Breaking down partnerships to the ridiculous
There are stark financial differences in using a global messaging provider, versus several geographically local service providers. These differences center around three areas of business: Procurement, operations management, and overall costs. And they can be quantified by the cost of time, issues with workarounds, missed opportunities for volume pricing, and the indirect costs of undelivered messages.
Let’s get to it and dig into the numbers.
Brokering deals and contracts takes time. Prior to testing APIs and software, procurement departments team up with technical teams to research potential SMS messaging partners, handle communication, and compare offers. Based on the experience of our customers, it takes at least 5 hours to research the market in each country, as there are several mobile network operators in every country. In addition, boutique SMS aggregators end up in the mix, as they aggregate traffic in small region.
Implementing APIs takes time as well. Ours takes 30 minutes, sometimes longer for more complex use cases. For the sake of argument, let’s put API deployment at 1 hour. Quality testing (i.e., delivery rates) takes a few hours as well. So, deployment and testing takes about 4 hours for each partner considered. It’s typical for an organization to test about 3 potential partners per geographical region.
Once a partner is selected, it takes some time to iron out the kinks, as with any new software integration –it’s roughly a cumulative of 3 hours communication and support cases –per partner.
Breaking down the math assuming there are 3 partners considered in a geographical market:
5 hours of research & negotiations
4 hours of testing & deployment per partner = 12 hours
3 hours of final integration with 1 partner
Total: 20 hours per country (or geographical region)
Now imagine repeating this for more countries – 3 countries takes up more time than most people spend working in one week, only to find SMS messaging providers.
Operations & Accounting
While unfortunate for accounting departments (or fortunately, depending on how you look at it,) business partners have varying accounting processes. SMS providers have their own policies regarding invoicing and prepayment may be required, depending on volume. Thus, the more partners, the more accounting processes to manage –prepay some, invoices from others. Things become more complex when services and features vary by region, like sender names, short-codes, inbound phone numbers, and two-way SMS.
Also, depending on the partner and volume, an account manager may not be provided, creating more work for the accounting team and tech team.
It takes about 2 hours a month to manage partner connections, campaigns, support, and account, based on our customer insights.
Quickly doing the math, selecting, then maintaining 3 partners in 3 countries takes 132 work hours in one year.
Consolidating traffic to a global partner with good connections reduces accounting and operations time to no more than 1 hour, as an account manager is provided to handle most things. The selection process and integration of 1 global partner takes 20 hours, plus about 12 hours of annual operations management time, and 100 hours is already saved compared to 3 partners for 3 regions.
Cost & Efficiency
Delivering SMS messages in multiple geographical markets is complex. There are hundreds of mobile operators and network hubs, and they only really care about volume. So, businesses get pricing from secondary markets (i.e., SMS service providers,) because pricing is 10-25% lower than going directly to network operators or boutique providers individually.
Working across several partners, with lower volumes per partner, also lowers traffic priority. If volume in a specific country is low, larger campaigns gain priority. This leads to poor SMS quality for that region, as business-critical messages, like PIN codes, aren’t delivered in time, damaging the customer experience. The same applies to delivery rates.
Global SMS providers that focus on business-critical messaging aggregate volume to get top-priority and high delivery rates, through quality routes. They also maintain several routes in one region to maintain quality.
Overall, managing three different partners, meaning lower volume through each partner, adds 10-25% of bottom-line costs, and lower conversions, plus resending undelivered messages, adds an additional 10% to costs. That’s 20-35% more in invoiceable costs on top of 100 extra hours of annual work.
Wow. That was quite a bit to think through, but that’s what we do. If there are any questions, feel free to email us at firstname.lastname@example.org