How to save big on SMS cost with WhatsApp in India?

Introduction

SMS in India is expensive than ever before.  In June 2023, all the SMS providers in India hiked its rates by nearly 50%.  Typically, this has resulted in SMS costs ranging from 15-18 paise per SMS.  

Now some may consider that it is still relatively cheaper than WhatsApp, which charges ~ 32 paise (in case of transactional/ utility messages) to ~73 paise (in case of marketing or promotional messages).  

But....wait a second, this would be a very pre-mature conclusion that people would draw, without understanding the pricing structure of WhatsApp fully.  This blog details the various ways in which a business can save big on their SMS cost, while substituting it with the WhatsApp and end up with significant savings in their overall communication costs. 

The savings are for real and also explained in the form of an example to fortify our insight!   

SMS pricing structure

Let's understand the pricing structure of SMS first:

1. Base pricing

SMS charges are generally on submission of a SMS by the CPaaS providers to telecom operators.  The pricing is a combination of API charges by the CPaaS provider plus a DLT fee.  

Overall it comes to ~ 15-18 paise per SMS in India.

2.  Now what constitutes 1 SMS?

1 SMS generally comprises of a 160 character alpha numeric message.  If the character count in a message exceeds 160, it constitutes 2 SMS and so on.  

If your message as unicode characters, the character count for 1 SMS reduces to 60 from 160

3. Charge is mostly on every message submitted

Yes, irrespective of whether the SMS got delivered to the user, your CPaaS provider will most likely charge you for every message submitted to the telecom operator, whether or not it gets delivered to the user.  

 If you've tried to reconcile your SMS consumption and have never been able to do it perfectly, then there are high chances that the differences were due to the above 3 reasons. 

WhatsApp's pricing structure 

WhatsApp pricing structure is relatively flat and straight forward.  WhatsApp charges businesses for each 24-hour conversation window initiated with a customer, with rates varying depending on the type of message and the country of the recipient. You can find more about the 24-hour conversation window here with examples.

The charge is only when messages you send to customers are delivered. The following are the charges in India:

• Marketing message: INR 0.7265
  
• Utility/ transactional message: INR 0.3082
  
• Authentication: Same as utility/ transactional
  
• Service/ Support: INR 0.2906
  

If you are using a BSP to access WhatsApp APIs, then you would be paying ~ 10-25% higher.

So 3 key takeaways here are:

• The charge is not for one message, but for a 24 hour conversation
  
• It is not dependent on the message content, character count etc.
• The cost is only on WhatsApp that is delivered.

How to leverage WhatsApp to SMS costs?

Now that we have understood the pricing structure for both SMS and WhatsApp, let's look at intelligent ways to save SMS cost by  leveraging WhatsApp. 

1. Exploit 24 hour conversation window on WhatsApp for incremental messages

If you are engaging users on both SMS and WhatsApp, then ensure that you are tracking the 24-hour WhatsApp conversation window of the user.  By doing so, you can ensure that all the incremental messages that you send to the user can go through WhatsApp instead of SMS within that 24 hour window.  

This is a classic example of how SMS cost can be completely neutralised or eliminated for all the SMS that get triggered to the users where WhatsApp window is active.  

Let's understand this with a contextual example and numbers:

A new age investment tech startup sells fixed income securities to a users.  A purchase journey of the individual will generally include logging into the application, completing his / her KYC, selecting the security/ bond and then finally making the investment.  Now let's look at the bare minimum notifications that the company would send to the user:

• OTP for authentication at the time of login
• KYC confirmation once the KYC is confirmed.  
• Investment confirmation once the investment / payment is done.
• Investment account statement after allotment of the bond.

This could mean 4 SMS costing of 15 paise each = 60 paise.  

At the time of login, in order to avoid drop-offs, businesses may send OTP via SMS and WhatsApp to ensure 100% of their OTPs get delivered in time.  If they have a sophisticated tech like Fyno, they can manage delivery failover to send WhatsApp only to users where SMS does not get delivered or vice-versa. 

Now if the user completes the other steps of KYC verification and completing the investment, here's where the WhatsApp 24 hour active window / conversation can be leveraged to ensure all next subsequent notifications like KYC confirmation, investment confirmation and account statement can be sent on WhatsApp without incurring any incremental cost of SMS.  This can potentially save cost of 3-4 SMSs. 

In the above technique, the cost would be:

• SMS + WhatsApp cost of 15 paise and 32 paise for OTP = 47 paise
  
• All future WhatsApp messages would be free
• Total cost = 47 paise.  This translates into a net cost reduction of 13 paise (ie, 22%).  
• If an intelligent failover technique is used while sending OTPs, the savings could be higher to the tune of 28 paise (ie, 45%).   

2. Use Whatsapp for messages exceeding 160 characters

As understood above in the SMS pricing structure, SMS costs ~ 15 paise for 160 characters.  This means that if the message size goes beyond 160 characters, it would cost ~ 30 paise, which is the equal to the cost of 1 WhatsApp with 24 hour conversation window.

Most of the times, when companies send transactional communications, the message content would generally contain variable placeholders like name, tracking link, order ID etc. 

When these placeholders are replaced at the time of sending the notification with actual values, the character count of messages can increase and go beyond 160 characters.  This could end up costing 2 SMS.  

Where regional content is used (which is very common for tier 2 and 3 consumers), the character count per SMS reduces to 60 and hence, it could cost the business 3 SMS or more, for delivering a single message!  

In such scenarios, it is worth-while to intelligently use an automated mechanism which prioritises WhatsApp when the message count increases to 2 or 3 after considering the variable placeholders.     

