In this blog post, Brian Kelly, Chief Technology Officer at Openmind Networks, explores pricing innovations being introduced by OTT players, how SMS messaging providers can evolve and adapt to the changing times, and what the future looks like for business messaging.
Business messaging is a rapidly growing field for both telecom operators and businesses themselves, offering a direct line of communication with customers via messaging platforms. However, with various Over-the-Top (OTT) providers like WhatsApp, Viber, WeChat and more entering the space, the question arises: who will emerge as the winner in this growth area? And who will find the pricing model that unlocks hyper-growth in this space?
WhatsApp, with its Business API and a solid base of 2 billion active users, has already made a significant impact on the customer service sphere. More than 200 million businesses now use WhatsApp to communicate with their customers. In 2022, WhatsApp Business introduced a new pricing model called Conversation-Based Pricing.
Under its latest iteration of per-conversation pricing, there are four distinct categories of prices for a 24-hour conversation with a customer:
1. Authentication e.g. One Time Passwords and system access.
2. Marketing/Sales e.g. special offers, abandoned cart messages & much more.
3. Utility e.g. reminders and notifications for appointments, deliveries and so on.
4. Service e.g. customer support queries, refunds and other user-initiated conversations.
WhatsApp Business provides the first 1,000 conversations free of charge. This provides the added benefit to new businesses of establishing and developing a messaging strategy without incurring any charges.
When it comes to choosing a pricing model, enterprises consider the functionality and pricing structure of the channel. While the traditional per-message pricing model charges content creators for each message delivered, WhatsApp has innovated away from this, and in the process, is incentivizing enterprises to use messaging instead of other means of communication.
In France, advanced tests are emerging into a ‘session-based’ model of pricing for business messaging. Similar to per-conversation pricing, this model simply charges businesses once a day for an exchange between a brand and an end-user. This does not currently include the differentiation between conversation types that WhatsApp insists upon, and the feedback from enterprises has been extremely positive.
For many businesses, the messaging landscape remains divided into personal messaging channels and business messaging channels. The personal messaging market is dominated by OTT players, but the business messaging market still prefers SMS, as long as it can provide better value for money and greater certainty on what end costs will be.
Another model being considered by messaging providers is the ‘active-user’ model. This allows enterprises to pay only for the customers they engage in conversations over a given period, usually monthly. This enables brands to have greater control over how much they pay while having the flexibility to grow. It’s often easier for brands to estimate the amount of customer conversations they have had previously, than the number of individual messages that they have sent. In this respect, brands should be better able to estimate the costs they will incur with this pricing strategy.
Businesses always seek out clear pricing strategies to avoid nasty surprises and the end of the month or year when the bill arrives. Innovation in pricing models is not just good for enterprises, but for the entire industry. Innovative pricing strategies hold the key to unlocking business messaging and driving its growth.
The Need for Evolution: SMS in the Changing Landscape
SMS has an incredible reach as it is compatible with every single end-user device. However, the traditional per-message pricing structure may not be viable for business messaging in the future. While charging for individual messages might work in certain cases, the inability to accurately budget monthly or yearly messaging costs remains a drawback.
The true potential of business messaging lies in adopting an omni-channel strategy that combines the strengths of both SMS and OTT messaging. OTT providers are continuously innovating, offering richer messaging experiences that businesses have come to expect. At the same time, SMS remains indispensable. Enabling enterprises to reach all customers, regardless of their device or platform.
Telecom operators should maintain open channels of communication with their enterprise clients, seeking feedback on pricing models, service quality and future enhancements. Active collaboration to understand their pain points and requirements will enable telecom operators to tailor and evolve service offerings to meet the needs of their customers.
In conclusion, as business messaging continues to evolve, a clear focus on innovative pricing models and the omni-channel approach will drive its future. SMS remains a powerful tool, but its evolution is essential to keep up with the changing times.