What are Webhooks?: An Explanation for the Non-Technical

Discover the power of webhooks in B2B SaaS integrations. Explore APIs, practical use cases, and enhance your technology knowledge in the B2B SaaS space.
Written by
Michelle Artreche, Content Marketing Manager
Published on
September 28, 2023

If you're in SaaS, you've probably come across the term webhooks. But what are they exactly?

To grasp the concept of webhooks and their role in SaaS integrations, it's useful to know a bit about APIs and product integrations.

SaaS companies now provide a wide range of ready-to-use integrations for their customers. These integrations are typically developed using an API.

An API is like an application's communication channel, enabling other systems to interact with it by requesting, inputting, updating, or deleting data. Product integration utilizes APIs of two systems to automate the sharing and updating of data between them.

Let's use an example of how to illustrate how APIs facilitate integration between systems. 

Imagine a CRM and Webinar Software working together through their APIs. The integration allows the Webinar Software to retrieve contact lists from the CRM and add the names and emails of webinar attendees back to the CRM. It can also remove contacts from the Webinar Software if they were deleted in the CRM.

In simpler terms, APIs enable systems to automatically communicate with each other, including tasks like requesting, pushing, updating, and deleting data in both systems.

Here's how it works: The CRM can send a request to the Webinar Software's API, asking for any new registrants for an upcoming webinar. This request is commonly referred to as a 'poll,' 'call,' or 'sync.' It can be scheduled to occur at specific intervals or triggered manually by a user or developer.

Since these requests often operate on a schedule, they can generate a significant amount of activity and computing power. However, if there hasn't been much data updated since the last request, the amount of data involved might be relatively small.

Note that there is usually a delay in data accuracy between systems due to API limitations. Scheduling calls to occur every millisecond or second is often restricted. For example, if your CRM syncs with a website form every 10 minutes, the contacts list in your CRM may not be fully up to date during that interval.

What are Webhooks?      

A webhook is a more efficient way of sending data compared to an API integration. Instead of constantly polling for updates, a webhook is set up once and only sends data when a specific event occurs.

For instance, our Webinar Software has a webhook that shares contact information of registered participants with other systems. Whenever someone signs up for a webinar, their information is immediately sent to our CRM.

The main advantage of webhooks is that they provide real-time data updates. This is crucial in many business scenarios where up-to-date information is essential.

Another benefit of webhooks is that they eliminate unnecessary communication when no relevant events take place. In an API integration, the CRM would repeatedly request information from the Webinar Software, even when there are no new registrations. This can result in wasted resources and computing power.

From a technical perspective, setting up webhooks is relatively simple. It involves configuring a POST request and an endpoint in the system that sends the data, while the receiving system needs a URL to receive the data.

Related content: Should You Build or Buy Your Integration Infrastructure?

What are the Disadvantages of Webhooks?

Webhooks have limitations compared to API integrations. They can only receive data and lack functionalities like pushing, deleting, or updating data in another system. They're not suitable for complex integrations requiring two-way communication or data deletion.

Webhooks don't provide immediate feedback if the other system is down or fails to send data. API integrations offer error responses when polling, allowing you to detect system unavailability. Implement additional mechanisms to monitor availability with webhooks if needed.

If your system is offline when a webhook is sent, there's a limited number of retries before giving up. Prepare a backup plan to retrieve data in case of prolonged downtime.

Despite limitations, webhooks can be useful depending on your integration requirements. 

Just be aware of their constraints and plan accordingly.

Related content: How to Integrate Systems Like a CTO: 10 Best Practices

Webhook Use Cases

Many SaaS companies offer REST APIs and webhooks. Webhooks are ideal when real-time data transfer or efficient execution is necessary between systems. Here are some use cases where webhooks are often applicable:

  • Automated email sent to a CRM when a prospect fills out a demo request, webinar, or ebook form.
  • Salesperson receives a notification in Slack when a returning prospect asks a question in a chatbot.
  • Coupon application receives a notification when a person abandons their online shopping cart, triggering a coupon pop-up.
  • Customer's email is sent to a CRM or marketing automation system upon completing the checkout process.
  • Invoice is sent to accounting or financial software after a customer completes payment.
  • Approved job applicant is forwarded to an email marketing automation system from an Applicant Tracking System (ATS).
  • Customer support person is alerted in Slack when a ticket is submitted by one of their customers.
  • Developer is notified via email about a non-urgent but important issue that needs fixing.
  • Customer support team is notified in their help desk software when a customer disputes a payment.

From a business standpoint, the decision to use webhooks primarily depends on the need for immediate data transfer to another system. This requirement typically arises when timely notifications are crucial for optimal performance.

Related content: How Integration User Stories Can Boost Your Business

For example, a demo request, when responded to after 10 minutes, has fewer conversions compared to an immediate response. Developers need to address efficiency, data limits, and security concerns. They should also establish a mechanism for data reconciliation when either system is down.

Examples of Real-Life SaaS Webhook Implementations

X

X offers account activity webhooks to provide real-time notifications for various events such as receiving direct messages, tweets, replies, and likes. 

This feature is beneficial for social media managers who can promptly respond to interactions with the business account — the receiving system can be a social media management tool like Hootsuite or Hubspot, or a simpler option like Slack.

Example of X's webhook-based API

On the other hand, X's Engagement API is not a webhook but allows systems to retrieve engagement data for their account and tweets within a specific time period. 

This data is essential for assessing and tracking marketing performance, but real-time updates are not as crucial from a business perspective.

Similarly, X's Search API enables another system to search for tweets related to specific topics. While this can provide valuable data for analysis, it doesn't typically require real-time automation for business purposes.

Shopify

Shopify offers a number of webhooks to boost efficiency and meet the real-time demands of e-commerce. 

These webhooks enable automated responses and follow-ups during customer activities like purchasing, paying, disputing transactions, canceling orders, or requesting refunds, resulting in improved customer service.

By receiving real-time notifications about inventory, customers, and products, businesses can ensure that their inventory management systems, marketing efforts, and shop displays are always up to date.

Shopify webhook subscriptions

Additionally, Shopify provides REST and GraphQL APIs that cover various functions, such as shipping and fulfillment, reporting on business performance, managing storefront content, accessing product information, and much more.

Webhooks can enhance the value of your product and tech ecosystem. They enable real-time data transfer between systems, which is essential for your customers' business goals. 

If your customers sporadically require specific data to move between systems, webhooks offer an ideal solution.

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