Afraid to Use SMS? Here’s What You Need to Know First

Andrew (00:01)

Welcome to the 98% Podcast — the show for sales, marketing, and go-to-market experts who are done playing it safe and ready to do what actually works. I'm your host, Andrew Davis. If you're tired of surface-level takes and want conversations that actually change how you work, you're in the right place. Let's get into it.

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Andrew (00:18)

All right, today we're tackling something I hear all the time — and honestly, something I think is costing teams more than they realize: the use of SMS. Specifically, why so many teams are refusing to use it as a channel of communication. Not because they don't see value — most of them do — but because compliance feels like a minefield they have to constantly navigate. Nobody wants to be the person who got the company flagged, shut down, or worse, fined.

But here's what I've started to wonder. What if most of the fear is based on assumptions that just simply aren't true? What if avoiding SMS is actually the riskier move? That's exactly what we're going to dig into today. If SMS has been sitting on your "maybe someday" list, this episode is going to change the way you think about that.

Joining me today is Martin Payne, CEO of TextUs — somebody I've become very familiar with in my career. TextUs is a business performance SMS platform that helps go-to-market teams and customer-facing teams communicate faster, get better results, and ultimately create more pipeline.

Martin, welcome to the podcast.

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Martin Payne (01:42)

Thanks Andrew, it's good to be on.

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Andrew (01:45)

Awesome. So let's just jump right into it. You've got the better part of a decade — and more — under your belt when it comes to SMS specifically. You've got a lot of experience in how organizations are creating pipeline across marketing, sales, and operations.

I think there are some assumptions around why SMS is difficult. Why do you think teams are avoiding it more than anything else?

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Martin Payne (02:20)

Yeah, in actuality, it is more difficult. But the reputation and the mystique around its difficulty is far greater than what it really is. I think it's based in truth — which is why some people assume it's harder. It is a more tightly regulated messaging medium than email. The FCC is the regulatory body here and it is more stringent. And because the FCC is more stringent, it causes the mobile carriers and SMS infrastructure providers to also be more stringent so that they don't run afoul of the law.

But these are pretty well-defined rules — there's no mystery around them. And unpacking that is one of our core areas of expertise at TextUs.

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Andrew (03:26)

When you talk to go-to-market leaders — sales, marketing, operations, customer success — do you feel like compliance is the most common thing preventing adoption? Or are there other themes as well?

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Martin Payne (03:43)

It's a really big one. Right now, where we are in the market adoption curve, it's the most common one. For the really large marketers out there who send a ton of messaging volume — mostly email — it's the number one thing that stops them from adopting SMS more broadly. The other thing that comes up is that SMS is short form while email is medium to long form, so there are real content and creative changes that have to occur. But I find that to be secondary compared to the compliance-related barriers.

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Andrew (04:28)

Yeah, I tend to agree. I have a large network of go-to-market individuals and it seems less like fear and more like just not understanding it — not necessarily misinformation, but not clearly defined information. We've had a lot of that come up in discussions with major enterprise go-to-market leaders as well.

There's also the fear factor around what actually happens if you're out of compliance. Where do you think that fear comes from within organizations? Is it the legal terms? The federal regulatory bodies? Leadership coming down with an iron fist?

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Martin Payne (05:27)

I think it comes from probably two areas.

One is that SMS is more stringent when it comes to shutting brands down. Certain behaviors you can get away with in email you can't get away with in SMS. For example, being on-brand isn't just important from a marketing or positioning standpoint — if you're not using your registered brand name in your text messaging, there's a risk you'll get shut down. What the carriers are really trying to control for is fraud. If they detect a different brand than what you're registered under, they see that as a risk. Their filtering is only so good. So you've got to be tighter in your processes — your marketing processes, your content control processes.

The other area is the legal department. If you look at litigation related to anything telecommunications-related versus email, the punitive damages associated with telecommunications are quite a bit higher. There have been some fairly high-profile cases that all legal departments are aware of. That just raises the internal hurdle rate that a CMO or executive has to get over in order to get buy-in — they've got to make a case for how they can control for that risk.

