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Expert Interview Series: Lauri Kinkar with Messente on Transaction-Based SMS Messaging

February 12, 2016 12:00 am by

Lauri Kinkar has been in the telecom industry since SMS technology was just beginning to gain traction. In 2001 he joined Mobi Solutions, which focused on premium SMS-based mobile payments.

“Mobile was only taking off and doing anything via SMS was cutting edge,” he says.

As the head of sales, Lauri managed the sales of SMS-based payment solutions and mobile advertising solutions and as a member of the board he was also involved in the product development and the evolution of mobile payment platforms as well as messaging platforms.

Lauri led Mobi’s sales for 12 years and saw mobile payments and messaging going through a lot of changes technologically and in terms of business models.

Since 2013, Lauri has been the CEO of Messente.com. He recently checked in with us to share his insight on transaction-based SMS messages. Here’s what he had to say:

What are transaction-based SMS messages?

Transaction-based messages are personalized SMS messages that are sent by companies to their customers as a part of using their (mostly online) services. For instance, a restaurant confirming your booking over SMS, your bank sending you a notification about a received payment, your car repair shop letting you know you can pick up your car – these are all examples of transaction-based SMS messages as there was a transaction which triggered the sending.

Marketing or advertising messages are not transaction-based as they are not a part of a specific service process.

What are the biggest benefits of transaction-based SMS messages? How important are theses types of transactions to businesses today?

As communication channel SMS has a set of characteristics yet to be beaten by any other mobile channel.

  • It is read almost instantly when received.
  • It does not require a specific app to be installed.
  • All the service provider needs to know about you is your phone number.
  • It can reach any phone model.
  • You don’t have to be online to receive an SMS.
  • This makes SMS the perfect tool to use for business and time critical notifications. Whenever an SMS contains a call to action the conversion rates for SMS notifications are often three to four times higher compared with e-mail notifications, for instance.

    Customers simply want to know as soon as possible when a table opens up for tonight in a busy restaurant or when their car repairs are finished.

    What are the most exciting trends or innovations you’re observing with SMS messaging today? What do you think is the future for SMS messaging?

    I think on one hand we’ll see ongoing growth of messaging platforms like WhatsApp, Facebook messenger, Viber, WeChat, Line and others. This trend has had the biggest effect on how we communicate with friends from one phone to another.

    On the other hand, despite the emerging messaging apps and social media, SMS is still the fastest and easiest way to reach anyone in the world. So businesses will still be using the universal SMS messages as a part of their service.

    This view seems to be supported by almost all the major market researchers covering the mobile messaging industry who claim that the business to customer SMS messaging market is worth about $56 billion globally and it’s expected to grow to over $70 billion by 2020.

    What are the biggest drawbacks of transaction-based SMS messages?

    For businesses the main drawback is cost. E-mails and in-app push notifications are free. This means businesses have to simply consider the cost on one hand, on the other hand they need to understand how business critical is the message they are sending out.

    In the majority of cases I have seen, the added revenue from excellent service and happy customer clearly outweighed the messaging costs.

    What should businesses be doing to ensure the safety and security of SMS messaging?

    I think above all companies should work with messaging service providers they trust.

    What are best practices for businesses when it comes to using transaction-based SMS messaging?

    In my experience the most important best practices relate to what happens after people give their phone number to a company. These two rules are the most important:

    1. Whenever a customer gives a company her phone number, she gives it to them for a specific purpose. It does not mean the company can automatically use the number for other purposes (marketing, etc).

    2. Permission has a life expectancy. When customers give a company permission to contact them via SMS, the permission should be renewed after a period of time. After all it’s the engaged customers who drive your conversion rates not the ones who signed up a year ago and have long forgotten what is it all about.

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