General • Last Updated 5/10/2024

The complete guide to CPaaS

What is Communications Platform as a Service (CPaaS), and why does your business need it?


By Emily Bowen

"What is CPaaS?" graphic on light yellow background

Businesses of any size and across all industries can benefit from using CPaaS solutions. In fact, Gartner predicts that 74% of organizations will be using CPaaS in 2024. In this post, you’ll find a detailed explanation of what CPaaS is, why your business should consider CPaaS, and examples of how businesses are using CPaaS technology to transform their communications.

What is CPaaS (and why does it matter)?

CPaaS stands for Communications Platform as a Service. A CPaaS is a cloud-based software platform that allows businesses to add communications features to existing applications without building backend infrastructure from scratch.

Today’s customers demand seamless real-time communications, complete with consistent, transferable experiences across brand channels. With CPaaS, businesses can easily unify and scale communications to transform their operations and customer journey.

You likely encounter CPaaS functionality on a daily basis, even if you don’t realize it. When a chat box pops up as you navigate through a website, when you get a push notification that your ride is on the way, or when you receive a verification code via text while resetting a password—that’s CPaaS technology at work.

CPaaS providers allow businesses to easily integrate real-time communications such as messaging, video, voice, and two-factor authentication into existing applications. You don’t need to be an IT expert or have a large staff of developers at your disposal to use CPaaS: CPaaS providers offer a fully supported framework that gives you the ability to adapt and customize your applications with just a few clicks.

The alternative to CPaaS, which some businesses still use today, is a complicated web of providers, vendors, and contracts. Managing these providers can be time consuming, messy, and expensive.

With CPaaS, you work with a single provider that makes backend infrastructure and connectivity simple, so your team can focus on creating a communications experience that fits the needs of your business. CPaaS makes it easy to scale your communications with ready-to-embed application programming interfaces (APIs) that reduce administrative burdens and speed up development. Communication services become à la carte—you pick and choose which features you need, and customize them for your particular use cases.

8 examples of CPaaS integration

Countless industries benefit from CPaaS integration. Some common applications of CPaaS include push notifications, identify verification services, and pop-up chat boxes on websites. CPaaS solutions help businesses across countless industries communicate more efficiently. Here’s a closer look at use cases in 8 industries:

1. CPaaS for healthcare

Telehealth, which skyrocketed during the COVID-19 pandemic, is here to stay. In fact, 83% of patients surveyed in 2022 said they plan to continue using telehealth options. A major component of telehealth includes virtual office visits via real-time voice or video applications, which eliminates unnecessary travel and wait times for patients. For patients who do come into the office, automated appointment reminders via phone call or text message reduce missed appointments, which cost the U.S healthcare system $150 billion annually.

Other applications of CPaaS in the healthcare field include secure data-sharing across providers and platforms. Support teams can retrieve a patient’s medical history before answering an incoming patient call, and patients can access test results and medical reports via portals that require two-factor authentication to protect personal information.

2. CPaaS for retail

The retail industry depends on contextual, targeted communication with shoppers. Retailers can use CPaaS to market to and incentivize existing customers effectively via email, text, and push notifications.

Businesses can drive revenue by personalizing special offers based on customers’ purchase history and delivering these offers to them via their preferred channels. Or, if a customer abandons their virtual shopping cart, they might receive a nudge to complete the purchase.

Post purchase, customers could receive automated messages thanking them for their order and offering discounts and deals on their future purchases. Many retailers have seasonal promotions and virtual coupon codes they share with “members only,” makes customers feel valued and builds brand loyalty. Retailers can also use CPaaS integrations to gather feedback on customer experiences via surveys and polls.

3. CPaaS for finance

Client trust is critical in the finance industry, since consultants handle sensitive data and assets. Like the healthcare industry, two-factor authentication is a critical part of safeguarding information and protecting customer accounts, particularly with the rise of self-service banking kiosks and finance apps.

One study reported that 89% of customers ranging from baby boomers to millennials use mobile banking—use CPaaS for banking to enhance the customer experience and accelerate your customer service. Video banking and video- and voice-enabled ATMs allow clients to receive immediate assistance from tellers and allow for convenient, secure financial consultations through the use of multi-factor authentication and face/fingerprint identification.

Real-time transaction alerts via push notifications or SMS messaging protect customers from fraud. One feature cited as “extremely valuable” by 47% of customers is the ability to temporarily lock a payment card.

Signing, sharing, and accessing secure documents also becomes easier with CPaaS, since enterprises can embed security and sharing features within their existing applications.

4. CPaaS for food service

New economies have been built on mobile ordering apps and food delivery services, and CPaaS enables critical functionalities within these applications.

From hosting secure, anonymized conversations between drivers and customers to sending automatic delivery updates, CPaaS enables mobile ordering apps to enhance user experiences and reduce support requests.

During the COVID-19 pandemic, restaurants used CPaaS technology to provide delivery updates for online orders, in support of the revenue streams that helped them stay afloat. Now, post pandemic, many restaurants continue to offer these services to customers. Delivery remains a major source of revenue for restaurants: 43% of customers still order delivery monthly, and 23% order weekly.

