts, and a user’s ability to change the time or location of deliveries via chatbot. 

Across industries, CPaaS platforms deliver value throughout the customer journey. Here are a few key CPaaS examples you can consider for your business communications.

Messaging notifications, reminders, and offers

Make sure customers never miss an appointment or a delivery by sending them timely messaging notifications as text messages, WhatsApp messages, or even RCS (Rich Communication Services) messages. Even better: Turn one-way notifications into two-way conversations to give customers the opportunity to reply in-message, and, for instance, reschedule a delivery or ask questions about a recommended product.

Email marketing automation and nurturing

Send the right emails at the right time and hit the inbox every single time. From welcome emails to abandoned cart notifications, and personalized nurture campaigns, the right email API will help you build successful email programs and drive higher customer lifetime value.

In-app video calls

Whether it’s a telehealth appointment or a meeting with a financial advisor, in-app video calling allows businesses to connect with their audience in a convenient way while retaining the human touch and reducing costs and no-shows. A true win-win!

AI-powered support

Provide five-star, always-on support on your customers’ favorite channels. Conversational AI applications leverage the power of NLP (Natural Language Processing) and NLU (Natural language understanding) to provide instant, helpful answers to customer queries. The result? A seamless, human-like experience.

_{Robert Gerstmann, co-founder and Chief Evangelist at Sinch, goes through how AI can help improve the UX of customer service in CPaaS solutions.}

Bonus: Customers who require real human assistance can automatically be transferred to a live agent who’ll have access to the full chatbot conversation history, but also to customer information thanks to CRM integration. This means less friction and quicker resolution! 

Toll-free numbers

Sometimes, a good old phone call is still the best way forward. Let customers call you toll-free and text you on the same phone number if they have questions.

User verification

Make sign-ups smooth and secure with user-friendly two-factor authentication (TFA) to verify logins. You can also use SMS one-time passcodes, flash call verification, data verification, or phone call verification.  

Pro tip: Blend multiple authentication methods to increase security while optimizing CX and costs.

According to new research from Juniper, the value of the CPaaS market will rise to $29 billion by 2025. Similarly, in its Market Guide for Communications Platform as a Service (September 2022), Gartner predicts that “by 2026, 90% of global enterprises will leverage CPaaS as a strategic IT skill set to maintain digital competency, up from 30% in 2022.” 

The CPaaS market is growing, but it doesn’t mean all vendors have everything it takes to power reliable and secure communications at scale. That’s why we’ve compiled everything you need to look out for in a CPaaS service provider below. 

1. API range and features

Customers expect personalized, real-time interactions with brands on the channels they already use. This means you need a provider with a range of APIs spanning all communication channels — yes, even if you’re not using all of this today, because you never know what the future will bring! Ask yourself — and potential providers — this:  

• Can you easily upgrade to omnichannel?
• Can they provide demonstratable customer use cases for all of their services?
• Is the service compatible with any user device?
• Do you need any additional equipment to use the services?

2. Support and community

You need a partner who can provide quick, efficient support in case things go wrong — and preferably, one who can do so 24×7!   

• Check the vendor’s response times, contact options, and processes for fixes and updates.  
• Take a look at the vendor’s user community and forums to see how they’re supporting their user base.  
• Check how the vendor support its customers during integration and onboarding and how they ensure businesses make the most of their technology. 
• Check what services they provide in-house and how good their partner network is. 

3. Network infrastructure and reliability

When it comes to CPaaS, experience is of the essence, as are a global network and direct connections with mobile operators worldwide, because this is what ensures that messages get delivered, that emails reach customer inboxes, and that calls are connected with the best voice quality. So, make sure to check the following:  

• How long has the provider been on the market?
• Does it have a carrier-grade network?
• How many direct connections do they have to operators, channel providers, and postmasters?
• How about uptime, deliverability, and historical outages?

4. Integration and user experience

Selecting a partner with tools you can integrate and work with effortlessly is also crucial:  

• Are the vendor’s APIs easy to integrate with your existing tools?  
• Can you easily add more messaging services to your communication mix in the future?  
• Does the vendor have native integrations with CRMs, contact centers, ERPs, e-commerce and marketing platforms, and other tools your business is using?

5. Security and privacy

Data security isn’t something you can compromise on. Make sure your provider will keep your business and customers safe:  

• Does the provider have certifications demonstrating its expertise in data security?  
• Is the provider compliant with all local data laws and restrictions of the markets where you operate?

6. Cost and general conditions

Cost is of course an important consideration when choosing a new vendor, but keep in mind your current requirements might change: 

• What does the vendor bill for its services, and what are the taxes and fees applicable?
• Is the vendor able to adjust its costs and pricing to your needs?
• Is there a contract? How can you get out?

7. Growth and flexibility

You never know what the future holds, which is why you need a partner who can grow and scale with you:  

• Does the vendor have local and international reach and expertise?
• How easily can you access new channels and services? How much will it cost?
• Is the vendor driving innovation by regularly adding new channels, features, and security and platform capabilities?

8. Market research and customer reviews

Don’t just take their word for it. Look at what existing customers and industry experts have to say!

CPaaS has taken the communications world by storm in the past years, helping brands provide flawless, always-on customer interactions on their favorite channels.   

With best-of-breed solutions for messaging, voice, email, video, verification, and more, Sinch is in a prime position to help businesses create a robust, scalable ecosystem for meaningful conversations.  

We don’t only support all your communications needs. We own and manage our network infrastructure — and just as importantly, we’re dedicated to our clients’ success!

Check out the IDC MarketScape 2023 excerpt1 where Sinch has been named a Leader in the CPaaS market. 

Need more insights? Get a copy of the 2023 Gartner® Magic Quadrant™ for Communications Platform as a Service (CPaaS). 

1: IDC MarketScape, Worldwide Communications Platform-as-a-Service (“CPaaS”) 2023 Vendor Assessment (doc #US50607923, May 2023)