3. Prioritise WhatsApp for high frequency updates

Let's look at a quick example to understand this.  You have ordered from an e-commerce brand and there is a delivery promise that the product will be delivered in 24-48 hours. 

In general, there will be the following updates that you will receive in your order delivery cycle:

•  Order received message / acknowledgement
• Order confirmation message with order ID
  
• Order processing message with ETA for delivery
• Order dispatch notification
• Order out for delivery
• Order delivery OTP (for high value deliveries)
• Order delivery confirmation 

Some companies may skip or add additional messages, but largely, you can expect 5-6 messages in the order fulfilment cycle.

If these communications are sent using SMS, it will only make  sense from a cost perspective if the fulfilment cycle is spread out for more than 3 days. 

But in majority of e-commerce pin codes, given the advancement of warehousing, logistics and fulfilment operations, most of the orders get delivered within 48 hours. Some brands are also promising same day delivery.  Checkout Blitz, which manages same day fulfilment or delivery for many D2C brands. 

In such scenario, it will always make sense to initiate the communication only using WhatsApp, since businesses will be charged for 1 WhatsApp conversation instead of 5-6 SMS.  Even if the fulfilment spreads over 2 days, it will still turn out to be a cheaper alternative.     

The same logic can also be applied in the following industry/ segments:

• Return pick up by e-commerce companies/ their logistics operators.
  
• Online booking companies like Booking.com, AirBnB, Expedia on bookings managed by them. 
• Quick commerce companies for high frequency and repeat customer orders. 
• Travel industry (including Airlines) that send multiple messages to the travellers on the day of their journey.

The Complexity Behind Implementation

Now that we've seen that meaningful and substantial SMS cost optimisation is possible using WhatsApp, I wonder why are businesses not doing it.  

Implementing these cost-effective messaging strategies involves navigating a series of technological challenges. To fully realize the cost-saving potential of WhatsApp over SMS, businesses must have access to an advanced technological infrastructure capable of making real-time, data-driven decisions about the routing of each message. This infrastructure needs to:

1. Automate Message Routing: Determine the most cost-effective and efficient channel for each message in real-time, whether it's SMS or WhatsApp. This involves analyzing factors such as the type of message (transactional vs. promotional), the recipient's preferences, and historical engagement data to ensure optimal deliverability and cost savings.
2. Measure the 24-Hour Open Window on WhatsApp: Implement sophisticated tracking mechanisms to identify and exploit the 24-hour window during which messages can be sent to WhatsApp users without incurring additional charges. This requires a dynamic monitoring system that can adapt to each customer's interaction timeline, ensuring that businesses can send follow-up messages or important notifications within this cost-effective window.
3. Conduct Intensive Data Analysis for Automated Routing: Utilize advanced analytics to process vast amounts of data on message delivery rates, user engagement, and channel efficiency. This analysis informs the automated routing system, enabling it to learn and adapt over time, optimizing message delivery paths based on evolving patterns of success and user behavior.
   

The Limitation of Absolute SMS Replacement

While WhatsApp offers significant advantages in terms of engagement and cost, it's important to recognize that SMS still plays a crucial role in certain scenarios. For instance, SMS remains a universally accessible communication channel, requiring no internet connection and being available on every mobile device. This universal accessibility makes SMS indispensable for critical alerts, one-time passwords (OTPs), and situations where immediate deliverability is paramount.

Moreover, regulatory requirements and user preferences may necessitate the continued use of SMS alongside WhatsApp. A sophisticated messaging strategy, therefore, does not seek to replace SMS entirely but to intelligently choose between SMS and WhatsApp based on the specific context and requirements of each message.  Checkout our detailed coverage on this topic here.​

Fyno: The Sophisticated Solution

In the face of these complexities, most businesses find the development of an in-house solution to be prohibitively expensive and technically challenging. This is where Fyno comes into play, offering a comprehensive messaging platform designed to manage these challenges end-to-end.

1. Automated Channel Failover and Intelligent Routing: Fyno's platform is engineered to ensure that each message is sent through the most effective channel. By employing automated failover mechanisms, Fyno guarantees high deliverability rates, automatically switching between SMS and WhatsApp based on real-time delivery feedback and pre-defined rules tailored to the business's objectives.
2. Leveraging the 24-Hour Window for WhatsApp Users: Fyno excels in tracking and utilizing the WhatsApp 24-hour conversation window, enabling businesses to send timely follow-ups and notifications without incurring additional costs. This capability is crucial for maintaining engagement while optimizing messaging expenses.
3. Data-Driven Decision Making: At the core of Fyno's offering is a robust analytics engine that processes data on messaging trends, delivery success rates, and user interactions. This engine powers the platform's automated routing decisions, ensuring that businesses can achieve both cost reduction and improved communication effectiveness.
4. Comprehensive Messaging Strategy Support: Beyond the technological capabilities, Fyno provides strategic support, helping businesses to craft messaging campaigns that are not only cost-effective but also aligned with their broader communication goals. This includes advising on message content, timing, and segmentation to maximize engagement and ROI.

Conclusion

In an era where messaging costs can significantly impact a business's bottom line, leveraging advanced technologies like Fyno to optimize communication strategies is no longer optional but a necessity. 

Fyno stands out as a sophisticated solution capable of navigating the complexities of modern messaging, ensuring that businesses can send the right message, through the right channel, at the right time, without unnecessary expense. With Fyno, companies can seamlessly integrate WhatsApp into their communication mix, achieving unparalleled efficiency and effectiveness in customer engagement.