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 💬➡️0️⃣.

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 millions of 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 realized 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:

• 💎 Premium Plan: This plan lets the user continue using OkCredit's server-sent SMS service for a monthly fee.

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

A key challenge was to seamlessly onboard both our existing user base and new users onto this new model without causing confusion or friction. We designed distinct user flows for each segment, which we tested rigorously.

Onboarding Existing Users 👨‍👩‍👧‍👦 For users already active on the app, we introduced the new choice immediately after they completed a transaction. The flow was designed to be clear and educational:

1. The Choice 🤔: After a transaction, a screen would appear presenting the two options: the premium OkCredit SMS or the free device-sent SMS.

2. The "Pre-Permission" Dialog 💬: If a user selected the "Free Plan," our app would first show a custom dialog box. This screen explained why we needed SMS permission, ensuring the user understood the context before seeing the official OS prompt.

3. The System Permission 📲: After the user acknowledged the pre-permission screen, the app would trigger the native Android permission dialog to formally request access.

4. Success State 🎉: Upon granting permission, the user would be taken to a success screen, and all future transaction SMS for that customer would be sent from their device.

This flow, including paths for users who initially denied permission, was mapped out to handle various scenarios and ensure a smooth transition.

Onboarding New Users 🧑‍🚀 For new users, we hypothesized that simplifying the initial choice would lead to higher adoption of the free plan. We ran an experiment where the "send from my phone" option was presented as the primary and only path for their first transaction, with no initial mention of a premium subscription. This was designed to frame device-sent SMS as the default, integrated experience from the very beginning.

This segmented and experimental approach was crucial in helping us seamlessly migrate the majority of our users to the new system, laying the groundwork for the successful outcomes.

🚀 Outcome: 90% SMS Cost Reduction

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

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

• 💰 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 our merchants value.