Free to End User Text Messaging

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Free to End User Text Messaging

A Game Changing Business Model

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The advent of personal wireless communications

Mobile communications technology began its meteoric rise in the 1980s with the development of first-generation cellular networks. What was a nascent market 25 years ago is now a multi-billion-dollar industry with more than 302 million cell phone subscriber connections

in the US—96% of the population. Today, 25% of US households rely solely on their cell phones, and just 9% use only landlines. As wireless becomes dominant and cell phone functionality obliterates historical devices

such as the pager and PDA, one thing is clear: We are witnessing a shift from mass to personalized communication. Technology has made communicating at the right time, in the right place, with the right message, a reality.

Going mobile with SMS text messaging

Cell phone growth has been accompanied by its versatile new uses, dominated by the Short Message Service, better known as SMS or text messaging. Today, SMS can reach virtually all of the world’s five billion mobile phone users, making it a globally pervasive communications technology. In March 2011, US consumers exchanged more than six billion text messages per day, and according to Nielsen Mobile, the average consumer sends or receives 737 text messages per month compared to making or receiving just 166 voice calls.

Businesses quickly recognized the potential of adapting a person-to-person (P2P)

communications channel to an application-to-person (A2P) opportunity. SMS is a universal technology that does not require development for individual platforms, specific phone operating systems, or multiple Web sites. Businesses can communicate by text to virtually any consumer with a mobile phone, and as a push mechanism, SMS text messaging can stimulate action and interaction.

SMS: A compelling and versatile communication channel

• Short Message Service, known as SMS or text messaging, is a telecommunications service that allows the sending of short (160 characters or less) text-based messages to or from mobile phones.

• SMS is most commonly used for person-to-person communication, but is increasingly also used by businesses for both two-way interaction with customers and prospects and for one-way notifications.

• Short codes are virtual telephone numbers (5 to 6 digits) which are assigned to businesses for sending SMS messages from mobile phones. Consumers can also send text messages to short codes to respond to businesses. • Standard rate text messages

result in only normal text messaging charges being applied to the subscriber’s wireless bill, or result in messages being deducted from a subscriber’s messaging plan allowance. • FTEU text messaging allows

enterprises to exchange messages with consumers without the consumer incurring any cost from the cellular operator.

MOBILE PHONES OUTNUMBER LANDLINES THREE TO ONE IN US

Source: CTIA FCC and Portio

Telephones

(millions) (billions per month)Text Messages

450 450 300 150 0 300 150 0 2006 2008 2010 2012 2014 TEXT MESSAGES MOBILE PHONES LANDLINES Actual Forecast

TABLE OF CONTENTS

The advent of personal wireless communications ...2

Going mobile with SMS text messaging ...2

Free to End User (FTEU) text messaging...3

The power of ‘FREE’ ...3

Consumers and enterprises share the benefits...4

Putting FTEU text messaging to work...5

Completing the mobile solution ...7

Summary ...8

About SoundBite Communications ...8

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Application-to-person mobile messaging services allow businesses to send messages quickly and efficiently and offer consumers a simple reply path for interactive

communications. Enterprises are harnessing its power by making text messaging an important component of a multi-channel communications strategy that broadens their exposure and proactively reaches consumers. Today, its use as a communications channel is pervasive.

It can be integrated into smartphone apps and mobile Web sites in order to keep consumers engaged with brands, while helping to drive them toward rich media experiences and stimulate brand interaction.

As a mature technology, SMS continues to grow, as mobile subscribers embrace the immediacy of a communications channel that speaks to them personally. But while acceptance of SMS text messaging is wide spread, consumers expect businesses to bear the cost.

Free to End User (FTEU) text messaging

The majority of North American carriers offer text messaging plans to their customers. Users may subscribe to an unlimited text message service, choose a monthly plan that offers limited text message service, or send and receive messages on a pay-per-use basis. However, in the US, many users do not subscribe to a monthly or unlimited message plan, leaving them subject to per-message charges. FTEU text messaging removes that burden from the consumer by enabling businesses to absorb the often complex and variable charges levied by mobile operators.

Free to End User text messaging is one of the most effective business models in the wireless ecosystem. It has proven its value by opening new business models, removing the cost barrier to consumer participation, and complying with legislation that in certain cases prohibits processes that charge consumers for information. Yet while FTEU text messaging has been used for over a decade by mobile carriers and a small number of very large enterprises, the technology has remained virtually undiscovered by the rest of American businesses and individuals.

