Pivoting SMS Cost Centre into Revenue Centre 📈

How we transformed our SMS strategy by switching from server-sent to device-sent messages, essentially reducing our SMS costs to zero.

OkCredit is a digital ledger (Khata) designed for small business merchants in India, such as Kirana store owners, to easily keep track of credit (Udhaar) & payment transactions of their customers.

🏁 Goal: Moving towards Profitability We needed to reduce our operating costs as part of our business goals. One of our biggest costs was the SMS messages sent to customers for every transaction added. This feature was important to provide transparency between the customer and the merchant, but the cost was constantly going up.

💸 Problem: The Burden of SMS Costs As OkCredit grew, our SMS messages costs went up. With million transactions daily, the cost of transaction SMS messages became a major expense. We had to find a way to reduce this cost, but without jeopardising the transparency factor between merchants and their customers.

💡 Solution: Giving Merchants a Choice We realised that most of our merchants have a mobile plan that includes 100 free SMS per day. So, we decided to give them the choice to use their device to send SMS, rather than sending SMS from OkCredit's server.

We engineered a new user experience (UX) that gave merchants two options to choose from:

1. Premium Plan: This plan lets the user continue using OkCredit's SMS messages service for a monthly cost of Rs. 75.

2. Free Plan: This plan sends SMS messages directly from the user’s device at no additional cost.

To make this experience simple, we added a pop-up screen that appeared after each new transaction for each customer. This allowed merchants to choose between the two options. If they chose the free plan, they simply had to allow OkCredit to send SMS messages from their device.

To make this experience simple, we added a pop-up screen that appeared after each new transaction for each customer. This allowed merchants to choose between the two options. If they chose the free plan, they simply had to allow OkCredit to send SMS messages from their device.

🚀 Outcome: 90% SMS Cost Reduction

1. Zero-Cost Design: Transaction SMS messages are sent via the user’s device, slashing costs dramatically.

2. Revenue Generation: The premium plan not only covers costs but turns a previously loss-making feature into a 5% profit margin.

3. Improved Profitability: Overall SMS messages costs reduced by 90%, reinforcing our journey toward profitability.

Our retention and activation numbers remained stable; maintaining stable profits was a big win. We have successfully reduced costs while maintaining the user experience. This strategic pivot has effectively converted a significant expense into a robust revenue engine while maintaining the transparency and trust of our merchants' value.