This webinar outlines how to define SMS service quality, why it matters to brands and businesses, and how we go about it. The transcript has been added below the video.
Yuriy Mikichenko: All right everyone, we'll go ahead and get started now. Thanks for joining the webinar on this beautiful Thursday afternoon here in town. It’s finally sunny. But the purpose of this webinar is to go over SMS service quality, what it means to us and how we define it at Messente and to give brands and businesses an understanding of what it means to them as well.
As SMS is becoming one of the most used communication channels with brands and businesses customers and internally as well. Before we get started, I want to introduce our panelists. We have with Uku Tomikas, he is our lead sales researcher We have Margus Sutt, he is one of our key account managers and myself I am Yuriy Mikichenko, I am the head of marketing here at Messente. Uku and Margus have spent the last few months actually going through how we handle SMS service quality working with our team, going through industry lingo. Going through an industry research information to give a better overview to our customers and those organizations using SMS APIs. Better give them a better understanding of what SMS service quality means, all of the variables behind them. I will now pass it off to Margus to get us started.
Margus Sutt: Thanks, Yuriy and hey everybody, and thanks for joining this webinar. As Yuriy already started my name is Margus. I'm working with Messente’s key customers. That means I help to maximize the SMS service benefits for large businesses that usually operate in multiple countries. As well as helping to discover and inspire new use cases, where we can solve their challenges through SMS operations.
So, today's webinar topic has been inspired by numerous of those same businesses and they've been asking occasionally ‘What do we mean when we talk about the quality of SMS delivery?’ So, Uku and I have been working on this to kind of like unwrap the details about it and what actually matters when we're talking about delivering SMS messages, as well as what are the finances behind it.
So, first of all when we're talking about SMS service quality, it's very common to consider only the price and somewhat delivery quality with very minor testing and frankly this approach is by far very insufficient in order to be sort of happy with the service that you're working with later on. So, we're here to break down what is a true deliberate, meaning what are the main elements that actually make a difference in SMS service. So, there are four elements to it. One of them being delivery rate, meaning what is the ratio of successful delivery as compared to send requests?
Then there is routing and latency, which is the average amount of time between a send request and the message delivery. There is Database quality which is the number of valid mobile numbers provided by the clients and lastly the ability to scale the service. It's sort of like the opportunity to expand your SMS delivery to more than one country without having to choose a partner or SMS service for every country.
Average delivery rates and why can't providers always deliver100% has been one of the main questions. We take the delivery quality of SMS very seriously and our most prominent claim is that every one percent makes the world of a difference behind SMS service costs. So, that being said cheaper price is a kind of like a slippery slope that can reduce the SMS delivery rate, meaning lost profits worth many times over than discounts on SMS price.
But first of all, and there are specific variables that make it practically impossible to deliver 100% of messages. So, regardless of how refined or straightforward the SMS delivery system is, you know errors still happen. Now based on our own experience in working with other SMS service providers globally, the average delivery rate for any SMS service provider is approximately 95%. So, the 5% of undelivered messages is usually lost in in the next aspects. One of them being undeliverable messages, meaning every mobile number database that we're provided or being provided includes number that are invalid. The other variable that contributes to the 5% is inefficient routing. So, every SMS service provider needs to maintain and build the infrastructure of connections between them and the mobile operator. So, meaning in that network failures can also happen.
Last but not least every now and then software's have bugs. Which means again some messages can get lost in the process. So, all that combined will usually make approximately 5% of failed messages. So, again our claim is that the way Messente approaches the SMS delivery we have proven to increase the delivery rates.
But we're talking about like five percent of failed messages on average and I mean one percent can make a difference, this is what we claim. But how does it actually make a world of a difference? So, the five percent of average failed message is important. When we have talked about this with the companies we work with, we've been told that five percent delivery is actually okay as long as we give them the best price on the markets.
But hereby, we need to define what those five percent fail messages also known as minor delivery issues actually mean for your business. So, I'll set up in an example. Let's say that there's a company X, they're fast growing and global expanding micro-financing service what they do is that they give out loans very quickly within two minutes. So, for them verifying customers with an SMS PIN code through their own online application is the last step before they can acquire a customer.
