What are the benefits of SMS-based customer communication in emerging markets?

What are the benefits of SMS-based customer communication in emerging markets?

As the digital audience shifts to emerging markets, merchants need to localize their acquisition channels and payment strategy. But at the core of successful expansion is users understanding the value of the service provided and making sure their onboarding is smooth. For that, the way to communicate with users needs to be adapted as well.

There are two key statistics that change the way customer communication should be done in emerging markets:

  • Large number of mobile-only users: In Indonesia 67% of people exclusively use their smartphone to access the internet compared to the US where the number is just at 12%
  • Lack of access to mobile data: In Indonesia 36% of people have mobile broadband access while in Germany 70% of people can use smartphones to access the internet

This means the user journey needs to be built up in a way where their only engagement with the service will likely be through a small smartphone screen (meaning simplicity in flows) on which they are unlikely to have access to the internet.

With SMS messaging, these challenges can be mitigated in several steps of the user journey. Below, we give a quick overview of why an SMS-based approach to customer communication outperforms other channels in emerging markets.

User sign-up

Traditionally, user accounts are based on email. For emerging markets, the alternative option is to use customers' phone numbers instead as their identifier. The benefits of this approach are:

  • It’s easier to enter a phone number, there are less chance of typos and confirmation of the sign-up can be done instantly through SMS (users do not need to check their inbox)
  • Phone numbers can often be detected automatically from the device or SIM card, which means better conversion as there are less form fields to fill out
  • Phone numbers can later be reused for payments done through carrier billing where the number can be prefilled automatically
  • More privacy for users as phone numbers are more anonymous, especially in emerging markets where a majority of the mobile subscriber base uses prepaid SIM cards

2-factor authentication

To keep user accounts secure, many digital merchants use 2-factor authentication to verify users when they log in or take certain actions on their account. Authenticator apps such as those created by Google are often used for this purpose. However, SMS messaging outperforms such an approach for two reasons:

  • Authenticator apps require the user to take additional steps for verification (installing and opening the app) while SMS-based authentication does not require the user to leave the application
  • SMS-based authentication is agnostic: accessible and usable in all cases, regardless of the platform or operating system in use; with many people in emerging markets still owning feature phones, authenticator apps may even not be available for them

Payment receipts and notifications

With cards and digital wallets, the standard approach to sharing payment receipts is to do it over email and share notifications in the checkout window itself. In case of using carrier billing, such notifications are viewed as mandatory by mobile operators, but instead they are delivered through SMS.

The good thing is, payment-related SMS notifications are usually free of charge with carrier billing and there is better alignment between the payment method and the delivery medium. In addition to the mandatory receipt notifications, SMS works better in cases where there are issues with payments (e.g. failed subscription renewal), because users receive a notification immediately, even if they are offline or not checking their email account.

Marketing and upselling

Notifying customers of promotional offers, new content and discounts is traditionally done by digital merchants through emailing and social media campaigns. SMS messaging can be used to complement the other channels and in several cases has notable advantages:

  • Users are more likely to read SMS than emails; according to Dynmark, the industry average SMS read rate is 98% compared to email which sits between 15% and 25%
  • With SMS, there is no Spam folder; for email campaigns, your offering might not even end up being visible to the user
  • Delay in communication through SMS can be significantly lower compared to email and the ability to gather instant feedback, as well as inclusion of URL-s make it an attractive solution for time-sensitive promotions

In order to provide a better user experience, a growing amount of digital merchants are adapting SMS for user accounts, authentication, payment notifications and marketing. In case you wish to bring your customer communication to the next level in emerging markets, make sure to check out Fortumo’s Messaging Platform!