And the third piece is that there really aren't great attribution methods that clearly justify the ROI of taking on the compliance risk and the cost of SMS — because the per-message cost of SMS is quite a bit different from the per-message cost of email. Because of that, you need to be really confident in your expected ROI. I think all of these things just contribute to a real — and non-trivial — internal hurdle to clear. TextUs is leading the charge in terms of how to make that case internally.

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Andrew (08:10)

Yeah, I agree — the fear is real and there are real reasons for it. I want to get into what actually happens when a team gets it wrong. I think most people assume worst-case scenario: lawsuits, fines, never being able to text again. And sure, that's a possibility — but that's usually not where it starts. So can you walk me through what actually happens when a message gets flagged, a carrier kicks it back, or something is undeliverable? Does the sender know? How are they notified?

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Martin Payne (09:09)

Yeah, the vast majority of the time you're not done — you just get warnings. Starting from the top: if you're getting a really high opt-out rate, you're going to have a conversation with us, because we're having conversations with mobile carriers about why that's happening.

A lot of this is just standard best practices that sales and marketing people already know — it just takes it up a notch in SMS. Having a clean list of opted-in contacts so that when you send messages there's not a high opt-out rate is really important. The other thing that will get you warned is a high percentage of undeliveries. That's also tied to good list management and hygiene — if you've got a clean contact list, opt-outs will be low and deliveries will be high.

The other area where people will get warned or rejected by mobile carriers is spammy or illegal language detected in the message. The carriers are looking for specific things, and we've arguably got one of the best data lakes in the industry in terms of sheer message volume. We mine this data with machine learning to understand what message attributes will trigger a spam filter versus not. We've got the technology to help people identify risky message language and rewrite it using AI.

So those three things — undeliverability rates, opt-out rates, and message content — are commonly flagged and are actually easily correctable. The fourth one is easily correctable but has more serious consequences, and that comes back to branding. The carriers require you to register your business and go through a vetting process — brand registration and campaign registration — before you can send text messages. They monitor messages to make sure the brand used matches the registered brand. That's there to prevent fraud and phishing, which is a good guardrail.

We've had instances where a customer is part of a division with a different brand name and they're sending text messages through a phone number registered under the parent brand. That can create a false positive and the carriers will think it's phishing and shut the brand down. That's avoidable — there are ways to structure the texting account so you don't run into that problem. And one of our upcoming AI features will detect accidental — or intentional — misuse of brand.

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Andrew (13:36)

That's great. You mentioned AI components that can rewrite messages or recognize spammy language. Is there customization you can do on individual accounts so the AI can detect things specific to that brand — like the wrong brand name being used? I'm thinking about CMOs at Fortune 500 companies with tens of thousands of employees. Can that be customized per account?

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Martin Payne (14:35)

Yeah, great question. We do a lot of talking to customers — we've got a lot of big customers — and one of their requirements was: TextUs, it's great that you capture the horizontal phrases that will cause blocks, like words and phrases the FCC literally bans, and words and phrases the carriers will block even if the FCC allows them. But we have specific internal requirements too. The legal department, the marketing department have words and phrases they don't want their employees using.

So we've built a custom dictionary of words and phrases that each customer can customize, which we factor into the AI detection and rewrite when crafting messages.

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Andrew (15:49)

As a marketing leader, that's music to my ears. That used to be a huge problem in communications generally — especially email. It's a really standout feature compared to the rest of the texting space.

I want to move forward to the myths of compliance. We talked about the consequences — warnings, opt-out thresholds, everything in between — but teams keep coming back to: "We just won't use SMS, it's too complicated." Let's talk about legal, for example. Not every organization has a legal department. There's a myth out there that legal has to approve every message going out. Why do people believe that, and why do we call it a myth?

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Martin Payne (17:20)

I think it's there because the cases that have been litigated and lost by businesses have been fairly substantial — and high-profile. But the number of cases that actually go to trial is pretty few and far between. In my experience with thousands of customers, I think we've had one — and it was based on pretty egregious behavior, way off the reservation. You have to go pretty far off the reservation in terms of bad behavior to see that kind of outcome. But when they do happen, they're high-profile, and that creates a lot of misunderstanding.