Now let's say that the company gives out 1,000 new loans to existing customers every month, meaning also that at least 1,000 new pin codes have to be delivered to customers mobile phones in order to verify them. So, meaning convert these applications to actual business and finally let's say that the average gross profit per loan is 200 euros.
So, this is a very simplified example. Every thousand customers would make the company twenty thousand euros gross profits. So, very simple 20 thousand euros worth of gross profit from 1,000 verified customers every month. Now this is the part where every 1% of undelivered messages can do times more harm to your business than slightly higher SMS price.
So, in this example 1% is simply 10 messages out of thousand pin codes every month. This seems very insignificant, right? Especially if you compare to sort of agreeing to slightly higher estimates price which again seems like an unreasonable cost increase, just save 10 messages on every thousand messages. But actually that 1% equals to 10 customers who didn't receive the pin code, so they can't be verified and it eventually means that it's lost profit.
So, in plain and simple numbers every 1% of undelivered pin codes for this business is actually 200 - I mean 2,000 euros of lost profit every month. So, it's very common to prefer lower SMS price and risk with minor delivery issues then pay slightly more for that for higher delivery but actually the finances behind it are more important in that sense.
So, we say that focusing on lower prices in most cases is vastly counterproductive. More so, the bigger the traffic, the loss of potential profits gets exponentially higher. So, what can be done? Based on the Messente’s approach to delivery quality, we increase the rate the approximately 3% from the average. So, meaning out of all deliverable messages we deliver up to 98% and so by doing so we help businesses to maximize their possible earnings. But this micro-financing is just one of them. There are so many different other examples not only in services. For example, many of the businesses we work with are global customer relationship management software's. So, for them every missed appointment has on average 100 euros alternative costs.
So, that's thousand euros loss per 10 missed appointment reminders. SMS is known to be one of the best marketing channels due to its incomparably high open rate. So, a realistic conversion rate for marketing messages would be 5%. Let's say that each conversion is 250 euros so that's 5,000 euros missed in SMS marketing conversion.
The losses are not necessarily coming from transactions like this. In case of just 1% of lower delivery rate, your customer service has to deal with this. So, meaning that someone will have to deal with the customers who are not receiving pin codes and someone needs to deal with your service provider who's not delivering those messages. So, every 2,000 undelivered pin codes, your business loses 300 up to 600 euros considering that 15 euros would be the cost of customer service.
So, to conclude this, one SMS seems simple. The service quality is more complex than deliberate and the price you're paying for SMS. Secondly, focusing on actual delivery rate is far more rewarding for your profits than try to negotiate the cheapest price possible. Since poor delivery quality means direct loss in profits. Thirdly a good SMS service is something you forget about, the more support time you have to allocate, the larger the indirect costs grow in terms of man-hours. So, to conclude all this, we're helping a lot of businesses to find you in their SMS operations and to maximize their potential profits dependent on SMS operations. Now how exactly we do this? Uku will tell you more.
Uku Tomikas: Thanks, Margus and hi everybody. So, I'll be talking a little bit about some of the things that we do and some of the systems that we utilize in order to achieve that you know three percent higher delivery rate than the market average of 95. How do we make that jump from 95 to 98%? So, the first and foremost thing that I'd like to talk about is the connections themselves, the routes that we use.
So, in these things you need to understand that there is a myriad of ways to deliver a single SMS. So, I'll give you an example like this. For example, you want to send the message from Estonia - let's say Poland. Now the partner you utilize in Estonia or that you have in Estonia, has a partner that helps them with their delivery in Europe. Let's say there are smaller companies whether you're utilizing somebody bigger and that bigger company has their own partner for their Polish operations.
So, just to send out this one message you're going to send it from your system to your service provider, who sends it to a partner, who sends it to a partner, who sends it to another partner in the other end, at this instance being a telco. So, it's already a very long loop and whenever you have this sort of a multiple link situation, a multiple link connection you're going to inevitably stumble upon those difficulties that Margus mentioned in the beginning.