The power of ‘FREE’

The word ‘free’ establishes a strong set of expectations between two parties that is rarely replicated with other words. Marketers know that the word elicits customer action and can be an influential factor in attracting new customers. But ‘free’ is also subject to debate, disagreement, and even legal disputes.

Early in the mobile marketing days, many businesses were eager to tell customers that their service or offering was free. They included language to that effect in text messages, opt-in Web pages, print materials, and elsewhere. Mobile content providers and carriers soon discovered that ’free’ meant different things to different parties. While businesses might offer their customers free text service, consumers often found that their mobile carriers charged for text delivery.

150+ 100-149 75-99 50-74 25-49 0-24 40 35 30 25 20 15 10 5 0 Income ($K) Percent 55+ 35-54 25-34 13-24 40 35 30 25 20 15 10 5 0 Percent Age

APPLICATION-TO-PERSON USER PROFILE

Source: The Nielson Company, 2010

Female 46.7% 53.3%Male

In the United States alone,

consumers sent more than

two trillion text messages

in 2010, up 31% from

2009, and that volume

is forecasted to continue

growing for years to come.

CTIA – The Wireless Association, 2010

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Standard rate text message programs are now rarely referred to as free. Even though content providers may not be charging for the service, consumers may incur a charge for the communication, reflected in the phrase “message and data rates may apply.” But with the advent of FTEU text messaging, truly free services are available.

FTEU text messaging is analogous to 800-number calling on a traditional landline phone, where the cost of the call is borne by the enterprise. Toll-free calling grew rapidly in the ‘80s and ‘90s because it was much more efficient and cost effective than operator-assisted collect calls, and—a side benefit—consumer usage was higher. Many businesses reported that toll-free numbers resulted in 600% higher usage rates than equivalent tolled numbers. Increased use translated into more sales and improved customer satisfaction.

Consumers and enterprises share the benefits

Cost is a motivating factor for consumers

The single biggest complaint that mobile subscribers have about text messaging is cost. Consumers do not want to pay to receive text messages from businesses. With FTEU text messaging, they don’t.

The disclaimer “message and data rates may apply” lacks clarity, confuses consumers, and impedes positive customer action. Text messages that are truly free do not cause confusion or prevent follow-through. Regardless of the service contract or payment plan that customers have with their carriers, FTEU text messaging is toll-free for communications that are mutually valuable to both parties in a business relationship. In a SoundBite survey conducted by Harris Poll National Quorum in 2011, when respondents were asked if one of the businesses they deal with offered to provide account updates,

programs, or special offers via a text messaging service, 13% indicated they would sign up. When asked if the same company offered this text messaging service completely free, i.e., FTEU text messaging, the percentage of

respondents who indicated they would sign up nearly doubled across all age groups, and tripled in the 18-to-24 age group, reaching nearly 40%.

The enterprise wins too

FTEU text messaging offers businesses a compelling communications channel for effective two-way interaction with customers and prospects. By providing immediacy and personalization that no other medium can offer, it can extend brand awareness, deliver timely content or critical information, and create customer loyalty. Besides reaching consumers wherever they are, over a communications channel they rely on, FTEU text messaging offers many benefits to enterprises that embrace it.

• Higher response rate: Toll-free calling services (1-800 numbers) produce higher response rates than tolled services. Enterprises that deploy FTEU text messaging can expect 6-to-10-times-higher response rates from the customers they serve.

FTEU TEXT MESSAGING INCREASES PARTICIPATION RATES

Source: SoundBite/Harris Poll® National Quorum Survey, 2011

If one of the companies you deal with regularly offered a text messaging service, how likely would you be to sign up for this service? Across all age groups, when text messaging service was free, sign-up nearly doubled.

23%

13%

FTEU Standard Rate

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• Market differentiation: Whenever possible, businesses prefer to offer solutions that are not available through their competitors. FTEU text messaging provides a differentiated service that sets these businesses apart.

• Regulatory compliance: A key concern among consumers and regulators is the cost of communications. FTEU text messaging provides the only mechanism whereby enterprises can communicate with consumers over a mobile device and the consumer incurs zero cost for the communication.

• Greater loyalty: While standard-rate messaging could be used, customers appreciate the personal service that enterprises provide by bearing the cost of FTEU text

messaging, engendering greater customer loyalty.

• Cost savings: The cost for an agent to post an alert to a customer’s voice mail exceeds one dollar per customer. FTEU text messaging not only reduces voice costs significantly, it is less expensive than direct mail as well. It can also reduce the number of incoming calls to contact centers by providing a mechanism through which consumers can get quick and accurate help.

