Escalating SMS messaging costs might be burning through your communications budget. Read on for some quick and easy cost-cutting tips.
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Rising SMS costs are often not reflective of increased value for your messaging strategy. Instead, those costs are driven upward by poor deliverability, commissions taken by resellers, and other inefficiencies introduced by your service provider.
Consider a scenario where your company’s average customer acquisition cost (CAC) is $200. If your SMS service provider offers deliverability close to 100 percent, that $200 figure is likely to hold.
But what happens when deliverability drops to 80 percent? If you’re using an SMS wholesale aggregator, this possible outcome is all too real. And it will come at a high cost, driving up your CAC to around $240.
And that revised figure is based on bad deliverability alone. If you’re dealing with deliverability rates that low, you’ve probably got other inefficiencies dragging down your messaging ROI.
These costs are neither sustainable nor necessary. If you’re worried about the high price of your current SMS strategy, there are several steps you can take to quickly cut expenses while also increasing the value of this customer engagement tactic.
By the end of this guide, you’ll understand:
The true cost of inefficiency in your SMS strategy
What steps you can take to immediately reduce your SMS costs
How to craft better messages to increase messaging performance and ROI
The high cost of inefficient SMS messaging
The cost of sending an individual message is cheap—sometimes a fraction of a penny. But those fractions of pennies add up fast across thousands and even millions of messages.
Some of the costs associated with an inefficient SMS messaging strategy can be reduced or eliminated simply by optimizing your tactics—while preserving, and even improving, the parts of this strategy that are generating revenue and value for your company.
To identify these opportunities and implement changes, let’s first review the ways SMS inefficiencies are creating unnecessary costs for your business.
The impact on customer and prospect engagement
Inefficient SMS messaging comes at a steep opportunity cost for any business.
One of the biggest issues affecting the customer experience occurs when message delivery is delayed by your service provider. This often happens when messages are being passed between multiple aggregators, rather than being executed by a direct service provider. Increased latency in message delivery can impact their relevance and value, especially if their content is time-sensitive.
Working with low-cost, local SMS aggregators can also result in changes to your campaign data. Changes to the message’s sender ID, for example, can result in your audience receiving messages from a new, unfamiliar number not associated with your business.
These inefficiencies can have tangible consequences for a number of messaging scenarios, including:
Marketing campaigns. An altered sender ID can give your audience the impression that the message they’re receiving is spam, rather than new communication from a familiar brand. This will inevitably result in lower open rates and, in many cases, diminished trust among your customers.
Two-factor authorization. If one-time passcode delivery is delayed, they may expire before they reach your end user. This can prevent the customer from accessing their online account and making a purchase—and the frustration may prompt them to swear off your brand.
Flash sales. When offers are time sensitive fast delivery is of the most importance. A delay can cause significant drops in conversion.
Shipping notifications. Your customers may want timely updates on order deliveries so they can promptly collect packages from their front step. Delayed shipping notifications could increase the risk of package theft.
Accurate opt-in and opt-out management. If the sender ID is being changed by aggregators, opt-ins and opt-outs notifications may not be routed to the correct sender ID for your SMS campaign. Notification delays can also slow down the opt-in and opt-out process, annoying your customers.
The financial implications for your business
Accumulating SMS costs can hit your business from many different angles, with implications extending far beyond your marketing ROI. The most significant examples include:
Financial penalties due to non-compliance. Failure to follow local laws regarding spam messaging, consumer privacy, and other applicable regulations can lead to steep fines for your business—as much as $500 per individual message in the U.S., although laws and penalties can vary by country.
Increased exposure to SMS fraud. Rising messaging costs—especially in contrast to declining ROI—could be the result of fraudulent activities on the part of your service provider. Fake traffic and delivery receipts can be very difficult to prove, giving your business little recourse to recover your lost funds.
Poor visibility into message delivery and performance. Processing fees and commissions are often based on the volume of messages being sent, but delivery of these messages can’t always be verified. A lack of reliable performance data can make it difficult to understand what kind of value you’re getting from your SMS campaigns. More often than not, a lack of visibility often goes hand-in-hand with lackluster results.
A bad return on investment. Lower delivery rates, open rates, click rates, and revenue generation all contribute to decreased ROI for this marketing strategy. Regulatory fines can come over the top and torpedo the underwhelming ROI you’ve managed to achieve in the first place. As costs continue to rise, your return on investment has nowhere to go but down.
5 tips for immediate cost reduction and improved messaging ROI
In the first year after making these changes, your business could see a dramatic reduction in wasted communications spend. Even better, an upgraded SMS strategy could boost your messaging performance and enhance your ability to generate revenue and other value from these campaigns.
Here are five quick and easy steps to get started:
1. Find a vendor with transparent pricing that does not charge a markup on SMS
Understanding the true cost of SMS messaging can be challenging.
It's comprised of carrier costs, phone number fees, marketing automation software expenses, CDP costs, inbound SMS fees, and more. Many vendors obscure their pricing models by adding markups to each of these components. These markups can become quite substantial, especially as your sending volume or database size increases. Bird takes a different approach, offering transparent pricing with no markups on SMS and no hidden fees.