So, software problems, you might get some packets missing, you might get different faults in in the systems. Not to mention some of the other things that we'll come back to later, such as throughput latency and message priority. So, to subvert this what we do is we utilize direct connections to telco partners whenever it's possible. So, for example in the Baltics, we’re connected every single partner, every single operator directly as well as most of Eastern Europe. Now this is incredibly crucial because these connections are of the highest quality. This means that we're working directly with the operators who directly send the message that you're trying to send to the mast. So, there is as small of a link as possible.
Now well this is an ideal solution, this solution isn't available everywhere in the world. So, let's say that we would like to go into the Ukrainian market per se. I'm not claiming that it's currently like that there, but let's just use this as an example. For example, they don't let foreign countries, utilize direct connections to Telco’s.
Either because of legislation differences, all the Telco’s themselves prefer to work with only local operators or local partners. In these situations, any company coming from outside and trying to provide a global service, will have to inevitably work with a local partner in order to have that connection ability into that particular market. These are considered the one hub connections, when there is one single hub between you and thus the partner in the Telco.
These connections because there is a plethora of them, let's say for example again in the Ukrainian example. You might have 10 different partners in the same country, offering connections directly into every single telco. So, in these situations you need to understand which type of connections are the highest quality. Which ones are the most reliable, which ones have the latest smallest latency, meaning the smallest time from message requests to our system and ending up in actual message delivery.
So, you need to understand these particular
aspects and choose the best possible connection for delivering business
critical messages. This of course means that we need to constantly and
consistently test every single connection and understand how these things work.
Shift traffic from one side to the other, to understand how these things work
and actually build up a library of connections that are reliable, trustworthy
and that we can use over a period of time and then retest to understand them
In order to do this automatically so it doesn't take hours upon hours of manual input. We use an adaptive routing system. What this means is, that our system will choose the best possible route for delivering business-critical messages. If that for some reason experiences difficulties, let's say that it has a high latency or messages that are sent through that pipeline or that particular connections start failing. In that particular instance our system will automatically switch over to an alternative route, that is in our library the second-best connection that is possible.
To ensure that all the messages get delivered in each particular case and in order to have this sort of a system built up, you need to have a lot of partners as well. So, we have around 800 partners around the world who we work with constantly who we test prioritize and understand which types of connections are the best to go with it at any given time, giving this flexibility to work through emergencies or peak times as well.
This brings us to the second topic I wanted to topic a talk about a little bit further, which is partner agreements. Now in order to understand how a partner connection works you need to test it. In order to have the best possible quality out of that particular connection, you need your partner to understand what type of transaction you're having with them. In our case, what type of messages are we sending?
So, there is a difference between sending marketing messages or pin codes or transactional confirmations that need to be delivered as fast as possible and these partnership agreements really boil down to three major aspects. Priority, latency and throughput. Now priority means that we have agreements in place, that take delivery priority to account so that messages like pin codes are sent first and our own system prioritizes similarly. So, what this means is that let's take this particular example first.
As Marcus mentioned we have company X a micro-financing company and they want to send out a campaign of 1 million messages to let's say Estonia. In this particular case, they want to send all of the million messages out immediately. Now every single connection has its limitations. Usually an industry standard would be let's say from 20 messages a second, to a few hundred messages a second. In that ballpark we're talking about let's say from 50,000, to let's say half a million messages in in an hour.
I think that my math is a slight bit off, but those are the ballpark figures you need to understand in order to put this thing into perspective. So, if you want to send out a million messages and you have a throughput of maybe sending out half a million messages an hour, sending those million messages out will take two hours.
Now if you don't have priority in place, your PIN codes will be stuck behind those marketing messages for two hours. So, you need to understand what types of messages you're sending. What type of connections need to be set up and what type of message priority needs to be set up? So, that those pin codes and those transactional messages reached people at a right time because no one wants to wait two hours in order to complete their transaction.
So, priority is very important not only in our own system but making sure that our partners understand what types of traffic, we are actually delivering and what is the priority that we need in this particular case. Now not only do you need to have a priority agreement set with partners, you also need throughput. Throughput is the amount; of messages you can send in a second.
As I mentioned you know industry standards about between 20 to a few hundred messages. Now in order to get to those few hundred messages, you need to actually have thorough conversations with telco partners. You need to explain why you need a maximum amount of throughput. Why you need to have these connections in place? Why do you need to work with at this particular connection while others might be working with lesser connections in doing just fine and getting through with a lot less throughput for example?