Consumers prefer to have choices in the way they communicate with each other and with the businesses that serve them. Increasingly, they are turning to text messaging. It is up to enterprises to embrace this communications channel with FTEU text messaging, or stand by as their customers go elsewhere.

Putting FTEU text messaging to work

FTEU text messaging can be used across any industry and at any stage of the customer lifecycle. It is used in healthcare, retail, financial services, utilities, telecommunications, media and entertainment, and in applications ranging from marketing, to customer care, to payment confirmations, collections, and risk management.

Marketing

Standard rate text messaging has been used for years in marketing programs to deliver personalized offers, notify customers of loyalty points and credits, drive redemptions, cross-sell services, replenish accounts, and deliver market-based or user-selected alerts. Each of these programs could increase customer participation with FTEU text messaging. FTEU text messaging is complementary to other mobile channels, including apps and the mobile Web, as well as traditional communications channels. Looking at the entire marketing spectrum—print, radio, television, direct mail, online, and outdoor—it is clear that text messaging has the ability to interweave and link with all channels, which can make traditional campaigns truly interactive and measurable.

Compared with many other marketing channels, the cost of SMS is low, providing a cost-effective channel with greater likelihood of customer participation. With FTEU text messaging, in rates increase, redemption and participation rates improve, and opt-outs decrease.

FTEU text messaging gives enterprises the opportunity to… • Introduce the immediacy and

intimacy of SMS to consumers and offer greater choice in communications.

• Contact consumers using a preferred communications channel without cost to them, regardless of their carrier plan. • Avoid disclaimers such as “other

charges may apply” and lower the risk of consumer complaints. • Differentiate a company from

competitors and enhance brand loyalty by stimulating dialog and interaction.

• Reach consumers with 1:1 communications to acquire new customers.

• Create highly-targeted marketing campaigns using location-based services (LBS) that extend point-of-purchase offers in real time, generating immediate foot traffic and revenue.

USE CASE

When a major retail brand wanted to increase store traffic and revenue, they modified their POS system to accept mobile telephone numbers and trained their sales associates to collect mobile numbers during transactions. FTEU text messages were then sent to these consumers, confirming their opt-in and offering promotional discounts. Using this technique, the retailer encouraged repeat business by providing effective, personalized incentives for cost-conscious consumers to shop at the store. Consumers received a positive user experience because the coupons, offers, and other relevant information were free, on their phone, and not easily forgotten.

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USE CASE

USE CASE

Customer care

Based on results of the 2011 Soundbite/Harris Poll survey, 67% of consumers expect customer care text messaging to be free of charge. It is used to welcome new customers, reduce issues on new accounts, notify customers of problems such as service interruptions, remind customers of maintenance, provide useful tips, and conduct customer satisfaction or other types of surveys.

FTEU text messaging takes customer care to a higher level by differentiating service quality through frequency, immediacy, and personalization. For example, pharmacies can notify customers that their prescriptions are ready, doctors and other professional service providers can send appointment reminders, and airlines can notify ticket holders of flight delays.

By providing personalized and relevant information in a text message, businesses not only reach out to consumers in a new and proactive way, they also gain an advantage in capturing customer feedback that is critical to improving service level KPIs.

Because few customers respond to traditional survey requests, a cable company found it difficult if not impossible to know precisely how they could modify their processes to improve customer loyalty and gain referrals. In an effort to overcome poor response rates, the company sent an FTEU text message survey that prompted customers to answer three simple questions with a rating of 1 through 10. This approach provided the granularity they needed to take action and improve the customer experience. Within hours of deploying the FTEU text message survey, the cable company experienced a 300% improvement in response rates over its previous voice-only survey.

Contact centers

Contact centers lower their support costs when consumers are given the opportunity for self-service. FTEU text messaging can be used proactively to notify consumers regarding an issue, or more passively to remind consumers that they can use free text messaging to contact the company. By combining FTEU text messaging with text-based agent support tools, live agent services can be accessed easily through click-to-call or call-me-back functions. Enterprises that use SMS to interact with their customers promote deeper brand awareness, grow pre-sales contact center traffic, and ultimately, increase customer satisfaction.

When one wireless carrier found that basic account alerts did not always reduce calls to their contact center, they decided to take action to reduce support costs. By combining FTEU text messaging with an automated message system, the carrier was able to automate entire text message conversations and include live agents when appropriate. Fully automated dialog addressed issues over 90% of the time, and strategic agent involvement ensured that all customer inquiries were promptly answered. With this approach, the number of calls to the contact center diminished, and agents were able to address twice as many customer questions per hour than via traditional voice conversations, resulting in higher agent productivity and improved customer satisfaction.

