Short Message System and App-based Messaging: Impact on User Experience in an Internet-Driven Nation

Short Message System (SMS) text messaging has been around since the 1990s and has long been one of the most useful ways to communicate using a mobile phone. But in the past couple of years, many over-the-top apps have emerged that route text messages over the Internet. WhatsApp and WeChat are good examples. Apple even allow a similar option for iPhone to iPhone messages using iMessage.

These apps have become more popular than traditional SMS messages because there is no "per message" charge - once you have your mobile data connection - and there is no geographic control, so you can text friends or work with colleagues all over the world at a very affordable cost. Apps like WhatsApp have developed their connectivity options even further and has already allowed voice and video calls in addition to messaging. Will this messaging evolution render SMS messages obsolete? What does this mean for the Telecommunication companies?

People who refuse to use WhatsApp in Singapore can now be seen almost as refuseniks - with the app's local penetration of 97%, almost everyone with a smartphone is using WhatsApp for messaging, having only 3% who still use the traditional messaging system. There are some examples of people who still use SMS, but reading the case studies it feels almost like they are just longing for the nostalgia of an earlier technology.

The industry analyst firm TRPC, in fact, cites only three strong reasons why phone users would still use SMS instead of an app such as WhatsApp:

1. Overseas visitors without a data roaming package
2. Customers who never upgraded and are still using feature phones and 2G Internet (they mentioned about the seniors, but I don’t think that the refusal to upgrade their mobile data connection is limited to a certain generation or group of people)
3. People who are paranoid about security or do not want to rely on mobile data

Some brands are still using SMS to send alerts and information because SMS remains a platform-independent technology. All phones can use SMS regardless of the apps on their phones or the mobile data plans they’ve subscribed into. However, the study showed that SMS usage in 2018 in Singapore was less than a third of what has been in 2011.

The banks and the retailers use SMS as a standard way to send notifications to customers to ensure compliance to the acceptable standard, but it is clear that most customers in Singapore no longer use SMS as a way to communicate with friends of family.

Given that the new apps have given the customers more leeway and flexibility to send messages at a fixed cost (as part of their data plan), there will come a time when even the formal institutions and organization will have no choice but to adapt to these new changes and preferences from their customers. Hence, completely seeing SMS phasing out from the preferred way of communication.

With the same customers heavily using VoIP services such as Skype or WhatsApp for their voice calls, this migration from SMS to WhatsApp shows that there is a bigger issue at play in the telecoms industry. If customers start focusing only on their data plan - because that is what they use for calls and texts - then postpaid plans including voice minutes and texts will become a very hard sell. Telcos need to start exploring how they can create customer loyalty in an environment where their main differentiator will only be how much data they are offering for a certain price. And the US gives an idea of where we are heading to because most cell phone operators there are now offering unlimited data plans for a fixed price - which means that the only differentiator (when prices are the same) is going to be the quality of the customer experience.

Telecom companies in Singapore need to pay attention because this change is about to happen very soon- this internet revolution has already changed the way people wants to be served. Price is one thing, quality of the internet connection is another thing. But what really gives customer loyalty to their provider is the service I get when I need it- the time I spend on waiting for someone to help me, the quality of service I get, has it been resolved and how fast did I get the resolution. For the customers, it not all about the existence of the issue. Most of the time, it is how the providers handle the issue that makes us stay or leave. Telecom providers in Singapore need to start differentiating their market position through offering a better customer experience than the lengthy IVR music and IVR options.

Shall you have any question on how we’re able to bridge this gap at the most cost-efficient way possible, please do not hesitate to get in touch with me or with the other Teleperformance experts.