In our case we need to elaborate that we need low latency, meaning low delivery time in peak times and in extreme events. For example, we work with global messaging companies or global alerts companies rather, that deal with emergency alerts. So, for example if there is a tsunami warning, if there's a hurricane warning, if there's a huge electricity out, it's something like that. You're going to need to deliver a plethora of messages a few hundred thousand messages maybe in a matter of minutes so you're going to have to have in place a system in which you're able to send a lot of messages quickly and efficiently.
For this we need to have our connections with place with telco partners and other hubs as well, in order so we could use as many connections as possible. In the case where we need to send a few hundred thousand messages in say minutes, we need to use every single partner we have in that particular country.
Let's say in the Ukraine example, we can push through ten different partners simultaneously let's say. In this situation you have you know your usual twenty to a few hundred messages a second you'll have two hundred to a few thousand messages a second. This greatly increases your ability to deliver messages quickly and efficiently. These things together both priority and through quickly the latency. Latency meaning, that they combined as a direct connection and minimize the time of delivering each and every single message.
As we work with our partners in these particular ways, when we discuss these topics, when we ask for better priority and ask for more throughput and have these agreements in place, we also need to understand our customers a little bit better. Which brings me to the to the last topic I'm going to talk about, meeting customer support and scaling. In these particular cases we not only need to understand or our partners rather need, to understand what we do what types of messages were sending.
But we need to understand what types of messages our clients are sending. So, what is the use case? What is the particular most efficient way of delivering your messages? What is most important to you? In these cases, people like Margus and me come in and we help to understand, what types of connections you would best be suited for.
What would be the best way to set up your account what would be the priorities we have in place in order to ensure as proper of a delivery as possible, to make sure that you get the maximum amount of that let's say extra three percent that you're getting. That your end and profits are as large as possible, when you consider your SMS service and what you are using. For these particular cases you're going to need a personal touch as well.
So, a real person like me and Margus is pretty much provided to every single customer, as it is important for us to understand and do the necessary tasks on our end to set up the accounts as needed. Another thing that Margus mentioned at the beginning, was that messages can be categorized as deliverable and undeliverable. Meaning it all depends on your database quality. What this means is that not every database that you have is a hundred percent accurate.
So, there are going to be some problems with data input. There are going to be some minor difficulties, let's say with converting one file from one to the other. You might have area codes and other area codes on another one and you might have these different types of issues, that bring about database quality issues. What this usually means is, that about five percent of your database is filled with invalid numbers.
That is the sort of the average that we seem to stumble upon. In addition to that you're going to have around three percent numbers are roaming as well. Either who are traveling or so on and so forth. What this means is before you actually get to the part where our connections come into play, in this particular case you're already lost 8% if the messages you're trying to deliver. If you haven't cleaned the database beforehand that will seem to you like a delivery quality issue.
So, if you have our 98 percent delivery and then you have at the loss of 2% from there. Then you have another 8 percent losing from your database, it should deliver it down to 90 percent. Not a hundred or not even 95, and if you're using an interesting standard connection of 95 percent then you're already at 87 percent as your total delivery rate. So, this is going to affect your business quite heavily. To actually mitigate the damage that this does, we've built the number lookup API, the pings have phone to make sure it's a valid number.
Which is a fraction of the cost of a standard SMS so you'll take your database you'll upload it you will send it through a number lookup API and that particular tool will tell you how many are invalid, how many are roaming and you can take this into consideration for a fraction of the cost and then send out your particular campaign. Making sure that the database you're sending out, you're not losing money off of that due to sending to invalid numbers. Some people also seem to think that when you have invalid numbers in your database, then you won't be charged for those numbers.
That is a fallacy because we attempt to send to each and every number as we put out the request to every single operator and as operators charge us per request, we do the same for clients. So, in this particular case if you have invalid numbers in your database, you're going to be charged for them as well unless you use a tool like the number lookup API to make sure that you have your database cleaned up a little bit better.