Payments and collections

FTEU text messaging prompts customers before payments are due, and reminds them of their payment obligation. It is used to gather immediate authorization for payments, collect convenience fees, drive payments through low-cost, self-service channels, reduce payment delays, or deliver immediate notification of potential fraud detection.

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USE CASE

During the economic downturn, a leading US bank experienced increased delinquencies and charge-offs across major portfolios. In an effort to generate cash and stem losses, the bank implemented an enhanced collections strategy that targeted nearly 50,000 accounts across major portfolios, divided between test and control groups. The test group received up to four FTEU text messages at various stages in the collections process, while the control group did not. In this case, the test group outperformed the control group in all areas—charge-offs, costs, and roll rates decreased significantly.

Completing the mobile solution

Working together, Application Providers and Mobile Transaction Networks (MTN) provide a complete mobile messaging solution that connects enterprises with their customers and prospects. Each specializes in their areas of expertise, together providing a best-in-class mobile messaging solution. The diagram below depicts the role of each member in the value chain.

The Application Provider typically builds the system that enables enterprises to

communicate with mobile consumers by packaging different components of the mobile experience. For text messaging, these systems may include contact center integration, message creation, telephone number verification, delivery scheduling, tracking, dialog management, opt-in/opt-out management, agent visibility, analytics, and reporting. Application Providers deliver mobile services at lower cost and reduced risk than businesses could achieve with in-house development.

The Mobile Transaction Network provides secure, reliable connectivity between

enterprises and the global mobile subscriber base. Combining networking expertise and trusted partnerships with hundreds of mobile operators, the MTN offers a single technical and commercial interface to reach billions of consumers. Its messaging services typically include robust two-way message delivery, short code management, and administration of all the operator-specific business processes required to launch a successful mobile program. The MTN also leverages its scale and buying power to provide its customers with enterprise-grade messaging at a cost advantage.

Organizations looking to adopt a mobile messaging strategy should understand the role each member plays in the value chain. Additional benefits—time to market, ease of doing business-—may result when the Application Provider and the MTN have an existing business relationship.

SoundBite Communications and mBlox have partnered since 2005 to bring FTEU text messaging solutions to market. The two companies are among the leaders in the industry in both FTEU text messaging volume and services.

Three-quarters of large

retailers in the US have

plans for engaging

consumers in the mobile

space.

Forrester Research, Inc., 2010 GLOBAL MOBILE TRANSACTION NETWORKS APPLICATION PROVIDERS ENTERPRISES MOBILE SUBSCRIBERS MOBILE OPERATORS Source: mBlox, 2011

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Summary

Forward-looking organizations recognize the value of proactively communicating with their constituents to build trusted, lifelong, and profitable relationships. They understand that competing successfully requires a new approach to customer communications, one that responds to an unprecedented and dramatic shift in consumer communications preferences as consumers increasingly rely on their mobile devices and applications to access and exchange information through a variety of communications channels. Making FTEU text messaging a component of an enterprise’s customer communications strategy not only eliminates costs for consumers, but by removing barriers to direct interaction with consumers, it can lower communication costs for businesses. Establishing an opt-in mobile communication channel with consumers allows for economical two-way interactions, compared to mail or live-agent services. This consumer-friendly text messaging solution enhances service quality by giving consumers choices in how they receive and respond to information in a non-intrusive and simple manner that breaks through the communications clutter.

For more information on how your business can benefit from FTEU text messaging, please contact the industry leaders below.

About SoundBite Communications

SoundBite Communications is a leading global provider of cloud-based,

multi-channel proactive customer communications solutions designed to transform the way organizations communicate throughout the customer lifecycle to build trusted, lifelong, and profitable relationships. Clients can leverage SoundBite’s proactive customer communications offering and expertise in designing, executing, and optimizing communications strategies to engage in relevant customer interactions that deliver long-term business value. Visit www.soundbIte.com or call +1 (877) 769-6324 for more information.

About mBlox

mBlox, the world’s largest mobile transaction network, accelerates mobile commerce by enabling mobile interaction and communication between businesses and consumers. By managing the transmission, mobile payment, and financial settlement of SMS mobile messaging, mBlox provides easy access to mobile subscribers on more than 650 carriers in 180 countries. The company transmits a broad variety of rich content and secure messages to a wide range of customers worldwide, including financial institutions, transportation firms, media companies, and consumer brands. Visit www.mblox.com or call +1 (408) 617-3700 for more information.

With one-quarter of the

US population living in

mobile-only households,

the ability to communicate

effectively with mobile

consumers is becoming

vital.

CTIA – The Wireless Association, 2010

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