The vast majority of our customers stay within the guardrails and see the benefits of SMS's much higher engagement rates. They'll get a warning, correct their behavior, and we help them do that. Our customer success teams run QBRs with customers periodically, and if a serious warning comes up, we get with you right away to help you correct it. On top of that, we've now got things built into the system like Smart Delivery, which is essentially like having an expert on your shoulder helping you craft the right message.

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Martin Payne (19:56)

And if I'm talking to a CRO or CEO who says it's just safer not to use SMS — you can't afford not to adopt it. We're talking about a 5x to 10x improvement in conversion rates, full funnel. It's not just a top-of-funnel improvement. SMS as a higher-engagement channel works all the way through mid and bottom funnel. Your competition is likely considering it or already doing it, so competitively you have to have it in your toolkit.

And on top of that, the ROI of email is decreasing because everyone does it. There's so much noise in the inbox that your ability to break through as a brand gets lower and lower. You have to complement email with a higher-engagement channel that breaks through the noise. That's the way the messaging industry is moving. And there are partners like TextUs who can make the compliance part easy so you can realize the higher conversion and engagement SMS brings to your overall messaging mix.

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Andrew (22:01)

You really can't afford not to do this. It takes a little bit of compliance work upfront to unlock your funnel — but it's worth it. SMS isn't a lead generator, it's a lead converter. I was talking to a customer yesterday with one of our sales team members. They had 500 inbound demos every single month but were only getting about 200 of them to respond — and all they were doing was emailing and calling. That's 40% of their inbound funnel. What if you could just make that 50%? The downstream effect is enormous. That's the power of performance SMS.

And I should add — AI has had a huge impact on inbox noise. I used to get 50 emails a day and thought that was a lot. Now I'm getting 250. Internally, we rarely email each other. I tell people: text me or Slack me. Email engagement is dropping significantly.

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Andrew (24:03)

So what do carriers actually care about when they evaluate a message? I think that's where a lot of teams get lost — they assume everything is being watched and the message has to be perfect. What are the core things to think about?

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Martin Payne (24:45)

They're really looking for things tied to what the FCC regulates under the acronym SHAFT — Sexual content, Hate speech, Alcohol, Firearms, and Tobacco. Any message with related words is going to get blocked.

The other thing they look for is context — SMS is an opt-in channel. Once someone opts in, that's when SMS is supposed to be used. So if carriers see high undelivery rates and high opt-out rates, those are indicators to them that proper opt-ins aren't happening. Managing your contact list carefully and only texting opted-in contacts means your delivery rates should be high and opt-out rates should be low — because that person wants a relationship with your company.

And then there's solicitous language — things like "here's a hot promo going away soon" that sound like lead generation using the SMS channel. Carriers are looking out for that too.

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Andrew (27:13)

It sounds like Smart Delivery's AI component can take that same concept and rewrite a message in a more compliant way. Can you speak to why that was built and what it can do?

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Martin Payne (27:34)

Yeah — what I just explained is really putting it in a nutshell. There's a lot more technicality to it, and it's hard for any user — let alone a new one — to know all of that. It's tedious. That's the big reason we built Smart Delivery: let's just remove the tedium of knowing all the problematic words and phrases, including nuanced solicitous language that might or might not get blocked. It's hard to know all that. So we thought it was a perfect use case for AI — detect the language and rewrite it. Make it easy. Remove the burden from users so they don't have to know all of this themselves. Ease of use and usability are a big underpinning for us, so Smart Delivery was a very natural feature to build.

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Andrew (28:35)

It's one of my favorite features, for what it's worth — that and the message quality indicator. In A2P business texting, it's still very personable. But when you're messaging under a brand name, the message quality indicator is going to flag things that would be fine peer-to-peer but aren't appropriate in a business context. It's a really good check for an excited sales rep who has a deal right across the finish line and doesn't want to get shut down.