5. CPaaS for marketing campaigns

CPaaS is the ultimate omnichannel marketing solution. CPaaS integrations turn one-way campaigns into two-way conversations that engage customers and increase conversion rates. Customers demand a consistent, transferable experience across channels—with CPaaS integrations, their data shifts with them as they navigate from website to Instagram to chat, and brand voice remains consistent.

Marketing teams can track campaign metrics in real time and target potential customers through a combination of their preferred channels. Once a customer has provided information (such as a phone number or email address), automated notifications through push, SMS, social media ads, email, and other channels can move them through the funnel to purchase.

6. CPaaS for insurance

Insurance agents leverage CPaaS in a variety of ways, but most are centered around customer experience. In fact, 74% of customers say it’s important that their insurance provider offer the option of managing claims online or via mobile. CPaaS integrations can create automated status updates about prescription refills, auto maintenance, and pending documentation for quicker claim processing. Agents can message customers about policy updates and claim notifications. Customers can start or manage claims via website or app, or get answers to commonly asked questions in seconds or minutes (not hours or days) via call, text, or chatbot.

7. CPaaS for HR and recruitment

Streamline recruitment and hiring at your business by using CPaaS to improve and automate processes—CPaaS integrations allow you to use predefined triggers to simplify the interview process.

For example, you can remind candidates of upcoming interviews, request that they upload documents, and conduct virtual interviews in real time. If an interviewer recommends that a candidate advance to the next round of interviews, this can trigger an automated call that informs the candidate that they’ve been selected for the next round of interviews, and follows up with an automated email asking the candidate to select times they are available.

CPaaS also simplifies the onboarding process—instead of using your HR staff to conduct live trainings over and over again (which can become a huge time suck if your business is rapidly expanding), an HR team member can easily record training sessions using video APIs, and put together virtual training sessions that remain hosted securely for employees to watch at any time.

Another way HR staff leverage CPaaS is through company-wide notifications and alerts via SMS messaging, chat, or email. Remind employees of upcoming trainings, confirm that paychecks are available, or share important company information quickly.

8. CPaaS for customer service

CPaaS allows businesses in any industry to deliver top-notch customer service experiences.

Retail businesses can set up end-to-end order shipping information by automating SMS or push notification updates for every stage of the shipping journey. Smart interactive voice response (IVR) layers auto-respond to routine phone inquiries, which frees up your customer service representatives to focus on other tasks.

Food delivery and ride share businesses use CPaaS to reduce no shows and misdeliveries, verify claims of agents unable to complete an order to unresponsive customers, and use short code messaging to provide additional layers of security by anonymizing personal information such as phone numbers.

Salesforce research shows that 76% of customers prefer different channels of communication depending on the context. CPaaS integrations allow customers to get the help they need on their terms. Offering a variety of communication channels, such as chatbots on a website, DMs on Instagram, and voice or video calling ensures your customers leave satisfied.

Benefits of integrating a Communications Platform as a Service (CPaaS) into your business

Eighty-seven percent of companies experience business acceleration from their use of cloud services. The nature of work is changing, and companies need a unified communications strategy to compete. Well-made CPaaS APIs enable businesses to customize and deeply integrate telecommunications capabilities into their platforms with just a few clicks, in the way that best suits their specific use case.

Replace silos with omnichannel communications

In the past, business communications mostly took place over a singular physical phone system supported by a local carrier. Today, most businesses use a variety of simultaneous, yet separate communications tools. A business’s company-wide communications may take place primarily via email and instant messaging, while individual departments collaborate and converse with customers through different, more specialized channels. It’s difficult to track and optimize communication efficiently when interactions like this take place in isolation.

Cut unnecessary costs

CPaaS providers build, manage, and maintain the complex, expensive telephony infrastructure that enables global connectivity services.

The best providers have their own carrier licenses and direct connections to operators around the world, which translate to maximum control over their networks and the traffic that runs through them. Leading providers thus eliminate middlemen, reducing calling and messaging costs across the board, while driving higher levels of security and reliability. These providers are also better able to build and offer granular products and features, with pricing models to match—allowing customers to assemble and pay for the exact solutions that fit their needs.

Let’s take a quick look at two companies that experienced major cost savings after choosing Telnyx as their CPaaS provider:

Replicant uses Conversational AI to solve customer problems over the phone. When Replicant switched to Telnyx, it reduced voice costs from 7 cents to 1 cent per minute — that’s an 86% reduction. The substantial cost difference means Replicant can offer more competitive pricing and scale efficiently without having to worry about spiraling costs.Ooma is a smart communication platform that offers voice and collaboration features to businesses. Before switching to Telnyx, Ooma was using multiple providers for numbering, voice and messaging services. Since choosing Telnyx, Ooma has reduced costs by 30%. This means Ooma can scale business more efficiently, passing on the cost savings on to users.

Create customizable, scalable solutions

Your CPaaS provider should offer the API capabilities, flexibility, speed, and expertise you need to grow your business. It should offer a broad range of scalability and customization; just because you don’t need certain API capabilities right now doesn’t mean you won’t need them in the future.

