SMS marketing campaigns fail with acquired mobile number databases

SMS marketing campaigns fail with acquired mobile number databasesBulk SMS marketing is one of the effective means to reach masses by sending text messages to people’s personal mobile phones.

Businesses can buy mobile number databases from database vendors or cultivate their own contact lists. The results are literally hopeless when they use bought databases for SMS marketing campaigns.

Also there are serious setbacks in acquiring those mobile number databases. Read more …

Here it is assumed that a business has acquired a targeted contact list (mobile number database of target customers). An effort has been made to explore the major factors affecting the performance of bulk messaging campaigns up-on using those contact lists.

Cost per message is one of the important aspects affecting bulk sms marketing projects.

Increase in SMS prices over the years

During 2010 in India, many entities (individuals, small enterprises, and large enterprises) were using bulk SMS medium to reach the masses. 10 lac message credits were sold at about Rs. 15,000 (1.5 paise per credit) by bulk SMS service providers.

After the introduction of the SMS termination charges by TRAI (Telecom Regulatory Authority of India) the prices in the market shot up to 35 paise/SMS at one point of time. Termination charge is a fee paid by the operator (like Vodafone, BSNL, MTNL, etc.) on whose network the message originates to the operator on whose network the message terminates. At the time of writing this article there was a SMS termination charge of 5 paise/message applicable on both promotional and transactional category of messages. Refer Amendment to Principal Regulations page for details.

Coupled with the high costs of acquiring the databases the raise in SMS price was a big blow to all the participants of the industry. The enterprises sending pesky messages have stopped their marketing campaigns over the years.

From 1.5 paisa, the price of an SMS shot up to 35 paisa. Since then the price of an SMS has settled at about 15 paisa which is still almost ten times the price in 2010. Price is one of the major factors affecting the ROI of SMS campaigns. Enterprises wanting to add real value to their customers and members utilize the bulk SMS medium now.

Besides the cost per message it’s important to consider the quality of the service.

Cheap SMS is not reliable

There are individuals and companies selling bulk messaging credits for as low as 5 paise and as high as twenty paise. But with the mandatory SMS termination charge of 5 paise, it becomes impossible to sell SMS at 5 paise and remain in the business except if all the messages shown sent are never delivered.

It is technically possible for service providers to cut-off (do not send) a certain percentage of the messages its customers submit in bulk. This is the only way for the provider to keep a margin. Low deliverability of messages means high cost per message. It also makes high cost profiles render useless. Thus partnering with a poor service provider terribly affects the SMS campaigns.

So beware of the firms selling SMS credits and following malpractices.

The SMS prices from a service provider depend on various factors like quality of the SMS routes they use (choice of telecom operators, time to deliver messages, deliverability ratio (number of messages submitted to number of messages delivered), delivery reports), user friendly features, quality of customer support, etc. So it is important to assess the value the you get for your money.

Finally, it boils down to customers’ responsibility to choose their service providers diligently. It’s always better to start with a small volume and increase it gradually as you gauge the reliability of the service provider.

The behavior of the people to text messages has changed dramatically over the years, affecting the sms campaigns.

Lesser people respond compared to earlier years

Being in the industry from 2009 our observations reveal that the people responding to the text messages have reduced drastically over the years. There are some developments that would have affected the people’s responses to SMS offers.

People have more options now. With the raise of smart phones equipped with high speed internet they can easily shop via a website or a mobile app. Suppose a customer wants to buy a health insurance plan. At that time she receives an SMS offering a plan. With her smart phone, she can easily search and compare with other offers online.

Also now customers can compare prices, features, service quality, and much more before buying a product or a service. They can read the reviews of other buyers of a product. With online messaging apps, they can easily ask their friends and colleagues for an opinion.

There are more sellers for a product now than a few years earlier. This creates more competition bringing down the demand and profit margin for a product.

In order to reduce the pesky messages and regulate the bulk SMS industry, TRAI (Telecom Regulatory Authority of India) brought various regulations.

Effect of TRAI regulations

The traces of bulk SMS usage dates back to 2007 when people started receiving messages from sender ids like BankLoan, ElectMe, etc. other than sender’s mobile numbers. Majority of the messages were commercial in nature promoting banking products, financial products, real estate products, political candidates, etc.

After TRAI regulations and many amendments to the principal regulations, unsolicited messages to numbers in Do Not Disturb Registry (DND) or National Customer Preference Register (NCPR) reduced drastically. The regulations and its amendments can be found at the website nccptrai.gov.in.

The regulations resulted in categorizing messages into two types: promotional and transactional. It also introduced 6 character sender id for transactional messages, 6 digit numeric sender id for promotional messages, and 9am to 9pm messaging window for promotional messages, etc. Before the regulations there used to be 11 character sender ids created by users themselves, sending all types of messages to dnd and non-dnd numbers, etc. The regulations imposed strict actions against messaging promotional content to dnd numbers.

The reduced reach to masses affected the performance of SMS campaigns.

One round of advertising is never sufficient for any marketing campaign to get all the customers who wants to buy a product.

One SMS campaign is not enough

Some potential customers may not be ready to buy at the time they see an ad from a company. Later when they are ready to purchase, they will buy from the company whose products they come across then.

We’ve seen many companies give up after the first or second try of SMS marketing. Not many companies can bear the high costs of multiple marketing campaigns at regular intervals.

Even after clearing several hurdles the bulk SMS medium cannot be used to market products and services of choice.

Apt for only certain category of enterprises

Genuine database and SMS service are not the only essential factors for successful SMS campaigns. Other key factors influencing the performance of bulk SMS campaigns are product or service being offered, message content, response channels, handling responses, frequency of campaigns, campaign timings, time taken to deliver messages to all numbers, message delivery ratio, etc.

So the usage of mobile numbers for bulk SMS medium is not suitable for all products and services. For example, the approach may not work for marketing match boxes worth Rs. 2 per piece.

Conclusion

We conclude that it is a bad idea to buy databases from the gray markets and use them in bulk SMS campaigns in the hope of finding new customers. Most enterprises using bought databases conduct sms campaigns once or twice and abandon the campaigns confirming the ineffectiveness of the model.

Our observations reveal that the successful enterprises are using bulk SMS services frequently for remarketing, up-selling, and cross-selling by utilizing their home grown databases. Enterprises also use SMS services regularly to send informational messages like payment reminders, payment transactions, one time passwords (OTP), exam dates, exam results, wedding invitations, festival wishes, etc. to their big list of contacts.