This translates to discounts of up to 90% in markets like the US and around a 50% lower total cost of ownership.
2. Switch to a direct-to-carrier SMS provider
Instead of siphoning your messaging campaigns through a murky network of wholesale aggregators, find an SMS service provider that offers direct connections with carriers and network operators in the markets you want to reach.
These direct-to-carrier relationships improve the transparency, speed, and security of your messaging, and they provide far more reliable assurances regarding deliverability and compliance. With a direct-to-carrier provider, you’ll know exactly what you’re paying for and how that spending is translating to ROI.
Seek out a direct-to-carrier provider who can talk openly and positively about their network, their delivery rates, and their ability to drive conversions. Make sure the geographic regions they serve line up with the global audiences your business wants to reach.
3. Use a messaging platform to create omni-channel campaigns tailored to your audience.
SMS messaging can be a valuable pillar of a company’s communications strategy. But it isn’t the only way these communications goals can be achieved. The best way to maximize your messaging ROI is by moving your SMS campaigns to a platform where they can be integrated into a larger engagement strategy built around conversational marketing.
Communication channels like SMS, email marketing, WhatsApp, and Messenger can add value to one another by sharing customer data, tools, and other resources within a centralized platform. Setting up this centralized approach is easy: Bird’s API and CRM can be set up in hours, and integrations with tools like Salesforce and Zendesk can immediately enhance the quality of your SMS campaigns.
Once you decide to make the switch, your business can be up and running with your new platform in a matter of days.
4. Clean and segment your contact lists using HLR Lookups
The longer a number is stored in your contact list, the more likely it is to become invalid. Customers change their phone numbers. In some cases, the numbers in your list might have been invalid to begin with—the result of a typo, or a customer intentionally adding a fake number into a form field.
Your business is still paying to deliver messages to those numbers, though. This wasted money can be immediately saved by validating your contact list numbers using Bird Lookup. The Lookup API conducts a Home Location Register (HLR) lookup to confirm the number’s accuracy and clean up related contact information, such as the number’s provider.
Once the numbers are reviewed, Lookup lets you remove invalid numbers from your contact list, reducing your number of undeliverable messages and protecting you against one of the most common forms of SMS fraud.
5. Account for international pricing differences when planning campaigns
The cost of delivering a single SMS message can vary widely from one country to the next. Local pricing conventions and other country-specific variables can lead to significant differences in these costs, which can impact the number of consumers you’re able to target.
Along with the baseline cost of international messaging, some countries have restrictions that may impact the value of your SMS campaigns. Certain countries, for example, don’t allow you to send a message with a link, which could be a frustrating limitation for certain businesses.
Shifting more of your budget toward lower-cost international audiences can help you increase your total reach, reduce your overall SMS spending, or achieve both of these goals at once.
3 strategies for crafting a perfect (and cost-efficient) message
You’ve got a handful of tips and tricks to lower the cost of sending SMS messages.
Now it’s time to discuss a few ways you can reduce the resource cost of creating those messages—while also improving their impact and ROI.
Here are three steps to achieving more with your SMS campaigns:
1. Keep SMS messages short and sweet
The maximum length for an SMS message is 160 characters. Go above that and your message will be split into two—and the cost of sending your message will double.
We always recommend getting your message under that 160-character mark. But if you can make your message shorter, you may see improved performance in terms of response rates and/or click rates. A shorter, more concise message makes your message more likely to be read to its end, including its CTA.
2. Embrace a tools-based approach for more efficient messaging
Simple, digital tools can improve the performance of your messaging and allow you to get more done within a single SMS.
One perfect example? URL shorteners. This shortened code minimizes the length of hypertext URLs to help your message fit under that 160-character limit. Branded URL shorteners can also improve the consistency of your brand’s SMS experience.
Other tools can expand on the services supported through your SMS. Bird’s platform, for example, can use SMS messaging for customer service issues, with automated messaging and the ability to escalate the conversation to a live agent. Automated message triggers can engage customers who have recently abandoned a virtual shopping cart, expanding the utility of SMS without increasing the workload for your employees.
3. Fine-tune your timing for optimal engagement
Target message delivery to the most effective periods of your audience’s day, based on your audience research and prior campaign performance, to maximize open rates and engagement with your message.
Remember to account for time zones when scheduling these messages. Some countries also have rules dictating when you’re allowed to send messages: if you send messages in France on Sunday evening, for example, you’ll frustrate some of your customers and also run afoul with local regulators.
Invest in SMS success with Bird
Optimizing SMS spending isn’t a one-time project.
Contact lists must be cleaned up periodically. Campaign performance reports should inform audience targeting and the content of your messaging. International message delivery must be recalibrated based on your messaging goals and ROI.
But you don’t have to do this work all by yourself. Bird will do the heavy lifting for you, achieving cost-efficiencies that save your business money while squeezing more value out of your SMS campaigns.
It’s time to start doing more with less.