CPaaS gives you the tools and the confidence to meet the changing needs of your business, regardless of how unpredictable they may be. Maybe you need speech-to-text and text chat in your video API, but don’t need the ability to create multiple video rooms. Or perhaps you want two-factor authentication, but don’t need other messaging capabilities right now. CPaaS offers a level of customization that allows you to get the solutions you need without paying for services you don’t use. And, if you decide later on that you do want to add on additional features, those options are just a few clicks away.

Easily integrate with existing apps and tools

Many CPaaS providers offer integrations that allow customers to add real-time communications functions to the tools and applications they already use.

CPaaS integrations often leverage “if-this-then-that” logic, which enables specific events within a given application to trigger a message or call. For example, say you want to build outbound text messaging into your Marketo campaigns. All you need to do is follow a few simple steps to create and authorize a webhook, after which SMS messages get sent automatically once your defined criteria is met. The same concept applies to incident alerts, incoming leads, new support tickets, scheduling functions, and more.

Integrations relieve in-house engineering teams of the heavy-lifting, and can often be set up in a matter of minutes. Leading CPaaS providers offer a broad range of integrations with popular platforms their customers already use and love.

Design a better customer experience

A unified communications strategy optimizes the work your company does and positions you to outpace competitors. Using APIs to collect data allows customer-facing teams to have contextual conversations with customers even if they switch between representatives or communication channels. For example, if a customer describes an issue in a Twitter DM to a brand, and is then transferred to a call center or service portal, the customer will not need to re-describe the issue.

Allowing customers to communicate with representatives of your brand in real time is invaluable when it comes to securing sales and building loyalty. Customers do not want to navigate out of a website or social media platform to make a call or chat with an agent; they should be able to easily move from one channel to another, and see their experience reflected in all channels.

CPaaS FAQs / additional resources

What is real-time communications (RTC)?

Real-time communications is any form of live information exchange (meaning the exchange has little to no latency) between two or more users through a telecommunication service or internet connection. Some examples of RTC include calling, messaging (via apps like WhatsApp or Facebook Messenger), teleconferencing, and video conferencing (on platforms like Zoom or Skype).

What is an API?

An Application Programming Interface (API), is a software mechanism that allows communication between two applications.

For example, the National Weather Service has their own software system of weather data. Your smartphone has a weather app. The weather app on your phone communicates with the Weather Service software system via APIs, and shows you updated, accurate weather information on your phone.

APIs save developers time by allowing them to easily embed features and information streams into existing applications, and provide a layer of security for both your phone’s data and the server by acting as a barrier—only relevant data is shared between the phone and the server.

How does a CPaaS platform work?

CPaaS relies on APIs that support communication triggers for a variety of use cases. APIs bridge the gap between two endpoints (like a user’s smartphone and an app, or two different apps) and allow them to communicate. Data packets are sent from one endpoint to the other over an IP network (the internet), which allows the user to access the intended functionalities without compromising the app’s primary purpose.

CPaaS vs. UCaaS

Unified Communications as a Service (UCaaS) and CPaaS are similar in several ways, including their reliance on cloud service providers (CSPs). However, UCaaS bundles products while CPaaS enables à la carte tool selection. CPaaS uses APIs to create customizable and flexible features that are integrated into existing applications, whereas UCaaS consolidates all communications into a standardized package.

Think of it this way: UCaaS is a stock car, and CPaaS is a custom-built car. They both rely on the same basic parts, and have similar functions, but one is designed specifically for your needs. The stock car gets you where you need to go, but the custom built car is a better fit. Don’t need a sunroof because you live in cloudy Seattle? Would like an automatic car starter and cruise control? Extra leg room a must? With CPaaS, you can have all the features you want, without paying extra for things that you don’t.

Choosing the right CPaaS provider

By now, hopefully you’re convinced that integrating CPaaS into your business communication strategy is the smart choice. Remember:

A trustworthy CPaaS provider should offer control, quality, reliability, and flexibility. But choosing a provider can be tricky: you need a vendor that meets your business’s specific needs and has the capability to deliver impeccable service. We’ve done the research for you and compiled a checklist of evaluation criteria for selecting your CPaaS provider.

Telnyx is a software-driven connectivity company designed for the future.

We’ve built and vertically integrated CPaaS, telecom service provider, and telecom equipment layers leveraging our own private IP network, global PoPs, and multi-cloud redundancy to provide reliable, low-latency communications services.

Telnyx is a licensed carrier in over 30 countries. Cutting out the middleman allows us to drive efficiencies, provide better products to our customers, and set industry standards for price, value, and quality. Partner with Telnyx to build your ideal communications solution, with all the support and guidance you need to grow and scale your business.

Founded in 2009 with offices in Chicago, Dublin, Amsterdam, Warsaw, and São Paolo, Telnyx serves mission-critical communications for customers including Cisco, Philips, Slack, Red Cross, and more.

Click here to get our comprehensive eBook: The 2022 Guide to CPaaS: Evaluation Criteria for Selecting a CPaaS Partner

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