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Martin Payne (29:16)

And I'll add one important layer here. The message quality indicator has a sense of progressive severity. If something is slightly borderline, we'll warn you and suggest changing the language. But if it gets beyond a certain threshold — if we have high confidence the message is going to get blocked — we will prevent it from going out entirely and force a rewrite. Our machine learning is strong enough that we just know when a message is going to get blocked, and it's not worth sending it out.

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Andrew (30:02)

It's almost like the system is protecting users from themselves at times. We have thousands and thousands of users and a lot of people don't realize a message is going to be totally blocked before the AI detects it — which is incredibly beneficial.

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Martin Payne (30:06)

Exactly. And the other reason that's important: we talked about how the vast majority of warnings are just that — warnings. But if the behavior doesn't change, or gets worse, there is a point where they'll shut your campaign down and you won't be able to send messages. It can take a while to get there — outside of cases like fraud and phishing, where you'll get shut down right away. But in these other cases, there is time. The carriers and SMS providers will work with us to work with you to get you back in the swim lane. But you definitely don't want to let it go, which is why something like the message quality indicator and Smart Delivery are so important — we're nipping it in the bud before warnings even start building up.

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Andrew (31:18)

Now — I've heard people say texting isn't a trusted source anymore because of fraud and phishing. But I think that's a myth. You and I are both data-centric and we see the usage metrics, the increase in upsells, the growth in both conversational and campaign messaging. What would you say to someone who believes texting is just not a trusted channel anymore?

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Martin Payne (31:57)

I think that's largely a myth. I've been in marketing technology for a really long time now, and I have not seen any ecosystem police itself as well as this one does. The carriers and SMS providers realize how valuable SMS is when you keep it clean. The fact that it's unencrypted technology is actually an advantage here — the carriers can look at every message that goes out. The detection and filtering levels are way higher here than with even phone calls, for example — you obviously can't do that with voice calls, that would be against the law. But looking at an SMS message to determine whether it's non-compliant or illegal behavior? That's allowed. So the carriers are actively doing that.

The technology makes it easier to police, and at the end of the day that's well worth it — because it keeps the medium clean and far less noisy than other channels. And fraud and phishing don't get to use it for very long. It gets shut down really fast.

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Andrew (34:21)

For somebody who's been on the fence about SMS for the last couple of months — what's one thing you want them to walk away understanding about TextUs?

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Martin Payne (34:36)

We're specifically positioned to help mid-market and enterprise customers who tend to have a more nuanced view of compliance and higher requirements around brand protection. I'd want folks to know that if you're thinking about adopting SMS, work with a partner who has the knowledge that matches your internal requirements — from both a knowledge standpoint and a technology standpoint, like our Smart Delivery feature.

The other thing we know about mid-market enterprise customers is that once they've got compliance handled, they have steep requirements for performance too. And once we get you on best practices for compliance, we are all about the performance of SMS as a channel — in concert with your other channels, most commonly email. We've got the technology, the analytics, the AI, and the people to optimize that texting channel for maximum ROI.

A lot of players out there are really just about getting you adopted and letting SMS do its thing. But what we've found is that SMS is powerful even in a vanilla implementation — it's just a more engaging channel. What we've also found is that we can double or even triple the performance of a basic texting setup by using our features, our analytics, and the deep know-how our team has built around implementation that maximizes performance.

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Andrew (36:42)

So working with experts and simply adding a highly engaging channel will immediately give you results — and that's before you even learn how to text well or figure out automations. That's awesome.

Martin, this has been a great conversation about compliance, and I'm genuinely excited about Smart Delivery — it's one of my favorite features at TextUs. I think a lot of people listening have been sitting on SMS for a little too long, and today I think we gave them a real reason to move forward.

For anyone who wants to dig deeper into what we talked about today — compliance, Smart Delivery, message quality indicator, the AI rewrite feature — it's all linked in the show notes below. If you're even curious about what TextUs can do for your business, go check it out and book a demo using the link below.

And if this episode hit home for you, do me a favor — share it with the person on your team who keeps saying SMS is too risky. Win that argument in the break room. As always, I'm Andrew Davis. This is the 98% Podcast. We'll see you next time. Thanks, Martin.

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Martin Payne (37:53)

Thanks, Andrew.

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