So, in conclusion we ensure delivery quality by using directs and high-quality partner connections. Test constantly and consistently and utilize an adaptive routing system in case of failures. We have agreements in place to ensure priority, low latency and high throughput and support their customers by helping to clean databases and provide a personal account manager as standard. That's it from my side.
Yuriy Mikichenko: Awesome thanks Uku. So, I do want to open it up for questions. Anyone's got questions, there's a questions panel below in the GoToWebinar app on your desktop or mobile phone. But thanks, Uku and Margus for presenting the information here. I think it was pretty straightforward. I didn’t see any questions come up during the webinar, I'll give it, actually I found a question here we go.
We have a question, let's field it to someone. Can the number lookup API be called at any time and what is the approximate time in which they vote the validity of the number, can be confirmed? Uku?
Uku Tomikas: That's a good question now I don't know the particular time it would take, but as much as I understand it can be used at any given time as the recipient itself won't see that the number is being pinged. So, the recipient would have a problem with it it's not like sending a usual SMS and as for the request, I think it should be something around the same lines as sending an SMS. So, it's let's say around 20 to a few hundred messages a second. So, having let's say a database of a hundred thousand messages might take let's say ten minutes or something like that.
Those should be the ballpark estimates. Though for a specific answer, I would glad to come back to anyone who are who is interested in it if this didn't answer your question reliably.
Yuriy Mikichenko: Yeah does that answer the question, let us know I'm on the questions section here. One of the things that I remember talking about with Uku is, how often we recommend our customers to run the number lookup API, what was that?
Uku Tomikas: Well I ultimately run it for every single campaign I do, regardless of size because the cost benefit is there right and running your database through it on a regular basis, depends really on how much how much messages you send out. So, what's your traffic?
If you're sending maybe ten messages a day maybe you'll need to do with once a week. If you're sending ten million messages a day, you're probably going to need to do it a few times a day. So, so it really depends on your use case and in this particular case having one of our partners like me and Margus in place to advise would probably be best at that particular case. It goes case by case.
Yuriy Mikichenko: That's a good point.
Margus Sutt: It very much depends on the industry as well. We gave an example about like micro-financing company, there's a tendency in some industries where mobile numbers in databases, their clients might have a little less motivation to provide the correct numbers. So, that's very much collect connected to the debt collection for example or anything else actually.
So, in terms of industries it might vary and we strongly suggest anyone who we know such that their number databases might include more invalid numbers to use that number lookup API. It's just economically very efficient.
Yuriy Mikichenko: Yeah and it could depend on how often your database actually changes. How many times, a month or a week or day, new numbers are added. So, yes, we have a follow up question. Would it be possible to add a specific SMS ID for reports in the API and in the center portal?
So, actually yes, I will follow up with you on that question and I will send for more details on it and it could be a request that we send to our development team to add a feature to our dashboard. So, I'm going to make note of that question specifically. The next question we got is, do we have a feature where customers can unsubscribe when they receive an SMS campaign and Uku, Margus I think I know the answer to that, we will let you guys answer it. It's about unsubscribing an SMS campaign.
Uku Tomikas: No particular sort of feature for this. It would be relatively that there's no point of building this, rather is that the different databases how did you update - how customers update their big databases might be different. But you know we're always up to hearing suggestions and if so that we can narrow down like how companies build their databases, we can see if there's any possibilities for us actually build a tool that automatically lets a blacklists mobile numbers that they want to solve unsubscribe.
But the question about unsubscribing is that this is different, like from which database they want to unsubscribe do they want it not subscribe from all of them? Or just one of them? Is it like a certain period? So, there are a lot of variables that might change this. So, short answer is that we don't have a feature like this anymore. Sorry, not yet at least. But we'll definitely consider this, as our IT and the development side is always interested to hear new ideas.
Yuriy Mikichenko: Yeah so, currently the unsubscribe features that I've seen with SMS marketing campaigns for example, they just send a follow-up message saying if you want this to stop, just reply stop as an unsubscribe or they add a link to the message itself. Which would usually a shortened link, not to take too many characters. But in that case usually the people will add only into their message itself to unsubscribe or send a message to stop, which is two-way SMS. So, that's a good question as well off we'll follow up with you on that one as well.